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to the proof of claim of the IRS for the 1983 tax liability
stated:
3. The Debtors [Morgans] and the United States
agree that, notwithstanding the fact that the
underlying debt is dischargeable for the 1983 tax year,
a federal tax lien filed by the Internal Revenue
Service encumbers all of the Debtors’ property,
including any exempt property, to the extent it exists.
* * *
The only asset that petitioners had that was exempt from the
discharge order was the pension plan of petitioner W. Richard
Morgan (petitioner).
In the bankruptcy proceedings, petitioners were represented
by an attorney. Petitioners were also represented by a tax
attorney with respect to their 1981, 1982, and 1983 income tax
liabilities. Petitioners’ tax attorney had been engaged in the
practice of tax law since 1959 and had experience in tax
controversies and transactions planning. Petitioners’ tax
attorney had reviewed the law, regulations, and procedures on
installment agreements.
In March 1995, petitioners submitted an offer-in-compromise
to the IRS, which was later rejected. After the rejection of the
offer-in-compromise, petitioners’ delinquent tax accounts were
assigned to Revenue Officer Elizabeth Cooper (Cooper). Between
July 1997 and May 1998, Cooper advised petitioners’ attorney on
numerous occasions that petitioners needed to commence monthly
payments immediately while petitioners prepared a second offer-
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Last modified: May 25, 2011