Arthur A. Lemann III and Roberta A. Lemann - Page 17

                                       - 17 -                                         
               Section 7122 authorizes the Secretary to compromise any                
          civil case arising under the internal revenue laws and requires             
          him to prescribe guidelines for officers and employees of the               
          Internal Revenue Service to determine whether an offer-in-                  
          compromise is adequate and should be accepted to resolve a                  
          dispute.  Sec. 7122(a), (c)(1).  These guidelines must include              
          published schedules of national and local allowances designed to            
          ensure that taxpayers entering into a compromise will have                  
          adequate means to provide for basic living expenses and must also           
          provide for a determination, based on the facts and circumstances           
          of each taxpayer, that use of the published schedules will not              
          result in the taxpayer's lacking adequate means to provide for              
          basic living expenses.  Sec. 7122(c)(2).                                    
               The contemplated guidelines and schedules have been                    
          published.  See sec. 301.7122-1T(b)(3)(ii), Temporary Proced. &             
          Admin. Regs., 64 Fed. Reg. 39020 (July 21, 1999); IRM, exh.                 
          5.15.1-4 and -5 (Oct. 1999); IRM, exh. 5.15.1-10 and -11 (Oct.              
          2000).  Under this administrative guidance, the Commissioner will           
          generally compromise a liability on the basis of doubt as to                
          collectibility only if the liability exceeds the taxpayer's                 
          reasonable collection potential.  Cf. Murphy v. Commissioner, 125           
          T.C. 301, 308-310 (2005).  A taxpayer's reasonable collection               
          potential is determined, in part, using published guidelines for            
          certain national and local allowances for basic living expenses,            

Page:  Previous  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  Next

Last modified: May 25, 2011