- 26 -
Fargo to support that conclusion. See Keller v. Commissioner,
supra; Barnes v. Commissioner, supra.
Respondent’s rejection of petitioners’ longstanding case
argument was not arbitrary or capricious.
2. The IRM Example
Petitioners argue that respondent erred when he determined
that they were not entitled to relief based on the second example
in IRM section 5.8.11.2.2. Petitioners assert that many of the
facts in this case were not present in the example, and,
therefore, any reliance on the example was misplaced.
Petitioners’ argument is not persuasive.
IRM section 5.8.11.2.2 discusses effective tax
administration offers-in-compromise based on equity and public
policy grounds and states in the second example:
In 1983, the taxpayer invested in a nationally marketed
partnership which promised the taxpayer tax benefits
far exceeding the amount of the investment.
Immediately upon investing, the taxpayer claimed
investment tax credits that significantly reduced or
eliminated the tax liabilities for the years 1981
through 1983. In 1984, the IRS opened an audit of the
partnership under the provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA). After
issuance of the Final Partnership Administrative
Adjustment (FPAA), but prior to any proceedings in Tax
Court, the IRS made a global settlement offer in which
it offered to concede a substantial portion of the
interest and penalties that could be expected to be
assessed if the IRS’s determinations were upheld by the
court. The taxpayer rejected the settlement offer.
After several years of litigation, the partnership
level proceeding eventually ended in Tax Court
decisions upholding the vast majority of the
deficiencies asserted in the FPAA on the grounds that
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011