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two vehicles petitioners disclosed on their Form 433-A.4 Fourth,
Officer Clark decreased petitioners’ tax expense to $871. He
estimated petitioners’ Federal and State income taxes and their
tax under the Federal Insurance Contributions Act (FICA).
Officer Clark determined petitioners’ estimated Federal and State
income tax by multiplying by 63 percent the amount of income tax
reported on petitioners’ Federal income tax return and State
income tax return for 2005. Officer Clark computed petitioners’
FICA tax from Mrs. Diffee’s earnings statement for the first 16
weeks of 2006. Finally, Officer Clark reduced petitioners’
health care expense to $250 because petitioners did not provide
documentation or explanation of the $700 claimed on the Form 433-
A. Officer Clark also considered that petitioners did not list
any medical expenses as an itemized deduction on their last filed
Federal income tax return.
After all adjustments, Officer Clark determined that
petitioners had the ability to pay $2,377 per month5 under an
installment agreement. The following table shows the amounts
Office Clark used in making his determination:
4Petitioners disclosed that they owned a 2006 Honda Goldwing
motorcycle and a 1996 Ford Ranger.
5Officer Clark determined this amount by reducing
petitioners’ total income by their total living expenses.
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Last modified: November 10, 2007