Barry and Sherry Blondheim - Page 12

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          tax administration when collection of the full liability will               
          create economic hardship and the compromise would not undermine             
          compliance with the tax laws by taxpayers in general.  See sec.             
          301.7122-1(b)(3)(i), (iii), Proced. & Admin. Regs.  If a taxpayer           
          does not qualify for effective tax administration compromise on             
          grounds of economic hardship, the regulations also allow the                
          Commissioner to compromise a tax liability to promote effective             
          tax administration when the taxpayer identifies compelling                  
          considerations of public policy or equity.  See sec. 301.7122-              
          1(b)(3)(ii), Proced. & Admin. Regs.                                         
               Cochran considered all of the evidence submitted to her by             
          petitioners and applied the guidelines for evaluating an                    
          offer-in-compromise to promote effective tax administration.                
          Although petitioners did not specifically state on which basis              
          they were submitting their effective tax administration offer-in-           
          compromise, Cochran considered it under both economic hardship              
          and public policy and equity grounds.  Cochran determined that              
          petitioners’ offer was unacceptable because they had not                    
          demonstrated that they would suffer economic hardship and public            
          policy and equity reasons did not weigh in favor of accepting               
          their offer.  Cochran’s determination to reject petitioners’                
          offer-in-compromise was not arbitrary, capricious, or without a             
          sound basis in fact or law, and it was not abusive or unfair to             
          petitioners.  Cochran’s determination was based on a reasonable             






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