Folding more years into an IA at Appeals reappears, with no better results. And it doesn’t matter whether Einstein said it or not, doing the same thing again and expecting a different result doesn’t work.

We saw how Kennith Lee and Cathy Lee tried folding-in, in my blogpost “Unstealth,” 4/5/21. Well, STJ Daniel A (“Yuda”) Guy is no more willing to allow fold-ins than Judge Nega was, in Ivan T. Clover and Esther O. Clover, 2021 T.C. Sum. Op. 8, filed 4/14/21.

Ivan and Esther were short some self-reported $16K over four (count ’em, four) years. They claimed they’d paid, but IRS had allocated their payments to taxes and additions for years before the years at issue.

“Petitioners sent numerous checks to the IRS without designating the specific taxable period to which the payments were to be applied. Under the circumstances, the IRS was free to ‘apply the payment to periods in the order of priority that the Service determines will serve its best interest.” See Rev. Proc. 2002-26, sec. 3.02, 2002-1C.B. 746, 746. The record reflects that the IRS properly applied petitioners’ payments to offset their unpaid tax, additions to tax, and interest duly assessed for the taxable year [Year One], with the balance of the payments applied to the years in issue and taxable years thereafter.” 2021 T. C. Sum. Op. 8, at p. 7.

See my blogpost “Tell ‘Em,” 2/22/21.

Then Ivan and Esther tried the fold-in, with predictable result.

“As a final matter, petitioners assert that they accepted the Appeals Office’s offer to enter into a streamlined installment payment plan. The record shows that the Appeals Office offered petitioners a streamlined installment plan for the years in issue, whereas petitioners countered with an offer to enter into an installment plan for the years in issue as well as the taxable years 2015 and 2017. The Appeals Office did not accept petitioners’ proposed installment agreement.” 2021 T. C. Sum. Op. 8, at p. 7. And STJ Yuda finds no abuse of discretion.

Takeaway- Unless you have a squeaky-clean client, with only a couple years (hi, Judge Holmes) at issue, and a good story to go with it, don’t try a fold-in.