Legal Memorandum: ASO's Discretion to Reinstate an OIC

Issue: What is the discretion afforded an Appeals Settlement Officer (ASO) when considering the reinstatement of an officer-in-compromise (OIC)?

Area of Law: Administrative Law, Administrative Law & Regulation (Federal and State), Litigation & Procedure, Tax Law
Keywords: Appeals Settlement Officer (ASO); Officer-in-compromise (OIC); Discretion; reinstatment
Jurisdiction: Federal
Cited Cases: 461 F.3d 1162
Cited Statutes: 26 U.S.C. § 6330(c)(3)(C); 26 U.S.C. § 6330(c)(1), (3)(A)
Date: 03/01/2013

An Appeals Settlement Officer (ASO) may exercise his or her discretion to reinstate an offer-in-compromise (OIC), and an ASO abuses discretion in refusing to reinstate the OIC in this case where (1) the “default,” if any, was de minimus in comparison with Petitioner’s history of compliance; (2) the Petitioner did not receive notice of default or potential default; and (3) the terms of the OIC did not authorize termination of the offer for the mere late payment of a penalty.  See Trout v. Commissioner, 131 T.C. 239 (2008) TA l "Trout v. Commissioner, 131 T.C. 239 (2008)" s "Trout v. Commissioner, 131 T.C. 239 (2008)" c 1 .

An ASO must consider whether any proposed collection action “balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.” 26 U.S.C. § 6330(c)(3)(C).

The ASO must obtain verification from the IRS that the requirements of any applicable administrative procedures have been met and must consider that verification, or lack thereof, in reaching a decision, 26 U.S.C. § 6330(c)(1) TA l "26 U.S.C. § 6330(c)(1)" s "26 U.S.C. § 6330(c)(1)" c 2 , (3)(A) TA l "26 U.S.C. § 6330(3)(A)" s "26 U.S.C. § 6330(c)(1), (3)(A)" c 2 , including verification that appropriate notices have been sent, Trout, 131 T.C. at 260 (Marvel, J., concurring). 

Offer-in-compromise (OIC) agreements are subject to interpretation under principles of the federal common law of contracts.  One of those basic principles is that contractual language […]

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