Franklin and Janetta Hubbart - Page 14

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          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.                                                                
               Petitioners proposed an offer-in-compromise based                      
          alternatively on doubt as to collectibility with special                    
          circumstances or effective tax administration.  Petitioners                 
          offered to pay $60,400 to compromise their outstanding tax                  
          liability for 1981 through 1996, which totaled $345,145 at the              
          time of the section 6330 hearing.9  Petitioners argued that                 
          collection of the full liability would create economic hardship             
          and would undermine public confidence that the tax laws are being           
          administered in a fair and equitable manner.  Respondent                    
          determined that petitioners’ reasonable collection potential was            
          $394,318 and that their offer-in-compromise did not meet the                
          criteria for an offer-in-compromise based on either doubt as to             
          collectibility with special circumstances or effective tax                  
          administration.                                                             




               9  The Federal tax lien was filed to secure repayment of               
          petitioners’ outstanding tax liability for 1981-86 only.                    
          Petitioners estimated that their outstanding tax liability for              
          1981-86 was $257,012.  However, petitioners sought to compromise            
          their outstanding tax liability for not only 1981-86, but also              
          for 1987-96.  To accurately compare their offer amount to their             
          outstanding tax liability, we must therefore consider the total             
          assessed amount for 1981-96, and not for only 1981-86.                      




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