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expenses, and value of assets should have been accepted as
reported, we would not find that Ms. Cochran abused her
discretion in rejecting petitioner’s offer-in-compromise. Ms.
Cochran testified that, had she accepted the income, expenses,
and value of assets as reported, petitioner’s reasonable
collection potential would have been $238,592.
Respondent may accept an offer-in-compromise based on doubt
as to collectibility with special circumstances even if the offer
amount is less than petitioner’s reasonable collection potential.
However, given all other considerations discussed herein, we do
not believe that Ms. Cochran abused her discretion by rejecting
an offer-in-compromise that bore no relationship to petitioner’s
ability to pay based on his own calculations.
c. Encouraging Voluntary Compliance With the Tax Laws
We are also mindful that any decision by Ms. Cochran to
accept petitioner’s offer-in-compromise based on doubt as to
collectibility with special circumstances must be viewed against
the backdrop of section 301.7122-1(b)(3)(iii), Proced. & Admin.
Regs.11 See Barnes v. Commissioner, T.C. Memo. 2006-150. That
section requires that Ms. Cochran deny petitioner’s offer-in-
11 The prospect that acceptance of an offer-in-compromise
will undermine compliance with the tax laws militates against its
acceptance whether the offer-in-compromise is predicated on
promotion of effective tax administration or on doubt as to
collectibility with special circumstances. See Rev. Proc. 2003-
71, 2003-2 C.B. 517; IRM sec. 5.8.11.2.3; see also Barnes v.
Commissioner, T.C. Memo. 2006-150.
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