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the Appeals officer's rejection of petitioners' proposed
installment agreement was an abuse of discretion.
Petitioners' Offer-in-Compromise
The Appeals officer also rejected petitioners' second
proposed collection alternative, their $67,000 offer-in-
compromise. In doing so, the Appeals officer essentially adopted
the recommendation of the offer specialist that petitioners did
not qualify for an offer-in-compromise based on doubt as to
collectibility because they were capable of paying the entire
amount of the outstanding liabilities (by making an initial
payment of $40,000 and monthly installments of $2,820 thereafter
for 59 months).
11(...continued)
outstanding liabilities when the notice of intent to levy was
issued on Jan. 30, 2001, totaled $201,191. The aggregate
payments under a $1,500 per month installment plan running
through July 21, 2007 (the expiration date of the latest period
of limitations) would have fallen substantially short of that
figure, whether measured from the time when the Appeals officer
preliminarily rejected it in Apr. 2002 ($96,000) or finally
rejected it in the notice of determination in July 2002
($91,500).
Sec. 6502(a)(2)(A) allows the taxpayer and the Commissioner
to extend the period for collection in connection with entering
into an installment agreement. The Commissioner's policy
generally limits such extensions to no more than 5 years beyond
the original expiration of the limitations period. IRM, sec.
5.14.2.1 (Mar. 2002). While there is no evidence that the
Appeals officer considered such an extension, this issue is
immaterial, as an addition of 5 years to the applicable periods
of limitation would still not have resulted in full satisfaction
of petitioners' liabilities; i.e., $1,500 per month for an
additional 60 months would amount to another $90,000, which, when
added to the $91,000 petitioners would pay before the expiration
date, would still be less than petitioners' total unpaid tax
liabilities.
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