Michael Keller - Page 17

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          supplemental notice of determination reflects consideration of              
          the arguments raised in the letter.                                         
               The mere fact that petitioner’s “equitable facts” did not              
          persuade respondent to accept petitioner’s offer-in-compromise              
          does not mean that those assertions were not considered.  The               
          supplemental notice of determination and Mr. Vander Linden’s                
          testimony demonstrate respondent’s clear understanding and                  
          careful consideration of the facts and circumstances of                     
          petitioner’s case.  We find that respondent’s determination that            
          the “equitable facts” did not justify acceptance of petitioner’s            
          offer-in-compromise was not arbitrary or capricious, and thus was           
          not an abuse of discretion.                                                 
          B.   Compromise of Penalties and Interest in an Effective Tax               
               Administration Offer-in-Compromise                                     
               Petitioner advances a number of arguments focusing on his              
          assertion that respondent determined that penalties and interest            
          could not be compromised in an effective tax administration                 
          offer-in-compromise.  Petitioner argues that such a determination           
          is contrary to legislative history and is therefore an abuse of             
          discretion.  These arguments are not persuasive.                            
               The regulations under section 7122 provide that “If the                
          Secretary determines that there are grounds for compromise under            
          this section, the Secretary may, at the Secretary’s discretion,             
          compromise any civil * * * liability arising under the internal             
          revenue laws”.  Sec. 301.7122-1(a)(1), Proced. & Admin. Regs.  In           





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