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A. Petitioners' Offer in Compromise
Section 7122(a) authorizes a compromise of a taxpayer's
Federal tax liability. An OIC may be accepted where there is
doubt as to liability or collectibility, or where it would
promote effective tax administration. Sec. 301.7122-1(b),
Proced. & Admin. Regs.
Doubt as to liability does not exist where the liability
has been established by a final court decision or judgment
concerning the existence or amount of the liability. Sec.
301.7122-1(b)(1), Proced. & Admin. Regs. Doubt as to
collectibility exists in any case where the taxpayer's assets and
income are less than the full amount of the liability. Sec.
301.7122-1(b)(2), Proced. & Admin. Regs.
After reviewing petitioners' financial situation, Ms.
Clinger determined that their financial situation enabled them to
pay the entire tax liability within a reasonable time.
Petitioners' financial information indicated that both
petitioners had gainful employment and that their monthly income
exceeded their necessary living expenses, thereby allowing the
full payment of their liability.
If there is no doubt as to liability or collectibility, a
compromise may be entered into to promote effective tax
administration when collection of the full liability will create
economic hardship within the meaning of section 301.6343-1,
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Last modified: May 25, 2011