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Ms. Glover attempted to discuss collection alternatives with
petitioners, but they declined to provide any financial
information. She informed petitioners that they were not
eligible for an installment agreement because they were not
current in their estimated tax payments or their filing
obligations. Petitioners had not filed a tax return since 2002.
On December 17, 2003, respondent sent petitioners a notice of
determination sustaining the proposed levy to collect their 1996
income tax liability.
Petitioners timely filed a petition in this Court in which
they alleged that “the Internal Revenue Service violated an order
of the U.S. Bankruptcy Court, Eastern District of Texas in the
manner and time of its allocation of funds in its possession for
payment to tax years covered in the bankruptcy. In the
alternative, the Internal Revenue Service violated the intent of
the bankruptcy court’s orders.”
Discussion
1. IRS’s Application of Petitioners’ 1995 Funds Against
Petitioners’ 1985 Tax Liability
a. Did the IRS Violate a Bankruptcy Order by Applying
Petitioners’ 1995 Overpayment to Their 1985 Tax Liability?
Petitioners allege that the IRS violated an order of the
bankruptcy court in the manner and time of its allocation of
funds in its possession for payment to tax years covered in the
bankruptcy. The Certificates of Official Record for petitioners’
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Last modified: May 25, 2011