James Weldon Aaron - Page 9

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          administrative hearing or otherwise brought to the attention of             
          the Appeals Office.  Magana v. Commissioner, 118 T.C. 488, 493              
          (2002); sec. 301.6320-1(f)(2), Q&A-F5, Proced. & Admin. Regs.               
               The sole collection alternative petitioner proposed was an             
          OIC.4  Section 7122(a) authorizes the Secretary to compromise any           
          civil case arising under the internal revenue laws.  As is                  
          relevant here, grounds for compromise of a liability include                
          doubt as to collectibility or promotion of effective tax                    
          administration.  Sec. 301.7122-1(b), Proced. & Admin. Regs.                 
               Before discussing each of these grounds, we address                    
          respondent’s contention, raised for the first time in his                   
          pretrial memorandum, that petitioner’s failure to pay his 2002              
          tax liability rendered him noncompliant with Federal tax laws.              
          The Court has held that where a taxpayer is not currently in                
          compliance with Federal tax laws, a determination that the                  
          taxpayer is not entitled to an OIC does not constitute abuse of             
          discretion.  Rodriguez v. Commissioner, T.C. Memo. 2003-153; see            
          also Orum v. Commissioner, 412 F.3d 819, 821 (7th Cir. 2005),               
          affg. 123 T.C. 1 (2004).  The Court also has held, however, that            


               4  Petitioner’s OIC does not address the taxable year 2002.            
          It is unclear whether he later proposed an OIC as a collection              
          alternative for that year.  On the basis of our discussion and              
          resolution of the issue for decision, infra, the result in this             
          case will not change if we find that petitioner offered to                  
          compromise his 2002 tax liability.  We therefore assume, without            
          deciding, that the issue of an OIC for the taxable year 2002 was            
          raised and is properly before the Court.                                    





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