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in an arbitrary or capricious manner in rejecting petitioner’s
OICs, which were largely premised on his position that he could
not afford to make a larger payment.
Finally, we note that the IRS Manual on Notice in Levy Cases
provides that in deciding whether to levy on a retirement
account, the Commissioner’s Appeals Office should determine
“whether the taxpayer’s conduct has been flagrant [, with] * * *
some examples of flagrant conduct [being] * * * Taxpayers who
have placed other assets beyond the reach of the government [by]
* * * dissipating them.” Administration, Internal Revenue Manual
(CCH), Notice to Levy, sec. 5.11.6.2(5) at 16,719. In this case,
the Kansas City Tax Clinic candidly shared with respondent the
details of petitioner’s gambling addiction. We are convinced,
based on this evidence, and our examination of both petitioner’s
financial statements and the rapidly declining IRA balances as
previously detailed in this report, that a large portion of the
$660,194 withdrawn from petitioner’s IRA accounts between 1998
and 2003 went to fund his gambling addiction.
We are further convinced by our examination of the Bank of
America statements that detail petitioner’s account balances as
of January 2001, that at the time that petitioner would have been
required to pay his Federal income tax owing for all of the years
in issue he could have done so, but elected not to for the
benefit of his proclivity for racetracks and casinos. Finally,
we are convinced, in the light of the above IRS Manual guidance,
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