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agreement would be applied first to petitioners’ 1994 liability
until such liability was extinguished and then to petitioners’
1990 liability. Additionally, petitioners contend that, but for
respondent’s misapplication of the payments to petitioners’ 1990
liability, the payments would have extinguished petitioners’ 1994
liability, and petitioners would not have incurred the related
penalties and interest. Furthermore, petitioners contend that
their position is supported by the installment agreement’s
listing of the 1994 tax year before the 1990 tax year and by
respondent’s application of six payments during 1996 and 1997 to
petitioners’ 1994 liability.
Respondent contends that, with the exception of several
payments applied to petitioners’ 1994 tax liability while
respondent considered the offer-in-compromise with respect to
petitioners’ 1990 tax year, petitioners’ payments were applied to
the earliest tax year covered by the installment agreement; i.e.,
1990, in accordance with respondent’s standard operating
procedures. Accordingly, respondent contends that respondent
properly applied petitioners’ payments in the best interest of
the United States pursuant to the terms of the installment
agreement and that the determination of respondent’s Appeals
Office was not an abuse of discretion.
The record does not support petitioners’ contentions.
Payments not applied to petitioners’ 1994 liability were applied
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Last modified: May 25, 2011