CCA 1024054: Counsel analyzed the Fresh Start offer-in-compromise requirements

Plain-English summary

The Office of Chief Counsel analyzed a Fresh Start offer in compromise under IRC § 7122. The memo states that the proposal did not include the ability-to-pay determination required for doubt as to collectibility and did not satisfy the requirements for an offer based on effective tax administration. It reproduces the governing statute and regulations, including rules on submission, acceptance, rejection, collection activity, refunds, and statutes of limitation. The memo does not approve or reject a particular offer.

Ruling snapshot

• Question: Did the Fresh Start offer satisfy the statutory and regulatory requirements for compromise?
• Outcome: Advice given
• Key authorities: IRC § 7122; Treas. Reg. § 301.7122-1; IRC §§ 6159, 6402, 6702, and 6103

Full text (IRS public release)

ID: CCA_2010050116513450 Number: 201024054
Release Date: 6/18/2010
Office: ----------------------------
UILC: 7122.00-00

From: -----------------------
Sent: Saturday, May 01, 2010 4:51:35 PM
To: ------------------
Cc: -----------------------
Subject: RE: Fresh Start OIC

I've copying the statute and regs for you below, so you can print them out if you wish.

The Service can only compromise liabilities to the extent authorized by the statute and
regs. The regs allow compromise based on doubt as to liability (DATL), doubt as to
collectibility (DATC), or effective tax administration (ETA). The proposal does not
include a determination of ability to pay which is required for a compromise based on
DATC. It also does not satisfy the requirements for an ETA offer. The regs provide: "A
compromise may be entered into to promote effective tax administration when the
Secretary determines that, although collection in full could be achieved, collection of the
full liability would cause the taxpayer economic hardship ....[OR] where compelling
public policy or equity considerations identified by the taxpayer provide a sufficient basis
for compromising the liability. Compromise will be justified only where, due to
exceptional circumstances, collection of the full liability would undermine public
confidence that the tax laws are being administered in a fair and equitable manner. A
taxpayer proposing compromise under this paragraph (b)(3)(ii) will be expected to
demonstrate circumstances that justify compromise even though a similarly situated
taxpayer may have paid his liability in full."
Statute:

§ 7122. Compromises.

(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.
 2

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) Rules for submission of offers-in-compromise.
(1) Partial payment required with submission.
(A) Lump-sum offers.
(i) In general. The submission of any lump-sum offer-in-compromise shall be
accompanied by the payment of 20 percent of the amount of such offer.
(ii) Lump-sum offer-in-compromise. For purposes of this section, the term 'lump-
sum offer-in-compromise' means any offer of payments made in 5 or fewer installments.
(B) Periodic payment offers.
(i) In general. The submission of any periodic payment offer-in-compromise shall
be accompanied by the payment of the amount of the first proposed installment.
(ii) Failure to make installment during pendency of offer. Any failure to make an
installment (other than the first installment) due under such offer-in-compromise during
the period such offer is being evaluated by the Secretary may be treated by the
Secretary as a withdrawal of such offer-in-compromise.
(2) Rules of application.
(A) Use of payment. The application of any payment made under this subsection to
the assessed tax or other amounts imposed under this title with respect to such tax may
be specified by the taxpayer.
(B) Application of user fee. In the case of any assessed tax or other amounts
imposed under this title with respect to such tax which is the subject of an offer-in-
compromise to which this subsection applies, such tax or other amounts shall be
reduced by any user fee imposed under this title with respect to such offer-in-
compromise.
(C) Waiver authority. The Secretary may issue regulations waiving any payment
required under paragraph (1) in a manner consistent with the practices established in
accordance with the requirements under subsection (d)(3).

(d) 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
 3

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,
(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, and
(C) any offer-in-compromise which does not meet the requirements of subparagraph
(A)(i) or (B)(i), as the case may be, of subsection (c)(1) may be returned to the taxpayer
as unprocessable.

(e) 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 [26 USCS § 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.

(f) Deemed acceptance of offer not rejected within certain period. 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. For purposes of the preceding
sentence, any period during which any tax liability which is the subject of such offer-in-
compromise is in dispute in any judicial proceeding shall not be taken into account in
determining the expiration of the 24-month period.

[(g)](f) Frivolous submissions, etc. Notwithstanding any other provision of this section, if
the Secretary determines that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or section 6159 [26 USCS §
6159] meets the requirement of clause (i) or (ii) of section 6702(b)(2)(A) [26 USCS §
6702(b)(2)(A)], then the Secretary may treat such portion as if it were never submitted
and such portion shall not be subject to any further administrative or judicial review.
Regulations:

301.7122-1 Compromises.

(a) In general -- (1) If the Secretary determines that there are grounds for
compromise under this section, the Secretary may, at the Secretary's discretion,
compromise any civil or criminal liability arising under the internal revenue laws prior to
 4

reference of a case involving such a liability to the Department of Justice for prosecution
or defense.

(2) An agreement to compromise may relate to a civil or criminal liability for taxes,
interest, or penalties. Unless the terms of the offer and acceptance expressly provide
otherwise, acceptance of an offer to compromise a civil liability does not remit a criminal
liability, nor does acceptance of an offer to compromise a criminal liability remit a civil
liability.

(b) Grounds for compromise -- (1) Doubt as to liability. Doubt as to liability exists where
there is a genuine dispute as to the existence or amount of the correct tax liability under
the law. Doubt as to liability does not exist where the liability has been established by a
final court decision or judgment concerning the existence or amount of the liability. See
paragraph (f)(4) of this section for special rules applicable to rejection of offers in cases
where the Internal Revenue Service (IRS) is unable to locate the taxpayer's return or
return information to verify the liability.

(2) Doubt as to collectibility. Doubt as to collectibility exists in any case where the
taxpayer's assets and income are less than the full amount of the liability.

(3) Promote effective tax administration. (i) A compromise may be entered into to
promote effective tax administration when the Secretary determines that, although
collection in full could be achieved, collection of the full liability would cause the
taxpayer economic hardship within the meaning of § 301.6343-1.

(ii) If there are no grounds for compromise under paragraphs (b)(1), (2), or (3)(i) of this
section, the IRS may compromise to promote effective tax administration where
compelling public policy or equity considerations identified by the taxpayer provide a
sufficient basis for compromising the liability. Compromise will be justified only where,
due to exceptional circumstances, collection of the full liability would undermine public
confidence that the tax laws are being administered in a fair and equitable manner. A
taxpayer proposing compromise under this paragraph (b)(3)(ii) will be expected to
demonstrate circumstances that justify compromise even though a similarly situated
taxpayer may have paid his liability in full.

(iii) No compromise to promote effective tax administration may be entered into if
compromise of the liability would undermine compliance by taxpayers with the tax laws.

(c) Special rules for evaluating offers to compromise -- (1) In general. Once a basis for
compromise under paragraph (b) of this section has been identified, the decision to
accept or reject an offer to compromise, as well as the terms and conditions agreed to,
is left to the discretion of the Secretary. The determination whether to accept or reject
an offer to compromise will be based upon consideration of all the facts and
circumstances, including whether the circumstances of a particular case warrant
acceptance of an amount that might not otherwise be acceptable under the Secretary's
policies and procedures.
 5

(2) Doubt as to collectibility -- (i) Allowable expenses. A determination of doubt as to
collectibility will include a determination of ability to pay. In determining ability to pay, the
Secretary will permit taxpayers to retain sufficient funds to pay basic living expenses.
The determination of the amount of such basic living expenses will be founded upon an
evaluation of the individual facts and circumstances presented by the taxpayer's case.
To guide this determination, guidelines published by the Secretary on national and local
living expense standards will be taken into account.

(ii) Nonliable spouses -- (A) In general. Where a taxpayer is offering to compromise a
liability for which the taxpayer's spouse has no liability, the assets and income of the
nonliable spouse will not be considered in determining the amount of an adequate offer.
The assets and income of a nonliable spouse may be considered, however, to the
extent property has been transferred by the taxpayer to the nonliable spouse under
circumstances that would permit the IRS to effect collection of the taxpayer's liability
from such property (e.g., property that was conveyed in fraud of creditors), property has
been transferred by the taxpayer to the nonliable spouse for the purpose of removing
the property from consideration by the IRS in evaluating the compromise, or as provided
in paragraph (c)(2)(ii)(B) of this section. The IRS also may request information regarding
the assets and income of the nonliable spouse for the purpose of verifying the amount
of and responsibility for expenses claimed by the taxpayer.

(B) Exception. Where collection of the taxpayer's liability from the assets and income of
the nonliable spouse is permitted by applicable state law (e.g., under state community
property laws), the assets and income of the nonliable spouse will be considered in
determining the amount of an adequate offer except to the extent that the taxpayer and
the nonliable spouse demonstrate that collection of such assets and income would have
a material and adverse impact on the standard of living of the taxpayer, the nonliable
spouse, and their dependents.

(3) Compromises to promote effective tax administration -- (i) Factors supporting (but
not conclusive of) a determination that collection would cause economic hardship within
the meaning of paragraph (b)(3)(i) of this section include, but are not limited to --

(A) Taxpayer is incapable of earning a living because of a long term illness, medical
condition, or disability, and it is reasonably foreseeable that taxpayer's financial
resources will be exhausted providing for care and support during the course of the
condition;

(B) Although taxpayer has certain monthly income, that income is exhausted each
month in providing for the care of dependents with no other means of support; and

(C) Although taxpayer has certain assets, the taxpayer is unable to borrow against the
equity in those assets and liquidation of those assets to pay outstanding tax liabilities
would render the taxpayer unable to meet basic living expenses.
 6

(ii) Factors supporting (but not conclusive of) a determination that compromise would
undermine compliance within the meaning of paragraph (b)(3)(iii) of this section include,
but are not limited to --

(A) Taxpayer has a history of noncompliance with the filing and payment requirements
of the Internal Revenue Code;

(B) Taxpayer has taken deliberate actions to avoid the payment of taxes; and

(C) Taxpayer has encouraged others to refuse to comply with the tax laws.

(iii) The following examples illustrate the types of cases that may be compromised by
the Secretary, at the Secretary's discretion, under the economic hardship provisions of
paragraph (b)(3)(i) of this section:

Example 1. The taxpayer has assets sufficient to satisfy the tax liability. The taxpayer
provides full time care and assistance to her dependent child, who has a serious long-
term illness. It is expected that the taxpayer will need to use the equity in his assets to
provide for adequate basic living expenses and medical care for his child. The
taxpayer's overall compliance history does not weigh against compromise.

Example 2. The taxpayer is retired and his only income is from a pension. The
taxpayer's only asset is a retirement account, and the funds in the account are sufficient
to satisfy the liability. Liquidation of the retirement account would leave the taxpayer
without an adequate means to provide for basic living expenses. The taxpayer's overall
compliance history does not weigh against compromise.

Example 3. The taxpayer is disabled and lives on a fixed income that will not, after
allowance of basic living expenses, permit full payment of his liability under an
installment agreement. The taxpayer also owns a modest house that has been specially
equipped to accommodate his disability. The taxpayer's equity in the house is sufficient
to permit payment of the liability he owes. However, because of his disability and limited
earning potential, the taxpayer is unable to obtain a mortgage or otherwise borrow
against this equity. In addition, because the taxpayer's home has been specially
equipped to accommodate his disability, forced sale of the taxpayer's residence would
create severe adverse consequences for the taxpayer. The taxpayer's overall
compliance history does not weigh against compromise.

(iv) The following examples illustrate the types of cases that may be compromised by
the Secretary, at the Secretary's discretion, under the public policy and equity provisions
of paragraph (b)(3)(ii) of this section:

Example 1. In October of 1986, the taxpayer developed a serious illness that resulted in
almost continuous hospitalizations for a number of years. The taxpayer's medical
condition was such that during this period the taxpayer was unable to manage any of
his financial affairs. The taxpayer has not filed tax returns since that time. The
 7

taxpayer's health has now improved and he has promptly begun to attend to his tax
affairs. He discovers that the IRS prepared a substitute for return for the 1986 tax year
on the basis of information returns it had received and had assessed a tax deficiency.
When the taxpayer discovered the liability, with penalties and interest, the tax bill is
more than three times the original tax liability. The taxpayer's overall compliance history
does not weigh against compromise.

Example 2. The taxpayer is a salaried sales manager at a department store who has
been able to place $ 2,000 in a tax-deductible IRA account for each of the last two
years. The taxpayer learns that he can earn a higher rate of interest on his IRA savings
by moving those savings from a money management account to a certificate of deposit
at a different financial institution. Prior to transferring his savings, the taxpayer submits
an e-mail inquiry to the IRS at its Web Page, requesting information about the steps he
must take to preserve the tax benefits he has enjoyed and to avoid penalties. The IRS
responds in an answering e-mail that the taxpayer may withdraw his IRA savings from
his neighborhood bank, but he must redeposit those savings in a new IRA account
within 90 days. The taxpayer withdraws the funds and redeposits them in a new IRA
account 63 days later. Upon audit, the taxpayer learns that he has been misinformed
about the required rollover period and that he is liable for additional taxes, penalties and
additions to tax for not having redeposited the amount within 60 days. Had it not been
for the erroneous advice that is reflected in the taxpayer's retained copy of the IRS e-
mail response to his inquiry, the taxpayer would have redeposited the amount within the
required 60-day period. The taxpayer's overall compliance history does not weigh
against compromise.

(d) Procedures for submission and consideration of offers -- (1) In general. An offer to
compromise a tax liability pursuant to section 7122 [26 USCS § 7122] must be
submitted according to the procedures, and in the form and manner, prescribed by the
Secretary. An offer to compromise a tax liability must be made in writing, must be
signed by the taxpayer under penalty of perjury, and must contain all of the information
prescribed or requested by the Secretary. However, taxpayers submitting offers to
compromise liabilities solely on the basis of doubt as to liability will not be required to
provide financial statements.

(2) When offers become pending and return of offers. An offer to compromise becomes
pending when it is accepted for processing. The IRS may not accept for processing any
offer to compromise a liability following reference of a case involving such liability to the
Department of Justice for prosecution or defense. If an offer accepted for processing
does not contain sufficient information to permit the IRS to evaluate whether the offer
should be accepted, the IRS will request that the taxpayer provide the needed additional
information. If the taxpayer does not submit the additional information that the IRS has
requested within a reasonable time period after such a request, the IRS may return the
offer to the taxpayer. The IRS may also return an offer to compromise a tax liability if it
determines that the offer was submitted solely to delay collection or was otherwise
nonprocessable. An offer returned following acceptance for processing is deemed
pending only for the period between the date the offer is accepted for processing and
 8

the date the IRS returns the offer to the taxpayer. See paragraphs (f)(5)(ii) and (g)(4) of
this section for rules regarding the effect of such returns of offers.

(3) Withdrawal. An offer to compromise a tax liability may be withdrawn by the taxpayer
or the taxpayer's representative at any time prior to the IRS' acceptance of the offer to
compromise. An offer will be considered withdrawn upon the IRS' receipt of written
notification of the withdrawal of the offer either by personal delivery or certified mail, or
upon issuance of a letter by the IRS confirming the taxpayer's intent to withdraw the
offer.

(e) Acceptance of an offer to compromise a tax liability. -- (1) An offer to compromise
has not been accepted until the IRS issues a written notification of acceptance to the
taxpayer or the taxpayer's representative.

(2) As additional consideration for the acceptance of an offer to compromise, the IRS
may request that taxpayer enter into any collateral agreement or post any security
which is deemed necessary for the protection of the interests of the United States.

(3) Offers may be accepted when they provide for payment of compromised amounts in
one or more equal or unequal installments.

(4) If the final payment on an accepted offer to compromise is contingent upon the
immediate and simultaneous release of a tax lien in whole or in part, such payment
must be made in accordance with the forms, instructions, or procedures prescribed by
the Secretary.

(5) Acceptance of an offer to compromise will conclusively settle the liability of the
taxpayer specified in the offer. Compromise with one taxpayer does not extinguish the
liability of, nor prevent the IRS from taking action to collect from, any person not named
in the offer who is also liable for the tax to which the compromise relates. Neither the
taxpayer nor the Government will, following acceptance of an offer to compromise, be
permitted to reopen the case except in instances where --

(i) False information or documents are supplied in conjunction with the offer;

(ii) The ability to pay or the assets of the taxpayer are concealed; or

(iii) A mutual mistake of material fact sufficient to cause the offer agreement to be
reformed or set aside is discovered.

(6) Opinion of Chief Counsel. Except as otherwise provided in this paragraph (e)(6), if
an offer to compromise is accepted, there will be placed on file the opinion of the Chief
Counsel for the IRS with respect to such compromise, along with the reasons therefor.
However, no such opinion will 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. Also placed on
 9

file will be a statement of --

(i) The amount of tax assessed;

(ii) 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

(iii) The amount actually paid in accordance with the terms of the compromise.

(f) Rejection of an offer to compromise. -- (1) An offer to compromise has not been
rejected until the IRS issues a written notice to the taxpayer or his representative,
advising of the rejection, the reason(s) for rejection, and the right to an appeal.

(2) The IRS may not notify a taxpayer or taxpayer's representative of the rejection of an
offer to compromise until an independent administrative review of the proposed
rejection is completed.

(3) No offer to compromise may be rejected solely on the basis of the amount of the
offer without evaluating that offer under the provisions of this section and the
Secretary's policies and procedures regarding the compromise of cases.

(4) Offers based upon doubt as to liability. Offers submitted on the basis of doubt as to
liability cannot be rejected solely because the IRS is unable to locate the taxpayer's
return or return information for verification of the liability.

(5) Appeal of rejection of an offer to compromise -- (i) In general. The taxpayer may
administratively appeal a rejection of an offer to compromise to the IRS Office of
Appeals (Appeals) if, within the 30-day period commencing the day after the date on the
letter of rejection, the taxpayer requests such an administrative review in the manner
provided by the Secretary.

(ii) Offer to compromise returned following a determination that the offer was
nonprocessable, a failure by the taxpayer to provide requested information, or a
determination that the offer was submitted for purposes of delay. Where a determination
is made to return offer documents because the offer to compromise was
nonprocessable, because the taxpayer failed to provide requested information, or
because the IRS determined that the offer to compromise was submitted solely for
purposes of delay under paragraph (d)(2) of this section, the return of the offer does not
constitute a rejection of the offer for purposes of this provision and does not entitle the
taxpayer to appeal the matter to Appeals under the provisions of this paragraph (f)(5).
However, if the offer is returned because the taxpayer failed to provide requested
financial information, the offer will not be returned until a managerial review of the
proposed return is completed.

(g) Effect of offer to compromise on collection activity -- (1) In general. The IRS will not
levy against the property or rights to property of a taxpayer who submits an offer to
 10

compromise, to collect the liability that is the subject of the offer, during the period the
offer is pending, for 30 days immediately following the rejection of the offer, and for any
period when a timely filed appeal from the rejection is being considered by Appeals.

(2) Revised offers submitted following rejection. If, following the rejection of an offer to
compromise, the taxpayer makes a good faith revision of that offer and submits the
revised offer within 30 days after the date of rejection, the IRS will not levy to collect
from the taxpayer the liability that is the subject of the revised offer to compromise while
that revised offer is pending.

(3) Jeopardy. The IRS may levy to collect the liability that is the subject of an offer to
compromise during the period the IRS is evaluating whether that offer will be accepted if
it determines that collection of the liability is in jeopardy.

(4) Offers to compromise determined by IRS to be nonprocessable or submitted solely
for purposes of delay. If the IRS determines, under paragraph (d)(2) of this section, that
a pending offer did not contain sufficient information to permit evaluation of whether the
offer should be accepted, that the offer was submitted solely to delay collection, or that
the offer was otherwise nonprocessable, then the IRS may levy to collect the liability
that is the subject of that offer at any time after it returns the offer to the taxpayer.

(5) Offsets under section 6402 [26 USCS § 6402]. Notwithstanding the evaluation and
processing of an offer to compromise, the IRS may, in accordance with section 6402 [26
USCS § 6402], credit any overpayments made by the taxpayer against a liability that is
the subject of an offer to compromise and may offset such overpayments against other
liabilities owed by the taxpayer to the extent authorized by section 6402 [26 USCS §
6402].

(6) Proceedings in court. Except as otherwise provided in this paragraph (g)(6), the IRS
will not refer a case to the Department of Justice for the commencement of a
proceeding in court, against a person named in a pending offer to compromise, if levy to
collect the liability is prohibited by paragraph (g)(1) of this section. Without regard to
whether a person is named in a pending offer to compromise, however, the IRS may
authorize the Department of Justice to file a counterclaim or third-party complaint in a
refund action or to join that person in any other proceeding in which liability for the tax
that is the subject of the pending offer to compromise may be established or disputed,
including a suit against the United States under 28 U.S.C. 2410. In addition, the United
States may file a claim in any bankruptcy proceeding or insolvency action brought by or
against such person.

(h) Deposits. Sums submitted with an offer to compromise a liability or during the
pendency of an offer to compromise are considered deposits and will not be applied to
the liability until the offer is accepted unless the taxpayer provides written authorization
for application of the payments. If an offer to compromise is withdrawn, is determined to
be nonprocessable, or is submitted solely for purposes of delay and returned to the
taxpayer, any amount tendered with the offer, including all installments paid on the offer,
 11

will be refunded without interest. If an offer is rejected, any amount tendered with the
offer, including all installments paid on the offer, will be refunded, without interest, after
the conclusion of any review sought by the taxpayer with Appeals. Refund will not be
required if the taxpayer has agreed in writing that amounts tendered pursuant to the
offer may be applied to the liability for which the offer was submitted.

(i) Statute of limitations -- (1) Suspension of the statute of limitations on collection. The
statute of limitations on collection will be suspended while levy is prohibited under
paragraph (g)(1) of this section.

(2) Extension of the statute of limitations on assessment. For any offer to compromise,
the IRS may require, where appropriate, the extension of the statute of limitations on
assessment. However, in any case where waiver of the running of the statutory period
of limitations on assessment is sought, the taxpayer must be notified of the right to
refuse to extend the period of limitations or to limit the extension to particular issues or
particular periods of time.

(j) Inspection with respect to accepted offers to compromise. For provisions relating to
the inspection of returns and accepted offers to compromise, see section 6103(k)(1) [26
USCS § 6103(k)(1)].

(k) Effective date. This section applies to offers to compromise pending on or submitted
on or after July 18, 2002.