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On April 7, 2006, respondent’s Appeals Office issued its
notice of determination sustaining respondent’s notice of tax
lien filing and rejecting petitioner’s OIC.
Discussion
Section 6330(c)(2)(A)(iii) permits a taxpayer to propose
collection alternatives to the filing of a Federal tax lien.
Rev. Proc. 2003-71, sec. 4.02(2), 2003-2 C.B. 517, 517, provides
that an OIC based on doubt as to collectibility will be treated
as an acceptable collection alternative only where the OIC
reflects the reasonable collection potential from the taxpayer.
Where a taxpayer has dissipated assets in disregard of the
taxpayer’s outstanding Federal income taxes, the dissipated
assets may be included in the calculation of the minimum amount
that is to be paid under an acceptable OIC. Internal Revenue
Manual (IRM) 5.8.5.4(5).
A dissipated asset is defined as any asset (liquid or not
liquid) that has been sold, transferred, or spent on nonpriority
items and/or debts and is no longer available to pay the tax
liability. Samuel v. Commissioner, T.C. Memo. 2007-312; IRM
5.8.5.4(1).
Our review of respondent’s adverse determination relating to
petitioner’s proposed OIC focuses on whether respondent abused
his discretion in rejecting petitioner’s OIC. Sego v.
Commissioner, 114 T.C. 604, 610 (2000).
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Last modified: March 27, 2008