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petitioners’ reasonable collection potential, we find that those
errors were harmless because, even when corrected, petitioners’
reasonable collection potential exceeds their offer amount.
1. Petitioners’ Income and Expenses
a. Housing and Utilities Expense
Section 7122(c)(2)(A) provides that “the Secretary shall
develop and publish schedules of national and local allowances
designed to provide that taxpayers entering into a compromise
have an adequate means to provide for basic living expenses.”
Section 7122(c)(2)(B) provides that the national and local
allowances should not be used “to the extent such use would
result in the taxpayer not having adequate means to provide for
basic living expenses.”
Mr. Owens used national and local standards to determine
petitioners’ allowable housing and utilities expense, including
their second mortgage expense. Petitioners assert that, by not
allowing their actual expenses, they will not have adequate means
to provide for basic living expenses. However, petitioners did
not provide any information to Mr. Owens or to the Court showing
that they would be unable to provide for basic living expenses if
only allowed the national and local standards. Given the lack of
12(...continued)
Petitioners do not dispute respondent’s reduction of their
transportation expenses.
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