Ralph M. and Rosemary L. Conlon - Page 7

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          petitioners’ offer in compromise could not be accepted because              
          they could pay their tax liability in full.                                 
               On September 11, 2002, the Appeals Office issued a Notice of           
          Determination Concerning Collection Action(s) Under Section 6320            
          and/or 6330 (notice of determination) notifying petitioners of              
          the determination to proceed with collection of the 1991 income             
          tax liability.                                                              
               On October 7, 2002, petitioners filed a Petition for Lien or           
          Levy Action Under Code Section 6320(c) or 6330(d) (the petition).           
          In the petition, petitioners allege, in part:  “In 1991, we had             
          over a 200,000 loss * * *.  We feel we are entitled to the full             
          loss. * * * The letter of deficiency was sent to our tax                    
          representatives, we have no knowledge of result’s [sic].”                   
               Respondent contends:  (1) Petitioners cannot dispute their             
          underlying 1991 tax liability; and (2) there was no abuse of                
          discretion by respondent in refusing to accept petitioners’ offer           
          in compromise.                                                              
               A.  Underlying Liability                                               
               In general, section 6330 prohibits the Commissioner from               
          proceeding with collection by levy until the taxpayer has been              
          given notice and an opportunity for an administrative review of             
          the matter (in the form of a hearing before the Internal Revenue            
          Service’s Office of Appeals).  If the Commissioner issues a                 

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