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b. Section 6651(a)(1) Addition to Tax in the
Deficiency Case
For the reasons described supra (Issue 1.B.5.a.), with
respect to the section 6651(a)(1) late filing addition to tax in
the section 6330 cases, petitioners are liable for the addition
to tax under section 6651(a)(1) in the deficiency case up to the
maximum statutory amount.
6. No Abuse of Discretion in Sustaining Levy
Petitioners argue the Appeals officer abused his discretion
in sustaining respondent’s levy because: (1) The Appeals officer
did not consider that the collection of tax would not be in
jeopardy, given petitioners’ ownership of substantial assets and
income-earning potential with which to pay their tax liabilities;
(2) IRS agents repeatedly declined to inspect petitioners’ real
property damaged by natural disasters in 1997 and 1998; and (3)
respondent never replied to petitioners’ good-faith efforts to
negotiate reasonable collection alternatives, including
petitioners’ offer in compromise.
Respondent filed a motion to strike portions of petitioners’
reply brief relating to the issue of abuse of discretion because
that issue was not raised in the petition.
Petitioners conceded the issue of abuse of discretion
because the petitions filed with the Court do not assert (nor is
there any basis in the administrative record for the Court to
conclude) that the Appeals officer abused his discretion with
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