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interest in rental property Barry Downing (petitioner) jointly
owned with his brother) with equity of about $29,000, life
insurance with a loan value of $1,000, and vehicles with equity
of about $4,500. Petitioners did not consult an accountant or
other tax professional concerning their 1995 return.
Respondent misplaced petitioners’ offer in compromise for
about 1 year; i.e., from April 15, 1996, to April 15, 1997.
Respondent also erroneously applied the $5,000 payment towards
petitioners’ 1995 tax liability, but, upon discovering the error,
returned the $5,000 with interest to petitioners on April 16,
1997.
Respondent did not issue a notice of deficiency to
petitioners for 1995. In 1996 and 1997, petitioners made the
following offers in compromise as full settlement of their 1995
income tax liability of $32,561, plus the addition to tax for
failure to pay and interest:
Date Amount of offer
Apr. 11, 1996 $5,000
Nov. 8, 1996 5,000
Dec. 3, 1996 4,398
Apr. 28, 1997 7,850
June 3, 1997 6,385
Respondent did not accept any of these offers because
respondent’s revenue officer believed that respondent could
collect about $38,635 from petitioners’ assets.
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Last modified: May 25, 2011