- 20 - A compromise on that basis would place the Government in the unenviable role of an insurer against poor business decisions by taxpayers, reducing the incentive for taxpayers to investigate thoroughly the consequences of transactions into which they enter. It would be particularly inappropriate for the Government to play that role here, where the transaction at issue involves a tax shelter. Reducing the risks of participating in tax shelters would encourage more taxpayers to run those risks, thus undermining rather than enhancing compliance with the tax laws.11 See Clayton v. Commissioner, supra; Barnes v. Commissioner, supra. Sixth, petitioners argue that Cochran failed to balance efficient collection with the legitimate concern that collection be no more intrusive than necessary. We disagree. Cochran thoroughly considered this balancing issue on the basis of the information and proposed collection alternative given to her by petitioners. She concluded that “the proposed levy action 11 Nor does the fact that petitioners’ case may be “longstanding” overcome the detrimental impact on voluntary compliance that could result from respondent’s accepting petitioners’ offer-in-compromise. An example in IRM sec. 5.8.11.2.2 implicitly addresses the “longstanding” issue. There, the taxpayer invested in a tax shelter in 1983, thereby incurring tax liabilities for 1981 through 1983. He failed to accept a settlement offer by respondent that would have eliminated a substantial portion of his interest and penalties. Although the example, which is similar to petitioners’ case in several respects, would qualify as a “longstanding” case by petitioners’ standards, the offer was not acceptable because acceptance of it would undermine compliance with the tax laws.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011