§7122 — Compromises

Petitioner argues that respondent should be deemed to have accepted his effective tax administration (ETA) offer-in-compromise (OIC) pursuant to section 7122(f).1 Petitioner alternatively argues that respondent inadequately considered his ETA OIC.

As explained in the notice of determination, MDIA asked the IRS to use its authority under section 7122 to compromise the outstanding liability because, inter alia, despite not satisfying the requirements of section 430, MDIA purports to have made regular contributions sufficient to pay all retirees’ payments when they came due.

165, 177 (2005) (“We do not discern in section 7122 an intent of Congress to override application of specific provisions of the tax laws in every instance in which the liability is perceived to be unfair or inequitable.

mposes a penalty when a frivolous position is asserted in “specified frivolous submissions,” which are defined in section 6702(b)(2)(B) as CDP hearing requests and applications under section 6159 (relating to written installment payment agreements), section 7122 (relating to compromises), and section 7811 (relating to taxpayer assistance orders); and (2) section 6702(b)(3) provides a circumstance, i.e., allowing a taxpayer to withdraw his “specified frivolous submission,” which results in the se

See § 7122 (providing the IRS with discretionary authority 8 [*8] to compromise an outstanding tax liability). Although petitioner checked the box for “Offer in Compromise” on her Form 12153, she and the SOs confined their discussions to the terms of a direct-debit IA. Pe- titioner never submitted a Form 656, despite SO1’s request that she do so if sh

ing on June 21, 2018. The second proposed offer-in-compromise was withdrawn or terminated on February 20, 2019. The record does not contain any evidence that Mr. Gayou is currently paying his tax liabilities pursuant to a compromise agreement under section 7122. Shortly thereafter, Mr. Gayou entered into an installment agreement for his liabilities for the taxable years at issue. The installment agreement was entered on August 13, 2019, and was subsequently terminated on May 11, 2020. The record

mit IRS Form 8857, Request for Innocent Spouse Relief). Finally, the SO correctly determined that petitioner was ineligi- ble for a collection alternative. An RBA liability, based on court-ordered restitution, cannot be compromised by the IRS under section 7122. See § 6201(a)(4)(C); Carpenter, 152 T.C. at 213 (citing 18 U.S.C. § 3664(o)) (ruling that, once a restitution order has become a final judgment, it cannot be modified absent enumerated statutory exceptions). Although petitioner might hav

Lewis reserves all collection rights that she may qualify for now or in the future, including without limitation, the right to relief under IRC §6015 (innocent spouse), §6159 (installment agreement), §7122 (offer in compromise), §6343 (release of levy), §7811 (taxpayer assistance order), §6502 (statute of limitations on collection), §6325 (release of lien), collection due process, collection appeals program, currently non-collectible status, bankruptcy, and any other current or future law that m

utually agree that the matter so determined shall be final and conclusive subject, however, to reopening in the event of fraud, malfeasance, or misrepresentation of material fact, and the required application of statutory provisions expressly providing that effect be given thereto as stated therein notwithstanding any law or rule of law other than section 7122 of the Code .

§ 301.7122-1(d)(1) (“An offer to compromise a tax liability pursuant to section 7122 must be submitted according to the procedures, and in the form and manner, prescribed by the Secretary”), and never proposed terms for an IA in response to IRS Appeals’ proposed terms (which the Lipkas rejected).

That would prolong the case even further, defying logic and undermining Congress’ intent.5 For all these reasons, we hold that the OIC petitioner submitted in May 2018 was not “deemed accepted” under section 7122(f).

Rowen as owing a seriously delinquent tax debt within the meaning of section 7345(b), we conclude that the Commissioner is entitled to summary judgment.

Section 7122 The Code permits a taxpayer to make an OIC, and section 7122(a) gives the Commissioner very wide discretion to compromise tax liabilities. Sec. 7122(c)(1); sec. 301.7122-1(c)(1), Proced. & Admin. Regs. In an effort to “treat[] all 10 Driving home this point is IRS Appeals’s recent name change to “Independent Office of Appeals.” See Tax

Section 7122 The Code permits a taxpayer to make an OIC, and section 7122(a) gives the Commissioner very wide discretion to compromise tax liabilities. Sec. 7122(c)(1); sec. 301.7122-1(c)(1), Proced. & Admin. Regs. In an effort to “treat[] all 10 Driving home this point is IRS Appeals’s recent name change to “Independent Office of Appeals.” See Tax

2012): "If* * * [a] CDP officer or employee enters into an installment agreement under section 6159, a closing agreement under section 7121, or an OIC [offer-in-compromise] under section 7122 with the taxpayer, then ofcourse the agency will be bound under general contract principles to honor the agreement." But we concluded that determinations ofAppeals personnel not reflected in such an agreement are not final and binding on the IRS.

Regulations implementing section 7122 set forth three grounds for the compromise ofa liability: (1) doubt as to liability, (2) doubt as to collectibility, and (3) promotion ofeffective tax administration.

Regulations implementing - 10 - [*10] section 7122 set forth three grounds for the compromise ofa liability: (1) doubt as to liability, (2) doubt as to collectibility, and (3) promotion of effective tax administration.

Offer-in-Compromise The Secretary is authorized to compromise civil tax liabilities arising under the Code.¹7 Guidance for the acceptance ofsuch compromises under section 7122 is outlined in the regulations and includes three grounds for the compromise ofa liability: (1) doubt as to liability, (2) doubt as to collectibilty, and (3) to promote effective tax administration.¹ª ¹5Sec.

nternal Revenue Manual pt. 1.2.47.9 (Jan. 23, 1992). In short, the SO properly determined that petitioner had proffered no plausible evidence ofa settlement. - 11 - [*11] Once assessed, a disputed tax liability may be compromised by the IRS un- der section 7122. Petitionerwas free to propose an offer-in-compromise during the CDP proceeding by submitting Form 656, Offer in Compromise, together with supporting financial information. But he declined to request a collection alternative ofany sort, i

Offer-in-Compromise "The Secretary may compromise any civil or criminal case arising under the internal revenue laws prior to reference to the Department ofJustice".3 The regulations provide guidance for the acceptance ofsuch compromises under section 7122 and include three grounds for the compromise ofa liability: (1) doubt as to liability, (2) doubt as to collectibility, and (3) promotion ofeffective tax administration.4 When a taxpayer's liability exceeds assets and income, as is the case her

Regulations implementing section 7122 set forth three grounds for the compromise ofa liability: (1) doubt as to liability, (2) doubt as to collectibility, and (3) promotion ofeffective tax administration.

etitioner has not offered any authority for his proposition that Letter 4364C is a binding determination, nor could we find any such authority. Petitioner does not claim that Letter 4364C is a closing agreement under section 7121 or compromise under section 7122. And we know ofno other notice that would bind the IRS in the way petitioner claims. Even a notice ofdeficiency is not so binding; our Rules anticipate that the IRS may assert new matters, increases in deficiency, and affirmative defense

Section 7122 authorizes the compromise ofa taxpayer's Federal income tax liability, and regulations adopted under that section set forth three grounds for compromise: (1) doubt as to liability; (2) doubt as to collectibility; and (3) promotion ofeffective tax administration. Sec. 301.7122-1, - 19 - [*19] Proced. & Admin. Regs. With respect to the

an three years after Mr. 8The other two exceptions relate to situations in which either spouse has (1) commenced a refund suit for the taxable year, sec. 6013(b)(2)(C); or (2) has entered into a closing agreement under sec. 7121 or compromised under sec. 7122 a civil or criminal case, sec. 6013(b)(2)(D). Respondent does not contend that either ofthese exceptions applies in this case. - 8 - Camara "filed a separate return"9 and (2) Mr. Camara "received a notice of deficiency, and filed a petition

d an Offer in Compromise (OIC) on the form 12153 as a collection alternative: You submitted the completed form 656 with attachments to compro- mise the 1040 liabilities on 08/02/2013 and for the assessed fraud penalties on 08/27/2013 pursuant to IRC Section 7122. The offers, based upon doubt as to collectability, were submitted for the follow- mg assessments: (cid:16)042 For thejoint 1040 liabilities: The offer was ajoint offer in the amount of$370,570.75, an initial payment of $77,673.48 was ma

History ofSection 301.7122-1 Petitioner cites section 7122, arguing that "corporations are not excluded from submitting an offer-in-compromise to resolve an 'economic hardship' when that corporation cannot fully pay a tax liability." Although petitioner is correct that a corporation may submit an offer-in-compromise under section 7122, the regulations are clear that in this context, nonindivid

requirements must be met for reliefunder the mitigation provisions: (1) there must have been a "determination" as defined in section 1313(a); (2) that determination caused one ofthe errors described in section 1312; and (3) on the date ofthat determination, any adjustment to correct the error is - 9 - [*9] barred by operation oflaw (other than a section 7122 compromise or these mitigation provisions).

We hold that ASO Mobley did not abuse her discretion by adhering to national and local standards even ifit forces petitioner to alter his lifestyle.

requirements must be met for reliefunder the mitigation provisions: (1) there must have been a "determination" as defined in section 1313(a); (2) that determination caused one ofthe errors described in section 1312; and (3) on the date ofthat determination, any adjustment to correct the error is - 9 - [*9] barred by operation oflaw (other than a section 7122 compromise or these mitigation provisions).

We're certainly aware ofthe longstanding rule that the IRM doesn't have the force oflaw, but because section 7122 gives such wide discretion to the Commissioner to establish guidelines for evaluating OICs, we've generally upheld a settlement officer's determination - 9 - [*9] rejecting an OIC as reasonable when he follows the IRM.

Respondent further contends that Appeals did not abuse its discretion in rejecting petitioners' offers-in- compromise because petitioners failed to make the periodic payments as required under section 7122 while their offers were being considered.

Regs., provides that "[a]n offer to compromise a tax liability pursuant to section 7122 must be submitted according to the procedures, and in the form and manner, prescribed by the Secretary." Petitioner failed to remit either a partial payment ofhis proposed $5,000 compromise or the relevant application fee, and he also failed to submit supporting financial documents.

SO Owyang's erroneous assumptions lay at the heart ofhis ultimate determination to sustain the levy. Respondent also argues that SO Owyang did not abuse his discretion in sustaining the proposed levy because the estate failed to submit an OIC under section 7122. The record shows, however, that the estate had in fact, at SO Pobre's request, submitted an OIC as memorialized in Mr. Snyder's November 8, 2011, letter, and that this offer was rememorialized in Mr. Snyder's May 9, 2012, letter to SO Ow

Regulations adopted pursuant to section 7122 set forth three grounds for the - 21 - [*21] compromise ofa liability: (1) doubt as to liability; (2) doubt as to collectibility; or (3) promotion ofeffective tax administration.

Regulations adopted pursuant to section 7122 set forth guidelines for evaluating offers whichpromote ETA.

Regs., also provides that "[a]n offer to compromise a tax liability must be made in writing, must be signed by the taxpayerunder penalty ofperjury, and must contain all ofthe information prescribed or requested by the Secretary." Petitioners argue that they reached abinding settlement agreement with respondent in which resp

The regulations and procedures pursuantto section 7122 provide the exclusive method ofeffecting a binding nonjudicial compromise.

Regs., provides that an "offer to compromise a tax liability pursuant to section 7122 must be submitted according to the procedures, and in the form and manner, prescribed by the Secretary.

Section 7122 establishes the authority ofthe Secretaryto compromise tax liabilities. The IRS may compromise a taxpayer's liability on the grounds ofdoubt as to liability, doubt as to collectibility, or effective tax administration. Sec. 301.7122-1(b), Proced. & Admin. Regs. Whether an offer is accepted or rejected is left to the discretion ofthe IR

Regulations adopted pursuantto section 7122 set forth guidelines for evaluating offers to promote ETA.

Section 7122(a) provides that "[t]he Secretary may compromise any civil * * * case arising under the internal revenue laws".

Using this form and section 7122, petitioner sought to settle his civil penalty liability for the 1991 tax year with an offer-in-compromise.

We then turn to whetherthe Commissioner can exercise this compromise authority in the context ofa collection hearing. See sec. 6330. 1. Section 7122 We first look to the Commissioner's authority to compromise an unpaid tax liability. The Commissioner is required to collect all Federal income tax liabilities. Sec. 6301. The Commissioner h

Regs., provides that doubt as to collectibility is a ground for the compromise ofa liability.7 Section 301.7122-1(b)(2), Proced.

error would require an assessment of one such tax and the refund or credit ofthe other tax, and (3) Ifat any time the correction ofthe error is authorized as to one such tax but is prevented as to the other tax by any law or rule of law (other than section 7122, relating to compromises), then, ifthe correction authorized is made, the amount ofthe assessment, or the amount ofthe credit or refund, as the case may be, authorized as to the one tax shall be reduced by the amount ofthe credit or refu

Regs., provides that an "offer to compromise a tax liability pursuant to section 7122 must be submitted according to the procedures, and in the form and manner, prescribed by the Secretary.

Section 7122 establishes the authority ofthe Secretaryto compromise tax liabilities. The IRS may compromise a taxpayer's liability on the grounds ofdoubt as to liability, doubt as to collectibility, or effective tax administration. Sec. 301.7122-1(b), Proced. & Admin. Regs. Whether an offer is accepted or rejected is left to the discretion ofthe IR

The only mention ofsection 6654 was in respondent's brief--merely asserting that.petitioner "failed to offer any evidence ofreasonable cause for the abatement of* * * [section] 6654 penalties for the tax years 2006 and 2007." In these circumstances, we hold that respondent failed to provide petitioner with adequate notice ofthe section 6654 additions to tax.

The regulations under section 7122 provide that an OIC is appropriate where there is doubt as to collectibility.

Overview Section 7122 (a) authorizes the Commissioner to compromise a taxpayer's Federal tax liabilities.

Section 7122 (a) authorizes the Commissioner to conpromise any civil case arising . under the internal revenue laws In general, the decision to accept or reject an offer, .as well as the terms and conditions agreed to, are left to tl e discretion of the Commissioner. Sec. 301.7122-1(c) (1), Proced. & Admin. Regs. Even if petitioner' s statement on

graphs off section 1312 and, on the date of the deternination, correction of the effect of the error referråd to in the applicable paragraph of section 1312 is prevented by the operation of any law or rule of law, other than this part and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314.

-13- Taxpayers wao have enterede into final closing agreements under section 7121 of the Code or compromises under section 7122 with respect to employment status controversies are ineligible Eor relief under the Act, unless they have not completely paid their liability.

Specified submissions include requests for an administrative hearing under sections 6320 and 6330 and applications for an installment agreement under section 6159, an offer-in-compromise under section 7122, or a taxpayer assistance order under section 7811.

The regulatignt| s and procedures under section 7122 provide the exclusive method of effecting a binding nonjudicial compromise.

The regulations promulgated under section 7122 set forth three grounds for compromise of a taxpayer's liability.

wo years for possible increases. "See sec. 6159(d), ("In the case of an agreement entered into by the Secretary * * * for partial collection of a tax liability [i.e., a PPIA], the Secretary shall review ,the agreement at,least once every 2 years."); sec. 7122 (authorizing agreement between a taxpayer and the Government that fully settles a tax liability for payment of 'less than the full amount owed.) But see Internal Revenue Manual (IRM) pt. 5.8.6 (Sept. 1, 2005) (when accepting an OIC, the -Go

Petitioner contends that respondent abused his discretion by not treating the $60,000 payment either as an acceptance of, or as a deposit relating to, petitioner's OIC.2 Section 7122 provides the exclusive method of effectuating an OIC.

Section 7122(d) provides that the Secretary "shall prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in- - 7 - compromise is- adequate and should be accepted to resolve a dispute." Taxpayers- who wish to propose an OIC must submit a Form 656.

Regulations issued pursuant to section 7122(d) (1) set forth three grounds for an offer-in-compromise: (1) doubt as to collectibility, (2) doubt as to liability, and (3) promotion of effective tax administration.

The procedures for closing agreements and compromises are set forth in section 7121 (relating to closing agreements), section 7122 (relating to compromises) and the regulations thereunder.

The procedures for closing agreements and compromises are set forth in section 7121 (relating to closing agreements), section 7122 (relating to compromises) and the regulations thereunder.

Collection issues If the CDP officer or employee enters into an installmen t agreement under section 6159, a closing agreement under section - 46 - 7121, or an OIC under section 7122 with the taxpayer, then of course the agency will be bound under general contract principles to honor the]]agreement .56 However the agency is also bound t o i honor such agreements that it enters into outside of the CDP context, whether by the office of Appeals or by another branch of the IRS .

Petitioners do not argue, and the record does not establish, that the requirements of section 7121 or section 7122 were satisfied when the Service cashed the $2 ;166 check that it received from them in March 2009 .

determine whether an offer-in- compromise is adequate and should be accepted to resolve a dispute ." The regulations issued pursuant to section 7122(d) set' forth three grounds for an OIC : .

Section 7122(d) provides that the Secretary shall prescribe guidelines for evaluation of whether an OIC should be accepted.

74'/', 1043 a Regylations adopted pursuant to section 7122 set forth guidelines for evaluating offers-in-compromise to promote - 17- - effective tax administration (ETA offers) Under-section 301.7122-1(b) (3) (i) , Proced.

t Appeals abused its discretion . 2 . No Abuse of Discretion in Rejecting Petitioners' Doubt as to Collectibility Claim The guidelines for evaluating offers-in-compromise on the basis of doubt as to collectibility are set forth in regulations under section 7122 . See sec . 301 .7122-1(b)(2), (c)(2), Proced . & Admin. Regs . ; see also IRM pt . 5.8 .4 .4 (Sept . 1, 2005) . Under this guidance, the Commissioner may generally compromise a tax liability on the basis of doubt as to collectibility whe

We hold that the appeals officer did not abuse her discretion in rejecting as inadequate the Sullivans' OICs, including their $54,000 informal proposal .

- 2 5 - Section 7122( a) authorizes the Secretary to compromise any civil case arising under the internal revenue laws .

362, 364 (2006),-which amended section 7122 by adding a new subsection (c) requiring a 20-percent downpayment for a lump- sum OIC made on or after July, 16, 2006 .

(other than section 7122, relating to compromises) , then, if the correction authorized is made, the amount of the assessment, or the amount of the credit or refund, as the case may be, authorized as to the one tax shall be reduced by the amount of the credit or refund, or the amount of the assessment, as the case may be, which would be required with respect t

arbitrary on their face and do not follow the congressional mandate of.section 7122(cid:127) because counties'in the United States vary in size and population-and it would be more,equitable .for, the local standards to be issued on a .

2003-316 ("It is well settled that section 7122 and the regulations thereunder provide the exclusive method of effectuating a valid compromise of assessed tax liabilities .") ; Ringgold v .

Section 7122 gives the Commissioner a very wide discretion, providing that he "may" compromise tax liabilities and authorizing him to establish guidelines for the IRS to "determine whether an offer-in- compromise is adequate and should be accepted ." Sec . 7122(a),(d)(1) . Section 7122 was amended by the Tax Increase Prevention and Reconciliation A

The regulations and procedures under section 7122 provide the .exclusive method of effecting a binding nonjudicial compromise .

The, regulations and procedures under section 7122 provide the exclusive method of effecting a binding nonjudicial compromise .

Regulations promulgated under section 7122 set forth three grounds for compromise of a liability : (1) Doubt as to liability, (2) doubt as to collectibility, or (3) promotion of effective tax administration .

Petitioner, however, insists that it would be unfair to make her pay the amount due given her circumstances, and she argues that the ETA provision of section 7122 mandates that she not be required to pay the liability, the addition to tax, or any interest on her Federal income tax obligation .

{ Regulations adopted pursuant to section 7122 set;; forth three grounds for the compromise of a liability: (1) Doubt as to liability, (2) doubt-as to collectibility, or (3) promotion o f effective tax administration .

12 - Regulations implementing section 7122 set forth three grounds for the compromise of a tax liability : (1) Doubt as to liability, (2) doubt as to collectibility, and (3) to promote effective tax administration .

Section 7122 (a) permits the Secreta y to compromise any civil case arising under the internal re enue laws . Section 7122 ( c) requires the Secretary to prescribe guidelines for officers and employees of the IRS to det rmine whether an offer- in-compromise is adequate and should be accepted to resolve a dispute . Sec . 7122 (a),(c)(1) . Section 71

Regulations under section 7122 set forth three grounds for compromise of a taxpayer's liability .

746, 746 (payments made pursuant to the terms of offers-in-compromise that have been accepted by the Commissioner in accordance with section 7122, absent an agreement between the parties, will be applied to periods in the order of - 11 - priority that the Commissioner determines will serve the Commissioner’s best interests).

horizes the Secretary to prescribe guidelines for the officers and the employees of the Internal Revenue Service to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute . The regulations promulgated under section 7122 11 ( . . continued) years 2002 and 2003 . Assuming arguendo that petitioners were disputing the respective amounts of petitioners' unpaid 2002 liability and petitioners' unpaid 2003 liability and that they had challenged the respective am

Section 7122 authorizes the Secretary to compromise any civil case arising under the internal revenue laws and requires him to prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in- compromise is adequate and should be accepted to resolve a dispute . Sec . 7122(a), (d)(1) . A compromise bas

However, "An offer to compromise a tax liability pursuant to section 7122 must be - 5 - submitted according to the procedures, and in the form and manner, prescribed by [respondent] ." Sec .

Section 7122 ( c) and (d) provides as follows : SEC . 7122 (c) . Standards for Evaluation of Offers .-- (1) In general .--The Secretary shall prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in- compromise is adequate and should be accepted to resolve a dispute . - 16 - (2) Allowances fo

The section 7122 regulations set fo th grounds for the compromise of a taxpayer's liability, in luding doubt as to collectibility . Sec . 301 .7122-1(b), Pro ed. & Admin . Regs . Doubt as to collectibility exists in any case where the taxpayer's assets and income are less th n the full amount of the liability . Sec . 301 .7122-1(b)(2), Proce . & Admin

Under section 7122, the Secretary is authorized to compromise civil or criminal tax liabilities. An offer to 1The assessed tax liability includes any additions to tax. Sec. 6201(a); sec. 301.6201-1(a), Proced. & Admin. Regs. - 11 - compromise a tax liability must be submitted according to the procedures and in the form and manner described by the Commis

Section 7122 (c) authorizes the Commissioner to prescribe guidelines to determine when a taxpayer ' s offer-in- compromise should be accepted . The applicable regulations , 6ection' 301 .7122-1 (b), Proced. & Admin. Pegs ., list three grounds on which the . Commissioner may accept an offer-in -compromise of a Federal tax debt . These grounds are "D

Section 7122 provides respondent with the authority to grant an offer-in-compromise as an alternative to collection action.

Section 7122 (a) authorizes the Secretary to compromise any civil case arising under the internal revenue laws . The Secretary may compromise a liability on the ground of effective tax administration when, inter alia, although collection in full could be achieved, collection of the full liability will create economic hardship . Speltz v . Commissio

- 14 - The regulations under section 7122 set forth three grounds for the compromise of a tax liability: (1) Doubt as to liability; (2) doubt as to collectibility; or (3) promotion of effective tax administration.

- 17 - The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

adequate and should be accepted to resolve a dispute . Sec . 7122(a), (c)(1) . The contemplated guidelines and schedules pertaining to evaluating offers-in-compromise on the basis of collectibility have been published in the regulations interpreting section 7122 . See sec . 301 .7122-1(c)(2), Proced . & Admin . Regs . ; 1 Administration, Internal Revenue Manual (CCH), sec . 5 .8 .4 .4 at 16,306 . Under this administrative guidance, the Secretary will generally compromise a liability on the basis

The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

The regulations promulgated under section 7122 set forth three grounds for the compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, and (3) to promote effective tax administration.

issioner , supra at 125 ; Kaplan v . United States , 133 F .3d 469, 473 (7th Cir . 1998) . Second, petitioners argue that Cochran's rejection of their offer-in-compromise conflicts with the congressional committee reports underlying the enactment of section 7122 . According to petitioners, their case is a "longstanding" case, and those reports require that respondent resolve such cases by forgiving interest and penalties that otherwise apply . We disagree with petitioners' reading and applicatio

The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

The section 7122 regulations set forth three grounds for compromise of a taxpayer's liability . These grounds are doubt as - 15 - to liability, doubt as to collectibility, and the promotion of effective tax administration . Sec . 301 .7122-1(b), Proced . & Admin . Regs . Petitioner seeks a compromise based on doubt as to collectibility . The Secretary

missioner, supra at 125 ; Kaplanly . United States , 133 F .3d 469, 473 (7th Cir . 1998) . Second, petitioners argue that Cochran's rejection of thei r offer-in-compr mise conflicts with the congressional committee reports underling the enactment of section 7122 . According to petitioners , their case is a "longstanding" case, and those reports requir that respondent resolve such cases by forgiving interest and p nalties that otherwise apply . We disagree with petitioners' r ading and applicatio

Section 7122' authorizes respondent to grant an OIC as an alternative to pursuing a collection action, but petitioner must provide detailed financial statements and supporting documentation . Sec . 301.7122-1(d)(2), Proced . & Admin. Regs . Respondent, on numerous occasions, requested supporting documentation from petitioner . Petitioner, however,

Regulations promulgated under section 7122 set forth three grounds for compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, or (3) promotion of effective tax administration.

Section 7122 provides for administrative but not judicial review of a rejection of a proposed OIC .

Section 7121 (closing agreements) and section 7122 (compromises) authorize the Service to enter into agreements to resolve a taxpayer’s tax liability.

Section 7122 ( a) authorizes the Secretary to compromise any civil case arising under the internal revenue laws . The Commissioner will generally compromise a liability on the basis of doubt as to collectibility only if the liability exceeds the taxpayer ' s reasonable collection potential . Lemann v . Commissioner, T.C . Memo . 2006-37 . A taxpaye

missioner , supra at 125; Kaplan v . United States , 133 F .3d 469, 473 (7th Cir . 1998) . Second, petitioners argue that Cochran's rejection of their offer-in-compromise conflicts with the congressional committee reports underlying the enactment of section 7122 . According to petitioners, their case is a "longstanding" case, and those reports require that respondent resolve such cases by forgiving interest and penalties that otherwise apply . We disagree with petitioners' reading and applicatio

However, regulations promulgated under section 7122 provide that "No offer to compromise may be rejected solely on the basis of the amount of the offer without evaluating that offer under the provisions" of the regulations "and the Secretary's policies and procedures regarding the compromise of cases ." Sec.

. Commissioner , supra . Petitioners make seven arguments in advocating a contrary result . First, petitioners argue that Cochran's rejection of their offer-in-compromise conflicts with the congressional committee reports underlying the enactment of section 7122 . According to petitioners, their case is a "longstanding" case, and those reports require that respondent resolve such cases b y forgiving interest and penalties that otherwise apply . disagree with petitioners' reading and application

respondent's settlement officer had issued an Appeals Case Memorandum which explained in detail respondent's reasons for rejecting petitioner's OIC, as follows: SUMMARY AND RECOMMENDATION The taxpayer is seeking to compromise, under the authority of Section 7122 of the Internal Revenue Code, and as amended by the Restructuring and Reform Act of 1998 to include provisions under Effective Tax Administration (ETA), the unpaid taxes plus all statutory additions, relating to the Individual Income Tax

The regulations under section 7122 set forth three grounds for the compromise of a tax liability : (1) Doubt as to liability; (2) doubt as to collectibility; or (3) promotion of effective tax administration (ETA) .

The regulations under section 7122 provide that “If the Secretary determines that there are grounds for compromise under this section, the Secretary may, at the Secretary’s discretion, compromise any civil * * * liability arising under the internal revenue laws”.

mmissioner, supra at 125 ; Kaplan v. United States , 133 F .3d 469, 473 (7th Cir . 1998) . Second, petitioners argue that Cochran's rejectioi of their offer-in-compromise conflicts with the congressional committee reports underlying the enactment of section 7122 . According to petitioners, their case is a "longstanding" case, and those reports require that respondent resolve such cases by forgiving interest and penalties that otherwise apply . We disagree with petitioners' reading and applicatio

- 17 - Section 7122 authorizes the Secretary to compromise any civil case arising under the internal revenue laws and requires him to prescribe guidelines for officers and employees of the Internal Revenue Service to determine whether an offer-in- compromise is adequate and should be accepted to resolve a dispute. Sec. 7122(a), (c)(1). These guidelines mu

Section 7121 (closing agreements) and section 7122 (compromises) authorize the Service to enter into agreements to resolve a taxpayer’s tax liability.

Regulations implementing section 7122 set forth three grounds for the compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, and (3) to promote effective tax administration (effective tax administration).

The compromise authority under Section 7122 is not so broad as to allow the Service to disregard or override the judgments of Congress.

Section 7122 provides respondent with the authority to grant an offer in compromise as an alternative to collection action. Respondent grants an offer in compromise when there is a doubt as to the actual tax liability, doubt as to collectibility, or for other purposes relating to effective tax administration. Sec. 301.7122-1, Proced. & Admin. Regs.

nd transcript show Notice and Demand were properly made. At the hearing you were given the opportunity to dis- cuss or submit alternatives to the collection actions such as an Installment Agreement under IRC §6159 or an Offer In Compromise under IRC §7122. Instead, you chose to spend your time at the hearing bringing up frivolous issues. You made the statement that, “...this can not be frivo- lous... .” This mere assertion is not supported by the facts or by law. The courts have consistently rul

Regulations promulgated under section 7122 set forth three grounds for compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, or (3) promotion of effective tax administration.

The instant case is distinguishable because it involves an offer in compromise under section 7122 - 11 - that was submitted and accepted after the effective date of section 6015.

In this regard, we note that respondent is not authorized to compromise a liability except as provided in section 7122 regarding offers in compromise.

The regulations and procedures under section 7122 provide the exclusive method of effectuating a nonjudicial compromise.3 Laurins v.

Congress has provided that closing agreements under section 7121 and compromise agreements under section 7122 are the exclusive administrative means for the IRS to settle civil tax disputes with finality.

predicament has resulted from the activities in which she engaged with her former husband, Trupin, exacerbated by her activities with her husband, D’Aunay. (It may occur to the reader that petitioner could or should make an offer in compromise under section 7122. Her refusal to provide financial information to the IRS, however, also precludes that avenue of relief.) To take account of respondent’s concessions of the extent to which petitioner may be relieved from liability under section 6015(c),

4 (July 21, 1999);4 see sec. 7122(c)(1). Doubt as to liability is not at issue in the instant case. The Secretary may compromise a liability on the ground of doubt as to collectibility when “the taxpayer’s assets and income 4 Final regulations under sec. 7122 were promulgated effective for offers-in-compromise pending on or submitted on or after July 18, 2002. Sec. 301.7122-1(k), Proced. & Admin. Regs. - 21 - are less than the full amount of the assessed liability.” Sec. 301.7122-1T(b)(3)(i), Te

7122(c)(1).7 We hold that the Appeals officer’s disallowance of tithing expenses in evaluating petitioners’ ability to pay their taxes did not violate Mr.

2003-316 (“It is well settled that section 7122 and the regulations thereunder provide the exclusive method of effectuating a valid compromise of assessed tax liabilities.”); Ringgold v.

Regulations promulgated under section 7122 set forth three grounds for compromise of a liability: (1) Doubt as to liability, (2) doubt as to collectibility, or (3) promotion of effective tax administration.

IRC §7122 authorizes the Secretary of the Treasury to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. IRM [Internal Revenue Manual] 5.8.3.3(4) (rev. 2-4- 2000) states that an Offer cannot be processed if the taxpayer has not filed all tax returns. I researched your account and did not find

Section 7122 governs offers in compromise. Section 7122(a) authorizes the Commissioner to compromise a taxpayer’s outstanding liabilities. Taxpayers generally submit an offer in compromise according to procedures, and in the form and manner, prescribed by the Commissioner. Sec. 301.7122-lT(c)(l), Temporary Proced. & Admin. Regs., 64 Fed. Reg. 39025

the event of fraud, malfeasance, or misrepresentation of material fact; (2) it is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions notwithstanding any other law or rule of law except Code section 7122; and (3) if it relates to a tax period ending after the date of this agreement, it is subject to any law, enacted after the agreement date, that applies to that tax period.

7122 applies to cases involving compromises.

Congress has provided that closing agreements under section 7121 and compromise agreements under section 7122 are the exclusive means by which the IRS can administratively settle civil tax disputes with finality.

ts can be reached to satisfy the 1995-1999 tax liability”, “it was an abuse of discretion to ignore her over-all financial situation and reject her offer-in-compromise which acknowledged an indebtedness, but sought recognition that to deplete her trust would not be in the public interest.” Conversely, respondent asserts that standards reflected in section 7122 and regulations promulgated thereunder regarding evaluation of offers in compromise support respondent’s rejection of petitioner’s offer.

The regulations and procedures under section 7122 provide the exclusive method of effectuating a compromise.

Relying on respondent’s temporary regulations under section 7122, petitioner asserts that respondent’s Appeals officer, prior to rejecting petitioner’s offer in compromise, failed to have her proposed rejection of the offer in compromise reviewed by an “independent reviewer”.

Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3462(a), 112 Stat. 764, which added section 7122(c) to the Code, resulted in the issuance of new regulations substantially changing offer-in- compromise procedures found in section 7122. The traditional grounds for compromise had been doubt as to liability and doubt as to collectibility. Sec. 301.7122-1(b)(1) and (2), Proced. & Admin. Regs. Offers in compromise can now be considered for the “promotion of effective tax a

Offer in Compromise Section 7122 provides authority for an offer in compromise as an alternative to collection action.

) - 2 - for 1993, 1994, and 1995. Petitioners timely filed a petition seeking review of respondent’s determination not to abate interest. Initially, we must decide whether petitioners reached an enforceable compromise of their tax liabilities under section 7122. We hold that petitioners did not reach an enforceable compromise under section 7122. The remaining issue for decision is whether respondent’s denial of interest abatement with respect to petitioners’ income taxes for 1993, 1994, and 1995

he beginning of such second (or succeeding) taxable year”); sec. 7448(j)(3) (“Any accrued annuity remaining unpaid”). Sec. 6512(b) limits the amount of a refund in a deficiency proceeding. Sec. 7121 applies to cases involving closing agreements, and sec. 7122 applies to cases involving compromises. Sec. 301.6402-2(b)(l), Proced. & Admin. Regs., provides: No refund or credit will be allowed after the expiration of the statutory period of limitation applicable to the filing of a claim therefor exc

the event of fraud, malfeasance, or misrepresentation of material fact; (2) it is subject to the Internal Revenue Code sections that expressly provide that effect be given to their provisions notwithstanding any other law or rule of law except Code section 7122; and (3) if it relates to a tax period ending after the date of this agreement, it is subject to any law, enacted after the agreement date, that applies to that tax period.

Congress has provided that closing agreements under section 7121 and compromise agreements under section 7122 are the exclusive means for the IRS to settle civil tax disputes with finality.

sue before the Court at this time is whether petitioner is foreclosed from litigating the items contained in the notice of deficiency regarding Resource Reclamation Associates (RRA) by a closing agreement that he and respondent executed pursuant to section 7122. Petitioner resided in New York, New York, at the time the petition was filed. Background The relevant facts may be summarized as follows. On his 1981 Federal income tax return petitioner claimed, inter alia, ordinary losses from his limi

7122, I.R.C.; Botany Worsted Mills v. United States, 278 U.S. 282, 288-289 (1929); sec. 301.7122-1(d), Proced. & Admin. Regs. Truman Clare, for petitioner. William I. Miller, for respondent. MEMORANDUM OPINION NIMS, Judge: Respondent determined that petitioner qualified for exemption from Federal income tax under section 501(a) as an organizat

Contrary to the terms of the offer in compromise, respondent sent a notice of intent to levy to petitioners in 1997 demanding payment of approximately $11,000 in tax liability for the 1991 taxable year. After respondent refused petitioners’ initial requests to withdraw the notice of intent to levy, petitioners retained counsel to assist

Regulations under section 7122 clarify the procedure required with respect to an offer in compromise and how an offer may be accepted.

d require an assessment of one such tax and the refund or credit of the other tax, and - 23 - (3) If at any time the correction of the error is authorized as to one such tax but is prevented as to the other tax by any law or rule of law (other than section 7122, relating to compromises), then, if the correction authorized is made, the amount of the assessment, or the amount of the credit or refund, as the case may be, authorized as to the one tax shall be reduced by the amount of the credit or r

Q of ch.1] and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314.

Q of ch.1] and other than section 7122 (relating to compromises), then the effect of the error shall be corrected by an adjustment made in the amount and in the manner specified in section 1314.