Section 1 · IRC §7122 — authority since 1864
The oldest tax settlement provision in the Code.
The statutory authority for the Offer in Compromise predates the modern Internal Revenue Code. The original compromise authority was enacted in the Internal Revenue Act of 1864, granting the Commissioner authority to compromise tax cases. The current provision, IRC §7122, was substantially revised by the IRS Restructuring and Reform Act of 1998 (Pub. L. 105-206) to expand taxpayer-favorable provisions and add the Effective Tax Administration ground.
IRC §7122(a) provides the core authority: "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." The provision authorizes settlement of both civil tax liabilities and criminal tax cases (with DOJ involvement post-referral).
IRC §7122(c) sets procedural requirements including independent administrative review of offers above $50,000 (per IRM 5.8.7) and collection of fees (currently $205). IRC §7122(d)(1) requires the Secretary to prescribe guidelines for determining whether an offer is adequate. IRC §7122(d)(3)(A) prohibits rejection of an offer solely on the basis of the amount — meaning the IRS must evaluate DATCSC and ETA grounds even for offers well below RCP.
RRA 1998 Amendments — Expanded Taxpayer Protections
- §3462 (Pub. L. 105-206) — Enacted the modern §7122 framework with expanded compromise authority
- §3201 (Pub. L. 105-206) — Enacted the Effective Tax Administration ground, adding ETA-EH and ETA-PPE as compromise bases
- §7122(e) — Required independent administrative review for OICs above the threshold amount
- §7122(f) — The 24-month deemed acceptance rule, added to incentivize timely IRS decision-making
Section 2 · The implementing regulation
Three substantive grounds for compromise.
26 CFR §301.7122-1 is the principal implementing regulation. The regulation establishes three substantive grounds on which an OIC may be accepted, each with distinct procedural requirements and evidentiary frameworks:
§301.7122-1(b)(1) — Doubt as to Liability
Genuine dispute about the existence or amount of the correct tax liability. Separate from the taxpayer's ability to pay — DATL is a substantive challenge to the underlying assessment.
§301.7122-1(b)(2) — Doubt as to Collectibility
Doubt that the assessed liability can be collected in full. Evaluation requires Reasonable Collection Potential analysis. The most common ground — approximately 95% of accepted offers. Per §301.7122-1(b)(2)(ii), the IRS may accept an offer below RCP where the taxpayer demonstrates special circumstances (DATCSC).
§301.7122-1(b)(3) — Effective Tax Administration
Available only where DATC and DATL are not applicable — meaning RCP exceeds the liability and the liability is not in genuine dispute. ETA has two sub-grounds: (i) economic hardship (individuals only) and (ii) public policy / equity.
§301.7122-1(b)(3)(iii) — Voluntary Compliance Prerequisite
Mandatory rejection ground: the IRS must not compromise where acceptance would undermine voluntary compliance with the tax laws by other taxpayers. Applies to all ETA submissions and to DATCSC submissions per case law. The Murphy analysis applies this prerequisite.
Section 3 · IRM 5.8.5 — the RCP calculation
The single most consequential calculation in OIC practice.
Reasonable Collection Potential (RCP) is the IRS's calculation of the maximum amount it could realistically collect from the taxpayer over the remaining §6502 collection statute. The RCP methodology is set out in IRM 5.8.5 and IRM 5.8.4. RCP is the controlling number for DATC analysis — offers at or above RCP are mandatorily accepted; offers below RCP are rejected unless DATCSC or ETA applies.
IRM 5.8.5 — RCP Formula
RCP = NRE + FIC
NRE — Net Realizable Equity
Sum of QSV across all assets minus encumbrances minus exemptions
FIC — Future Income Component
Monthly disposable income × 12 (lump-sum) or × 24 (periodic)
Asset Categories Evaluated for NRE per IRM 5.8.5
Cash and bank accounts
Current balance minus 1 month allowable living expenses (IRM 5.8.5.5.1)
Investments
Current market value × 80% QSV
Retirement accounts
Balance minus 30–40% early-withdrawal discount × 80% QSV; special rules for §401(k), §403(b), IRA
Vehicles
KBB/NADA × 80% QSV; minus loan balance; minus IRS allowance ($3,450 first vehicle)
Real estate
Appraisal × 80% QSV; minus mortgage and prior liens; minus reasonable selling expenses
Business assets
FMV × 80% QSV; going-concern value per IRM 5.8.5.18 for going concerns
Life insurance
Cash surrender value only — not face value
Accounts receivable
Collectibility analysis; aged receivables may have minimal value
Other property interests
Partnership interests, trust interests, intellectual property
Section 4 · QSV — why 80% matters
Forced-sale value, not retail value.
The Quick Sale Value (QSV) discount under IRM 5.8.5 represents the IRS's recognition that forced-sale value is lower than retail fair market value. The 80% QSV multiplier applies to most asset categories — meaning a $100,000 asset is treated as $80,000 for RCP purposes before encumbrance and exemption deductions. The 80% figure is administrative — not statutory — but is consistently applied across the OIC program.
Practitioner Application — QSV Checklist
- ·Apply 80% QSV consistently across all assets
- ·Identify and document encumbrances with priority — these reduce NRE further
- ·Apply IRS-allowed deductions specifically (vehicle allowance $3,450, etc.)
- ·For retirement accounts, calculate appropriate early-withdrawal discount (typically 30–40%)
- ·For real estate, calculate reasonable selling expenses (typically 6–10% of FMV)
- ·Use current valuations — recent appraisals, current KBB, recent statement balances
Strategic note: QSV is a procedural protection for taxpayers. Practitioners should not understate assets, but should ensure all legitimate discounts and deductions are applied. The Offer Examiner will verify asset values through public records, recent statements, and third-party documentation — undervaluation produces credibility damage that affects the entire offer review.
Section 5 · 12 months vs 24 months
The structural decision that drives RCP.
The choice between lump-sum OIC (12-month multiplier) and periodic-payment OIC (24-month multiplier) is a foundational structural decision that substantially affects RCP.
| Structure | Multiplier | Effect on RCP |
|---|---|---|
| Lump-sum OIC (payment within 5 months) | 12 months | Lower RCP — generally preferred |
| Periodic-payment OIC (payment over 6–24 months) | 24 months | Higher RCP — when lump-sum not feasible |
Example — $500/month disposable income
Lump-sum FIC
$500 × 12 = $6,000
Periodic-payment FIC
$500 × 24 = $12,000
Difference: $6,000 — the periodic offer must be at least $6,000 higher than the lump-sum offer.
Critical procedural note: periodic-payment offers require continuing monthly payments during the IRS review period (which typically lasts 6–12 months). These review-period payments apply against the offer amount if accepted. Failure to make review-period payments triggers default and offer return. Lump-sum offers do not require review-period payments beyond the initial 20%.
Section 6 · Allowable expenses methodology
National Standards. Local Standards. Necessary Other Expenses.
The Collection Financial Standards (CFS) are the IRS's published allowances for taxpayer living expenses in RCP analysis. The CFS are published annually at IRS.gov. Three categories:
National Standards — Uniform Across the U.S.
- Food, Clothing, and Other Items — single-figure monthly allowance by family size (based on BLS Consumer Expenditure Survey)
- Out-of-Pocket Health Care — separate allowance by age (under 65 vs. 65+); in addition to actual insurance premiums
Local Standards — Vary by County / Metropolitan Area
- Housing and Utilities — by county; includes rent or mortgage interest, property taxes, insurance, utilities, telephone, internet
- Transportation — two components: (a) Ownership Costs by region (loan or lease payment on one or two vehicles); (b) Operating Costs by metropolitan area (gas, insurance, registration, maintenance, parking)
Necessary Other Expenses — IRM 5.15.1
· Federal, state, and local taxes (income, FICA, estimated)
· Court-ordered payments (alimony, child support)
· Child and dependent care
· Health insurance premiums (actual)
· Term life insurance (limited to current need)
· Secured debt minimum payments
· Educational expenses (required for work or by law)
Where actual expenses exceed CFS standards, the IRS allows only the standard amount unless the taxpayer demonstrates that the excess is necessary for production of income or health and welfare. Categories where excess is commonly allowed: housing/utilities (where regional standard is unrealistically low), health care (pre-existing conditions), child care (required for production of income).
Section 7 · §301.7122-1(b)(2) — the 95% ground
RCP analysis is the procedural and substantive heart of DATC.
Doubt as to Collectibility (DATC) is by far the most common OIC ground — approximately 95% of accepted offers. DATC applies when the taxpayer's RCP is substantially less than the assessed liability.
DATC Submission Requirements (IRM 5.8.4)
Form 656Current version Rev. 4-2026Form 433-A(OIC)Individual taxpayers (or sole proprietors)Form 433-B(OIC)Business taxpayers (corporations, partnerships, LLCs)Supporting docs3–12 months bank statements, pay stubs/P&L, mortgage statements, vehicle valuations, retirement account statements, asset valuations$205 feeOr low-income certification20% depositLump-sum; or first monthly installment (periodic); or low-income certification
DATCSC — §301.7122-1(b)(2)(ii) Special Circumstances
The IRS may accept an offer below RCP where the taxpayer demonstrates special circumstances that would make collection of full RCP unfair. Overlaps with ETA economic hardship but operates within the DATC framework. Per Murphy, DATCSC and ETA are analyzed together using the same factors. Typical fact patterns: serious medical condition, care of dependent with special needs, non-traditional income source vulnerable to disruption.
Section 8 · §301.7122-1(b)(1) — when the liability itself is wrong
Form 656-L. No Form 433. Substantive challenge.
Doubt as to Liability (DATL) under §301.7122-1(b)(1) applies when there is genuine dispute about the existence or amount of the correct tax liability. Procedurally separate from DATC and ETA — different form, different procedural framework, no financial substantiation required.
DATL Submission (IRM 5.19.24)
Form 656-LSeparate from Form 656 used for DATC and ETANo Form 433DATL is not based on ability to payNo 20% depositNo specific initial payment requiredSubstantive docsDetailed explanation of why the underlying tax is incorrect with supporting documentation
Common DATL Fact Patterns
- · Audit deficiency despite documented basis adjustment
- · SFR (§6020(b)) overstating actual liability
- · TFRP (§6672) — not responsible or willful
- · Assessment barred by §6501 statute of limitations
- · Identity theft — fraudulent activity not attributable to taxpayer
- · Innocent spouse — §6015 relief inappropriately denied
Critical — Per IRM 4.18.1.2(3)(C)
Offers combining DATL and DATC grounds have not been accepted since 2006. Practitioners must select the strongest single ground. Where the taxpayer disputes liability AND lacks ability to pay, the typical strategy is to pursue DATL first; if the liability is reduced, the remaining (lower) liability may then be addressed through DATC if necessary.
Section 9 · §301.7122-1(b)(3)(i) — economic hardship ETA
When the taxpayer can pay but full payment causes hardship.
Effective Tax Administration — Economic Hardship (ETA-EH) under §301.7122-1(b)(3)(i) applies when collection of the full liability would cause the taxpayer economic hardship. ETA-EH is available only to individual taxpayers — not businesses.
Procedural prerequisite for ETA: DATC must be unavailable — meaning the taxpayer's RCP must equal or exceed the assessed liability. ETA is the secondary path when DATC is not available because the RCP is high enough to support full collection but full collection would cause hardship.
Typical ETA-EH fact pattern: taxpayer has substantial home equity or retirement account (producing high NRE) but limited current income to support a payment plan. Collection of full RCP would require liquidation of the retirement account or sale of the home — causing economic hardship.
ETA-EH Documentation Framework (IRM 5.8.11)
- ·Detailed Form 433-A(OIC) with current financial substantiation
- ·Documentation of the specific hardship (medical, dependent care, elder care, special needs)
- ·Analysis showing that liquidation of assets producing high RCP would create the hardship
- ·Comparison of the taxpayer's circumstances to allowable living expenses
The ETA-EH analysis frequently overlaps with DATCSC under §301.7122-1(b)(2)(ii). Per Murphy v. Commissioner, 125 T.C. 301 (2005): "the same factors are taken into account in evaluating offers-in-compromise based on doubt as to collectibility with special circumstances and on effective tax administration."
Section 10 · §301.7122-1(b)(3)(ii) — public policy ETA
The narrowest OIC ground. Rarely accepted.
Effective Tax Administration — Public Policy / Equity (ETA-PPE) under §301.7122-1(b)(3)(ii) applies when collection of the full liability would be unfair or inequitable based on facts beyond the taxpayer's control. ETA-PPE is designed for exceptional circumstances where standard DATC and ETA-EH analyses do not address the substantive unfairness of full collection.
Serious illness
Taxpayer's illness contributed to inability to comply during the relevant period
Third-party fraud against the taxpayer
Tax liability arose from third-party criminal activity beyond the taxpayer's control
Natural disaster impacts
Substantial losses from natural disaster that affected income during the relevant period
Erroneous IRS advice
Taxpayer relied in good faith on incorrect IRS guidance
Service-related circumstances
Military service, government service abroad, or similar circumstances
ETA-PPE applications receive heightened scrutiny under the voluntary-compliance prerequisite — the IRS frequently rejects ETA-PPE offers on the ground that acceptance would undermine compliance by other taxpayers in similar circumstances who pay in full.
Section 11 · §301.7122-1(b)(3)(iii) — the rejection ground
Even sympathetic cases can be rejected.
§301.7122-1(b)(3)(iii) — Regulatory Text
"The Secretary will not compromise a tax liability based on doubt as to collectibility with special circumstances, or on the basis of promoting effective tax administration, if compromise of the liability would undermine compliance by taxpayers with the tax laws."
The §301.7122-1(b)(3)(iii) analysis asks: would acceptance of this offer signal to other taxpayers that aggressive tax-avoidance strategies, deliberate non-compliance, or strategic delays are rewarded? If so, the IRS must reject regardless of substantive hardship. The voluntary-compliance prerequisite is most-commonly invoked where:
- ·The taxpayer has substantial post-assessment income or assets that could pay the liability but chooses not to
- ·The non-compliance reflects deliberate strategic choices rather than circumstances beyond control
- ·The taxpayer has a history of repeated non-compliance suggesting compromise would not produce future compliance
- ·The case involves aggressive tax positions, abusive shelter participation, or other compliance-undermining conduct
Section 12 · The foundational ETA case
Standard of review and the special-circumstances analysis.
Leading Case
Murphy v. Commissioner, 125 T.C. 301 (2005), aff'd 469 F.3d 27 (1st Cir. 2006)
Edward F. Murphy had unpaid federal income tax liabilities from 1992 through 2001 totaling $275,777. Murphy submitted an OIC of $10,000 based on doubt as to collectibility with special circumstances and effective tax administration. The Settlement Officer calculated RCP of $82,164 (later revised to $97,884), rejected the offer as not commensurate with ability to pay, and the IRS sustained the rejection.
The Tax Court's analysis established four foundational propositions:
Standard of review — abuse of discretion
Review of CDP-based OIC determinations is for abuse of discretion, per Sego v. Commissioner, 114 T.C. 604 (2000), and Goza v. Commissioner, 114 T.C. 176 (2000). The court does not decide whether in its own view the offer should have been accepted — only whether the IRS rejection was 'arbitrary, capricious, or without sound basis in fact or law.'
Settlement Officer authority
The Settlement Officer is authorized to apply Treas. Reg. §301.7122-1 standards including the voluntary-compliance prerequisite. Settlement Officer rejection on §301.7122-1(b)(3)(iii) grounds is not arbitrary even where substantive hardship analysis might support acceptance.
DATCSC and ETA analyzed together
"The same factors are taken into account in evaluating offers-in-compromise based on doubt as to collectibility with special circumstances and on effective tax administration (economic hardship or considerations of public policy or equity)." Practitioners should not treat DATCSC and ETA as procedurally distinct in their case presentation.
Reasonable time for additional information
The Settlement Officer may set deadlines for additional information and may reasonably conclude proceedings when deadlines are missed. Murphy missed multiple deadlines; the Settlement Officer's eventual rejection was upheld.
The First Circuit affirmance at 469 F.3d 27 (2006) reinforced the Tax Court's analysis and explicitly affirmed the §301.7122-1(b)(3)(iii) voluntary-compliance prerequisite framework. Murphy remains the foundational ETA case 20 years after the Tax Court decision. Subsequent cases — Carter (T.C. Memo. 2007), Barnes (T.C. Memo. 2006-150), Ertz (T.C. Memo. 2007) — consistently apply the Murphy framework.
Section 13 · OIC pendency protections
Levy prohibition + CSED tolling.
§6331(k)(1) — Levy Prohibition
No levy may be made during OIC pendency or for 30 days following rejection, plus any period during which an appeal is pending.
Protection Windows
· OIC pendency — from submission through final determination
· Post-rejection 30 days
· Appeal pendency — extends through Form 13711 Appeals
Critical Limitations
· NFTL filing is permitted during OIC pendency
· Pre-OIC levies (including SITLP) may continue
· Jeopardy levy under §6331(a) not subject to §6331(k)(1)
§6503(a) — CSED Tolling
The §6502 collection statute is tolled during OIC pendency plus 30 days following rejection. A 12-month OIC review extends CSED by approximately 13 months.
§7122(c)(2)(B) Limitation
The §6503(a) tolling does not apply to §7122(f) deemed acceptance windows. Once deemed acceptance occurs, the original CSED applies without OIC-pendency tolling. This prevents the IRS from allowing OIC submissions to extend CSED without resolution.
Practitioners running CSED-strategy cases must factor §6503(a) tolling into all CSED calculations.
Section 14 · IRC §7122(f) — acceptance by operation of law
The statutory failsafe.
IRC §7122(f) — Statutory Text
"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."
Operational Mechanics — IRM 5.8.8.12
- ·24-month clock runs from date of submission at correct IRS processing center
- ·Clock stops if IRS issues a rejection, return, or withdrawal determination within 24 months
- ·Once rejected within 24 months, subsequent reopening does not restart the deemed-acceptance clock
- ·Taxpayer-requested extensions and additional documentation periods typically toll the 24-month clock
- ·CDP-related OICs submitted directly to Appeals follow different timing per IRM 8.23.1
Why §7122(f) deemed acceptance has occurred only rarely in practice: the IRS systemically tracks all pending offers and routinely issues disposition (rejection, return, hold notification) before the 24-month mark. The provision functions as a structural incentive for the IRS to make timely decisions. Practitioners should track OIC submission dates and calculate the §7122(f) deadline — where IRS processing approaches 18–20 months without disposition, document the inquiry to build the procedural record.
Section 15 · Form 13711 — the rejection appeal
Where many rejected OICs ultimately succeed.
IRM 8.23.1 establishes the IRS Appeals framework for OIC matters. Appeals has jurisdiction over: (a) offers appealed after Collection rejection (typical); (b) offers transferred during CDP hearing under IRC §6330; (c) OICs raised during innocent spouse proceedings; (d) other procedural intersections (bankruptcy-related, litigation-related).
Form 13711 — Appeals Process
File within 30 days of rejection letter
Late-filed appeals are not accepted — the taxpayer's only remaining path is a new OIC submission
Hazards-of-litigation framework
Appeals evaluates whether the IRS would prevail if the case proceeded to court
Settlement authority
Appeals Officers have explicit settlement authority that the initial Offer Examiner does not — meaning Appeals can accept offers the Examiner rejected
Appeals conference
Phone, video, or in-person; taxpayer or representative presents the case
Disposition options
Acceptance (at original offer, negotiated amount, or RCP); sustained rejection; settlement on alternative resolution (IA, CNC)
Standard of review in CDP-context OIC: per Murphy, Sego, and Goza, the standard is abuse of discretion — the Tax Court will not substitute its judgment for that of the IRS Appeals Officer. The standard creates substantial deference to IRS determinations, making the Appeals stage a critical procedural opportunity.
Section 16 · Practitioner pitfalls
Eight OIC procedural errors to avoid.
Submitting an offer below RCP without DATCSC or ETA documentation
Offers below RCP are rejected unless the taxpayer documents special circumstances or ETA grounds. Practitioners running offers should either match RCP or fully document the below-RCP justification.
Combining DATL and DATC grounds in a single offer
Per IRM 4.18.1.2(3)(C), offers combining doubt as to liability and doubt as to collectibility have not been accepted since 2006. Practitioners must select the strongest single ground.
Failing to apply current Form 656 (Rev. 4-2026)
Outdated form versions produce processing delays or returns. Verify the current Form 656 revision date before submission — the form is updated periodically.
Underestimating the 5-year post-acceptance compliance covenant
OIC acceptance triggers a 5-year compliance obligation. Default during the 5-year window reinstates the full original liability plus interest from the original assessment date. Counsel clients about the covenant burden before submission.
Ignoring the §301.7122-1(b)(3)(iii) voluntary-compliance prerequisite
Even sympathetic ETA cases can be rejected on voluntary-compliance grounds. Explicitly address the prerequisite in ETA submissions — anticipating and responding to the IRS's likely concerns about compliance impact.
Missing the 30-day Form 13711 Appeals window
After Collection rejection, the Form 13711 window is 30 days. Late-filed appeals are not accepted; the only remaining path is a new OIC submission with the procedural and financial costs that entails.
Failing to factor §6503(a) tolling into CSED calculations
OIC pendency tolls CSED plus 30 days. A 12-month OIC review extends CSED by approximately 13 months. Practitioners running CSED-strategy cases must include OIC tolling in all CSED calculations.
Pursuing OIC when PPIA or CNC is more appropriate
OIC is a substantial commitment — $205 fee, 20% deposit, 6–12 month review, 5-year covenant. For cases where Partial Pay IA or Currently Not Collectible would produce similar effective outcomes, those alternatives may be more efficient. Run the comparison before recommending OIC.
Practitioner FAQs
Six practitioner-grade questions
How does §7122(f) deemed acceptance interact with §6503(a) CSED tolling?
What is the procedural treatment of an OIC during pending bankruptcy?
How does §6331(k)(1) interact with §7345 passport certification?
What is the procedural treatment of OIC for non-resident taxpayers?
How does §7122(d)(3)(A) 'no rejection solely on low offer amount' operate?
What is the procedural status of an OIC during pending CDP under IRC §6330?
Section 17 · Bluebook citation index
Complete authority index for OIC procedure.
Internal Revenue Code
I.R.C. § 6020(b) (Substitute for Return)
I.R.C. § 6015 (Innocent spouse relief)
I.R.C. § 6159 (Installment agreements)
I.R.C. § 6321 (Federal tax lien)
I.R.C. § 6323 (NFTL filing)
I.R.C. § 6330 (CDP for levy)
I.R.C. § 6330(d)(1) (Tax Court review)
I.R.C. § 6331(k)(1) (Levy prohibition during OIC)
I.R.C. § 6334 (Property exempt from levy)
I.R.C. § 6501 (Assessment statute)
I.R.C. § 6502 (Collection after assessment — CSED)
I.R.C. § 6503 (CSED tolling)
I.R.C. § 6503(a) (OIC pendency tolling)
I.R.C. § 6503(c) (Absence from United States)
I.R.C. § 6651 (Failure to file/pay penalty)
I.R.C. § 6672 (Trust Fund Recovery Penalty)
I.R.C. § 7122 (Compromises)
I.R.C. § 7122(a) (Authority to compromise)
I.R.C. § 7122(c) (Procedural requirements)
I.R.C. § 7122(c)(2)(B) (§6503(a) inapplicable to §7122(f))
I.R.C. § 7122(d) (Standards for evaluation)
I.R.C. § 7122(d)(3)(A) (No rejection solely on amount)
I.R.C. § 7122(d)(3)(B) (Low-income taxpayer protections)
I.R.C. § 7122(e) (Independent administrative review)
I.R.C. § 7122(f) (24-month deemed acceptance)
I.R.C. § 7345 (Passport certification)
I.R.C. § 7345(b)(2)(B)(ii) (Accepted OIC exclusion)
Treasury Regulations
26 C.F.R. § 301.7122-1 (Implementing regulation)
26 C.F.R. § 301.7122-1(b)(1) (Doubt as to liability)
26 C.F.R. § 301.7122-1(b)(2) (Doubt as to collectibility)
26 C.F.R. § 301.7122-1(b)(2)(ii) (DATCSC — special circumstances)
26 C.F.R. § 301.7122-1(b)(3) (Effective tax administration)
26 C.F.R. § 301.7122-1(b)(3)(i) (ETA economic hardship)
26 C.F.R. § 301.7122-1(b)(3)(ii) (ETA public policy / equity)
26 C.F.R. § 301.7122-1(b)(3)(iii) (Voluntary compliance prerequisite)
26 C.F.R. § 301.7122-1(d) (OIC submission and consideration)
26 C.F.R. § 301.7122-1(e) (Acceptance)
26 C.F.R. § 301.7122-1(f) (Rejection)
Internal Revenue Manual
IRM 4.18 (Examination — Offers in Compromise)
IRM 4.18.1.2(3)(C) (No combined DATL/DATC offers)
IRM 5.8 (Offers in Compromise)
IRM 5.8.1 (Overview)
IRM 5.8.2 (Centralized Offer Processing Site)
IRM 5.8.3 (Transfers, Perfection, and Case Building)
IRM 5.8.4 (Investigation)
IRM 5.8.5 (Financial Analysis — RCP)
IRM 5.8.5.5.1 (Cash and bank accounts)
IRM 5.8.5.18 (Going concern value)
IRM 5.8.7 (Independent administrative review)
IRM 5.8.8 (Acceptance Processing)
IRM 5.8.8.12 (Mandatory Acceptance Under §7122(f))
IRM 5.8.11 (Effective Tax Administration)
IRM 5.8.11.2 (Compliance Considerations)
IRM 5.15 (Financial Analysis Handbook)
IRM 5.15.1 (Collection Financial Standards)
IRM 5.19.24 (DATL Offer in Compromise)
IRM 8.23 (Offer in Compromise — Appeals)
IRM 8.23.1 (Offer in Compromise Overview)
Cases
Murphy v. Commissioner, 125 T.C. 301 (2005), aff'd 469 F.3d 27 (1st Cir. 2006)
Foundational ETA case; voluntary compliance prerequisite; abuse-of-discretion review
Sego v. Commissioner, 114 T.C. 604 (2000)
Abuse of discretion standard for CDP-based review
Goza v. Commissioner, 114 T.C. 176 (2000)
CDP review framework
Woodral v. Commissioner, 112 T.C. 19 (1999)
Arbitrary, capricious, or without sound basis in fact or law standard
Carter v. Commissioner, T.C. Memo. 2007
Voluntary compliance prerequisite applied to ETA rejection
Barnes v. Commissioner, T.C. Memo. 2006-150
DATCSC and ETA analyzed together
Keller v. Commissioner, T.C. Memo. 2006-166
Abuse of discretion applied to OIC rejection
Fowler v. Commissioner, T.C. Memo. 2004-163
OIC review framework
Ertz v. Commissioner, T.C. Memo. 2007
ETA economic hardship analysis
Federal Statutes & Revenue Procedures
Internal Revenue Act of 1864 (Original OIC authority)
IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3462
IRS Restructuring and Reform Act of 1998, Pub. L. No. 105-206, § 3201
Rev. Proc. 2003-71 (OIC procedural framework)
Ebot Mbi, CPA, EA
Texas CPA #127163 · IRS Enrolled Agent · Founder, ebotCPA Academy (TWC School ID s59708)
CPA licensed by the Texas State Board of Public Accountancy and IRS Enrolled Agent licensed by the U.S. Department of the Treasury. Founder of ebotCPA Academy, an IRS-approved CE provider and licensed career school (TWC School ID s59708) training Enrolled Agents and tax resolution professionals. ebotCPA is located at 4425 West Airport Freeway Suite 595, Irving TX 75062.
Educational content — not legal advice. Consult a qualified tax professional for your specific situation.
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