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respondent stating that petitioner excluded the $75,000 because
petitioner was told by several people (including oral advice by
an Internal Revenue Service (IRS) employee) that the $75,000 was
not includable in petitioner’s 1998 gross income. Upon the
failure of petitioner to file a timely petition, the deficiency
and penalty were assessed. Responding to inquiries from
petitioner and petitioner’s counsel, respondent abated the
section 6662(a) penalty on June 4, 2001, but did not change the
determination that the proceeds were includable in petitioner’s
1998 gross income.2
IV. Collection Proceeding
On May 27, 2002, respondent issued to petitioner a Letter
1058, Final Notice of Intent to Levy and Notice of Your Right to
a Hearing. On June 9, 2002, petitioner timely filed a Form
12153, Request for a Collection Due Process Hearing (hearing).
At the November hearing,3 petitioner asserted that the $75,000
was excludable from gross income and requested an abatement of
penalties and interest. Petitioner submitted an offer-in-
compromise (OIC) for $8,000, but it was rejected because
petitioner had the ability to fully pay the tax liability by an
installment agreement. On December 5, 2002, petitioner filed a
2 Respondent assessed an addition to tax under sec.
6651(a)(3) on various dates in 2001.
3 Petitioner met with representatives of the IRS a number
of times between November 2002 and October 2003.
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Last modified: May 25, 2011