- 17 -
now offered to compromise all the penalties
and interest on terms more favorable than
those contained in the prior settlement
offer, arguing that TEFRA [Tax Equity and
Fiscal Responsibility Act of 1982, Pub. L.
97-248, 96 Stat. 324] is unfair and that the
liabilities accrued in large part due to the
actions of the Tax Matters Partner (TMP)
during the audit and litigation. * * *
Note:
In both of these examples, the taxpayers are
essentially claiming that Congress enacted unfair
statutes and are arguing that the Service should
use its compromise authority to rewrite those
statutes based on a perception of unfairness.
Compromise for that reason would not promote
effective tax administration. The compromise
authority under Section 7122 is not so broad as to
allow the Service to disregard or override the
judgments of Congress. [1 Administration, Internal
Revenue Manual (CCH), sec. 5.8.11.2.2, at 16,385-7
to 16,385-8.]
We need not detail in this opinion the complexities of the
AMT imposed by sections 55 and 56 or the taxation of ISOs under
sections 421 and 422. Petitioners do not dispute the
applicability of those sections or the computations under them.
The tax liability in this case was based on petitioners’
reporting on their Form 1040 for 2000. Nonetheless, petitioners
devote a substantial portion of their posthearing memorandum to
arguing that:
The Speltzes request for relief under the OIC
Statute, from the unintended harm being caused them by
the rote application of the AMT ISO Statute, does not
put the IRS or this Court in a position where Section
7122 is undermining Congressional intent with respect
to any other statute–-including the AMT ISO Statute.
Rather, based on their special circumstances in their
particular situation, the rote and literal application
of the internal revenue laws is imposing an impossible-
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