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that petitioners’ reasonable collection potential was $193,438
(future income potential of $38,208 + net realizable equity of
$155,230).
On May 19, 2005, Appeals issued petitioners the notice of
determination sustaining the proposed levy. The notice concludes
that petitioners’ $35,000 offer-in-compromise is not an
appropriate collection alternative to the proposed levy. The
notice, citing Internal Revenue Manual (IRM) sections 5.8.5.5.1
and 5.8.5.3.1, states that petitioners’ offer does not meet the
Commissioner’s guidelines for consideration of an offer-in-
compromise due to doubt as to collectibility with special
circumstances. The notice, citing IRM section 5.8.11.1(3),
states that petitioners’ offer also does not meet the
Commissioner’s guidelines for consideration as an offer-in-
compromise to promote effective tax administration.
As to petitioners’ offer-in-compromise due to doubt as to
collectibility with special circumstances, the notice states:
the taxpayers [petitioners] have the ability to pay
more than the offer amount from either the equity in
their assets or their income stream while still meeting
their necessary basic living expenses, in accordance
with IRM 5.8.5.5.1. The taxpayers’ representative
contended that the taxpayers’ equity in their assets
and any collection potential from future income should
be offset against possible future expenses that might
be incurred throughout the rest of the taxpayers’
lives. The Settlement Officer noted, however, that
11(...continued)
Internal Revenue Manual (IRM) sec. 5.8.5.5.
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