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Under Rev. Proc. 2003-7, an OIC is rejected or returned within the 24-month
The Tax Court held considered to be returned on the day the period, it is not deemed accepted.
IRS mails, or personally delivers, a written
Brown sought to have the Tax Court
that Brown’s OIC was letter to the taxpayer informing the reconsider its holding in Brown II. The
rejected in November taxpayer of the IRS’s decision to return court declined to do so and noted that it
2018, when the IRS the offer. Also, under Notice 2006-68, could not reconsider the Ninth Circuit’s
holding in Brown III. Moreover, the
“[t]he period during which the IRS
returned it to him. Office of Appeals considers a rejected court found that Brown’s argument was
offer in compromise is not included as meritless because it confused “two kinds
part of the 24-month period.” of finality: the administrative return of
SO closed the case. In August 2020, the In Brown’s case, his OIC was an OIC, which terminates the 24-month
IRS issued a notice of determination in submitted in April 2018 and was period under section 7122(f), and the
which it concluded that Brown’s OIC returned to him seven months later notice of determination, which terminates
was properly returned due to an ongoing in November 2018. Although the the CDP proceeding under section 6330.”
IRS investigation. SO spent additional time evaluating The Tax Court stated that, in
Brown timely petitioned the Tax Brown’s position, as provided in Notice essence, Brown was contending that Sec.
Court for review. In Tax Court, he filed 2006-68, this time was not included 6330 overrides the outcome dictated
a motion for summary judgment, again in the 24-month period under by Sec. 7122(f) because the notice of
contending that the IRS was deemed Sec. 7122(f). Thus, the Tax Court determination is the “critical event” under
to have accepted the OIC under Sec. concluded that Brown’s OIC was Sec. 7122(f) and that no real authority
7122(f) because it had not rejected the rejected within 24 months of its suggested a contrary result. This assertion,
OIC within 24 months of its submission. submission and under Sec. 7122(f), the the Tax Court found, ignored Regs. Sec.
regulations, and other relevant guidance, 301.7122-1, Brown II, Brown III, Notice
The Tax Court’s decision the OIC was not deemed accepted by 2006-68, and the IRM provisions it
The Tax Court held that Brown’s OIC the IRS under Sec. 7122(f). had cited. The court stated that these
was rejected in November 2018, when the Brown, however, while accepting authorities confirmed that the IRS’s
IRS returned it to him. Because this was the validity of these rules, claimed that initial decision to return an OIC is the
within 24 months of Brown’s submission they are inapplicable to OICs submitted event that terminates the 24-month
of the OIC, it was not deemed accepted in a CDP case. According to Brown, “deemed acceptance” period and Brown
by the IRS under Sec. 7122(f). OICs submitted during a CDP case are had failed to cite any authority for his
The Tax Court explained that under governed exclusively by Sec. 6330(c), claim that Sec. 7122(f) has a different
Regs. Sec. 301.7122-1(d)(2), an OIC under which only an Appeals notice meaning when an OIC is made in a
becomes pending when it is accepted for of determination can be the event that CDP context.
processing. An OIC that the IRS returns terminates the Sec. 7122(f) 24-month The Tax Court also found that having
following acceptance for processing is period. The Tax Court, however, rejected the 24-month period end with the IRS’s
deemed pending only for the period Brown’s arguments, finding that they initial rejection was consistent with
between the date the IRS accepts the were “at odds with judicial precedent and congressional intent expressed in the
OIC for processing and the date it derive no support from legal authority, legislative history of Sec. 7122(f) that
returns the OIC to the taxpayer. policy considerations, or common sense.” the IRS “would respond fairly promptly
Regs. Sec. 301.7122-1(d)(1) provides Brown had presented a similar theory to OICs, rather than letting them sit in
that a taxpayer must submit an OIC to the court in an earlier case, Brown, a pile for two years or more.” The court
“according to the procedures, and in T.C. Memo. 2019-121 (Brown II). In further noted that there was no reason
the form and manner, prescribed by that case, the Tax Court held, citing to believe, in enacting Sec. 7122(f), that
the [IRS].” The IRS has prescribed the Internal Revenue Manual (IRM) Section Congress intended to limit the duration
relevant procedures in Rev. Proc. 2003-71 8.23.3.1.1.1(6), that the 24-month Sec. of a CDP proceeding, which would be
and in Notice 2006-68. Notice 2006-68 7122(f) period ends when the COIC unit the practical effect of including the period
states that “[a]n offer will not be deemed returns a taxpayer’s OIC. In Brown, 826 of an Appeals review of a rejected OIC in
to be accepted if the offer is, within F. Appx. 673 (9th Cir. 2020) (Brown III), the Sec. 7122(f) 24-month period.
the 24-month period, rejected by the the Ninth Circuit affirmed that portion Finally, the court pointed out that if
Service [or] returned by the Service as of the Tax Court’s decision. Citing Notice Appeals was required to issue a notice of
nonprocessable or no longer processable.” 2006-68, the court held that if an OIC is determination within 24 months after

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