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III. Standard of Review
Where the validity of the underlying tax liability is not
properly at issue, we review the Commissioner’s administrative
determinations for abuse of discretion. Sego v. Commissioner,
supra at 610; Goza v. Commissioner, supra at 183. Petitioner
received a notice of deficiency, and his arguments are challenges
to the appropriateness of the collection action. Therefore, we
review the determination to proceed with collection for abuse of
discretion.
In this case, respondent’s determination regarding whether
petitioner’s unpaid liabilities were discharged in bankruptcy
required the interpretation and application of bankruptcy law.
If respondent’s determination was based on erroneous views of the
law and petitioner’s unpaid liabilities were discharged in
bankruptcy, then we must reject respondent’s views and find that
there was an abuse of discretion. See, e.g., Cooter & Gell v.
Hartmarx Corp., 496 U.S. 384, 405 (1990) (abuse of discretion
occurs if ruling was based on erroneous view of the law); Abrams
v. Interco, Inc., 719 F.2d 23, 28 (2d Cir. 1983) (stating that it
is not inconsistent with the abuse of discretion standard to
decline to honor a purported exercise of discretion that is
infected by an error of law).
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