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Example 1. The taxpayer has assets sufficient to
satisfy the tax liability. The taxpayer provides full
time care and assistance to her dependent child, who
has a serious long-term illness. It is expected that
the taxpayer will need to use the equity in his assets
to provide for adequate basic living expenses and
medical care for his child. The taxpayer’s overall
compliance history does not weigh against compromise.
Example 2. The taxpayer is retired and his only
income is from a pension. The taxpayer’s only asset is
a retirement account, and the funds in the account are
sufficient to satisfy the liability. Liquidation of
the retirement account would leave the taxpayer without
an adequate means to provide for basic living expenses.
The taxpayer’s overall compliance history does not
weigh against compromise.
Example 3. The taxpayer is disabled and lives on
a fixed income that will not, after allowance of basic
living expenses, permit full payment of his liability
under an installment agreement. The taxpayer also owns
a modest house that has been specially equipped to
accommodate his disability. The taxpayer’s equity in
the house is sufficient to permit payment of the
liability he owes. However, because of his disability
and limited earning potential, the taxpayer is unable
to obtain a mortgage or otherwise borrow against this
equity. In addition, because the taxpayer’s home has
been specially equipped to accommodate his disability,
forced sale of the taxpayer’s residence would create
severe adverse consequences for the taxpayer. The
taxpayer’s overall compliance history does not weigh
against compromise.
Under the regulations, a compromise may also be entered into to
promote efficient tax administration if there are compelling
public policy or equity considerations identified by the
taxpayer. Compromise is justified where, due to exceptional
circumstances, collection would undermine public confidence that
tax laws are being administered fairly. Sec.
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