Shebby's wife was irrelevant because Shebby had signed a
separate-property agreement with her. The letter asserted that
it was unreasonable to require an appraisal of the law practice.
The letter claimed that the proceeds from the sale of the Mill
River Lane property were used to pay attorney's fees and the
Shebbys' past due joint federal income tax liabilities. In a
letter dated June 17, 2008, Shebby supplemented his response to
Jacquez of June 16, 2008. The supplementary response is not
relevant to the errors that Shebby alleges were made by the
Office of Appeals.
On June 18, 2008, Jacquez sent a letter responding to the
June 16 and 17 letters. In the letter, Jacquez asserted that the
income of Shebby's wife was relevant and asked Shebby whether the
separate-property agreement had been created in order to avoid
collection of the section 6672 penalties. He also asked for
proof that the remainder of the proceeds from the Mill River Lane
property sale was consumed by attorney's fees, as Shebby had
claimed in his June 16 letter. Jacquez also advised Shebby that
the offer-in-compromise could not be processed without a 20-
percent payment.
In a letter that he faxed to Jacquez at 9:58 a.m. on June
19, 2008, Shebby responded to Jacquez' letter of June 18.
Shebby's letter did not answer Jacquez' question about the reason
for the separate-property agreement because, Shebby claimed, a
separate-property agreement cannot be considered a fraudulent
conveyance. Shebby's letter did not supply proof that the
remainder of the proceeds of the Mill River Lane property sale
was consumed by attorney's fees. In the letter, Shebby explained
that he had not made the 20-percent payment because he thought no
payment was necessary until the Office of Appeals accepted the
offer-in-compromise. However, Shebby said, he would make the
payment "if you so require."
On June 19, 2008, Jacquez (the settlement officer) conducted
a telephone conference with Shebby's lawyer. Shebby summarized
the telephone conversation in a letter sent to Jacquez the same
day. According to the letter, Shebby's counsel had told Jacquez
that Shebby was willing to make a "down payment", but Jacquez had
said it was too late. Shebby's letter enclosed a check for
$5,000, which was the entire amount of Shebby's offer-in-
compromise, but the letter stipulated that the check could be
applied by the IRS only if the IRS accepted the proposed offer-
in-compromise. On June 19, Jacquez returned the $5,000 check to
Shebby.
On June 30, 2008, the IRS Office of Appeals issued a notice
of determination. The determination stated that Shebby's offer-
in-compromise could not be processed because Shebby had not
provided an original, signed, offer-in-compromise containing
terms. (The offer submitted by Shebby on June 9, 2008, did not
indicate a payment plan.) It also stated that Shebby had not
submitted a payment with the offer-in-compromise. The
determination recounted that Jacquez generally found Shebby's
documentation inadequate. It noted that Shebby had refused to
supply an appraisal of his law practice. The determination
stated that