Craig I. Smith and Mary Lou Smith - Page 5

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               Pursuant to their obligations under the installment                    
          agreement, petitioners timely made the required monthly payments            
          through October 2004, but failed to timely make their November              
          2004 payment.5  In addition, petitioners failed to make estimated           
          tax payments relating to tax years after 2001 and 2002 as                   
          required by the terms of the installment agreement.                         
          Consequently, respondent terminated the agreement and demanded              
          payment in full of petitioners’ uncollected tax liabilities for             
          2001 and 2002.  On December 13, 2004, respondent mailed                     
          petitioners a Notice CP 523, Notice of Intent to Levy--You                  
          Defaulted On Your Installment Agreement, for 2001.  On the same             
          day, respondent mailed a similar notice to petitioners for 2002.            
          We hereinafter refer to these notices collectively as the second            
          notice of levy.  Each letter stated:                                        
                    This is a formal notice of our intent to terminate your           
               installment agreement 30 days from the date of this notice.            
               You defaulted on your agreement because you didn’t make your           
               payments as agreed.  The agreement states that we may                  
               terminate your agreement and collect the entire amount of              
               your tax liability if you don’t meet all the conditions.               
               This is your notice, as required by Internal Revenue Code              
               Section 6331(d), of our intent to levy * * * To prevent                
               collection action you must bring your account up to date by            
               paying your past due amount, as well as any current payments           
               due. * * *  If you don’t agree with this decision, you have            
               a right to request Appeals consideration by calling the                
               number listed below within 30 days from the date the                   
               agreement is terminated.                                               

               5Respondent received and recorded the November payment on              
          Dec. 6, 2004.  The record does not disclose any further payments            
          made by petitioners.                                                        

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