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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 run those risks, thus undermining
rather than enhancing compliance with the tax laws. See Barnes
v. Commissioner, supra.
C. Petitioner’s Other Arguments
1. Compromise of Penalties and Interest in an
ETA Offer-in-Compromise
Petitioner advances a number of arguments focusing on his
assertion that respondent determined that penalties and interest
could not be compromised in an ETA offer-in-compromise.
Petitioner argues that such a determination is contrary to
legislative history and is therefore an abuse of discretion.
These arguments are not persuasive.
The regulations under section 7122 provide that “If the
Secretary determines that there are grounds for compromise under
this section, the Secretary may, at the Secretary’s discretion,
compromise any civil * * * liability arising under the internal
revenue laws”. Sec. 301.7122-1(a)(1), Proced. & Admin. Regs. In
other words, the Secretary may compromise a taxpayer’s tax
liability if he determines that grounds for a compromise exist.
If the Secretary determines that grounds do not exist, the amount
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