Authority to Compromise Tax Liabilities After a DOJ Referral (9/4/17)

On Saturday, I posted a blog entry on the Federal Tax Crimes Blog regarding the Tax Court's application of the civil fraud penalty for multiple years after the taxpayer pled guilty to tax evasion involving only one of the years.  See Taxpayer Held Liable for Civil Fraud Penalty after Plea to Tax Evasion for One of the Years (Federal Tax Crimes Blog 9/2/17), here, discussing Cantrell v. Commissioner, T.C. Memo. 2017-170, here.

I thought some fans of tax procedure might be interested in the blog entry since the civil fraud penalty and collateral estoppel are important issues for tax procedure.  The application of the civil fraud penalty and collateral estoppel for the year of conviction in Cantrell is fairly routine.

What was not routine, and what tax procedure enthusiasts may not fully appreciate is the treatment of offers in compromise after a tax evasion conviction.  Cantrell dealt with one aspect of that issue and I expound further on it in the blog entry.  There are many nuances, so I refer readers to the blog entry linked above, where I discuss some of them.

At the inception, readers will want to read § 7122(a), here, titled Compromises, which seems to be very simple:

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.

I discuss in an addendum to the Federal Tax Crimes Blog post linked above some of the nuances caused by this statutory division of authority to compromise.  Federal tax procedure enthusiasts my want to read the blog, particularly the addendum.