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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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Last modified: May 25, 2011