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reflect any abatement of penalties that were assessed
against the Debtor. Consequently, all account balances
shown for each year commencing in 1989 through the year 1997
are incorrect.
On January 23, 2002, the Appeals officer replied to
petitioner’s January 14, 2002, letter. The Appeals officer’s
letter stated:
You also stated that penalties discharged in
bankruptcy were not credited. I have consulted with
one of the local Bankruptcy Specialists who has advised
me that the penalties in your client’s case were not
dischargeable. Taxes will not be dischargeable if the
due date for a tax return is within 3 years of the
bankruptcy petition date. Also, when a case converts
from Chapter 11 to Chapter 7, it carries the same
original petition date. Although, according to the
dates in your letter, your client’s bankruptcy
converted to Chapter 7 in 1996, the petition date for
purposes of determining dischargeability goes back to
the original filing in 1991.
Accordingly, my determination, at this time, would have
to be that the balances shown due are correct. If I
have misstated or misunderstood either the facts or the
law relating to some aspect of this matter, please
correct me and provide a citation that supports your
position. I will certainly reconsider all of this if
my analysis is not consistent with the facts and law.
If you wish to explore payment options, I can assist
you in that matter. Options may include either an
installment payment agreement, an offer in compromise
or, possibly, a suspension of collection action pending
an improvement in your client’s financial situation.
Form 656 is enclosed for your use and information. In
that booklet you will also find financial statements
(Forms 433-A&B). If anything other than a short-term
payment plan is sought, your client will have to submit
the appropriate financial statement in support of the
proposal they wish to make.
I am faxing this letter to you this morning. The
original will be in the mail along with the Form 656.
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Last modified: May 25, 2011