The Internal Revenue Service's rejection of a taxpayer's offer in compromise of $28,000 for a tax liability of more than $150,000 was not an abuse of discretion, because the taxpayer failed to prove any special circumstances warranting
During the CDP hearing the settlement officer advised petitioner that the OIC would not be accepted because petitioner’s Form 1120 submitted with the OIC showed loans to shareholders of $443,887 as of October 1, 2007, and $468,888 as of September 30, 2008.
Both settlement officers encountered multiple pieces of evidence in the administrative record which stated that outstanding loans to shareholders payable to petitioner existed, including the first Form 1120.
Additional information relevant to the shareholder loan issue was then requested, and both OICs were rejected when petitioner failed to provide satisfactory evidence that no loans to shareholders existed. The information requested of petitioner was not available to the settlement officers internally (indeed, many of the internally available records stated that loans to shareholders existed), and no blanket request from petitioner was made.
Therefore the Tax Court found that the IRS's determinations were not arbitrary, capricious, or
without sound basis in fact or law.
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