Michael D. Cornwell and Hilary J. Iker - Page 9
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decision to reject the offer in compromise actually
submitted by the taxpayer was arbitrary, capricious, or
without sound basis in fact or law. Skrizowski v.
Commissioner, T.C. Memo. 2004-229; Fowler v.
Commissioner, supra; see Woodral v. Commissioner, 112
T.C. 19, 23 (1999).
The proposals presented to Settlement Officer Lin were for less
than $25,000 against total liabilities approximating $84,000 as
of June 2006. Petitioners’ proposals were rejected by the
settlement officer, who calculated an acceptable offer by
reference to petitioner’s actual earning history, in accordance
with the Internal Revenue Manual. Petitioners then suggested
that overtime pay that had been consistently earned by petitioner
should be excluded from the calculation altogether. That
suggestion does not appear to be reasonable, because petitioner
continued to receive overtime pay notwithstanding his employer’s
policy. Petitioners never offered any evidence that petitioner’s
actual earnings were declining as a result of the 2004 or
allegedly “new” in 2006 overtime policy.
Petitioners argue that the settlement officer should have
conducted a further investigation before sending the notices of
determination. Respondent points out that the negotiations over
petitioners’ long delinquent tax liabilities had gone on for
years and that reasonable deadlines had been set and had passed
when the notices of determination were sent. See Murphy v.
Commissioner, supra at 322-323.
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Last modified: November 10, 2007