                        T.C. Memo. 2007-77



                     UNITED STATES TAX COURT



         WILLIAM J. AND LOIS J. DICINDIO, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7029-03L.                Filed April 2, 2007.



     William J. and Lois J. DiCindio, pro se.

     Donald M. Brachfeld, for respondent.



                       MEMORANDUM OPINION


     COLVIN, Chief Judge:   Respondent sent a Notice of

Determination Concerning Collection Action(s) Under Section 63201

and/or 6330 to petitioners in which respondent determined that it



     1
        Unless otherwise indicated, section references are to the
Internal Revenue Code as amended.
                                 -2-

was appropriate to sustain collection action with respect to

petitioners’ unpaid income taxes for 1985-89 and 1991-2001 (the

years in issue).2   Thereafter petitioners timely filed a petition

in which they requested our review of respondent’s determination.

The issue for decision is whether respondent’s determination to

reject petitioners’ offer-in-compromise (OIC) and proceed with

collection was an abuse of discretion.     We hold that it was not.

                              Background

     Some of the facts have been stipulated and are so found.

Petitioners are married and resided in Edison, New Jersey, at the

time the petition was filed.

     Respondent issued a Final Notice of Intent to Levy and

Notice of Your Right to a Hearing to petitioners on September 5,

2002.    Petitioners timely requested a collection due process

hearing on October 1, 2002.    Petitioners’ outstanding tax

liability is $463,496 plus statutory additions.    Petitioners did

not challenge the assessments or the underlying tax liabilities.

A settlement officer (SO) from respondent’s Appeals Office

(Appeals) spoke on the telephone with petitioners’ representative

on February 4, 2003.    The SO told petitioners’ representative

that collection alternatives such as an OIC or an installment



     2
        In the petition, petitioners also disputed the collection
action for taxable year 1990. No notice of determination was
issued to petitioners for that year. By separate order, the
Court dismissed this case as it relates to taxable year 1990.
                                -3-

agreement would not be considered because of petitioners’ poor

compliance record.   Respondent issued the notice of determination

on April 8, 2003, sustaining the levy.

     In the petition, petitioners alleged errors in the notice of

determination, specifically that Appeals failed to give them a

fair hearing and that Appeals failed to act properly with regard

to the collection activity.   After the petition was filed,

counsel for respondent requested that Appeals discuss collection

alternatives with petitioners at a face-to-face hearing.

Petitioner3 and respondent’s SO met on September 9, 2003, and

discussed collection alternatives.    Petitioners submitted an OIC

on November 6, 2003.   On December 1, 2003, the SO sent

petitioners a letter requesting that they complete missing items

on the form and submit additional information.

     This case was calendared for trial at the May 3, 2004,

session of this Court in New York, New York.   Petitioners filed a

motion for continuance in which they stated that they would be

submitting an OIC.   The Court granted the motion.   The case was

then calendared for trial at the session of this Court beginning

on January 24, 2005.   Petitioners filed another motion for

continuance in order to retain counsel.   The Court granted the

motion and ordered petitioners to submit an OIC to respondent no

later than March 1, 2005.   Petitioners filed a status report on


     3
         References to petitioner are to William J. DiCindio.
                                  -4-

March 1, 2005, stating that they had decided not to submit an OIC

because they would have no way of paying the debt.    Trial was

held on September 19, 2005, in New York, New York.

     Following trial, the Court ordered petitioners to provide

counsel for respondent a complete Form 656, Offer in Compromise,

and an updated Form 433-A, Collection Information Statement for

Wage Earners and Self-Employed Individuals.    Counsel for

respondent received petitioners’ OIC on November 15, 2005, and

sent it to an offer specialist (OS) for consideration.    In the

following months, the OS requested that petitioners provide

additional information by various deadlines.    Petitioners did not

meet any of these deadlines.

     In April 2006, petitioners requested that the Court keep the

pending OIC open for consideration until August 15, 2006, so that

petitioner could file his 2005 income tax return.    The Court

denied petitioners’ request.   Thereafter, respondent returned the

pending OIC to petitioners and closed their file because

petitioners had failed to provide additional information

necessary to determine the acceptability of their offer and they

failed to verify their compliance with the estimated income tax

requirements for 2005 and 2006.

                           Discussion

     Petitioners contend that respondent’s refusal to consider

their offer-in-compromise submitted on November 15, 2005, for the
                                  -5-

years in issue was an abuse of discretion.    We disagree.   Section

7122(c)(1) provides that the Secretary shall prescribe guidelines

for the Internal Revenue Service (IRS) to use in determining

whether to accept an OIC.   The decision to accept or reject an

OIC, as well as the terms and conditions to which the IRS agrees,

is left to the discretion of the Secretary.    Sec. 301.7122-

1(c)(1), Proced. & Admin. Regs.

     Petitioners contend that returning their OIC for additional

information was arbitrary and capricious.    We disagree.

     If an offer accepted for processing does not contain

sufficient information to permit the IRS to evaluate whether the

offer should be accepted, the IRS will request that the taxpayer

provide the needed additional information.    Sec. 301.7122-

1(d)(2), Proced. & Admin. Regs.    On three separate occasions,

respondent’s OS contacted petitioners to request additional

information.   The OS explained that this additional information

was necessary to account for discrepancies between petitioners’

Form 433-A and the information they had previously submitted.

Petitioners failed to provide the requested information.     If the

taxpayer does not submit the requested information to the IRS

within a reasonable time after a request, the IRS may return the

offer to the taxpayer.   Id.   The decision not to process

petitioners’ OIC on account of their failure to provide

additional information was consistent with the prescribed
                                -6-

guidelines and was a reasonable exercise of respondent’s

discretion.

     Petitioners contend that respondent’s rejection of their OIC

while a motion for reconsideration was pending before the Court

was an abuse of discretion.   We disagree.

     The granting of a motion to reconsider rests in the

discretion of the Court.   Louisville & Nashville R. Co. v.

Commissioner, 641 F.2d 435, 443-444 (6th Cir. 1981), affg. on

this issue and revg. on other issues 66 T.C. 962 (1976); Estate

of Halas v. Commissioner, 94 T.C. 570, 574 (1990); Vaughn v.

Commissioner, 87 T.C. 164, 166-167 (1986).   Motions to reconsider

will not be granted unless unusual circumstances or substantial

error is shown.   Estate of Halas v. Commissioner, supra at 574;

Vaughn v. Commissioner, supra at 167.   Petitioners submitted

their offer-in-compromise to respondent on November 15, 2005.

However, they failed to respond to respondent’s repeated requests

for additional information.   In April 2006, petitioners requested

an extension until August 15, 2006, so that petitioner could file

his 2005 income tax return.   The Court was not persuaded that

petitioners were entitled to an extension of any deadlines

related to respondent’s processing of the OIC and denied their

motion.   In the interim, respondent rejected petitioners’ OIC.

     We have no reason to believe that an extension to August

would have changed the disposition of petitioners’ offer-in-
                                -7-

compromise.   The reason for the requested extension was to file

petitioner’s 2005 income tax return.    However, the filing of

petitioner’s 2005 income tax return was not a requirement of

respondent’s acceptance of the offer.    The OS knew that

petitioner had requested an extension for filing his 2005 taxes.

The information that the OS needed, however, had to do with

additional information to verify and confirm the data on the

submitted OIC.   Therefore, it was not an abuse of discretion to

reject petitioners’ OIC on account of their failure to submit

additional information before the Court ruled on petitioners’

pending motion for reconsideration.

     We conclude that respondent may proceed with collection of

petitioners’ tax liabilities for 1985-89 and 1991-2001 because

respondent’s rejection of petitioners’ offer-in-compromise was

not an abuse of discretion.



                                           Decision will be entered

                                      for respondent.
