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the facts of this case, the late filing, by itself, is not
sufficient basis for a material breach of the contract.
Adequacy of compensation for loss. The IRS was adequately
compensated for its “loss”. Respondent suffered minimal, if any,
damages, as he held petitioner’s refund as security.
Forfeiture by party who fails. Under this factor, the
comments in the Restatement explain: “[A] failure is less likely
to be regarded as material if it occurs late, after substantial
preparation or performance, and more likely to be regarded as
material if it occurs early, before reliance.” 1 Restatement,
supra, sec. 241, comment d. In this case, petitioner had
substantially performed under the terms of the offer-in-
compromise at the time the offer was declared in default.
Petitioner’s untimely mailing of the return occurred in the
fourth year of a 5-year agreement. Petitioner had already paid
the full amount of the offer-in-compromise, with borrowed funds,
within 60 days after the offer had been accepted. Petitioner had
complied with the filing requirements for the first 3 years of
the agreement. Further, at the time the Appeals officer
determined to proceed with collection, petitioner had filed his
1998 return and complied with all other terms of the offer-in-
compromise.
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