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fined in IRM 5.8.4.3, Effective Tax Administration and
Doubt as to Collectibility with Special Circumstance,
or IRM 5.8.11, Effective Tax Administration, the offer
may be accepted on the basis of hardship or Effective
Tax Administration (ETA).
Section 4.02(2) of Revenue Procedure 2003-71 provides in
pertinent part:
An offer to compromise based on doubt as to col-
lectibility generally will be considered acceptable if
it is unlikely that the tax can be collected in full
and the offer reasonably reflects the amount the Ser-
vice could collect through other means, including
administrative and judicial collection remedies. See
Policy Statement P-5-100. This amount is the reason-
able collection potential of a case. In determining
the reasonable collection potential of a case, the
Service will take into account the taxpayer's reason-
able basic living expenses. In some cases, the Service
may accept an offer of less than the total reasonable
collection potential of a case if there are special
circumstances.
On the record before us, we find that the settlement officer
followed all of the guidelines that respondent has prescribed to
determine whether an offer-in-compromise is adequate and should
be accepted to resolve a dispute. In the settlement officer’s
March 1, 2005 letter, the settlement officer suggested to peti-
tioner the possibility of an offer-in-compromise and outlined the
filing and payment requirements that petitioner would be required
10(...continued)
mine public confidence that the tax laws are being
administered in a fair and equitable manner. Sec.
301.7122-1(b)(3)(ii), Proced. & Admin. Regs.
Murphy v. Commissioner, 125 T.C. 301, 309 (2005), affd. 469 F.3d
27 (1st Cir. 2006); see also IRM 5.8.11 (Effective Tax Adminis-
tration).
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Last modified: November 10, 2007