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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.
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