Oliver W. and Harriet S. Williams - Page 3




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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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