Donald G. and Claudia A. Willis - Page 9

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          find no abuse of discretion in the settlement officer’s decision            
          that petitioners were not eligible for CNC status.                          

          Installment Agreement                                                       
               Section 6159 authorizes respondent to consider installment             
          agreements when a taxpayer lacks the current ability to satisfy             
          the full amount of taxes.  At the time of the collection due                
          process hearing in this case, respondent maintained a policy of             
          accepting installment agreements only with terms that would                 
          result in full payment of all Federal income tax liabilities                
          within the applicable collection periods of limitation.  Internal           
          Revenue Manual, sec. 5.14.1.1 (effective Oct. 18, 1999 to                   
          Mar. 30, 2002).  A 5-year extension of the periods of limitation            
          is permissible when making this determination.  Internal Revenue            
          Manual, sec. 5.14.1.7 (effective Oct. 18, 1999 to Mar. 30, 2002).           
               In light of the amount of petitioners’ cumulative liability,           
          an acceptable installment agreement would have required payments            
          of approximately $1,500 per month for the 116 months in the                 
          collection periods of limitation.  Even with a 5-year extension,            
          payments of more than $1,100 per month would have been required.            
          Petitioners do not dispute their inability to make payments in              
          that amount.                                                                
               After the notice of determination was issued in this case,             
          respondent changed its policy related to installment agreements.            
          Under respondent’s new policy, respondent may allow taxpayers to            





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