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explain why some of the extensive funds could not be employed to
pay taxes, and the Court concurs.
On the matter of collection alternatives, petitioners on
brief specifically find fault with Mr. Skidmore’s evaluation of
currently not collectible status and of an offer-in-compromise.
The Internal Revenue Manual (IRM) provides for the reporting of
accounts as currently not collectible, pursuant to which accounts
are removed from active inventory. IRM, sec. 5.16.1.1 (Sept.
2005). The IRM enumerates a variety of reasons that will support
currently not collectible status, including where collection
would create undue hardship by leaving taxpayers unable to meet
necessary living expenses. Id.; see also Willis v. Commissioner,
T.C. Memo. 2003-302.
Petitioners’ claims of financial hardship rest in large part
on the inclusion in their living expenses of housing costs
greatly in excess of the amount considered standard for their
geographic area; i.e., $7,081 claimed versus a $1,299 standard
allowance. Petitioners attempted to explain and justify their
housing expenditures in their October 27 and November 17, 2003,
letters to Mr. Skidmore and in the attachment to their Form 12153
for 2001 and 2002 (which is substantially identical to the
November 17 letter). They indicated that the figure represented
payments made on three loans overencumbering their home and
offered the following generalized statement in explanation: “The
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