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compliance by taxpayers with the tax laws. Sec. 301.7122-
1(b)(3), Proced. & Admin. Regs.
The Internal Revenue Manual provides generally that an offer
in compromise is not processable if all tax returns for which the
taxpayer has a filing requirement have not been filed. 2
Administration, Internal Revenue Manual (CCH), sec.
5.8.3.2.1(1)(a), at 16,281 (Nov. 30, 2001). The Internal Revenue
Manual further specifies: “In-business taxpayers must have
timely filed and timely deposited all employment taxes for two
quarters preceding the offer submission. They must have also
timely paid all federal tax deposits due in the quarter in which
the offer is submitted.” Id.
The Tax Court, moreover, acknowledging such provisions of
the Internal Revenue Manual, has ruled as follows:
The Commissioner’s decision not to process an offer in
compromise or a proposed collection alternative from
taxpayers who have not filed all required tax returns
is not an abuse of discretion. Londono v.
Commissioner, T.C. Memo. 2003-99; Ashley v.
Commissioner, T.C. Memo. 2002-286; Richter v. United
States, 90 AFTR 2d 2002-5998, 2002-2 USTC par. 50,607
(C.D. Cal. 2002); AJP Mgmt. v. United States, 87 AFTR
2d 2001-347, 2001-1 USTC par. 50,184 (C.D. Cal. 2000);
TTK Mgmt. v. United States, 87 AFTR 2d 2001-350, 2001-1
USTC par. 50,185 (C.D. Cal. 2000). The Commissioner
may set reasonable priorities for Internal Revenue
Service staff as needed to effectively administer the
revenue laws. The decision not to accept the offer in
compromise submitted by petitioner on account of her
failure to file all required returns was an entirely
reasonable exercise of the Commissioner’s discretion in
administering the offer in compromise program.
[Rodriguez v. Commissioner, T.C. Memo. 2003-153.]
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