- 4 -
never filed one. With no voluntary payment in sight, the
Commissioner sent a collection due process (CDP) notice in
February 2003, which warned the Nicholses that he intended to
levy their property to collect the still unpaid 1994 taxes. The
Nicholses did not request a CDP hearing after getting the notice,
but instead sent a letter in March requesting reconsideration of
the IRS’s decision to deny them the benefit of the NOLs that they
had claimed on their 1040X.3
In April 2003, the IRS sent the Nicholses a CDP notice of
the filing of a federal tax lien. This time, the Nicholses did
request a CDP hearing, arguing that the filing of a lien was
premature as there were still “significant issues that remain
unresolved.” Foremost among these open issues was their March
2003 request to the IRS that it reconsider its decision denying
them the NOL carrybacks. Their CDP request also mentioned that
they planned to seek an abatement of interest, though they didn’t
actually ask for one in their CDP request.4
3 At about the same time, they also sent a letter to the IRS
asking for an installment payment plan, conditioned on a
reduction in the 1994 deficiency. However, at that time they had
not filed a tax return for any tax year after 1997, and the
Commissioner will not consider giving installment agreements to
taxpayers who are not current in their filing obligations. See
Orum v. Commissioner, 412 F.3d 819, 820 (7th Cir. 2005), affg.
123 T.C. 1 (2004); Internal Revenue Manual sec. 5.14.1.5.1(4) and
(5).
4 The Nicholses raised several other procedural arguments in
their CDP request which they have since conceded.
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