Stanley R. Harbaugh and Bonnie L. Harbaugh - Page 7

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          Compromise of Tax Liabilities                                               
               Petitioner contends that the first call resulted in an                 
          agreement under which he would be required to pay a total amount            
          that was less than he owed.  We have found as a fact that he                
          believed that after making the payments for 36 months, he would             
          owe nothing more with respect to his tax liabilities.                       
               Respondent contends that an installment agreement, not a               
          compromise, was made during the first call.  Respondent contends            
          that, according to guidelines set forth in the Internal Revenue             
          Manual, amounts that were accrued but unassessed at the time of             
          the first call, such as interest and penalties, would not be                
          covered by the installment payments, and would remain due even              
          after all of the installment payments had been made.                        
               It is well settled that section 7122 and the regulations               
          thereunder provide the exclusive method of effectuating a valid             
          compromise of assessed tax liabilities.  Ringgold v.                        
          Commissioner, T.C. Memo. 2003-199; see also Botany Worsted Mills            
          v. United States, 278 U.S. 282, 288-89 (1929); Laurins v.                   
          Commissioner, 889 F.2d 910 (9th Cir. 1989), affg. Norman v.                 
          Commissioner, T.C. Memo. 1987-265.  After evaluating the                    
          requirements of section 7122 and the regulations thereunder, we             
          find that petitioner and the ACS employee did not enter into a              
          binding agreement to compromise petitioners’ liabilities.                   

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