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1996 and February 1997) to provide funds to pay their 1995 tax
liability but were turned down. We disagree. Petitioners had
assets from which they could have paid their 1995 tax liability
without undue hardship when they submitted their offers in
compromise. They did not try to get a second trust until 6
months after they filed their 1995 return and submitted their
initial offer in compromise.
In November 1998, respondent proposed a monthly payment plan
to petitioners under which they would not have had to liquidate
all of their assets or sell their cars, but petitioners claimed
they could not afford to make the payments. Their claim that
they could not afford the monthly payments is incredible because
they sold two cars and petitioner’s one-half interest in the
rental property and borrowed $17,000 from petitioner’s retirement
account between June 1997 and November 1999. They did not use
these proceeds to pay their remaining 1995 tax liability.
Petitioners did not follow the directions in Form 656, Offer
in Compromise, for making an offer in compromise. Their offer of
a small portion of their assets (equal to less than 20 percent of
their 1995 tax liability) was not reasonable cause for failure to
pay their 1995 tax. The instructions for Form 656 describe how
to compute a minimum offer in compromise and state that the
Commissioner will not process an offer not meeting those minimum
requirements. Petitioners’ offers did not meet these minimum
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