Court review of IRS abuse of discretion.

Journal of Accountancy, December, 2004 by Schnee, Edward J.

Various code sections give the IRS discretion to reduce or eliminate a tax liability for equity or hardship reasons. If the IRS fails to reduce a liability, the taxpayer can ask a court to mandate a reduction on the grounds the IRS abused its discretion. This type of judicial review has been the subject of litigation. Recently, a taxpayer won the right to submit information and evidence to the court that was not in the administrative record.

On October 31, 1995, James Robinette and the IRS entered into an offer in compromise for tax years 1983 to 1991. Robinette agreed to pay $100,000 of the total $989,475 liability and to timely file his next five tax returns, which he did; however, the IRS never received his 1998 return. As a result it ruled Robinette...

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