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Ms. Cochran testified that she considered all of Ms.
Merriam’s and petitioners’ assertions, including the numerous
letters and exhibits. Nevertheless, Ms. Cochran determined that
petitioners did not qualify for an offer-in-compromise.
The mere fact that petitioners’ “equitable facts” did not
persuade respondent to accept their offer-in-compromise does not
mean that those assertions were not considered. The notice of
determination and Ms. Cochran’s testimony demonstrate
respondent’s clear understanding and careful consideration of the
facts and circumstances of petitioners’ case. We find that
respondent’s determination that the “equitable facts” did not
justify acceptance of petitioners’ offer-in-compromise was not
arbitrary or capricious, and thus it was not an abuse of
discretion.
We also find that compromising petitioners’ case on grounds
of public policy or equity would not enhance voluntary compliance
by other taxpayers. A compromise on that basis would place the
Government in the unenviable role of an insurer against poor
business decisions by taxpayers, reducing the incentive for
taxpayers to investigate thoroughly the consequences of
transactions into which they enter. It would be particularly
inappropriate for the Government to play that role here, where
the transaction at issue is participation in a tax shelter.
Reducing the risks of participating in tax shelters would
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