Michael Keller - Page 10

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          the Secretary may compromise a tax liability on the ground of               
          effective tax administration when:  (1) Exceptional circumstances           
          exist such that collection of the full liability would undermine            
          public confidence that the tax laws are being administered in a             
          fair and equitable manner; and (2) compromise of the liability              
          would not undermine compliance by taxpayers with the tax laws.10            
               Petitioner proposed an effective tax administration offer-             
          in-compromise, arguing that exceptional circumstances exist such            
          that collection of the full liability would undermine public                
          confidence that the tax laws are being administered in a fair and           
          equitable manner.  Respondent rejected petitioner’s argument and            
          determined that “the offers in compromise under ETA provisions              
          are [not] appropriate given the circumstances of this case.”                
               Because the underlying tax liability is not at issue, our              
          review under section 6330 is for abuse of discretion.  See Sego             
          v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner,            
          114 T.C. 176, 182 (2000).  This standard does not ask us to                 
          decide whether in our own opinion petitioner’s offer-in-                    
          compromise should have been accepted, but whether respondent’s              
          rejection of the offer was arbitrary, capricious, or without                


               10  The regulations also provide that the Secretary may                
          compromise a liability on the ground of effective tax                       
          administration when collection of the full liability will create            
          economic hardship.  See sec. 301.7122-1(b), Proced. & Admin.                
          Regs.  Petitioner does not argue that collection of the full                
          liability will create economic hardship.                                    





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