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to determine whether the Appeals officer’s decision to reject the
taxpayer’s offer-in-compromise was arbitrary, capricious, or
without sound basis in fact or law. Skrizowski v. Commissioner,
T.C. Memo. 2004-229; Fowler v. Commissioner, supra.
Section 7122(a) authorizes the Commissioner to compromise
any civil or criminal case arising under the internal revenue
laws. See Fargo v. Commissioner, 447 F.3d 706, 712 (9th Cir.
2006) (noting that the authorization to compromise any civil or
criminal case is discretionary), affg. T.C. Memo. 2004-13.
Section 7122(c) provides that the Commissioner shall prescribe
guidelines for evaluation of whether an offer-in-compromise
should be accepted. See sec. 301.7122-1(c)(1), Proced. & Admin.
Regs.
The section 7122 regulations set forth grounds for the
compromise of a taxpayer’s liability, including doubt as to
collectibility. Sec. 301.7122-1(b), Proced. & Admin. Regs.
Doubt as to collectibility exists in any case 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
pronouncements, an offer to compromise based on doubt as to
collectibility will be acceptable only if it reflects the
reasonable collection potential of the case; i.e., that amount,
less than the full liability, that the IRS could collect through
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Last modified: March 27, 2008