Gary and Cynthia Stein - Page 4

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          taxable years.  The OIC provided that petitioners would pay                 
          $32,000 to satisfy these liabilities, with $27,000 to be                    
          initially deposited upon respondent’s acceptance of the OIC, and            
          $5,000 to be paid 6 months after respondent’s notice of                     
          acceptance.  As part of the OIC, petitioners were to “comply with           
          all provisions of the Internal Revenue Code relating to the                 
          filing [of] returns and paying [of] required taxes for five (5)             
          years from the date IRS accepts the offer.”  Petitioners signed             
          the OIC on January 30, 1997.                                                
               Respondent accepted petitioners’ OIC by return letter dated            
          March 28, 1997.  In his acceptance letter, respondent provided              
          that “the conditions of the offer require [petitioners] to file             
          and pay all required taxes for five years from the date shown in            
          the upper right corner of this letter.”  To avoid default on the            
          OIC, petitioners were required to timely file and pay their taxes           
          through March 28, 2002.                                                     
               Over the next 5 years, petitioners either did not timely               
          file, and/or did not timely pay, and/or failed to report all of             
          their income on their Federal tax returns.                                  
          1.  Taxable Year 1997                                                       
               Petitioners failed to report all of their income on their              
          1997 Federal income tax return.  Respondent issued a notice of              
          deficiency for taxable year 1997, which petitioners subsequently            
          defaulted.  As a result of the default, respondent assessed an              






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