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petitioners’ 1994 tax liability. To the extent that petitioners
were visited by an IRS employee in March 1996, we think it more
likely than not that the visit related to Southwestern’s
employment tax liabilities. Furthermore, we think it more than
coincidence that the $26,000 paid to respondent in March of 1996
was, at the time, the amount of Southwestern’s outstanding
employment tax liability.
Our conclusion on this point is further supported by the
payments made by petitioners in May 2001. As noted, in May 2001,
petitioners sent two separate checks to respondent which totaled
$21,859 to be applied to their 1994 tax liability. Both checks
were subsequently returned for insufficient funds. Despite
petitioner’s explanation to the contrary, we find it implausible
and unlikely that petitioners would make payments in excess of
$21,000 with respect to the 1994 tax liability that they
considered to have been previously paid.
Respondent introduced a certified transcript of account for
petitioners’ 1994 tax liability. The transcript reflects, among
other things, petitioners’ tax liability for the taxable year
1994 and all payments received with respect to this liability.
The transcript provides that petitioners’ withholding tax credit
for 1994 was applied to their 1994 tax liability, as well as the
two checks sent by petitioners in May 2001 and the subsequent
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