Michael W. Braun - Page 3

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               Petitioner finally began to get his life back on track about           
          3 years later, and in 1998 he filed the Brauns’ tax returns for             
          1994 through 1997 and submitted an offer in compromise to                   
          respondent for the outstanding tax liabilities and interest.3               
               Specifically, petitioner filed the Brauns’ prior 4 years of            
          income tax returns on September 13, 1998.  The Brauns were due              
          refunds for 1995 and 1996.  After crediting the refunds against             
          their 1994 tax liability, the Brauns had tax liabilities left               
          outstanding for 1994 and 1997.  Respondent previously sent the              
          Brauns a deficiency notice for 1994.  When the Brauns failed to             
          respond, respondent assessed an amount the Internal Revenue                 
          Service (IRS) determined to be the Brauns’ 1994 tax liability and           
          $2,028.31 in interest.4                                                     
               Respondent assessed additional tax and interest after the              
          Brauns filed their income tax return for 1994.5  Respondent also            
          assessed the tax reported on their income tax return for 1997               


               3The Brauns were due refunds for 1995 and 1996 that                    
          respondent applied against their 1994 tax liability.  Income tax            
          credits totaling $2,294.05 from 1995 and 1996 were applied to the           
          Brauns’ 1994 account, and respondent abated $197.21 of interest.            
          Income tax credits totaling $2,832.47 from 1999-2002 were also              
          applied to the Brauns’ 1994 account.                                        
               4The amount assessed for 1994 included a $7,057 income tax             
          deficiency, a $1,220.75 addition to tax under sec. 6651(a)(1) for           
          failure to file timely, and a $239.13 addition to tax under sec.            
          6654 for failure to pay estimated tax.                                      
               5The late-filed return for 1994 reflected a $12,311.60 tax             
          liability that resulted in an additional assessment for 1994 of             
          $5,254 in tax and $1,219.06 in interest.                                    




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