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abuse of discretion. Section 7122(a) authorizes the Secretary to
compromise any civil case arising under the internal revenue
laws. The regulations set forth three grounds for the compromise
of a liability: (1) Doubt as to liability; (2) doubt as to
collectibility; or (3) promotion of effective tax administration.
Sec. 301.7122-1T(b), Temporary Proced. & Admin. Regs., 64 Fed.
Reg. 39024 (July 21, 1999); see sec. 7122(c)(1). Doubt as to
liability is not at issue in the instant case.
The Secretary may compromise a liability on the ground of
doubt as to collectibility when “the taxpayer’s assets and income
are less than the full amount of the assessed liability”. Sec.
301.7122-1T(b)(3)(i), Temporary Proced. & Admin. Regs., supra.
Additionally, the Secretary may compromise a liability on the
ground of “effective tax administration” when: (1) Collection of
the full liability will create economic hardship; or (2)
exceptional circumstances exist such that collection of the full
liability will be detrimental to voluntary compliance by
taxpayers; and (3) compromise of the liability will not undermine
compliance by taxpayers with tax laws. Sec. 301.7122-1T(b)(4),
Temporary Proced. & Admin. Regs., supra; see 2 Administration,
Internal Revenue Service (CCH), sec. 5.8.11.2, at 16,385-15
(taxpayer’s liability may be eligible for compromise to promote
effective tax administration if not eligible for compromise based
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