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a minister’s tithing expenses for purposes of determining ability
to pay outstanding tax liabilities.
I. Petitioners’ Contentions
Petitioners claim that tithing expenses are incurred as a
condition of Mr. Pixley’s employment as a Baptist minister and
should be taken into account in determining petitioners’ ability
to pay their taxes. Petitioners argue that the Appeals officer’s
disallowance of the tithing expenses for this purpose violates
Mr. Pixley’s First Amendment right to free exercise of religion.
II. Standard of Review
Because petitioners’ underlying tax liability was not
properly at issue in the Appeals Office hearing, we review the
Appeals Office determination for abuse of discretion. See Keene
v. Commissioner, 121 T.C. 8, 17-18 (2003); Lunsford v.
Commissioner, 117 T.C. 183, 185 (2001).
III. Offers in Compromise
A. In General
Section 7122(a) authorizes the Commissioner to compromise a
taxpayer’s outstanding tax liabilities. Dutton v. Commissioner,
122 T.C. 133, 137 (2004). Section 7122(c)(1) provides that “The
Secretary shall prescribe guidelines for officers and employees
of the Internal Revenue Service to determine whether an offer in
compromise is adequate and should be accepted to resolve a
dispute.”
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Last modified: May 25, 2011