-CITE-
    26 USC CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES      01/19/04

-EXPCITE-
    TITLE 26 - INTERNAL REVENUE CODE
    Subtitle F - Procedure and Administration
    CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES

-HEAD-
              CHAPTER 74 - CLOSING AGREEMENTS AND COMPROMISES          

-MISC1-
    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.

-End-



-CITE-
    26 USC Sec. 7121                                            01/19/04

-EXPCITE-
    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.)


-MISC1-
                                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-



-CITE-
    26 USC Sec. 7122                                            01/19/04

-EXPCITE-
    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.)


-MISC1-
                                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.

-End-



-CITE-
    26 USC Sec. 7123                                            01/19/04

-EXPCITE-
    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.)


-MISC1-
                             PRIOR PROVISIONS                         
      A prior section 7123 was renumbered section 7124 of this title.

-End-



-CITE-
    26 USC Sec. 7124                                            01/19/04

-EXPCITE-
    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.)


-MISC1-
                                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.

-End-