Michael D. Brown, 158 T. C. 9, filed 6/23/22, is back, still trying to get his OIC from his $50 million-plus tax liability accepted. Nothing if not resourceful, Mike claims 27 (count ’em, 27) months had gone by from Mike’s submission until Appeals issued the NOD bouncing same, so Section 7122(f) says the OIC is deemed accepted.

There’s much backstory on Mike on this my blog, going back to 2013, but I’ll spare you the catalogue now. But see infra, as my expensive colleagues say.

Mike sent in his OIC, but six months later the collection specialist handed it back to Mike, saying there were other investigations pending at the time that might affect his delinquent account. While Judge Albert G (“Scholar Al”) Lauber doesn’t elaborate, maybe it was some of the SDLIAs Mike was flogging. See my blogpost “Not Ready For Prime Time,” 12/2/13.

Mike and Appeals jousted, but finally Appeals issued the SNOD. Mike tries the “deemed accepted” gambit, even though he’d lost that once before in 9 Cir.

Judge Scholar Al: ” For purposes of section 7122(f), petitioner’s OIC was ‘deemed pending only for the period between the date the offer [wa]s accepted for processing and the date the IRS return[ed] the offer to [him].’ Treas.  Reg. § 301.7122-1(d)(2). His offer was accepted for processing… but it was returned six months later…. See Rev.  Proc. 2003-71, § 5.06, 2003-2 C.B. at 518 (‘An offer to compromise is considered to be returned on the day the Service mails, or personally delivers, a written letter to the taxpayer informing the taxpayer of the decision to return the offer.’). Because the IRS returned petitioner’s OIC within 24 months of submission, his OIC was not deemed accepted under section 7122(f).” 158 T. C. 9, at p. 8.

The NOD terminates the CDP; the hand-back terminated the OIC. Mike tries to conflate the two, and that doesn’t fly.

“It is not uncommon for taxpayers to submit an OIC (as petitioner did here) at the outset of a CDP hearing. If that offer is returned by the COIC unit, the taxpayer may urge the SO to reverse that decision, but the taxpayer may also pursue other options. He might challenge his underlying liability, request ‘innocent spouse’ relief, propose an installment agreement, or seek withdrawal of a tax lien filing. These issues may require the SO to evaluate multiple submissions of financial information, seek assistance from the IRS Examination Division, and/or consult with the IRS’s Cincinnati Centralized Innocent Spouse Operation. Even absent a pandemic, these events may consume a considerable amount of time and possibly prolong the CDP case beyond 24 months. The Secretary recognized this possibility in Notice 2006-68, § 1.07, 2006-2 C.B. at 106, directing that ‘[t]he period during which the IRS Office of Appeals considers a rejected offer in compromise is not included as part of the 24-month period.’

“Acceptance of petitioner’s argument—that Appeals must issue the notice of determination within 24 months after an OIC is submittted—could place the SO in a dilemma. If the SO by that deadline has not resolved every issue raised by the taxpayer, the SO could be motivated to issue a notice of determination prematurely, lest the OIC be ‘deemed accepted.’ But doing so would risk reversal and remand for failure to address all ‘relevant issue[s] relating to the unpaid tax or the proposed [collection action].’ § 6330(c)(2)(A). That would prolong the case even further, defying logic and undermining Congress’ intent.” 158 T. C. 9, at p. 12. (Footnote omitted, but it says that if Mike’s reading is correct, wits, wags, and wiseacres might send in an OIC with their Form 12153, and try to yoick the collection specialist and Appeals around until the 24-month clock ran out, and claim deemed acceptance).