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final notice of intent to levy. Petitioners timely requested a
hearing, the focus of which was their offer to compromise the
nearly two decades of compound interest for $7,500. The Appeals
officer rejected their offer and determined that a levy was
appropriate. This action followed. The case was calendared for
trial in California, where the Fargos resided when they filed
their petition. The parties stipulated the relevant facts, and
moved to submit the case for decision without trial under Rule
122.
Discussion
Section 7122(c) directs the Secretary to prescribe
guidelines for determining whether to accept or reject specific
offers in compromise. Under section 301.7122-1T(b), Temporary
Proced. & Admin. Regs., 64 Fed. Reg. 39024 (July 21, 1999),2
there are three grounds for compromise: Doubt as to liability,
doubt as to collectibility, and promotion of effective tax
administration. Petitioners argue that their compromise offer
met two of the temporary regulations’ separate standards for
acceptance “in furtherance of effective tax administration”--
collection of the full amount would cause them economic hardship,
2 As petitioners submitted their offer in compromise after
July 21, 1999, and before July 18, 2002, it is governed by the
temporary regulations that were then in force. (The portions
relevant to this case survived in substantially similar form in
the final regulations at sec. 301.7122-1(b), Proced. & Admin.
Regs.)
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