US (United States) Code. Title 26. Subtitle F: Procedure and Administration. Chapter 74: Closing agreements

Codificación normativa de EEUU (Estados Unidos) Legislación Federal estadounidense # Internal revenue code. Compromises

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26 USC CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle F - Procedure and Administration

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

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Sec.

7121. Closing agreements.

7122. Compromises.

7123. Appeals dispute resolution procedures.

7124. Cross references.

AMENDMENTS

1998 - Pub. L. 105-206, title III, Sec. 3465(a)(2), July 22,

1998, 112 Stat. 768, added items 7123 and 7124 and struck out

former item 7123 "Cross references".

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 514, 7801, 7851 of this

title.

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26 USC Sec. 7121 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle F - Procedure and Administration

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-

Sec. 7121. Closing agreements

-STATUTE-

(a) Authorization

The Secretary is authorized to enter into an agreement in writing

with any person relating to the liability of such person (or of the

person or estate for whom he acts) in respect of any internal

revenue tax for any taxable period.

(b) Finality

If such agreement is approved by the Secretary (within such time

as may be stated in such agreement, or later agreed to) such

agreement shall be final and conclusive, and, except upon a showing

of fraud or malfeasance, or misrepresentation of a material fact -

(1) the case shall not be reopened as to the matters agreed

upon or the agreement modified by any officer, employee, or agent

of the United States, and

(2) in any suit, action, or proceeding, such agreement, or any

determination, assessment, collection, payment, abatement,

refund, or credit made in accordance therewith, shall not be

annulled, modified, set aside, or disregarded.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 849; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

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AMENDMENTS

1976 - Subsecs. (a), (b). Pub. L. 94-455 struck out "or his

delegate" after "Secretary".

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 547, 860, 1313, 6013,

6015, 6103, 7123, 7206 of this title.

-End-

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26 USC Sec. 7122 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle F - Procedure and Administration

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-

Sec. 7122. Compromises

-STATUTE-

(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.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 849; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 104-168,

title V, Sec. 503(a), July 30, 1996, 110 Stat. 1461; Pub. L.

105-206, title III, Sec. 3462(a), (c)(1), July 22, 1998, 112 Stat.

764, 766.)

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AMENDMENTS

1998 - Subsec. (c). Pub. L. 105-206, Sec. 3462(a), added subsec.

(c).

Subsec. (d). Pub. L. 105-206, Sec. 3462(c)(1), added subsec. (d).

1996 - Subsec. (b). Pub. L. 104-168 substituted "$50,000.

However, such compromise shall be subject to continuing quality

review by the Secretary." for "$500."

1976 - Subsecs. (a), (b). Pub. L. 94-455 struck out "or his

delegate" after "Secretary".

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-206 applicable to proposed

offers-in-compromise and installment agreements submitted after

July 22, 1998, see section 3462(e)(1) of Pub. L. 105-206, set out

as a note under section 6331 of this title.

EFFECTIVE DATE OF 1996 AMENDMENT

Section 503(b) of Pub. L. 104-168 provided that: "The amendment

made by this section [amending this section] shall take effect on

the date of the enactment of this Act [July 30, 1996]."

PREPARATION OF STATEMENT RELATING TO OFFERS-IN-COMPROMISE

Pub. L. 105-206, title III, Sec. 3462(d), July 22, 1998, 112

Stat. 766, provided that: "The Secretary of the Treasury shall

prepare a statement which sets forth in simple, nontechnical terms

the rights of a taxpayer and the obligations of the Internal

Revenue Service relating to offers-in-compromise. Such statement

shall -

"(1) advise taxpayers who have entered into a compromise of the

advantages of promptly notifying the Internal Revenue Service of

any change of address or marital status;

"(2) provide notice to taxpayers that in the case of a

compromise terminated due to the actions of one spouse or former

spouse, the Internal Revenue Service will, upon application,

reinstate such compromise with the spouse or former spouse who

remains in compliance with such compromise; and

"(3) provide notice to the taxpayer that the taxpayer may

appeal the rejection of an offer-in-compromise to the Internal

Revenue Service Office of Appeals."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 63, 473, 1311, 6013,

6015, 6103, 6159, 6325, 6331, 6511, 6521, 7123, 7206, 7809 of this

title.

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26 USC Sec. 7123 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle F - Procedure and Administration

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-

Sec. 7123. Appeals dispute resolution procedures

-STATUTE-

(a) Early referral to appeals procedures

The Secretary shall prescribe procedures by which any taxpayer

may request early referral of 1 or more unresolved issues from the

examination or collection division to the Internal Revenue Service

Office of Appeals.

(b) Alternative dispute resolution procedures

(1) Mediation

The Secretary shall prescribe procedures under which a taxpayer

or the Internal Revenue Service Office of Appeals may request

non-binding mediation on any issue unresolved at the conclusion

of -

(A) appeals procedures; or

(B) unsuccessful attempts to enter into a closing agreement

under section 7121 or a compromise under section 7122.

(2) Arbitration

The Secretary shall establish a pilot program under which a

taxpayer and the Internal Revenue Service Office of Appeals may

jointly request binding arbitration on any issue unresolved at

the conclusion of -

(A) appeals procedures; or

(B) unsuccessful attempts to enter into a closing agreement

under section 7121 or a compromise under section 7122.

-SOURCE-

(Added Pub. L. 105-206, title III, Sec. 3465(a)(1), July 22, 1998,

112 Stat. 768.)

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PRIOR PROVISIONS

A prior section 7123 was renumbered section 7124 of this title.

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26 USC Sec. 7124 01/06/03

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TITLE 26 - INTERNAL REVENUE CODE

Subtitle F - Procedure and Administration

CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-

Sec. 7124. Cross references

-STATUTE-

For criminal penalties for concealment of property, false

statement, or falsifying and destroying records, in connection

with any closing agreement, compromise, or offer of compromise,

see section 7206.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 850, Sec. 7123; Pub. L. 97-258,

Sec. 3(f)(12), Sept. 13, 1982, 96 Stat. 1065; renumbered Sec. 7124,

Pub. L. 105-206, title III, Sec. 3465(a)(1), July 22, 1998, 112

Stat. 767.)

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AMENDMENTS

1998 - Pub. L. 105-206 renumbered section 7123 of this title as

this section.

1982 - Subsec. (a). Pub. L. 97-258, Sec. 3(f)(12)(A), struck out

heading "Criminal penalties".

Subsec. (b). Pub. L. 97-258, Sec. 3(f)(12)(B), struck out subsec.

(b) which set forth cross reference to R.S. 3469 (31 U.S.C. 194)

relating to compromises after judgment.

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