Offers in compromise.

The possibility of a taxpayer compromising a tax liability is not a new concept. It first appeared in the Internal Revenue laws in 1868. At present, the Government's authority to enter into offers in compromise is contained in Sec. 7122 and Regs. Sec. 301.7122-1, which authorize the IRS to compromise civil or criminal tax liabilities, (1) provided there is doubt as to liability or collectibility. Offers in compromise based on doubt as to liability are beyond the scope of this article. Accordingly, this article will discuss offers in compromise based on doubt as to collectibility.

The Service will seriously consider an offer in compromise when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential[2] The Service's goal is to achieve collection of what is potentially collectible at the earliest possible time, at the least cost to the Government[3] The Service also seeks to give taxpayers a fresh start, enabling them to voluntarily comply with the tax laws[4] Thus, before a taxpayer's offer can be seriously considered, doubt must exist regarding the Government's ability to collect the assessed sum. Absent such doubt, legal consideration based on ' 'mutual concessions" will be lacking and the offer will be rejected.(5) As a result, a form of insolvency is generally required before a tax liability will be compromised. Taxpayers who have filed bankruptcy, are contemplating doing so, or who have substantial tax liabilities arising from tax-sheltered investments, historically constitute appropriate candidates for the submission of offers.

Refection of an offer will not necessarily result in the immediate seizure and sale of the taxpayer's assets. This is particularly so if undue hardship would result from such action. Instead, the matter will be referred back to the Collection Division to be processed pursuant to established collection procedures. However, these procedures provide that if an offer in compromise is rejected or withdrawn due to the inadequacy of the offer, the Service will, consistent with the reasons for refection, commence collection proceedings.[6]

Contractual Aspects

Consummated offers in compromise constitute valid legal contracts with the finality attendant thereto.[7] They require mutual assent with both parties having the capacity, authority and intent to be bound by the agreement[8] Unless otherwise provided, they encompass the entire liability of the taxpayer, including taxes, ad valorem penalties and interest, with all questions of such liability being conclusively settled by the agreement? They are, however, subject to rescission, reformation and other contractual remedies. For example, the Service was permitted to set aside a compromise based on inaccurate representations by the taxpayer's counsel[10] Similarly, the Government was entitled to rescind a compromise agreement negotiated with a decedent's estate because the presence of a life insurance policy unknown to either party had a material effect on the financial condition of the estate.(11)

The offer-in-compromise process is also subject to the following three jurisdictional limitations.

1. The Service's authority to compromise a tax liability is limited to cases that have not been referred to the Justice Department for prosecution or defense. Once such a referral takes place, compromise authority is vested in the Attorney General or his delegate[12]

2. Settlement authority is limited to Service personnel to whom the Secretary of the Treasury has delegated the power to compromise tax liabilities? For civil cases, this authority is vested in the District Directors and Assistant District Directors, regardless of the amount of tax sought to be compromised. Compromise authority is also vested in Collection Division Chiefs, Collection Branch Chiefs and Special Procedures Branch Chiefs when the unpaid liability {including any interest, penalty, additional amount or addition to tax) is $100,000 or less.(14) Rejection authority is vested in all of these officials regardless of the amount of liability sought to be compromised, except that authority to reject offers for public policy reasons is restricted to District Directors[15]

3. Cases recommended for acceptance by an approving official involving liabilities of $500 or more {including any interest, penalty, additional amount or addition to tax) require a legal opinion from District Counsel[16]

The entire offer-in-compromise process must be strictly complied with for a binding contract to be created.[17] This includes written notification of acceptance being received by the taxpayer from an authorized Government official; (18) oral agreements do not bind either party.(19 )On acceptance, the offer becomes available for public inspection in the office of the District Director for a period of one year from the date of acceptance.[20]

Commencing the Offer

The Service encourages the submission of adequate compromise proposals consistent with a taxpayer's ability to pay. Accordingly, in cases in which an offer in compromise appears to be a viable solution to a tax delinquency, the Service employee assigned to the case will discuss the compromise alternative with the taxpayer and, when necessary, assist in preparing the required forms. The taxpayer will, however, be responsible for initiating the first specific proposal for compromise.[21]

Offers in compromise are submitted on Form 656, Offer in Compromise,[22] generally through revenue officers, although they can be filed in any IRS office or Service Center. If it is determined that an offer merits consideration and the interests of the Government will not be jeopardized thereby, collection activity will normally cease while the offer is considered[23] It is important, therefore, to submit the offer early in the collection process to avoid collection action. The offer should address all outstanding liabilities for all outstanding years[24] The Service will not consider piecemeal offers.[25] In addition, the taxpayer must be in compliance with all filing and payment requirements for periods not included in the offer,[26] including estimated payments, Federal tax deposits and similar obligations.

The preptinted language on Form 656 requires the taxpayer to incorporate into his offer the following provisions.

1. A waiver of the statute of limitations on assessment and collection during the pendency of the offer plus one year. Should the offer contain a deferred payment provision, this waiver remains in effect until one year after the last installment is paid.

2. A waiver of the right to receive refunds or credits for overpayment of any tax or other liability, including interest and penalties, for periods ending before, within, or as of the end of the calendar year in which the offer is accepted. This provision does not apply to the extent the refund or credit exceeds the difference between the assessment and the amount offered. In this circumstance, any excess credit is immediately refunded.

3. A commitment to remain in full compliance with all filing and payment requirements of the law for a period of five years after the offer is accepted.(27)

4. On notice of acceptance, a waiver of the right to contest in court or otherwise the amount of the liability sought to be compromised.

5. On default, a waiver of restrictions on assessment and collection as well as further notice before assessment and collection. At the Service's option, the sum due the Treasury is the unpaid balance of the offer plus interest or the previously uncompromised liability, including interest and penalties, less any payments received. The waivers on assessment, collection and notice are fully applicable to either alternative[28]

A second document, Form 433-A, Collection Information Statement for Individuals, or Form 433B, Collection Information Statement for Businesses, and/or any other financial statement prepared by the taxpayer as long as it contains the information requested on Form 433-A or Form 433-B and is signed under penalty of perjury, must be completed and submitted concurrent with the offer. The use of these forms instead of former Form 433, Statement of Financial Condition and Other Information, reflects the new Service policy that the investigation of offers is now limited in depth to that required in a normal tax delinquent account investigation[29] The Service is simply attempting to find out the taxpayer's present and potential sources of income and what the taxpayer owns and owes. Great care should be taken in the preparation of these documents as they constitute the basis for the Service's acceptance or rejection of the offer.(30) The documents can also provide the offeror with a practical insight as to his prospects for acceptance. An offer below his net realizable equity will be rejected.(31)

When preparing the offer, the practitioner should be careful to point out any circumstances that could reduce his client's ability to respond to the full amount of the assessment. Some common mitigating circumstances are:

1. The taxpayer's age and health as they relate to his earning capacity during the time remaining on the 10-year statute on collection.

2. The earning capacity of the taxpayer's spouse.

3. The likelihood that the taxpayer will file bankruptcy if an accord is not reached, and the amount of tax liability that would be discharged if such an event occurred.

4. The taxpayer's prospects of receiving an inheritance or other windfall in the near future. 5. The taxpayer's ability to borrow sums from relatives to discharge his obligations to the Government.

To the extent mitigating factors exist, they should be documented and submitted with the offer. For example, a doctor's statement should accompany a cash flow statement that seeks to discount the offeror's future income potential for health reasons.

When filling out the offer, all outstanding tax liabilities should be entered on Form 656. To protect the client, the identification of all liabilities should be specific and complete with all contingencies disclosed.[32] Each year should be separately listed by the type of tax sought to be compromised. If fiscal years are involved, this should be clearly stated with the ending dates disclosed. Should coobligors on a joint assessment be other than husband and wife, such as a limited partnership and its general partner, or a corporation and its responsible directors, separate offers must be submitted.(33)

Taxpayers are encouraged to submit a cash deposit as a sign of good faith.[34] If an offer accompanied by a cash payment is rejected, the taxpayer's deposit is returned without interest,[35] unless Form 3040, Authorization to Apply Offer in Compromise Deposit to Liability, was executed authorizing the Service to apply the deposit to the assessment. Frequently, the rejection letter, which explains the reasons for the rejection, will be accompanied by written or oral suggestions as to how to increase the likelihood of presenting an acceptable offer.(36 )In addition, a detailed narrative of the factors causing the Service to reject the offer can be obtained from the Collection Division.[37] If the client chooses, a new offer can be submitted, as long as no other offers are currently under consideration.

The tax adviser's fee should be paid up front in cash. In addition to constituting a wise business practice for the practitioner, it benefits the client, as it reduces his net worth for purposes of computing his net realizable equity.

The Administrative Review

The number of offers in compromise submitted to the IRS has increased significantly in recent years. In response to the increasing use of this negotiating procedure, the Service has restaffed its Collection and Appeals Divisions. Absent unusual circumstances, it is the Service's expectation that offer investigations will be completed within six months.[38]

On submission, an offer is referred to the appropriate Service Center, where the taxpayer's account is coded to denote that an offer is being processed. At that time, it will be associated with any prior offers that may exist. Any sums tendered with the offer or paid later under its terms are placed in a noninterest-bearing trust account pending the outcome of the review process.

After the processing in the Service Center is complete, the offer will be referred back to the appropriate district office.[39] It will then be reviewed by a specially trained Revenue Officer in a field collection group or an offer-in-compromise specialist in the Special Procedures Section of the Collection Division, depending on the administrative review procedures in that district.[40] When conducting his review, the reviewer will be guided by IRM Section 57( 10)( 10}. 1, which provides that when doubt as to collectibility is the basis for the offer, the amount offered must reflect "all that can be collected from the taxpayer's equity in assets and income, present and prospective," after giving effect to all priorities granted to the Government.(41) Thus, at a minimum, a basis for compromise exists only i/the amount offered equals or exceeds the potential collectibility from the taxpayer's assets and future income.

When evaluating income potential, there is no fixed percentage of a taxpayer's present or future earned and unearned income that must be accounted for in deciding the acceptability of an offer. The issue is how much of the taxpayer's income is or will be realistically available-to pay the delinquent taxes. In evaluating future income prospects, the taxpayer's education, profession or trade, age and experience, health, and past and present income will be considered.(42)

Generally, if the taxpayer offers the net realizable equity in his assets and the present value of five years of future income after reduction for necessary living expenses, the Service will give serious consideration to accepting the offer.[43] Example 1: Taxpayer T owes $28,000. He has assets of $10,000 and $275 per month left over after necessary living expenses. T would pay 60 x $275, or $16,500, in five years. Assuming the present value of $16,500 is $13,246.75, T would have to offer $23,246.75 for the offer to be acceptable.

When evaluating the taxpayer's offer, the Service is required to consider assets owned by relatives when those assets are considered reachable by the taxpayer.[44] As a result, there will be times when an acceptable offer must significantly exceed the net realizable equity in the taxpayer's own assets and future income. Example 2: Taxpayer T owes $28,000, but he has no assets.

A relative will lend him $20,000. T has $275 left over per month after necessary living expenses. T would pay 60 x $275, or $16,500, in five years. If the present value of $16,500 is $13,246.75, then $20,000 would be an acceptable offer.

When conducting his review, the reviewer will tend to focus on the quick-sale value of the offeror's assets when computing net realizable equity.[45] He will also give due consideration to the likelihood of an increase in the value of assets or earning power in the near future.[46]

Quick-sale value is generally the amount the taxpayer would receive if he were to conduct his own distressed sale. It usually falls somewhere between value realized through a sale or auction by the Service and fair market value. In practice, it tends to be approximately 75% to 85% of fair market value. In this regard, the nature of the asset is important.(47) For example, cash and marketable securities will have identical quick-sale and fair market values. Real estate and personal property may, on the other hand, become the subject of legitimate disputes as to their quick-sale value. In this circumstance, both sides will have to rely on negotiation and appraisal in an attempt to reach an accord.[48]

The value the Service will assign to jointly held assets will depend on a number of factors. If the property is owned solely by the taxpayers seeking the compromise, it will, of course, be included at its full quick-sale value. If, on the other hand, the asset is held in joint tenancy or in tenancy-incommon, and only one of the owners owes tax, it might be possible to have a value assigned to this share that is less than its proportionate share of the total asset value. Similarly, the value of community property held in co-tenancy with third parties may, in some cases, be discounted to some extent.[49]

Valuation problems can also arise in connection with the sum to be assigned to a nonofferor spouse's interest in community and other marital property[50] Under community property law, the community property interests of both spouses may be liable for either spouse's premarital debts. The earnings of a nonresponsible spouse may not, however, be responsible for the other spouse's premarital debts absent commingling. The rules are less clear for transmutation agreements entered into after a tax liability has been assessed. Although a taxpayer can legitimately contend that such an agreement should be respected if supported by fair consideration, the Service will generally be reluctant to do so for offer-in-compromise purposes[51] In this situation, as is generally the case in the valuation area, an involved practitioner negotiating in good faith may be able to render valuable assistance to his client[52]

The last step in arriving at net realizable equity is to subtract exemptions and encumbrances superior to the Service's position from quick-sale value. The most common encumbrances are mortgages and perfected commercial financing arrangements. The most common exemption is necessary wearing apparel[53] In addition, there is a $1,650 exemption for furniture and personal effects?

* Collateral agreements

Although the taxpayer's net realizable equity constitutes the minimum acceptable amount for offer-in-compromise purposes, the administrative review has frequently not ended with this computation. In the past, unless the taxpayer was elderly with diminished future income prospects, the Service has often requested that a collateral agreement supplement the offer. However, the Service's new policy provides that collateral agreements will not be routinely secured unless a significant recovery can be expected[55] The reviewer must now justify the use of such an agreement, whereas before he was required to justify its exclusion. The most common collateral agreement is a future income agreement. This agreement, executed on Form 2261, Collateral Agreement, requires the taxpayer to remit a percentage of his annual income in excess of his necessary living expenses, including Federal income taxes, to the Treasury.[56] The duration of the agreement is subject to negotiation, with a length of three to six years commonly chosen.

Other established collateral agreements require the taxpayer to{l)reduce the basis of assets for purposes of computing depreciation and gain or loss on disposition, (2)waive net operating loss carrybacks and carryforwards and (3)waive bad debt losses or other deductions.[57] Again, the Service's new policy is that securing such agreements should be the exception and not the rule. Collateral agreements other than those outlined above are not to be entered into without National Office approval.[58]

* Appeals

More offers are rejected than accepted. The offer may be rejected for public policy reasons or, as is more likely the case, because the parties are unable to reach agreement on the terms and conditions of the offer. In either case, the taxpayer has a right to an Appeals conference, which will be explained to him in the refection letter.[59] If he wishes such a conference, it must be requested within 30 days from the date of the refection.[60] If the liability does not exceed $%500 for any tax year or tax period, the protest may be presented orally or in writing.(61 )If the total liability exceeds $2,500 for any tax year or tax period, the taxpayer must file a written protest to receive appeals consideration.[62] The decision of Appeals is, however, final. Judicial review of the decision is not available.[63]

Before recommending the submission of an offer in compromise, the practitioner should carefully consider the advantages and disadvantages such an action could have on his client.

Some of the advantages of making an offer are as follows.

1. Payment of less than the full amount of the assessment. This is the principal purpose of submitting an offer, be it of cash or deferred payment. By paying an amount he is able to afford, the client can remove a potentially impossible financial burden and secure a fresh start.

2. In appropriate cases, the ability to make deferred payments on the reduced balance due without further accruals of the failure to pay penalty. Interest continues to accrue, but only on the offered amount. These payments constitute a nondeductible liquidation of the reduced principal.

3. The release of tax liens filed against the client's personal and business assets. This will frequently improve both his current liquidity position and his future income prospects.

4. The finality attendant to a contractual arrangement.[64] Absent fraud in the inducement or a mutual mistake of fact, the client can plan his future financial arrangements with the knowledge that the Service is also legally bound by the terms of the agreement. This can be particularly important when the client has wages or other identifiable assets that could otherwise become the subject of enforced collection action.

Some of the disadvantages of making an offer are as follows.

1. As continuing consideration for the Service's acceptance of the taxpayer's offer, the taxpayer must be in full compliance with all filing and payment requirements of the law for a period of five years after the offer is accepted. Failure to comply with this provision constitutes a default by the taxpayer under the terms of the agreement.[65] 9.. The possibility exists that the Service will condition its acceptance of the offer on the execution of a future income agreement or other collateral agreement. This will effectively negate at least part of the reduction in tax liability. From a client's perspective, assuming an obligation to pay future after-tax income against a reduced, but still significant, tax liability might not always be justified.

3. Form 656 requires the taxpayer to waive the 10year statute of limitations on collection for the period of the offer plus one year. If the offer is to make deferred payments, this waiver continues until one year after the last installment is paid. For those clients in severe financial distress, bankruptcy might be a preferable alternative to lengthening the payment period through the offer-incompromise process.[66] 4. Under the terms of an accepted offer, a default by the taxpayer authorizes the Service to commence collection activity without further notice. If such an occurrence appears likely, a prudent business practice might be to notify the Service in advance of the default. As previously indicated, if the interests of the Government are not jeopardized, it will generally continue the compromise process.

Conclusion

The ultimate goal is a compromise that is in the best interest of both the taxpayer and the Service. Practitioners who believe a compromise would benefit both parties should not be reluctant to have their clients submit offers--even if the amount of the tax sought to be compromised is great and the liability arose from a tax shelter. The only absolute rule is that the amount accepted must reasonably reflect collection potential. Acceptance of the offer is, however, completely discretionary on the part of the Service. An otherwise qualifying offer may be rejected solely on the grounds that knowledge of its acceptance would be detrimental to the Government's best interest.[67]

(1) As a practical matter, tax liabilities arising out of criminal conduct are seldom compromised. See Nelson and Keightley, "Managing the Tax Court Inventory," 7 Virgirnia Tax Review 451 {Winter 19881, at 461. See also Regs. Sec. 301.7122-1(b1, which removes from offer-in-compromise consideration tax liabilities arising from deliberate acts with intent to defraud.

(2)Intenal Revenue Manual (hereinafter, "IRM"| Section 57( 10J 1.1.

(3)Id.

(4)IRM Section 57{lO}l.2(3}.

(5)Regs. Sec. 301.7122-1{a1.

(6)IRM Section 57{101{10].I(4]

(7)Big Diamond Mills Co., 51 F2d 721 (8th Cir. 1931H10 AFTR 315, 2 USTC [paragraph]7911.

(8)Id.

(9) Regs. Sec. 301.7122-l{c1, IRM Section 57(1011.4. Specific penalties not directly related to the tax liabilities such as the excise tax for violations of the Employee Retirement Income Security Act of 1974 {ERISA) must be separately compromised.

(10)Est. of Ralph L. Jones, 795 F2d 566 (6th Cir. 1986}(58 AFTR2d 86-6372, 86-2 USTC [paragraph]13,675].

(11) R. Carter Pittman, N.D. Ga,, 1948 {38 AFTR 1597, 48-2 USTC [paragraph 9328]..

(12)Sec. 7122[a]

(13)Secs. 71221[a] 7701(a)(11}(B) and (a][12](A). 632

(14)IRM Section 57(1011.61.

(15)Id.

(16) RNI Section 57( 10){ 16).23.

(17) Botany Worsted Mills, 278 US 282 {1929)(7 AFTR 8847, 1 USTC [paragraph] 3481.

(18) Regs. Sec. 301.7122-1(d1{31.

(19)Pierre Boulez, 810 F2d 209 {D.C. Cir. 1987][59 AFTR2d 87-608, 87-1 USTC [paragraph] 9177L cert. denied. (20)RM Section 57(10)[16] 92. (21)IRM Section 57[10)1.1.

(22) Two spaces are provided on Form 656 for the offeror's signature.

When a husband and wife seek to compromise a joint liability, both must sign to ensure that the waiver and other provisions bind both parties. In the case of a corporation, the corporate name must be entered on the first line and the signature of the president or other authorized officer on the second line. Form 2848, Power of Attorney and Declaration of Representative, is sufficient to allow complete representation for an offer in compromise, with the exception of appeals. [see Circular 230 for complete representation requirements of Appeals. l See IRM Section 5711016.6.

(23)IRM Section 57[10]5.1[3].

(24)Pending liabilities [i.e., proposed deficiencies in the Examination

Division, Appeals or Tax Court] can be compromised on doubt as to collectibility, See IRM Sections 5711011.9, 57110}1 .[ 11 ]. (25)IRM Section 57[10]6.2. (26)IRM 656 Instructions, p. 4. (27)IRM Section 57(10]5.1(9J.

(28) Although discretion remains with the Service, a default by the taxpayer will not always result in the acceleration of his contractual commitments under the offer. See IRM Section 57{10)(211] authorizing the appropriate official to reduce payments temporarily, provided there is evidence that the taxpayer is acting in good faith and not attempting to place his assets beyond the reach of the Government.

(29)IRM Sections 57{101(12).1{1); 57[10](12).1[2].

(30) In addition, it should be noted that the Code contains criminal sanctions for taxpayers and their representatives who knowingly provide false information on Form 433-A or Form 433-B. See Sec. 7206{5), 18 U.S.C. Section 2.

(31)Net realizable equity is the value assigned to the taxpayer's assets less any exemptions and encumbrances superior to the Service's position. See IRM Sections 57{10){10).1(2} and 57[10)( 13} for a discussion of the evaluation of the offeror's assets.

(32) See IRM Section 57} 10}6.2 for more details on identifying the liability.

(33)See IRM Section 57{10)(15}.9 for a further discussion of individual offers on joint assessments.

(34)IRM Section 57{1015.1{S).

(35)Sec. 7809{b1; IRM Section 57(1015.1(5].

(36)See. IRM Section 57( 10][10]2 requiring the Service to make every effort to negotiate an acceptable offer.

(37)The release of Form 1271 and other internal documents addressing the Service's rejection of an offer will generally fall within the provisions of the Freedom of Information Act.

(38)IRM Section 57(10]2.1[l](d]l.

(39) A variation in the percentage of accepted offers exists in the IRS districts nationwide. This suggests that administrative criteria for uniformity in the acceptance of offers is not set at the national or regional level. Instead, the key Service personnel in the individual districts have wide latitude when reviewing offers.

Possibly the most important factor is the philosophy of the individual official as to the proper collection procedure.

(40)See IRM Section 57{ 10}9.3, which requires the examining officer to contact the taxpayer within 30 days from the receipt of the offer. At that time, the taxpayer will be notified regarding information the examiner will need to make a decision, and will be given a reasonable amount of time in which to comply.

(41)See Rev. Proc. 80-6, 1980-1 CB 586, for a further discussion of the guidelines governing the acceptability of an offer in compromise.

(42)IRM Section 57[lO][l3).[11].

(43)See IRM Section 57(10){1].(11), which provides a formula for determining present value of future earned and unearned income. This allows for a determination of what the taxpayer can pay now rather than installment payments over an extended period.

(44)IRM Section 57( 10][ 10). 1.

(45)IRM Section 57{10)[10L1(2).

(46)1RM Section 57110)(13}.{12).

(47)See IRM Section 57( 10] 13) for a discussion of the evaluation of specific assets.

(48)See IRM Section 57{10)110).1{4L stating that the negotiation process should be open and asset valuations should be the result of mutual agreement. Rejection of an offer based on narrow criteria of asset valuation should be avoided.

(49)See IRM Section 57[10)(13L92 for a further discussion of the flexibility that exists when valuing jointly owned real property if only one party owes tax.

(50)See IRM Section 57[lo][l3].[l4][l] for a discussion of possible relief for an innocent spouse under Secs. 6013[e] and 6653[b].

[51]See IRM Section 57[10]( 10]. 1 requiring the Offer-in-Compromise Specialist to consider a spouse's separate property when reviewing the offer as it is considered reachable by the offeror.

[52]In addition to being involved in negotiating asset values, the practitioner should be aware that some assets may be excluded entirely for purposes of computing a client's net realizable equity. For example, see IRM Section 57{10][13].4[1], which may, in some cases, authorize the exclusion of a pension plan from off let-in-compromise consideration.

(53) Sec. 6334[a] 111.

(54) Sec. 6334[a][2].

(55) IRM Section 57[10][15][13].

(56)With respect to the percentage of annual income to be remitted, the experience of one prominent practitioner indicates it will generally range from 20% to 50%. See Schriebman, IRS Taxation Collection Procedures: A Manual for Practitioners, Ed ed. Chicago: CCH, 1988, at [PARAGRAH]13.

(57) See IRM Section 57[10](15] for a detailed discussion of the various types of collateral agreements.

(58) IRM Section 57[10][15]I[3).

(59) Acceptance authority and rejection authority in Appeals are limited to Regional Directors of Appeals, Appeals Chiefs and Associate Appeals Chiefs.

(60) IRM Section 5 7(10)(17).6(4)].

(61} IRM Section 57(10)(17).8(1).

(62) IRM. Section 57(10)(17).8(2).

(63) Robert L Carroll, E.D.N.Y., 1964 114 AYTR2d 5564, 64-2 USTC [PARAGRAPH]9687).

(64)Regs. Sec. 301.7122-1(c).

(65)IRM Section 57{10)5.1{9).

[66]Federal, state and local tax obligations that were assessed over three years before the filing of a petition are generally dischargeable in bankruptcy. When filing the petition, the practitioner should consider not filing it within 240 days after an assessment as this may materially extend the time the client is eligible for a discharge. See 11 U.S.C. Section 507.

[67]IRM Section 57(10)1.3.