Richard Nichols and Lisa Nichols - Page 5

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               The Nicholses finally requested interest abatement on                  
          October 31, 2003, in a letter sent to an IRS agent not involved             
          in the CDP process.  In that letter, they asked for an abatement            
          of 75% of the accrued interest because of “numerous lengthy spans           
          of time during which the files just sat on the respective                   
          personnel’s desks.”  They also claimed that the initial audit               
          took six years to complete and that this was an unreasonable                
          amount of time.  The letter didn’t offer any other reasons for              
          the interest abatement, nor did it explain why they decided to              
          ask for an abatement of only 75 percent of the interest charged.            
          The first IRS agent to consider the matter denied the request               
          quickly, but the Nicholses asked the IRS Appeals Office to review           
          that denial, arguing that the acts complained of were                       
          “managerial” under section 301.6404-2 of the Procedure and                  
          Administration Regulations.  The Appeals Office has not yet held            
          a conference to consider their request.                                     
               Although the Nicholses had not listed either the NOL                   
          carryback or the interest abatement issues as reasons to release            
          the lien, the Appeals officer who held the CDP hearing considered           
          the NOL carryback issue and noted in the record that the                    
          Nicholses were pursuing interest abatement.  In June 2004, that             
          officer tentatively agreed with the Nicholses to allow all the              
          NOLs.  In a letter confirming their understanding of this                   
          agreement, the Nicholses also asked him to abate all interest and           






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