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taxable year 2000, the Appeals officer requested updated financial
statements in order to consider petitioners’ proposed installment
agreement. By this time, the financial statement was over 3 years
old. Petitioners had previously acknowledged in connection with
their hearing for the taxable years 1997-99 that their
circumstances had changed from the facts shown in the financial
statement, and that the Appeals officer could no longer rely on
the financial statement. Clearly, respondent could not make an
objective determination of the viability of petitioners’ proposed
installment agreements on the basis of such outdated information.
Respondent, therefore, did not abuse his discretion in denying
petitioners’ proposed installment agreement on the basis of their
failure to comply with his request for updated financial
information. See id.
Petitioners have also contended that respondent abused his
discretion in refusing to consider “excessive necessary” and
“conditional” expenses. Under IRM sec. 5.15.1.3(4) (2000), the
“five-year” rule states that the Appeals officer may consider any
“excessive necessary” or “conditional” expenses if the taxpayers
can show that they can fully pay their outstanding income tax
liabilities over 5 years. Respondent argues that he was unable to
consider any “conditional” or “excessive necessary” expenses
because petitioners did not provide an updated financial statement
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