Ronald W. Oman - Page 9

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          and circumstances of the taxpayer’s case are considered and the             
          taxpayer is permitted “to retain sufficient funds to pay basic              
          living expenses.”  Sec. 301.7122-1(c)(2), Proced. & Admin. Regs.            
               The Internal Revenue Manual (IRM) contains guidelines for              
          rejection of offers-in-compromise.  IRM sec. 5.8.7.6(5) (Nov. 15,           
          2004), which respondent relied on in rejecting petitioner’s                 
          offer, states:                                                              
               An offer rejection may also be based on a determination                
               that acceptance of the specific offer at hand is not in                
               the "best interest of the government", per policy                      
               statement P-5-100.  Rejections under this provision                    
               should not be routine and should be fully supported by                 
               the facts outlined in the rejection narrative.  Offers                 
               rejected under this section require the review and                     
               approval of the second level manager; that is,                         
               Territory Manager for the field or Department Manager                  
               for COIC [Centralized Offers in Compromise].  Examples                 
               of situations that may warrant rejection as not being                  
               in the "best interest of the government" include:                      
               Recent compliance satisfies offer processability                       
               criteria, however the taxpayer has an egregious history                
               of past non-compliance and our analysis of his current                 
               finances reveals that it will be highly unlikely the                   
               taxpayer will be able to remain in compliance during                   
               the offer terms.                                                       
          Policy statement P-5-100 (Jan. 30, 1992), on which the IRM                  
          relies, states:                                                             
               The Service will accept an offer in compromise when it                 
               is unlikely that the tax liability can be collected in                 
               full and the amount offered reasonably reflects                        
               collection potential.  An offer in compromise is a                     
               legitimate alternative to declaring a case currently                   
               not collectible or to a protracted installment                         
               agreement.  The goal is to achieve collection of what                  
               is potentially collectible at the earliest possible                    
               time and at the least cost to the Government.                          






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