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) 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; and
(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.
(d) 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.