Legal Memorandum: Determining Materiality of Breach of an OIC

Issue: Under federal law, how does a court determine whether a taxpayer’s breach of an Offer in Compromise (OIC) was material?

Area of Law: Business Organizations & Contracts, Tax Law
Keywords: Materiality; Offer in Compromise (OIC); Breach
Jurisdiction: Federal
Cited Cases: 439 F.3d 455
Cited Statutes: Restatement (Second) of Contracts § 241, 229
Date: 04/01/2014

Gabriel S. Galanda, Native American Heritage, the Law, and Common Misconceptions, ABA Tort Trial & Ins. Prac. Sec., Committee on Diversity in the Profession, available at http://apps.americanbar.org/tips/wami/articles.html explains that some tribes who carry insurance have waived immunity and authorized the recovery of monetary damages, as long as any award would be paid from the tribe’s insurance.  Id.  The Navajo Nation Sovereign Immunity Act, for instance, includes a provision that specifically permits suits against the Nation when any money damages would be covered by insurance. The Navajo Superior Court has held that the Act’s insurance exception constitutes a waiver of immunity.  Id.  Note, however, that Congress’s enactment of federal legislation requiring tribes to carry liability insurance in certain business contexts does not amount to a general waiver.  Although the Indian Self-Determination Act mandates that tribes purchase insurance to cover tribal business activities carried out pursuant to the Act, and denies the insurance carrier the right to raise the tribe’s immunity as a defense to recovery, some courts have held that the insurance provision of the Act does not constitute a waiver of tribal immunity.  Attorney Galanda, the author of the article, advises that, to determine whether a tribe actually waived immunity by carrying insurance, you must analyze the tribe’s policy, consider the impact of federal legislation on the activity underlying the coverage, and research the relevant tribal code. “Without clear or unequivocal evidence of tribal or Congressional waiver of immunity, a personal injury claim against the tribe will fail.”  Id.  […]

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