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By notice dated September 7, 2001, respondent determined to
proceed with collection. In response, petitioners, while
residing in San Diego, California, filed a petition and amended
petition on September 20, and October 18, 2001, respectively.
OPINION
Petitioners’ sole contention is that they do not owe the
liability for which the lien was recorded because they were
“given an offer in compromise in fact” by the auditor.
Respondent contends that petitioners and the auditor did not
execute a binding agreement. We agree with respondent.
The law regarding compromises is well established. The
regulations and procedures under section 7122 provide the
exclusive method of effectuating a compromise. Shumaker v.
Commissioner, 648 F.2d 1198, 1199-1200 (9th Cir. 1981) (citing
Botany Worsted Mills v. United States, 278 U.S. 282, 288-289
(1929)), revg. on another issue T.C. Memo. 1979-71. Petitioners
and the auditor did not enter into a binding agreement to
compromise petitioners’ 1997 tax liability. First, petitioners
did not submit Form 433-A for respondent to determine whether
there was doubt as to collectibility. See sec. 301.7122-1(a),
Proced. & Admin. Regs. Second, petitioners did not submit an
offer in compromise on the appropriate form (i.e., Form 656), and
were never notified in writing that an offer in compromise had
been accepted. Laurins v. Commissioner, 889 F.2d 910, 912 (9th
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