- 24 -
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.16 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,
a finding that we decline to make, we would not find that Ms.
Cochran’s rejection of petitioners’ offer-in-compromise was an
abuse of discretion. As discussed below (in our discussion of
petitioners’ “equitable facts” argument), we conclude that
acceptance of petitioners’ offer-in-compromise would undermine
voluntary compliance with tax laws by taxpayers in general.
B. Public Policy and Equity Considerations
Petitioners assert that “There are so many unique and
equitable facts in this case that this case is an exceptional
circumstance”, and respondent abused his discretion by not
accepting those facts as grounds for an offer-in-compromise. In
support of their assertion, petitioners argue: (1) The
16 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. 5.8.11.2; see also Barnes v.
Commissioner, T.C. Memo. 2006-150.
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