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encourage more taxpayers to run those risks, thus undermining
rather than enhancing compliance with the tax laws. See Barnes
v. Commissioner, supra.
B. Petitioners’ Other Arguments
1. Compromise of Penalties and Interest in an Effective
Tax Administration Offer-in-Compromise
Petitioners advance a number of arguments focusing on their
assertion that respondent determined that penalties and interest
could not be compromised in an effective tax administration
offer-in-compromise. Petitioners argue that such a determination
is contrary to legislative history and is therefore an abuse of
discretion. These arguments are not persuasive.
The regulations under section 7122 provide that “If the
Secretary determines that there are grounds for compromise under
this section, the Secretary may, at the Secretary’s discretion,
compromise any civil * * * liability arising under the internal
revenue laws”. Sec. 301.7122-1(a)(1), Proced. & Admin. Regs. In
other words, the Secretary may compromise a taxpayer’s tax
liability if he determines that grounds for a compromise exist.
If the Secretary determines that grounds do not exist, the amount
offered (or the way in which the offer is calculated) need not be
considered.
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