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In this case, petitioner’s position is that
respondent abused his discretion in the subject notice
of determination, which sustained the proposed collection
action for 2000 and 2001, because respondent refused to
process petitioner’s offer-in-compromise. Thus, the only
issue in this case involves a collection alternative,
petitioner’s offer-in-compromise. We review the
determination for an abuse of discretion because the
underlying tax liability is not at issue. Lunsford v.
Commissioner, 117 T.C. 183, 185 (2001); Nicklaus v.
Commissioner, 117 T.C. 117, 120 (2001).
Section 7122(a) authorizes the Secretary to compromise
any civil case arising under the internal revenue laws.
The regulations set forth three grounds for the compromise
of a liability: (1) Doubt as to liability; (2) doubt as
to collectibility; or (3) promotion of effective tax
administration. Sec. 301.7122-1(b), Proced. & Admin.
Regs.; see sec. 7122(c)(1). Neither doubt as to liability
nor doubt as to collectibility is at issue in the instant
case.
The Secretary may compromise a liability to promote
“effective tax administration” when: (1) Collection of the
full liability would cause the taxpayer economic hardship
within the meaning of section 301.6343-1, Proced. & Admin.
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