30. Collateral Agreement - Future Income - Individual

The taxpayer identified above has submitted a settlement offer dated ____________ to compromise the following liabilities, plus statutory interest and additions:

1. In addition to any payments and other consideration under the settlement offer referred to above, the taxpayer will pay out of annual income for the years ____ to ____ inclusive—
   1. Nothing on the first $_____________ of annual income;
   2. __ percent of annual income in excess of $__________ and not in excess of $________;
   3. __ percent of annual income in excess of $__________ and not in excess of $________;
   4. __ percent of annual income in excess of $__________ and not in excess of $________;
   5. __ percent of annual income in excess of $__________ and not in excess of $________;
   6. __ percent of annual income in excess of $__________.
   1. If the taxpayer is a married couple, annual income shall include their combined income, except that, in the event that such married couple becomes, and thereafter remains, divorced and separated, then this agreement, as applied to the computation, reporting, and making of payments required after such divorce and separation, shall be construed as a separate agreement with each spouse (without altering any other obligations under the settlement, including this agreement).
   2. Annual income shall be calculated without regard to the effect of any state community or other inter-spousal property laws.
   3. Where income of the taxpayer's spouse is not included but the taxpayer files a joint income tax return with the taxpayer's spouse, the federal, state, and/or local income tax to be subtracted from the taxpayer's separate income in computing the payment required hereunder shall be that portion of the joint federal, state, and/or local income tax which bears the same ratio to the whole of such tax as the amount of the federal income tax for which the taxpayer would have been liable bears to the sum of the federal income taxes for which the taxpayer and the taxpayer's spouse would have been liable had each spouse filed a separate return (ignoring state community or other inter-spousal property laws).
   1. Losses from the sale or exchange of property shall not be allowed, and any losses from the sale or exchange of property of any partnership or S corporation in which the taxpayer holds an interest shall be excluded in computing the taxpayer's share of the entity's income or loss under Code Sections 702 and 1366(a)(1).
   2. The deductions under Code Section 404 for contributions on behalf of a self-employed individual and Code Section 219 for contributions to an individual retirement account shall not be allowed.
   3. Any deduction or exclusion for long-term capital gains shall not be allowed.
   4. Consistent with paragraph 10 below, carryovers or carrybacks of net operating losses incurred before or after the period covered by this agreement shall not be allowed. Further, any net operating loss for any year during the period covered by this agreement shall be carried forward and only to the immediately succeeding year.
   1. In the event of default in payment of any installment of principal or interest due under the terms of the settlement (including this agreement) or in the event any other provision of this agreement is not carried out in accordance with its terms, or in the event the taxpayer becomes the subject of any proceeding whereby the affairs of the taxpayer are placed under the control of another person or under the control and jurisdiction of a court other than in a case under the Bankruptcy Code, the United States, at its sole option, may—
      1. proceed immediately (by suit if necessary) to collect the entire unpaid balance of the amount due under the settlement (including this agreement); or
      2. proceed immediately (by suit if necessary) to collect the full unpaid balance of the liability sought to be compromised (including the entry of a judgment, if one has not been entered), with statutory additions and interest pursuant to Code Sections 6621(a)(2) and 6622(a); or
      3. disregard the settlement (including this agreement) and apply all amounts previously paid thereunder against the amount of the liability sought to be compromised and, without further notice of any kind, assess (if not yet assessed) and collect, by levy or by proceedings supplemental to judgment or by separate suit (any restrictions against assessment and collection being waived), the balance of such liability with statutory additions and interest pursuant to Code Sections 6621(a)(2) and 6622(a).
      1. the taxpayer must promptly cure any payment default (with interest, including post-petition interest, pursuant to Code Sections 6621(a)(2) and 6622);
      2. the taxpayer must demonstrate adequate assurance of future performance without deferral or delay both during the bankruptcy proceeding and after confirmation of a plan or other termination of the proceeding, and without impairment of any security interest of the United States arising by virtue of any tax lien; and
      3. no creditor with a claim of lower distribution priority may receive more than it would if the United States terminated this agreement and sought enforcement of the full amount of its tax claim in accordance with the Bankruptcy Code. Further, the taxpayer agrees to provide notice to the appropriate Internal Revenue Service office and also to the Department of Justice, Tax Division, if the taxpayer becomes the subject of any proceeding under the Bankruptcy Code, making reference in such notice to the settlement (including this agreement), and the taxpayer agrees that, unless both such notices are provided, the United States may be deemed not to have notice of the bankruptcy.

      This agreement shall be of no force or effect unless the underlying settlement offer is accepted.

      (Second signature if taxpayer is a married couple)