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On June 8, 2001, respondent’s settlement officer sent
petitioners the following letter regarding the proposed
installment agreement:
I have not received a more viable proposal for payment
of your 1993 thru 1998 (and 1999) Federal Income Taxes.
As we discussed during our telephone conference on
5/21/2001, although you do not demonstrate an ability
to pay in full within the near future, an adjustment of
your expenses should be made so that within one year
you can commence substantial payments to allow payment
in full of all the liabilities listed on the Notice of
Intent and the 99 and prospective 2000 tax debt. An
installment agreement in the amount of $75.00 could be
initially allowed which would increase to $748.00 per
month in one year. I am sorry, but the unsecured and
incidental debt you list in your April 2001 financial
statements * * * [is] not allowable when forbearance
would result in payment in full of all tax liabilities,
penalty and interest.
The standards for allowable living expenses are
prescribed in the Internal Revenue Manual are the guide
used by both the Compliance and Appeals functions. I
cannot * * * [forgo] these guidelines unless there is a
special circumstance such as critical health needs.
In response to this letter, petitioners submitted a Form 433-A,
Collection Information Statement for Individuals, dated June 20,
2001, in which they stated: “I would like to reach a compromise
between the $75 that was previously agreed to + the $735 [sic]
that the IRS has calculated.” The Monthly Income and Expense
Analysis, as part of that form, lists monthly income of $6,965,
which consists of Mr. Schulman’s salary of $3,965 and his wife’s
salary of $3,000, as well as the following expenses:
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