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In 2002, the Billingses filed for bankruptcy and received a
discharge, which of course did not affect Rosalee’s obligation to
repay the money she’d embezzled or her own liability for the
unpaid 1999 taxes. 11 U.S.C. secs. 523(a)(1), 507(a)(8) (2000).
David retired from GM in 2003 and began collecting a pension,
though he continues to work two other jobs. He and his wife have
filed timely tax returns for later years as they came due.
As the IRS had not processed David’s original request for
relief, he filed another one. In November 2002, the IRS denied
his request for relief based on “all the facts and
circumstances,” but particularly because:
you failed to establish that it was
reasonable for you to believe the tax
liability was paid or was going to be paid
at the time you signed the amended return.
David appealed, and the IRS issued its final determination, again
denying him relief because he did not believe when he signed the
amended return that the tax would be paid.
The Commissioner argues:
Instead of filing an amended return, [Rosalee]
could have contacted respondent and informed
him of the unreported embezzlement income.
Once informed, respondent could have proceeded
with examination procedures and [Rosalee] could
have agreed to respondent’s determination of
additional tax.
3(...continued)
persuasive form. We also note that the Billingses made these
decisions in late 2000, long before the Supreme Court held the
guidelines to be merely advisory. See United States v. Booker,
543 U.S. 220 (2005).
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