U.S. Tax Court Denies Taxpayer’s Attempt for Rereview of Previously Denied Offer in Compromise – Los Angeles Income Tax Planning and Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on November 22, 2013

The Internal Revenue Service (IRS) offers several ways, like the Offer-in-Compromise, for a taxpayer to pay his or her taxes when the taxpayer is unable to pay the tax in full. With an offer-in-compromise, a taxpayer offers to settle his or her taxes by paying less than the full amount owed. An offer-in-compromise is requested by filing Forms 656 and 433-A or 433-B with a $150 application fee with the IRS. If an offer-in-compromise is denied, the IRS will give a list of the reasons why in the rejection letter. A taxpayer who wants to appeal the denial, has 30 days from the date of the rejection letter. However, the IRS does not have to consider your appeal, and if your appeal is not considered or is also denied, a taxpayer has no further appeal. In a recent Tax Court case, however, a taxpayer tried to get the Tax Court to create an appeal of a denied offer-in-compromise.

Mr. Reed did not file his tax returns for the years 1987 through 2001. When he finally filed, he could not pay the tax due. In 2004, Mr. Reed sent an offer-in-compromise to the IRS, which it denied. In 2008, he submitted another offer-in-compromise. This one was returned because it could not be processed. Thereafter, the IRS issued a notice of intent to levy. As his right, Mr. Reed then asked for a collection due process hearing.

At the hearing, Mr. Reed asked the settlement officer to reconsider his 2008 offer-in-compromise. Determining he did not have the authority to do so, the settlement officer denied Mr. Reed’s request. The levy was upheld and Mr. Reed filed a petition with the U.S. Tax Court.

The Tax Court upheld the settlement officer’s denial to reopen the 2008 offer-in-compromise, holding that since the financial data accompanying the 2008 offer-in-compromise was more than six months old (IRC Section 7122(d)(1)), the offer-in-compromise could not be reopened. Further, if it was reopened this would “improperly expand administrative and judicial review, since Proc. & Admin. Reg. § 7122(f)(5)(ii) explicitly provides that there is no review available when an offer in compromise is returned.” Reed v. Commissioner, 2013 U.S. Tax Ct. LEXIS 27, slip op. at *14-*15.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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