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to collectibility.
Section 7122(c) provides the standards for evaluation of
such offers. Under section 7122(c)(2):
(A) * * * the Secretary shall develop and publish
schedules of national and local allowances designed to
provide that taxpayers entering into a compromise have
an adequate means to provide for basic living expenses.
(B) Use of schedules.-–The guidelines shall
provide that officers and employees of the Internal
Revenue Service shall determine, on the basis of the
facts and circumstances of each taxpayer, whether the
use of the schedules published under subparagraph (A)
is appropriate and shall not use the schedules to the
extent such use would result in the taxpayer not having
adequate means to provide for basic living expenses.
Under the regulations for doubt as to collectibility cases:
A determination of doubt as to collectibility will
include a determination of ability to pay. * * * To
guide this determination [of the amount of the
taxpayer’s basic living expenses], guidelines published
by the Secretary on national and local living expense
standards will be taken into account. [Sec. 301.7122-
1T(b)(3)(ii), Temporary Proced. & Admin. Regs., supra.]
Thus, use of the national and local average statistics
published by the Internal Revenue Service is an appropriate
method to determine a taxpayer’s monthly expenses. By using
national and local averages for some of petitioner’s expenses
Proced. & Admin. Regs., applies to offers pending on or submitted
on or after July 18, 2002. We do not need to address the
applicability of the statute and the regulations to the first
offer because we focus on the second offer. The second offer was
made on Sept. 5, 2001, and returned on June 17, 2002, after the
effective date of the statutory change and the temporary
regulation but before the effective date of the new regulation.
The statute and the temporary regulation are therefore effective
for the second offer. See Galvin v. Commissioner, T.C. Memo.
2003-263, for a discussion of the addition of sec. 7122(c).
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