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seek judicial review with the Tax Court or a District Court.
Where the validity of the underlying tax liability is properly at
issue, the Court will review the matter on a de novo basis. Sego
v. Commissioner, 114 T.C. 604, 610 (2000). However, when the
validity of the underlying tax is not at issue, the Court will
review the Commissioner’s administrative determination for an
abuse of discretion. Id. Petitioners do not dispute the
validity of the underlying tax. Accordingly, our review is for
an abuse of discretion.
We do not conduct an independent review of what would be
acceptable offers in compromise. We review only whether the
Appeals officer’s refusal to accept the offers in compromise was
arbitrary, capricious, or without sound basis in fact or law.
See Woodral v. Commissioner, 112 T.C. 19, 23 (1999). The Court
considers whether the Commissioner abused his discretion in
rejecting a taxpayer’s position with respect to any relevant
issues, including challenges to the appropriateness of the
collections action, and offers of collection alternatives. See
sec. 6330(c)(2)(A). This case involves collection alternatives.
Section 7122(a) authorizes the Secretary to compromise any
civil case arising under the internal revenue laws. There are
three standards that the Secretary may use to compromise a
liability. The first standard is doubt as to liability, the
second being doubt as to ability to collect, and the third being
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Last modified: May 25, 2011