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for officers and employees of the Internal Revenue Service to
determine whether an offer-in-compromise is adequate and should
be accepted to resolve a dispute.” In accordance with this
directive, section 301.7122-1T(b), Temporary Proced. & Admin.
Regs., 64 Fed. Reg. 39024 (July 21, 1999)3, sets forth three
grounds for compromise of a liability: (1) Doubt as to
liability, (2) doubt as to collectibility, or (3) promotion of
effective tax administration. Section 301.7122-1T(b)(4),
Temporary Proced. & Admin. Regs., supra, the provision relevant
here, reads as follows:
(4) Promote effective tax administration. If
there are no grounds for compromise under paragraphs
(b)(2) and (3) of this temporary regulation, a
compromise may be entered into to promote effective tax
administration when--
(i) Collection of the full liability will create
economic hardship within the meaning of � 301.6343-1;
or
(ii) Regardless of the taxpayer’s financial
circumstances, exceptional circumstances exist such
3 By their terms, the temporary regulations apply to offers
in compromise submitted on or after July 21, 1999, through July
19, 2002. Sec. 301.7122-1T(j), Temporary Proced. & Admin. Regs.,
64 Fed. Reg. 39027 (July 21, 1999). The temporary regulations
thus were effective throughout the period during which
petitioner’s offer was under consideration by respondent. Final
regulations, which do not differ materially in substance, were
subsequently issued and are applicable for offers pending on or
submitted on or after July 18, 2002. Sec. 301.7122-1, Proced. &
Admin. Regs. Temporary regulations are entitled to the same
weight and binding effect as final regulations. Peterson Marital
Trust v. Commissioner, 102 T.C. 790, 797 (1994), affd. 78 F.3d
795 (2d Cir. 1996).
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