Peter P. Baltic and Karen R. Baltic - Page 3

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          the notice, and don’t dispute that they never filed a petition in           
          this Court to challenge it.  Since the Baltics didn’t challenge             
          the deficiency, the Commissioner assessed it.  The Baltics didn’t           
          pay and so, in June 2004, the Commissioner sent them a notice               
          under section 6320 that he had filed a federal tax lien against             
          their property, and a notice under section 6330 that he intended            
          to levy their property to collect the unpaid tax.  The Baltics              
          promptly requested a collection due process (CDP) hearing.  Their           
          request stated that “We disagree with the determination of taxes            
          and additions owed, and the calculations of the amounts, if any.”           
          Before the hearing was scheduled, they submitted an OIC-DATL that           
          covered not just 1999, but all tax years from 1997 through 2003,            
          offering $18,699 to compromise their entire income tax liability            
          for all those years.  They also submitted amended tax returns for           
          1997-19992 and 2003, and original tax returns for the years 2000-           

               2 As with the Baltics’ 1999 tax year, the Commissioner had             
          already assessed deficiencies for the Baltics’ 1997 and 1998 tax            
          years after they failed to respond to a notice of deficiency for            
          those years.                                                                
               3 The Baltics enclosed a cashier’s check for the proposed              
          settlement amount with their OIC-DATL, noting on it that cashing            
          the check meant acceptance of the OIC.  This is not how the IRS             
          does business.  An OIC is accepted only when the taxpayer is                
          notified in writing.  Sec. 301.7122-1(e)(1), Proced. & Admin.               
          Regs.  Cashing a check does not mean that the IRS has accepted              
          the offer.  Colebank v. Commissioner, T.C. Memo. 1977-46;  Howard           
          v. Commissioner, T.C. Memo. 1956-219.  The Commissioner took the            
          check and applied it to the 1998 tax debt that the Baltics owed             

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