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are less than the full amount of the assessed liability.” Sec.
301.7122-1T(b)(3)(i), Temporary Proced. & Admin. Regs., supra.
Additionally, the Secretary may compromise a liability on the
ground of “effective tax administration” when: (1) Collection of
the full liability will create economic hardship; or (2)
exceptional circumstances exist such that collection of the full
liability will be detrimental to voluntary compliance by
taxpayers; and (3) compromise of the liability will not undermine
compliance by taxpayers with tax laws. Sec. 301.7122-1T(b)(4),
Temporary Proced. & Admin. Regs., supra; see 2 Administration,
Internal Revenue Service (CCH), sec. 5.8.11.2, at 16,385-15
(taxpayer’s liability may be eligible for compromise to promote
effective tax administration if not eligible for compromise based
on doubt as to liability or doubt as to collectibility, and
taxpayer has exceptional circumstances to merit the offer).
Ms. Vuicich reviewed petitioners’ submitted financial
information and determined that an offer-in-compromise was not
appropriate on the basis of doubt as to collectibility and
promotion of effective tax administration. Ms. Vuicich
communicated her determination to Mr. Orum in the June 20, 2002,
letter. In a later telephone conversation, Mr. Orum told Ms.
Vuicich that he understood why an offer-in-compromise could not
be considered. We received as an exhibit the financial
information before Ms. Vuicich and find that she could have
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