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liabilities for the years in issue was based upon income and
expense figures provided by petitioners and was computed under
the guidelines provided in the Internal Revenue Manual. We
reviewed respondent’s computations and conclude that they are
reasonable. McCorkle v. Commissioner, T.C. Memo. 2003-34;
Schulman v. Commissioner, T.C. Memo. 2002-129.
The passage of the Internal Revenue Service Restructuring
and Reform Act of 1998, Pub. L. 105-206, sec. 3462(a), 112 Stat.
764, which added section 7122(c) to the Code, resulted in the
issuance of new regulations substantially changing offer-in-
compromise procedures found in section 7122. The traditional
grounds for compromise had been doubt as to liability and doubt
as to collectibility. Sec. 301.7122-1(b)(1) and (2), Proced. &
Admin. Regs.
Offers in compromise can now be considered for the
“promotion of effective tax administration” if collection of the
full amount of the liability creates an economic hardship. Sec.
301.7122-1(b)(3), Proced. & Admin. Regs. The addition of this
category allowed factors such as advanced age and serious illness
to be considered to determine if economic hardship existed. 2
Administration, Internal Revenue Manual (CCH), sec. 5.8.11.2, at
16,385-15. In addition, the Internal Revenue Service announced
it would allow, in appropriate cases, a short-term payment option
that gives taxpayers up to 2 years to pay the entire amount
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