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providing for the care of dependents with no other
means of support; and
(C) Although taxpayer has certain assets, the
taxpayer is unable to borrow against the equity in
those assets and liquidation of those assets to pay
outstanding tax liabilities would render the taxpayer
unable to meet basic living expenses.
The regulation states that no compromise may be entered into if
such compromise of liability would undermine compliance by
taxpayers with the tax laws. Sec. 301.7122-1(b)(3)(iii), Proced.
& Admin. Regs. Paragraph (c)(3)(ii) then sets forth factors that
support (but are not conclusive of) a determination that a
compromise would undermine compliance with the tax laws. These
factors include: (A) A taxpayer who has a history of
noncompliance with the filing and payment requirements of the
Internal Revenue Code; (B) a taxpayer who has taken deliberate
action to avoid the payment of taxes; and (C) a taxpayer who has
encouraged others to refuse to comply with the tax laws. Sec.
301.7122-1(c)(3)(ii), Proced. & Admin. Regs. The regulation
continues:
(iii) The following examples illustrate the types
of cases that may be compromised by the Secretary, at
the Secretary’s discretion, under the economic hardship
provisions of paragraph (b)(3)(i) of this section:
Example 1. The taxpayer has assets sufficient to
satisfy the tax liability. The taxpayer provides full
time care and assistance to her dependent child, who
has a serious long-term illness. It is expected that
the taxpayer will need to use the equity in his assets
to provide for adequate basic living expenses and
medical care for his child. The taxpayer’s overall
compliance history does not weigh against compromise.
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Last modified: March 27, 2008