Peter P. Baltic and Karen R. Baltic - Page 4

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               The settlement officer who held the CDP hearing told the               
          Baltics that they couldn’t challenge the amount or existence of             
          their tax liability for 1999 because they had had a chance to               
          challenge the liability when they received a notice of deficiency           
          and hadn’t done so.  She also explained to them that, even though           
          she herself couldn’t consider the OIC-DATL as part of the CDP               
          hearing, an Appeals officer within another part of the IRS would            
          consider it and a revenue officer in yet a third part of the IRS            
          would examine the Baltics’ amended 1999 return in what is called            
          an “audit reconsideration.”  The settlement officer then ended              
          the CDP hearing, and sent the Baltics a notice in which she                 
          determined that collection by levy would be postponed until the             
          IRS both decided whether to accept the OIC-DATL and finished its            
          “audit reconsideration,” but that the lien would be sustained.              

          and then sent them a letter explaining that partial payment                 
          doesn’t defeat a tax lien.  His reason for doing so is                      
          unclear--section 301.7122-1(h), Proced. & Admin. Regs., says the            
          Commissioner should treat such checks as deposits, not payments;            
          implying the Baltics should ultimately get the money refunded if            
          their offer is rejected.  (Section 7122(c)(1) was recently                  
          amended, Tax Increase Prevention and Reconciliation Act of 2005,            
          Pub. L. 109-222, sec. 509, 120 Stat. 362, to require partial                
          payment to be submitted with an OIC, but the amendment doesn't              
          affect the Baltics, because they submitted their OIC before the             
          amendment's effective date.)                                                

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