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B. Settlement of Tax Controversies
There exist two principal contexts in which this Court is
called upon to consider the consequences of a settlement or
purported settlement between parties to a tax controversy.
Questions have arisen concerning the effect of a settlement
allegedly reached either (1) during the administrative process
prior to the docketing of a Tax Court case or (2) after the
filing of a Tax Court petition, and the standards we have
employed in the two scenarios are not identical.
1. Prepetition Settlements
This Court has summarized the rules generally applicable to
prepetition settlements as follows:
The law regarding administrative settlement offers
is well established. Regulations issued by the
Internal Revenue Service conclusively establish the
procedures for closing agreements and compromises
pursuant to sections 7121 and 7122. Secs. 301.7121-1,
301.7122-1, Proced. & Admin. Regs. These procedures
are exclusive and must be satisfied in order to
effectuate a compromise or settlement which will be
binding on both the taxpayer and the Government. * * *
[Rohn v. Commissioner, T.C. Memo. 1994-244.]
See also Urbano v. Commissioner, 122 T.C. ___, ___ (2004) (slip
op. at 15-16) (“it is firmly established that section 7121 sets
forth the exclusive means by which an agreement between the
Commissioner and a taxpayer concerning the latter’s tax liability
may be accorded finality”); Estate of Meyer v. Commissioner, 58
T.C. 69, 70 (1972) (“Section 7121 of the Internal Revenue Code of
1954 sets forth the exclusive procedure under which a final
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