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mentions “creating for the taxpayer an expectation of a fresh
start toward future compliance”.
According to policy statement P-5-100, it appears the “best
interest of the government” is a compromise that is also in the
best interest of the taxpayer and which collects the potentially
collectible amount, or more, at the earliest possible time. In
the instant case, respondent determined that petitioner’s
reasonable collection potential was zero. Pursuant to policy
statement P-5-100, it appears that acceptance of petitioner’s
$1,000 offer is in respondent’s best interest as it is also in
petitioner’s best interest and permits respondent to collect more
than respondent determined was potentially collectible otherwise.
It would also afford petitioner “a fresh start toward future
compliance”.
The Internal Revenue Manual does contain a provision that
allows for rejection of offers that exceed the reasonable
collection potential. IRM sec. 5.8.7.6.1 (Nov. 15, 2004)
states:
(1) Policy statement P-5-89 establishes that
offers may be rejected on the basis of public policy if
acceptance might in any way be detrimental to the
interests of fair tax administration, even though it is
shown conclusively that the amount offered is greater
than could be collected by any other means, if no
Effective Tax Administration (ETA) issues exist.
Note: This section should not be confused with IRM
5.8.11.2.2 under Effective Tax Administration (ETA)
offers.
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Last modified: May 25, 2011