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HAINES, J., concurring: I concur with the result reached by
the majority that we are not limited by the Administrative
Procedure Act in this case, our review is not limited to the
administrative record, and respondent abused his discretion in
his determination to proceed with collection of petitioner’s 1998
tax liability. I write separately to make two points.
First, we have held that an offer-in-compromise is governed
by general principles of contract law. Dutton v. Commissioner,
122 T.C. 133, 138 (2004); majority op. p. 39. We have not
extended that holding to mean that the general principles of
contract law must be determined by application of the law of the
State where the taxpayer resides.
The majority opinion uses the Restatement of Contracts to
provide the circumstances in which a failure to perform is
“material”. Majority op. p. 39 (citing 1 Restatement, Contracts
2d, sec. 241 (1981)). The majority opinion further states that
“Arkansas law adopts this analysis.” Majority op. p. 40.
Readers of this Opinion should not infer that the use of State
law of a taxpayer’s residence, rather than general contract
principles, is necessary to reach the majority’s result. Given
the number of offers-in-compromise negotiated and overseen by the
Commissioner, if the terms of each offer-in-compromise had to be
analyzed on the basis of the State law of a taxpayer’s residence,
the result would be an administrative nightmare for the
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