Joseph T. Hayes and Marilyn Hayes - Page 4

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          to collect the tax by levy on the taxpayer's property.  Sec.                
          6331(a).  Upon request, the taxpayer is entitled to an                      
          administrative hearing before the Appeals Office of the Internal            
          Revenue Service.  Sec. 6330(b)(1).  If dissatisfied with the                
          Appeals Office determination, the taxpayer may seek judicial                
          review in the Tax Court or a Federal District Court, as                     
          appropriate.  Sec. 6330(d).                                                 
               Respondent’s position before trial, as reflected in his                
          pretrial memorandum, was that petitioners had never paid the $611           
          amount due as shown on their joint 1997 return.  At the                     
          commencement of trial, respondent’s counsel stated that as she              
          was reviewing respondent’s transcripts of petitioners’ accounts             
          in preparation for trial, she had discovered that “it appears as            
          though the taxpayer sent in his 1997 return with a payment of               
          $611.  We’re not sure as to why, but that payment got applied to            
          1994 rather 1997.”3                                                         
               On the basis of all the evidence, we have found, as                    
          respondent’s counsel has suggested, that petitioners remitted the           
          $611 payment with their 1997 return.  Respondent has offered no             
          explanation or justification for applying the $611 remittance to            

               3 Respondent’s counsel represented that this matter could be           
          resolved administratively.  After the trial, we allowed the                 
          parties an opportunity to attempt to resolve this case                      
          administratively.  After a prolonged attempt to reach an offer in           
          compromise, the parties reported to the Court that they were                
          unable to reach any agreement.                                              





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