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1. Economic Hardship
Petitioner asserts that Ms. Cochran abused her discretion by
rejecting his offer-in-compromise because “There is no indication
that SO Cochran gave any substantive consideration to
Petitioner’s demonstrated special circumstances or to the fact
that he would experience a hardship if required to make a full
payment.” In support of this assertion, petitioner argues: (1)
Ms. Cochran failed to discuss petitioner’s special circumstances
in the notice of determination; and (2) Ms. Cochran erroneously
determined petitioner’s reasonable collection potential income
and failed to take into account his future expenses.
Section 301.6343-1(b)(4)(i), Proced. & Admin. Regs., states
that economic hardship occurs when a taxpayer is “unable to pay
his or her reasonable basic living expenses.” Section 301.7122-
1(c)(3), Proced. & Admin. Regs., sets forth factors to consider
in evaluating whether collection of a tax liability would cause
economic hardship, as well as some examples. One of the examples
involves a taxpayer who provides full-time care to a dependent
child with a serious long-term illness. A second example
involves a taxpayer who would lack adequate means to pay his
basic living expenses, were his only asset to be liquidated. A
third example involves a disabled taxpayer who has a fixed income
and a modest home specially equipped to accommodate his
disability, and who is unable to borrow against his home because
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