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In other words and as summarized by petitioner, although “the
O’Brien Trust assets can be reached to satisfy the 1995-1999 tax
liability”, “it was an abuse of discretion to ignore her over-all
financial situation and reject her offer-in-compromise which
acknowledged an indebtedness, but sought recognition that to
deplete her trust would not be in the public interest.”
Conversely, respondent asserts that standards reflected in
section 7122 and regulations promulgated thereunder regarding
evaluation of offers in compromise support respondent’s rejection
of petitioner’s offer. In this connection and relying on
principles set forth in caselaw and in Rev. Rul. 55-210, 1955-1
C.B. 544, respondent maintains that petitioner’s interest in the
trust is properly reachable by Federal tax lien and that
petitioner therefore has sufficient assets to pay her liabilities
in full. Respondent further contends that petitioner has failed
to establish economic hardship or to present compelling public
policy or equity considerations, as described in the applicable
regulations discussed below, that would show any abuse of
discretion in respondent’s actions against these trust assets.
III. Analysis
Section 7122(a), as pertinent here, authorizes the Secretary
to compromise any civil case arising under the internal revenue
laws. Section 7122(c)(1) then addresses standards for evaluation
of offers, as follows: “The Secretary shall prescribe guidelines
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Last modified: May 25, 2011