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In 2001 he filed an untimely return showing that he owed no
tax, but the Commissioner later assessed a deficiency for that
year of slightly more than $1000. For 2002 and 2003,
Scharringhausen filed timely returns that showed tax due, but he
had not made estimated tax payments and did not pay the taxes
with the return. The Commissioner assessed the tax shown on the
returns for those years along with additions and interest for a
total balance of over $30,000. For his 2004 year,
Scharringhausen again filed a return--this one showing more than
$16,000 owed--but again made no estimated tax payments and no
payment with the return.
About the same time he filed his 2004 return,
Scharringhausen offered to settle his 2001-03 tax debt for a mere
$750, citing “doubt as to collectibility.” The Commissioner
returned this offer as “nonprocessable” because Scharringhausen
was “noncompliant” in that he had failed to pay his 2004 taxes.
After rejecting the compromise offer, the Commissioner filed an
NFTL for the years 2001-03. Scharringhausen received a
Collection Due Process (CDP) Notice of the NFTL and then timely
requested a CDP hearing. He also submitted a new offer-in-
compromise (OIC), offering to settle his unpaid 2004 tax bill as
well, again on grounds of doubtful collectibility. This time he
submitted a Form 433-A Collection Information Statement for Wage
Earners and Self-employed Individuals reflecting 21 creditors’
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Last modified: March 27, 2008