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failure to pay the amount shown on their return.4
B. Whether Petitioners Had Reasonable Cause for Failure To Pay
Their Income Tax for 1995
Respondent did not send a notice of deficiency to
petitioners, and petitioners did not otherwise have an
opportunity to dispute their tax liability for 1995. Thus,
petitioners may challenge the existence or amount of the
underlying tax liability. See sec. 6330(c)(2)(B); Sego v.
Commissioner, 114 T.C. 604, 609 (2000); Goza v. Commissioner,
supra at 180-181.
Petitioners prepared their 1995 return and all of the offers
in compromise. Petitioners contend that their failure to pay tax
was due to reasonable cause and not willful neglect because they
thought their offers in compromise were fair. We disagree. A
taxpayer has reasonable cause for failure to timely pay a tax if:
the taxpayer has made a satisfactory showing that he
exercised ordinary business care and prudence in
providing for payment of his tax liability and was
nevertheless either unable to pay the tax or would
suffer an undue hardship * * * if he paid on the due
date.* * * [Sec. 301.6651-1(c)(1), Proced. & Admin.
Regs.]
See also Valen Manufacturing Co. v. United States, 90 F.3d 1190,
4 We have previously held that a taxpayer is liable for the
addition to tax under sec. 6651(a)(2) in a lien and levy case
where the record is not clear that the taxpayer received a notice
of deficiency for 1 year, and no notices of deficiency were
issued for the other 5 years in issue. See Inman v.
Commissioner, T.C. Memo. 2001-107.
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