William H. and Jo Anne Lindley - Page 16

                                       - 16 -                                         
               In the February 28, 2005, letter, petitioners stated:                  
               The taxpayers would like to substantially increase the                 
               Offer amount and abandon their special circumstances                   
               arguments related to retirement, medical conditions,                   
               and the fact that they are victims of a convicted                      
               felon.  They would like to offer the full collection                   
               potential * * * of $150,000 contingent on acceptance of                
               the payment on November 1, 2006. [Emphasis added.]                     
          Contrary to petitioners’ assertion, this letter does not state              
          that the abandonment of their special circumstances arguments is            
          contingent upon acceptance of their increased offer amount.                 
          Instead, the letter communicates petitioners’ intention to do two           
          things, “[1] substantially increase the offer amount and [2]                
          abandon their special circumstances arguments”.  (Emphasis                  
          added.)  The only contingency expressed is that they would                  
          increase the offer amount only if the payment would be accepted             
          on November 1, 2006.  In addition, Mr. Owens credibly testified             
          that he did not recall petitioners’ stating that their                      
          abandonment of the special circumstances argument was contingent            
          upon acceptance of the increased offer amount.  Given the above-            
          quoted language, it was not arbitrary or capricious for Mr. Owens           
          to conclude that petitioners had abandoned their doubt as to                
          collectibility with special circumstances and effective tax                 
          administration arguments.                                                   
               Even assuming arguendo that Mr. Owens should have made a               
          final determination with respect to petitioners’ doubt as to                
          collectibility with special circumstances and effective tax                 






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