United States First Circuit

In a case in which the taxpayers, following a collection due process (CDP) hearing, offered to settle their tax liability for pennies on the dollar, which the IRS rejected as too low because taxpayers purportedly owned valuable real estate, the Tax Court's finding that the taxpayers were not the owners of the real estate in question, order to the IRS to accept the offer in compromise, and award of attorney fees to taxpayers, are reversed where the Tax Court employed an improper standard of review with respect to the IRS's subsidiary determinations. Applying a more deferential standard to these determinations consistent with the nature and purpose of the CDP process: 1) the IRS did not abuse its discretion when it rejected the taxpayers' offer in compromise; and 2) the IRS acted reasonably in determining that the taxpayers were the owners of the property, and thus, the equity in the property was appropriately considered when the IRS evaluated the compromise offer.

Appellate Information

• Decided 06/20/2012
• Published 06/20/2012

Judges

• SELYA

Court

• United States First Circuit

Counsel