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1995 income tax liability. Respondent’s certificate of official
record for 1995 (1995 record) indicated petitioners were credited
with making 22 monthly payments of $375 from June 23, 1997,
through March 24, 1999, a $375 payment on June 29, 1999, 6
monthly payments of $340 from June 2, 2000 through November 22,
2000, and a $340 payment on February 20, 2001, pursuant to the
installment agreement. Petitioners did not fulfill the terms of
the installment agreement, and an income tax liability for 1995
remains unpaid.2
C. Notice of Federal Tax Lien Filing of May 9, 2003
On June 19, 2001, petitioners filed with their 1998 income
tax return Form 5329, Additional Taxes Attributable to IRAs,
Other Qualified Retirement Plans, Annuities, Modified Endowment
Contracts, and MSAs. Petitioners failed to pay the 10-percent
additional tax on the early distribution as required under
section 72(t). On October 15, 2001, respondent assessed the 10-
percent additional tax liability including penalties and interest
for 1998.3 On May 6, 2003, respondent filed a notice of Federal
tax lien with respect to the 10-percent additional tax liability
and on May 9, 2003, mailed petitioners a Notice of Federal Tax
2 The 1995 record also indicated that on May 1, 2000, an
overpayment credit of $175 from 1994 was applied to petitioners’
1995 tax liability.
3 Respondent did not explain why the 10-percent additional
tax was assessed separately from the rest of the tax shown on the
return.
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Last modified: November 10, 2007