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5.8.11.2.5, states that petitioners’ offer also does not meet the
Commissioner’s guidelines for consideration as an offer-in-
compromise to promote effective tax administration.
As to petitioners’ offer-in-compromise due to doubt as to
collectibility, the notice states more specifically that
the taxpayers [petitioners] have the ability to pay
more than the offer amount from the equity in their
assets while still meeting their necessary basic living
expenses, in accordance with IRM 5.8.5.5.1. The
taxpayers have an ability to pay substantially more
than the amount being offered, as per the guidelines of
Internal Revenue Manual 5.8.5.3.1. The taxpayers’
circumstances have been documented and considered but
are insufficient to permit acceptance of an offer
amount that is, at best, less than 30% of the RCP
[reasonable collection potential] ($32,000/$107,617).
As to petitioners’ offer-in-compromise to promote effective tax
administration, the notice states:
Analysis of the taxpayers’ finances shows that the
taxpayers’ equity in assets plus present and future
income are less than the assessed amounts to be
compromised. The taxpayers, therefore, fail to meet
the requirements for consideration of an offer in
compromise based on Effective Tax Administration, as
per the guidelines of Internal Revenue Manual
5.8.11.1(2).
The notice further states as to Cochran’s balancing of efficient
collection with the legitimate concerns of taxpayers that
The taxpayers’ concerns about the proposed collection
action generally fall within two areas: (1) pending
litigation (the interest abatement case) and (2) a
viable collection alternative in the form of their
$32,000 offer in compromise.
The Settlement Officer has balanced the taxpayers’
first area of concern by confirming that the taxpayers’
interest abatement case has been decided in Tax Court,
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Last modified: May 25, 2011