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On April 15, 1998, petitioners filed their joint Form 1040
for 1995 showing a total tax of $21,295.90 and an overpayment of
$7,704.10. On the Form 1040, petitioners indicated that they
wanted the overpayment to be applied to their 1996 estimated
taxes. On August 31, 1998, respondent assessed tax of $21,120.76
on petitioners’ 1995 return.
Petitioners’ chapter 13 bankruptcy case was completed on
March 6, 2001, and a Notice of Plan Completion was filed on July
11, 2001. On August 13, 2001, the bankruptcy court entered its
Order Discharging Debtor After Completion of Chapter 13 Plan.
On October 27, 2002, respondent issued to petitioners a
Final Notice of Intent to Levy and Notice of Your Right to a
Hearing regarding collection of petitioners’ 1996 income tax
liability. Petitioners timely filed a Form 12153, Request for a
Collection Due Process Hearing (hearing).
During the hearing, petitioners asserted that their tax
liability for 1996 was paid in full through the application of
the overpayment from their 1995 return in addition to the payment
submitted with the 1996 return. Appeals Officer Deborah Glover
(Ms. Glover) informed petitioners that the 1995 overpayment had
been applied to their 1985 tax liability. Petitioners asserted
that since they had undergone a bankruptcy, they should not owe
anything.
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Last modified: May 25, 2011