Industrial Investors - Page 4




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               On June 21, 2004, Troy Talbott, the Appeals officer handling           
          the case, sent Wells a letter stating that he had started the CDP           
          review and that Wells had until July 8--just twelve business                
          days--to file Industrial’s overdue tax returns for 1996 and 2001            
          as well as submit any collection alternatives and current                   
          financial statements.  Two days later, Wells wrote back to                  
          Talbott with a summary of a phone conversation they had earlier             
          that day, and promised to respond to Talbott’s request for                  
          documents once he received an account history for Industrial.  He           
          added that he would need an extension of the July 8 due date, but           
          did attach copies of Industrial’s 1996 and 2001 tax returns                 
          (which had apparently already been filed) to his letter.                    
               Talbott, it turned out, had anticipated Wells’s request for            
          an account history and mailed a copy to Industrial even before              
          Wells asked for one.  Wells sent Talbott a brief note                       
          acknowledging receipt of that history on June 28:                           
               1. Receipt acknowledged.  2. It appears that 1990-1993                 
               is the problem as no deductions.  3. The $1 million                    
               income in 1990 never happened.  4. I will be sending                   
               you some papers shortly.                                               
          Talbott understood this note to be an omen that Wells planned to            
          revisit the amount of tax owed, and replied with a letter dated             
          July 1, telling Wells that Industrial could not reargue the                 
          underlying liability--it had already brought and settled a Tax              
          Court case for those years.  His letter also reconfirmed the July           
          8 deadline to provide any documentation.  With Independence Day             






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