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(9th Cir. 2006) (taxpayers made an offer-in-compromise to promote
effective tax administration where they had sufficient assets to
pay their tax liability in full).
Petitioners argue that respondent was required to compromise
their tax liability to promote effective tax administration. The
Commissioner may compromise a tax liability to promote effective
tax administration when collection of the full liability will
create economic hardship and the compromise would not undermine
compliance with the tax laws by taxpayers in general. See sec.
301.7122-1(b)(3)(i), (iii), Proced. & Admin. Regs. If a taxpayer
does not qualify for effective tax administration compromise on
grounds of economic hardship, the regulations also allow the
Commissioner to compromise a tax liability to promote effective
tax administration when the taxpayer identifies compelling
considerations of public policy or equity. See sec. 301.7122-
1(b)(3)(ii), Proced. & Admin. Regs.
Cochran considered all of the evidence submitted to her by
petitioners and applied the guidelines for evaluating an
offer-in-compromise to promote effective tax administration.
Although petitioners did not specifically state on which basis
they were submitting their effective tax administration offer-in-
compromise, Cochran considered it under both economic hardship
and public policy and equity grounds. Cochran determined that
petitioners’ offer was unacceptable because they had not
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