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future income.8 Respondent determined that petitioners’
reasonable collection potential was $426,439. Respondent
concluded that because petitioners had the ability to pay the
currently assessed amount in full, their offer amount of $150,000
was not acceptable. Further, respondent determined that
acceptance of an offer-in-compromise for 1991 through 1995 was
not possible because the years were still under examination.
In response to the notice of determination, petitioners
filed a petition with this Court on April 8, 2005.
OPINION
Section 7122(a) provides that “The Secretary may compromise
any civil * * * case arising under the internal revenue laws”.
Whether to accept an offer-in-compromise is left to the
Secretary’s discretion. Fargo v. Commissioner, 447 F.3d 706, 712
(9th Cir. 2006), affg. T.C. Memo. 2004-13; sec. 301.7122-1(c)(1),
Proced. & Admin. Regs.
The regulations under section 7122(a) set forth three
grounds for the compromise of a tax liability: (1) Doubt as to
liability; (2) doubt as to collectibility; or (3) promotion of
effective tax administration. Sec. 301.7122-1(b), Proced. &
Admin. Regs. While petitioners’ Form 656 indicated that they
8 Because petitioners made a cash offer, respondent
considered 48 months of petitioners’ disposable income ($1,979 x
48 months = $94,992). See Internal Revenue Manual (IRM) sec.
5.8.5.5.
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