Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased - Page 8

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               (g) Qualified Offer.--For purposes of subsection                       
               (1) In general.--The term “qualified offer” means a                    
               written offer which--                                                  
                    (A) is made by the taxpayer to the United                         
                    States during the qualified offer period;                         
                    (B) specifies the offered amount of the                           
                    taxpayer’s liability (determined without regard to                
                    (C) is designated at the time it is made as a                     
                   qualified offer for purposes of this section; and                 
                    (D) remains open during the period beginning on                   
               the date it is made and ending on the earliest of                      
               the date the offer is rejected, the date trial                         
                    begins, or the 90th day after the date the offer                  
                    is made.                                                          
               The legislative history of section 7430 provides insight               
          into the purpose of section 7430:                                           
                    The Committee believes that settlement of tax                     
               cases should be encouraged whenever possible.                          
               Accordingly, the Committee believes that the                           
               application of a rule similar to FRCP 68 [rule 68 of                   
               the Federal Rules of Civil Procedure] is appropriate to                
               provide an incentive for the IRS to settle taxpayers’                  
               cases for appropriate amounts, by requiring                            
               reimbursement of taxpayer’s costs when the IRS fails to                
               do so.  [S. Rept. 105-174, at 48 (1998), 1998-3 C.B.                   
               537, 584.]                                                             
          Additionally, we have previously stated that “The purpose                   
          underlying the qualified offer provision of section 7430(c)(4)(E)           
          * * * is to encourage settlements by imposing litigation costs on           
          the party not willing to settle.”  Gladden v. Commissioner, 120             
          T.C. 446, 450 (2003).                                                       

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