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reasonable collection potential due to public policy or equity
considerations. See Internal Revenue Manual (IRM) sec.
5.8.4.3(4). However, in accordance with the Commissioner’s
guidelines, an offer-in-compromise based on doubt as to
collectibility with special circumstances should not be accepted,
even when economic hardship or considerations of public policy or
equity circumstances are identified, if the taxpayer does not
offer an acceptable amount. See IRM sec. 5.8.11.2.1(11) and
.2(12).
The Secretary may also compromise a tax liability on the
ground of effective tax administration when: (1) Collection of
the full liability will create economic hardship; or (2)
exceptional circumstances exist such that collection of the full
liability would undermine public confidence that the tax laws are
being administered in a fair and equitable manner; and (3)
compromise of the liability would not undermine compliance by
taxpayers with the tax laws. Sec. 301.7122-1(b)(3), Proced. &
Admin. Regs.
Petitioner proposed an offer-in-compromise based
alternatively on doubt as to collectibility with special
circumstances or effective tax administration, offering to pay
$157,824 to compromise his outstanding tax liabilities.
Petitioner argued that collection of the full liability would
create economic hardship and would undermine public confidence
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