- 17 - administration arguments, we would not find that Mr. Owens abused his discretion by rejecting petitioners’ offer-in-compromise. An offer-in-compromise based on doubt as to collectibility with special circumstances or effective tax administration must be viewed against the backdrop of section 301.7122-1(b)(3)(iii), Proced. & Admin. Regs.11 See Barnes v. Commissioner, T.C. Memo. 2006-150. That section requires that Mr. Owens deny petitioners’ offer-in-compromise if its acceptance would undermine voluntary compliance with tax laws by taxpayers in general. Compromising petitioners’ case on grounds of public policy or equity would not enhance voluntary compliance by other taxpayers. Instead, it would place the Government in the unenviable role of an insurer against poor business decisions by taxpayers, reducing the incentive for taxpayers to investigate thoroughly the consequences of transactions into which they enter. It would be particularly inappropriate for the Government to play that role here, where the transaction at issue is participation in a tax shelter. Reducing the risks of participating in tax shelters would encourage more taxpayers to 11 The prospect that acceptance of an offer-in-compromise will undermine compliance with the tax laws militates against its acceptance whether the offer-in-compromise is predicated on promotion of effective tax administration or on doubt as to collectibility with special circumstances. See Rev. Proc. 2003- 71, 2003-2 C.B. 517; IRM sec. 5.8.11.2.2; see also Barnes v. Commissioner, T.C. Memo. 2006-150.Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Next
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