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(3) Taxpayer has not encouraged others to refuse
to comply with the tax laws.
For purposes of appraising respondent’s exercise of
discretion, we consider petitioner’s circumstances, as presented
to the Appeals Office, in light of the foregoing standards. The
regulations emphasize economic hardship, and petitioner
throughout these proceedings has generally asserted her lack of
ability to pay. Economic hardship is defined as an inability to
meet reasonable basic living expenses. Sec. 301.6343-1(b)(4),
Proced. & Admin. Regs.
Petitioner in her Form 433-A alleged an estimated monthly
income of $2,000, comprising $1,500 in earnings as an artist’s
model and $500 in distributions from the trust. The Form 433-A
further showed estimated monthly expenses of $1,975.50, including
$250 for food, clothing, and miscellaneous; $1,016.50 for housing
and utilities; $62 for transportation; $40 for health care; $557
for taxes; and $50 for other expenses. Yet petitioner submitted
bank statements reflecting miscellaneous expenditures and cash
withdrawals of at least $1,500 to $1,800 per month, which amounts
apparently exclude rental expenses. A number of the outlays are
to establishments that provide other than “basic necessities”,
such as Castle Wine & Spirits, Sea Grape Wine & Spirits, Ryan’s
Irish Pub, Rockefeller Center Cafe, Borders Books & Music, Tower
Records, World of Video, Triton Video, Radio Shack, The Gap, and
Speedo Authentic Fitness. The discrepancy between the seeming
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Last modified: May 25, 2011