Arthur A. Lemann III and Roberta A. Lemann - Page 16

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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).                                                             

          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                     
               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.               
 (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                

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