Internal Revenue Code · 26 U.S.C.
§ 7122. Compromises
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 7122
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Last amended
- July 1, 2019 by Pub. L. 116–25
- Amendments
- 6 dated changes in the source credit
- Length
- 7 subsections · 1,196 words · about 5 min to read
- Defines
- 1 term
- Cross-references
- cites 2; cited by 14 Code sections and 16 other regulations
- Regulations
- 2 issued under this section
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.
The submission of any lump-sum offer-in-compromise shall be accompanied by the payment of 20 percent of the amount of such offer.
For purposes of this section, the term “lump-sum offer-in-compromise” means any offer of payments made in 5 or fewer installments.
The submission of any periodic payment offer-in-compromise shall be accompanied by the payment of the amount of the first proposed installment.
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.
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.
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.
Paragraph (1), and any user fee otherwise required in connection with the submission of an offer-in-compromise, shall not apply to any offer-in-compromise with respect to a taxpayer who is an individual with adjusted gross income, as determined for the most recent taxable year for which such information is available, which does not exceed 250 percent of the applicable poverty level (as determined by the Secretary).
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.
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.
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 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.
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.
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 meets the requirement of clause (i) or (ii) of section 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.
(Aug. 16, 1954, ch. 736, 68A Stat. 849; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 104–168, title V, § 503(a), July 30, 1996, 110 Stat. 1461; Pub. L. 105–206, title III, § 3462(a), (c)(1), July 22, 1998, 112 Stat. 764, 766; Pub. L. 109–222, title V, § 509(a), (b), May 17, 2006, 120 Stat. 362, 363; Pub. L. 109–432, div. A, title IV, § 407(d), Dec. 20, 2006, 120 Stat. 2962; Pub. L. 113–295, div. A, title II, § 220(y), Dec. 19, 2014, 128 Stat. 4036; Pub. L. 116–25, title I, §§ 1001(b)(1)(F), 1102(a), July 1, 2019, 133 Stat. 985, 986.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 7122
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 2 other sections
- § 6159 Agreements for payment of tax liability in installments
- § 6702(b)(2)(A) Frivolous tax submissions
Cited by 14 Code sections
- § 63(e)(3)(B) Taxable income defined
- § 473(f)(1)(B) Qualified liquidations of LIFO inventories
- § 1311(a) Correction of error
- § 6013(b)(2)(D) Joint returns of income tax by husband and wife
- § 6103(k)(1) Confidentiality and disclosure of returns and return information
- § 6159(g) Agreements for payment of tax liability in installments
- § 6325(f)(2) Release of lien or discharge of property
- § 6511(d)(2)(B)(i) Limitations on credit or refund
- § 6521(a)(3) Mitigation of effect of limitation in case of related taxes under different chapters
- § 6702(b)(2)(B)(ii)(II) Frivolous tax submissions
- § 7123(b)(1)(B) Appeals dispute resolution procedures
- § 7206(5) Fraud and false statements
- § 7345(c)(2)(C) Revocation or denial of passport in case of certain tax delinquencies
- § 7809(b)(1) Deposit of collections
Cited in 16 regulations not issued under it
- § 1.63-1 Change of treatment with respect to the zero bracket amount and itemized deductions.
- § 1.270-1 Limitation on deductions allowable to individuals in certain cases.
- § 1.281-4 Taxable years affected.
- § 1.613-7 Application of percentage depletion rates provided in section 613(b) to certain taxable years ending in 1954.
- § 1.1311(a)-2 Purpose and scope of section 1311.
- § 1.1314(a)-2 Adjustment to other barred taxable years.
- § 1.1321-1 Involuntary liquidation of lifo inventories.
- § 1.1335-1 Elective method; time and manner of making election and effect thereof.
- § 20.2001-1 Valuation of adjusted taxable gifts and section 2701(d) taxable events.
- § 300.3 Offer to compromise fee.
- § 301.6325-1 Release of lien or discharge of property.
- § 301.6511(d)-2 Overpayment of income tax on account of net operating loss or capital loss carrybacks.
- § 301.6511(d)-4 Overpayment of income tax on account of investment credit carryback.
- § 301.6521-1 Mitigation of effect of limitation in case of related employee social security tax and self-employment tax.
- § 301.7803-2 Internal Revenue Service Independent Office of Appeals resolution of Federal tax controversies without litigation.
- § 601.203 Offers in compromise.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 116–25Parts changed in 2019: (c)(3) (e)(2)
- Amended by Pub. L. 113–295Parts changed in 2014: (f)
- Amended by Pub. L. 109–432Parts changed in 2006: (c) (d) (d)(3)(C) (e) (f)
- Amended by Pub. L. 109–222
- Amended by Pub. L. 105–206Parts changed in 1998: (c) (d)
- Amended by Pub. L. 104–168Parts changed in 1996: (b)
- Enacted by Pub. L. 94–455Parts changed in 1976: (a)
Where it sits in the Code
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2019—Subsec. (c)(3). Pub. L. 116–25, § 1102(a), added par. (3).
Subsec. (e)(2). Pub. L. 116–25, § 1001(b)(1)(F), substituted “Internal Revenue Service Independent Office of Appeals” for “Internal Revenue Service Office of Appeals”.
2014—Subsecs. (f), (g). Pub. L. 113–295 redesignated subsec. (f) relating to frivolous submissions as (g).
2006—Subsec. (c). Pub. L. 109–222, § 509(a), added subsec. (c). Former subsec. (c) redesignated (d).
Subsec. (d). Pub. L. 109–222, § 509(a), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e).
Subsec. (d)(3)(C). Pub. L. 109–222, § 509(b)(1), added subpar. (C).
Subsec. (e). Pub. L. 109–222, § 509(a), redesignated subsec. (d) as (e).
Subsec. (f). Pub. L. 109–432 added subsec. (f) relating to frivolous submissions.
Pub. L. 109–222, § 509(b)(2), added subsec. (f) relating to deemed acceptance of offer not rejected within certain period.
1998—Subsec. (c). Pub. L. 105–206, § 3462(a), added subsec. (c).
Subsec. (d). Pub. L. 105–206, § 3462(c)(1), added subsec. (d).
1996—Subsec. (b). Pub. L. 104–168 substituted “$50,000. However, such compromise shall be subject to continuing quality review by the Secretary.” for “$500.”
1976—Subsecs. (a), (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 2019 Amendment
Pub. L. 116–25, title I, § 1102(b), July 1, 2019, 133 Stat. 986, provided that: “The amendment made by this section [amending this section] shall apply to offers-in-compromise submitted after the date of the enactment of this Act [July 1, 2019].”
Effective Date of 2006 Amendment
Amendment by Pub. L. 109–432 applicable to submissions made and issues raised after the date on which the Secretary first prescribes a list under section 6702(c) of this title, see section 407(f) of Pub. L. 109–432, set out as a note under section 6320 of this title.
Amendment by Pub. L. 109–222 applicable to offers-in-compromise submitted on and after the date which is 60 days after May 17, 2006, see section 509(d) of Pub. L. 109–222, set out as a note under section 6159 of this title.
Effective Date of 1998 Amendment
Amendment by Pub. L. 105–206 applicable to proposed offers-in-compromise and installment agreements submitted after July 22, 1998, see section 3462(e)(1) of Pub. L. 105–206, set out as a note under section 6331 of this title.
Effective Date of 1996 Amendment
Pub. L. 104–168, title V, § 503(b), July 30, 1996, 110 Stat. 1461, provided that: “The amendment made by this section [amending this section] shall take effect on the date of the enactment of this Act [July 30, 1996].”
Preparation of Statement Relating to Offers-in-Compromise
Pub. L. 105–206, title III, § 3462(d), July 22, 1998, 112 Stat. 766, provided that:
“The Secretary of the Treasury shall prepare a statement which sets forth in simple, nontechnical terms the rights of a taxpayer and the obligations of the Internal Revenue Service relating to offers-in-compromise. Such statement shall—“(1) advise taxpayers who have entered into a compromise of the advantages of promptly notifying the Internal Revenue Service of any change of address or marital status;“(2) provide notice to taxpayers that in the case of a compromise terminated due to the actions of one spouse or former spouse, the Internal Revenue Service will, upon application, reinstate such compromise with the spouse or former spouse who remains in compliance with such compromise; and“(3) provide notice to the taxpayer that the taxpayer may appeal the rejection of an offer-in-compromise to the Internal Revenue Service Office of Appeals [now Internal Revenue Service Independent Office of Appeals].”