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In response to the notice of determination, petitioners
filed a petition with this Court on December 20, 2004.
OPINION
Section 7122(a) provides that “The Secretary may compromise
any civil * * * case arising under the internal revenue laws”.
Whether to accept an offer-in-compromise is left to the
Secretary’s discretion. Fargo v. Commissioner, 447 F.3d 706, 712
(9th Cir. 2006), affg. T.C. Memo. 2004-13; sec. 301.7122-1(c)(1),
Proced. & Admin. Regs.
The regulations under section 7122(a) set forth three
grounds for the compromise of a tax liability: (1) Doubt as to
liability; (2) doubt as to collectibility; or (3) promotion of
effective tax administration. Sec. 301.7122-1(b), Proced. &
Admin. Regs. Doubt as to liability and doubt as to
collectibility are not at issue in this case.11
As pertinent here, the Secretary may compromise a tax
liability on the ground of effective tax administration when:
(1) 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
(2) compromise of the liability would not undermine compliance by
11 While petitioners contest their liability for sec.
6621(c) interest, see supra note 2, they did not raise doubt as
to liability as a basis for their offer-in-compromise.
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