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petitioners again about their 1981-82 amended returns until early
1998.
3. Petitioners’ Payment of Tax
In 1986-90 and 1992, respondent applied substantial
overpayments and credits from 1980, 1982, and 1985-87 to
petitioners’ tax liability for 1981. Respondent also applied the
$14,193 in withholding credits that petitioners had reported on
their 1981 return to their 1981 tax liability.
In October 1987, petitioners paid their nearly $76,000 tax
liability for 1982. They expected that, because they had claimed
NOLs on their 1981-82 amended returns and made full payment for
1982, respondent would apply overpayments and withholding credits
of about $33,000 from 1985-87 to 1980 rather than to 1981 or
1982. Petitioners believed that, after the filing of their 1981-
82 amended returns, the paying of the $76,000 liability for 1982,
and the application of overpayments to 1980, they would have
fully paid all tax liabilities asserted by respondent relating to
their White Rim investment.
Respondent sent to petitioners notices of tax lien for 1981
on April 8, 1988, and June 19, 1991, a final notice of intent to
levy for 1981 on June 22, 1992, and a certificate of release of
Federal tax lien for 1981 on August 27, 1992.
Respondent did not contact petitioners further about their
1980-83 tax years until 1997. From 1987 to 1997, petitioners
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