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to permit him to use his current and expected future earnings to
maintain a lifestyle more lavish than the standard for the
Chicago area (petitioner’s living expenses are more than twice
those of the average national and local standards) plus $4,000
per month for “business expenses” without having to fully satisfy
his past due tax obligations. The record does not disclose any
special circumstances that warrant acceptance of petitioner’s
offer-in-compromise ($70,000 to extinguish a tax liability over
$200,000).
As for the impact that petitioner’s bankruptcy might have
had on respondent’s considerations, respondent contends that he
applied the provisions of the Internal Revenue Manual, which
advises:
When a taxpayer threatens bankruptcy, the impact of
bankruptcy on the Service’s ability to collect must be
considered. If the Offer Investigator believes, based upon
factual information, that the taxpayer is seriously
considering filing bankruptcy, the employee should discuss
the benefits of filing an administrative offer instead. [1
Administration, Internal Revenue Manual (CCH), sec.
5.8.10.2.2(1), at 16,367.]
The record shows that respondent considered the possibility
that petitioner might file a petition in bankruptcy.
Respondent’s correspondence to petitioner is specific in
explaining that petitioner had the ability to pay his total tax
liability in full and “in light of the recently passed bankruptcy
law which takes more into consideration an individual’s income
production”, respondent did not believe that petitioner would be
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Last modified: November 10, 2007