Estate of Carol Andrews, Deceased, Robert Andrews, Special Administrator, and Robert Andrews - Page 21

                                       - 21 -                                         
          Petitioners offered to pay only $25,000 to compromise their                 
          outstanding tax liability, which they estimated to be $255,254.             
          In some situations, respondent may accept an offer-in-compromise            
          of less than petitioners’ reasonable collection potential.                  
          However, given all other considerations discussed herein, we do             
          not believe that Ms. Cochran abused her discretion by rejecting             
          an offer-in-compromise that was only 10 percent of petitioners’             
          outstanding tax liability and that bore no relationship to their            
          ability to pay based on their own calculations.                             
               3.   Encouraging Voluntary Compliance With the Tax Laws                
               We are also mindful that any decision by Ms. Cochran to                
          accept petitioners’ offer-in-compromise due to doubt as to                  
          collectibility with special circumstances or effective tax                  
          administration based on economic hardship must be viewed against            
          the backdrop of section 301.7122-1(b)(3)(iii), Proced. & Admin.             
          Regs.12  See Barnes v. Commissioner, T.C. Memo. 2006-150.  That             
          section requires that Ms. Cochran deny petitioners’ offer-in-               
          compromise if its acceptance would undermine voluntary compliance           
          with tax laws by taxpayers in general.  Thus, even if we were to            
          assume arguendo that petitioners would suffer economic hardship,            

               12  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.; see also Barnes v.                
          Commissioner, T.C. Memo. 2006-150.                                          

Page:  Previous  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  Next

Last modified: May 25, 2011