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to liability, doubt as to collectibility, and the promotion of
effective tax administration. Sec. 301.7122-1(b), Proced. &
Admin. Regs. Petitioner seeks a compromise based on doubt as to
collectibility.
The Secretary may compromise a tax liability based on doubt
as to collectibility where the taxpayer’s assets and income are
less than the full amount of the liability. Sec. 301.7122-
1(b)(2), Proced. & Admin. Regs. Generally, under the
Commissioner’s administrative procedures, an offer-in-compromise
based on doubt as to collectibility will be acceptable only if it
reflects the taxpayer’s “reasonable collection potential”. Rev.
Proc. 2003-71, sec. 4.02(2), 2003-2 C.B. 517. Both parties
appear to agree that petitioner’s reasonable collection potential
is substantially less than his tax liability which, as above
noted, stood at more than $773,368, as of January 1, 2005. The
parties obviously disagree as to petitioner’s collection
potential.
The IRS has developed guidelines and procedures for the
submission and evaluation of offers to compromise under section
7122. Rev. Proc. 2003-71, supra. In furtherance thereof, the
Internal Revenue Manual (IRM) contains extensive guidelines for
evaluating offers-in-compromise. 1 Administration, Internal
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Last modified: November 10, 2007