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Petitioners’ primary arguments were that, at 71 and 70 years
of age, they were approaching retirement age; Mr. Bergevin had
special health problems; and, after retirement, they would have
negative cashflow. Petitioners presented projections claiming
that they would need to retain most of their asset equity to meet
their ordinary and necessary living expenses over the following
5 years. The settlement officer responded in part:
The Bergevin Asset Equity Calculator presented by your
representative’s firm, though an illustration commonly
presented as a contention in an Effective Tax
Administration offer, is non-persuasive. It’s based on
the erroneous premise that the Internal Revenue Service
is charged with making certain taxpayers have
sufficient assets to fund future living expenses. To
agree with this assumption is to conclude that absent
independent wealth no one over the age of 60 should
have to pay any federal tax because he/she will need
such funds for future retirement living expenses.
Congress has made no such exception and IRS, as the
revenue collecting arm of the United States, has no
role in such a social issue. General offer guidelines
require the IRS examiner to make a reasonable
determination as to necessary living expenses and
Effective Tax Administration guidelines further require
the examiner to make a reasonable determination as to
future living expenses within the overall context of
settlement, but the examiner is not required to ensure
the existence level presented by your representative at
the practical disregard for the tax debt. The examples
in Internal Revenue Manual 5.8.11 in no way present
such a requirement.
The taxpayers are each of retirement age. If one or
both retire, their household income would decrease
along with the expense allowances for Taxes and
Transportation. Health Care expenses would likely
increase. The IRM allows a continuing Transportation
Operating expense of $200 once the loan on the 2002
Toyota Camry is paid. Because of the uncertainties and
complexities involved in this case, I used a PV factor
of 24 (months) instead of the standard 48 (months) in
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