26 U.S.C. § 7122 : US Code - Section 7122: Compromises

Search 26 U.S.C. § 7122 : US Code - Section 7122: Compromises

    (a) Authorization
      The Secretary may compromise any civil or criminal case arising
    under the internal revenue laws prior to reference to the
    Department of Justice for prosecution or defense; and the Attorney
    General or his delegate may compromise any such case after
    reference to the Department of Justice for prosecution or defense.
    (b) Record
      Whenever a compromise is made by the Secretary in any case, there
    shall be placed on file in the office of the Secretary the opinion
    of the General Counsel for the Department of the Treasury or his
    delegate, with his reasons therefor, with a statement of - 
        (1) The amount of tax assessed,
        (2) The amount of interest, additional amount, addition to the
      tax, or assessable penalty, imposed by law on the person against
      whom the tax is assessed, and
        (3) The amount actually paid in accordance with the terms of
      the compromise.

    Notwithstanding the foregoing provisions of this subsection, no
    such opinion shall be required with respect to the compromise of
    any civil case in which the unpaid amount of tax assessed
    (including any interest, additional amount, addition to the tax, or
    assessable penalty) is less than $50,000. However, such compromise
    shall be subject to continuing quality review by the Secretary.
    (c) Rules for submission of offers-in-compromise
      (1) Partial payment required with submission
        (A) Lump-sum offers
          (i) In general
            The submission of any lump-sum offer-in-compromise shall be
          accompanied by the payment of 20 percent of the amount of
          such offer.
          (ii) Lump-sum offer-in-compromise
            For purposes of this section, the term "lump-sum offer-in-
          compromise" means any offer of payments made in 5 or fewer
          installments.
        (B) Periodic payment offers
          (i) In general
            The submission of any periodic payment offer-in-compromise
          shall be accompanied by the payment of the amount of the
          first proposed installment.
          (ii) Failure to make installment during pendency of offer
            Any failure to make an installment (other than the first
          installment) due under such offer-in-compromise during the
          period such offer is being evaluated by the Secretary may be
          treated by the Secretary as a withdrawal of such offer-in-
          compromise.
      (2) Rules of application
        (A) Use of payment
          The application of any payment made under this subsection to
        the assessed tax or other amounts imposed under this title with
        respect to such tax may be specified by the taxpayer.
        (B) Application of user fee
          In the case of any assessed tax or other amounts imposed
        under this title with respect to such tax which is the subject
        of an offer-in-compromise to which this subsection applies,
        such tax or other amounts shall be reduced by any user fee
        imposed under this title with respect to such offer-in-
        compromise.
        (C) Waiver authority
          The Secretary may issue regulations waiving any payment
        required under paragraph (1) in a manner consistent with the
        practices established in accordance with the requirements under
        subsection (d)(3).
    (d) 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.
      (2) Allowances for basic living expenses
        (A) In general
          In prescribing guidelines under paragraph (1), the Secretary
        shall develop and publish schedules of national and local
        allowances designed to provide that taxpayers entering into a
        compromise have an adequate means to provide for basic living
        expenses.
        (B) Use of schedules
          The guidelines shall provide that officers and employees of
        the Internal Revenue Service shall determine, on the basis of
        the facts and circumstances of each taxpayer, whether the use
        of the schedules published under subparagraph (A) is
        appropriate and shall not use the schedules to the extent such
        use would result in the taxpayer not having adequate means to
        provide for basic living expenses.
      (3) Special rules relating to treatment of offers
        The guidelines under paragraph (1) shall provide that - 
          (A) an officer or employee of the Internal Revenue Service
        shall not reject an offer-in-compromise from a low-income
        taxpayer solely on the basis of the amount of the offer,
          (B) in the case of an offer-in-compromise which relates only
        to issues of liability of the taxpayer - 
            (i) such offer shall not be rejected solely because the
          Secretary is unable to locate the taxpayer's return or return
          information for verification of such liability; and
            (ii) the taxpayer shall not be required to provide a
          financial statement, and

          (C) any offer-in-compromise which does not meet the
        requirements of subparagraph (A)(i) or (B)(i), as the case may
        be, of subsection (c)(1) may be returned to the taxpayer as
        unprocessable.
    (e) Administrative review
      The Secretary shall establish procedures - 
        (1) for an independent administrative review of any rejection
      of a proposed offer-in-compromise or installment agreement made
      by a taxpayer under this section or section 6159 before such
      rejection is communicated to the taxpayer; and
        (2) which allow a taxpayer to appeal any rejection of such
      offer or agreement to the Internal Revenue Service Office of
      Appeals.
    (f) (!1) Deemed acceptance of offer not rejected within certain
      period

      Any offer-in-compromise submitted under this section shall be
    deemed to be accepted by the Secretary if such offer is not
    rejected by the Secretary before the date which is 24 months after
    the date of the submission of such offer. For purposes of the
    preceding sentence, any period during which any tax liability which
    is the subject of such offer-in-compromise is in dispute in any
    judicial proceeding shall not be taken into account in determining
    the expiration of the 24-month period.
    (f) (!1) Frivolous submissions, etc.
      Notwithstanding any other provision of this section, if the
    Secretary determines that any portion of an application for an
    offer-in-compromise or installment agreement submitted under this
    section or section 6159 meets the requirement of clause (i) or (ii)
    of section 6702(b)(2)(A), then the Secretary may treat such portion
    as if it were never submitted and such portion shall not be subject
    to any further administrative or judicial review.