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Petitioners contend that the $40,000 they submitted along
with their offer in compromise adequately compensated respondent
for any interest that would have accrued during the period of
time respondent held the $40,000, and thus interest on
petitioners’ interest liabilities should have been tolled during
that period. Alternatively, petitioners claim that interest
should be tolled from September 4, 1996, the date petitioners
withdrew their offer, until an unspecified date in early January
1997, presumably the date petitioners received from respondent
their $40,000. Respondent contends that petitioners are not
entitled to an “interest credit”, for lack of a better term, for
the time that respondent held the $40,000 because the Form 656
petitioners executed, the form with which petitioners submitted
the $40,000, provides that respondent is not obligated to pay
interest on the $40,000 petitioners submitted.
We agree with respondent’s conclusion.
Paragraph 7(c) of the Form 656 petitioners executed
provides, in pertinent part, as follows: “I/we understand that
IRS will not pay interest on any amount I/we submit with the
offer.” Section 301.7122-1(d)(4), Proced. & Admin. Regs.,
dictates the same result.25 Thus, it is clear that petitioners
25 Sec. 301.7122-1(d)(4), Proced. & Admin. Regs., provides,
in pertinent part, as follows:
If an offer in compromise is withdrawn or rejected, the
(continued...)
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