Non-suit year settlements are those in which the taxpayer’s offer contemplates the disposition of years or issues not in suit, liabilities of taxpayers not in suit or both. If the scope of the settlement is restricted to the suit years, and merely has an affect on subsequent years, then Counsel would not view it as a non-suit settlement. Where the adjustments called for pursuant to the settlement do not automatically affect non-suit years, but leave the Service with no discretion as to their disposition, then a provision in the settlement disposing of non-suit years would call for a non-suit settlement.

When an attorney receives a request for a recommendation on an offer, several precautions should be taken in the event a non-suit year settlement will be necessary.

The attorney should immediately review the settlement offer to determine whether a non-suit year settlement is necessary. Any delay in recognizing that an offer calls for non-suit year settlement will result in a delay in the processing of the settlement.

Once it is decided a non-suit year settlement is involved, the determination should be made whether the offer is acceptable. Counsel, without referral to Appeals, has authority to recommend rejection of any settlement involving non-suit years or taxpayers not in suit. Accordingly, if rejection is recommended, then a non-suit year settlement is not needed and normal settlement procedures may be utilized. Non-suit year settlement procedures must be followed, however, if the rejection recommendation contains a proposal as to what would be an acceptable offer.

It is essential, once a determination is made that a settlement will be a non-suit year settlement, that the views of the Appeals or Exam field office be requested immediately. If there are newly discovered facts, they should be made available to these offices. The memorandum to these offices should state the issues in suit, provide a copy of the settlement proposal, and seek views and comments with respect to all of the matters involved. Appeals or Exam should also be asked to provide their views as to what they would consider an acceptable settlement if they recommend rejection.

A non-suit year settlement presents computational difficulties not present in a normal settlement proposal. In a regular settlement all of the files and necessary transcripts of account should be in Counsel’s possession. It would then be a simple matter to send this material to the appropriate office for a recomputation of the amount of the overpayment. See CCDM 34.8.1.2.2.3.

With non-suit year settlements, Counsel does not usually have complete files or transcripts of account. Years before Appeals or Exam may be unaudited. If a settlement is going to present computational problems, the solicitation of such an offer should be discouraged, and if received, the difficulty in disposing of it may serve as a basis for recommending rejection.

Although not always necessary, it is generally desirable for an attorney to prepare a memorandum to his or her reviewer when forwarding a proposed non-suit year settlement letter. The memorandum should point out why a non-suit year settlement is necessary, contain a brief discussion as to the acceptability of the offer, and include the views of Appeals.

Non-suit year settlement letters may be signed by the Chief Counsel, Associate Chief Counsel, or Deputy Associate Chief Counsel for matters under their respective jurisdictions. Additionally, under certain circumstances, such settlement letters may be signed by Division Counsel, Area Counsel, or Assistant Chief Counsel. See CCDM 34.8.1.1.2.

Attorneys in Associate offices must keep in mind the final authority to settle cases pending in litigation rests with DJ. Furthermore, any recommendation believed acceptable by an attorney must be approved by the attorney’s reviewer. Accordingly, Associate office attorneys should be careful at settlement conferences not to make any statements indicating the Office of Chief Counsel will recommend acceptance or the Government will ultimately accept the offer. If necessary, an attorney may indicate that he or she is inclined to favorably (or unfavorably) recommend the offer, with a caution that this is only the attorney’s present view, and that upon further consideration, a different formal recommendation may be made.

A conference memorandum is usually prepared, signed by the attorney and approved by the reviewer.

It is the attorney’s responsibility to carefully evaluate the merits of the offer based on the pertinent facts and applicable case law and formulate a specific recommendation with respect to the offer. In so doing, it is important for the attorney to have available the full factual elements of the issue or issues encompassed by the settlement proposal. Often the defense letter will indicate what, if any, additional factual development is deemed to be necessary.

When DJ seeks a recommendation on a factual issue, DJ’s letter should be accompanied by the appropriate factual development. For example, if significant facts were unknown at the defense letter stage, DJ’s letter seeking the Service’s recommendation, aside from being accompanied by the settlement offer itself, should also be accompanied by material shedding further light upon the facts, such as answers to interrogatories, depositions, appraisal reports, stipulations of fact, etc.

Whether further factual development of the case was required but is not forthcoming, a check should be made with DJ attorney to determine whether such material is available. Where necessary further factual development has not been undertaken and the settlement offer does not resolve all questionable factual issues in favor of the Government, then it would generally be appropriate not to consider the settlement offer until further factual development is undertaken. In this instance, we would advise DJ that Counsel is recommending rejection until additional factual development is available.

Regular. The typical settlement offer referred to Counsel encompasses a single case with a single taxpayer and covers the years and issues in suit. Generally, in these situations the referral letter should have covered issues raised by the settlement offer and may have provided a suggestion as to whether the case was susceptible of settlement and if so, on what basis. The referral letter may also have pointed out whether further factual development was necessary.

Non-suit Year Settlement. See the discussion in CCDM 34.8.2.1.2.

Joint Committee Settlement. See the discussion in CCDM 34.8.2.8.

Related Refund And Tax Court Case Settlement. See the discussion in CCDM 34.8.1.3.2.

Multiple Issues and Parties Settlement. Frequently, litigation will involve multiple issues and multiple parties. In most cases where multiple issues are pending, the settlement offer will encompass all of the issues in suit. However, in some cases only some of the issues are settled and the balance are left to be resolved by litigation or later settlement. Furthermore, as with defense letters, only one letter is prepared with respect to related cases which contain common issues. The format of a settlement letter involving multiple issues and/or multiple parties will not be different from a regular settlement letter with the exception that each issue, to the extent it is separable from the other issues, is discussed separately and separate conclusions are reached as to the appropriateness of the settlement as to each issue or party.

Letterhead. Settlement letters should be prepared on the same letterhead used for defense letters. Exhibit 35.11.1-27 depicts a sample settlement letter.

Symbols, Address, Caption, and Salutation. The instructions for symbols, address, caption, and salutation are the same as those for a defense letter.

Opening Statement. The opening statement of a settlement letter should refer to the DJ letter asking for the Service’s recommendation. In the next paragraph, it is helpful to point out the years, the amount of tax and the type of tax in suit. When several taxpayers are involved, the same information should be set forth for each taxpayer.

Statement of Issues. Following the opening statement, the issues that are stated in the referral letter should be set forth in the settlement letter. If new issues have arisen since the preparation of the referral letter, or one or more of the issues have been inappropriately set forth in the referral letter, the list of issues should be revised. Even though an issue has already been disposed of it is helpful to list it and its disposition can later be explained.

Statement of Offer. Following the statement of the issues, the terms of the offer should be set forth under a separate heading. If practical, the description of the offer should use a numbering system paralleling the number assigned to each issue. If there are four issues and the offer disposes of them on an issue by issue basis, disposition of each issue pursuant to the offer would be also set forth in four numbered paragraphs. If the offer reserves certain issues for litigation, or certain issues have already been disposed of, the particular status of the issue(s) should be described under the offer heading even though the pending offer does not dispose of the issue. For example, the description "This issue has been previously conceded by the Government," would be sufficient. Naturally, if the case is not being disposed of on an issue by issue basis, but instead is being disposed of on the basis of a 50 percent concession by the taxpayer and a 50 percent concession by the Government, a statement under the offer heading would be appropriate. If the terms of the offer are unclear, the attorney should first look to DJ’s letter acknowledging the offer for clarification. If the attorney is still unclear as to the terms of the offer, the DJ trial attorney should be contacted. Typically, the DJ trial attorney can obtain an immediate clarification from taxpayer’s attorney, either informally or by formal supplemental offer letter, enabling Counsel to continue working on the offer. However, if the ambiguity cannot be clarified in a reasonable period, it is best to reject the offer pending further clarification.

Recomputation. Following the description of the taxpayer’s offer, it is necessary to make some comment with respect to a recomputation. Generally, such comment will be necessary either where DJ has specifically requested a recomputation, if the case involves a refund that will be reported to the Joint Committee on Taxation, or if a recomputation is necessary to properly evaluate the offer and secure an allocation between tax and interest. Where a recomputation is necessary, it should be immediately requested from Appeals. See CCDM 34.7.1.4.1.

Discussion. The discussion part of an offer letter should be prepared in the same manner as the discussion part of a defense letter. Each issue being disposed of by the offer should be numbered and described under a separate heading; for example: Issue One. Abandonment Loss. Under this heading the facts and the legal analysis should be discussed under separate subheadings where appropriate. Obviously, if the legal issue is fact bound, or if the facts are merely incorporated by reference from the defense letter or some other document, it is permissible to discuss the facts and law together. Good judgment should be used in determining whether it would be helpful for the reader to have a separate discussion of the facts and law.

Conclusion and Recommendation. A settlement letter should be concluded with a separate heading entitled Conclusion and Recommendation. If an offer disposes of a case on an issue-by-issue basis, and an attorney has concluded it is acceptable with respect to each issue, then a recommendation for acceptance may be made merely on the basis of the foregoing evaluation.

Counterproposals. If rejection of the offer is recommended, DJ should be advised of whether the Service still regards the case to be susceptible to settlement and the appropriate basis of an acceptable settlement. DJ also may be advised that the case is susceptible to settlement even though no specific basis is suggested. If a specific proposal for settlement is recommended and DJ solicits an offer consistent with the terms of the counterproposal, DJ generally will not refer the subsequent offer to the Service for its views or recommendation. Where an offer closely approximates an attorney’s evaluation of a case, acceptance should be recommended even though it may fall slightly below what the attorney considers to be the value of the case. Naturally, determining whether a proposed settlement is within the acceptable range involves good judgment and must be applied on a case-by-case basis.

Nuisance Settlements. If the Government’s case is extremely strong, Counsel will occasionally receive settlement proposals asking the Government to concede five or ten percent of the case. Nuisance settlements are disfavored and should be rejected. The practice of conceding a very small percentage of a case without regard to the merits is to be thoroughly discouraged. If the Government’s chances of success in litigation are extremely small (for example, less than ten percent) the Government should not attempt to elicit a settlement from the taxpayer because of the cost of litigation to the taxpayer. Where the Government’s case is extremely weak, serious consideration should be given to recommending concession of the case.

Transmittal. The settlement letter should transmit to DJ copies of any recomputations, the administrative files, if they are no longer needed by the attorney, and any other files forwarded by DJ.

Signature. All settlement letters are prepared for signature on behalf of the Chief Counsel by the Field Counsel or an Associate Chief Counsel attorney. While many settlement letters must be coordinated with the appropriate Associate Chief Counsel office, they are nevertheless prepared for and signed by the Associate Area Counsel.

Where the Service recommends acceptance of an offer but DJ wishes to reject it, the further views of the Service will be solicited either formally or informally before an ultimate decision is made. Again, if the views cannot be reconciled, the matter should be referred to the appropriate Associate Chief Counsel office, if it is not already under such review.

In order to determine whether a settlement is a Joint Committee settlement a determination must be made as to whether the refund in question will exceed $2,000,000. The initial determination as to whether the settlement must be referred to the Joint Committee is the responsibility of the Service. Accordingly, if an attorney receives an offer that is being settled on a percentage or an issue by issue basis, it is important to review the offer immediately to determine the type and amount of tax involved.

In determining whether the $2,000,000 limit has been exceeded, the amount of tax, penalty, and assessed interest paid by the taxpayer must be taken into account. Statutory interest is not taken into account. If the taxpayer has sued for the recovery of $1,950,000 tax, $10,000 penalty and $20,000 assessed interest, and the Government concedes the case, the total refund of tax, penalty, and assessed interest would be $1,980,000. Even though the Government would be required to pay an additional $30,000 interest on those amounts to the taxpayer, for a total of $2,010,000, referral to the Joint Committee would not be required. Furthermore, if three taxpayers are in suit and $750,000 in tax, penalty, and assessed interest is refunded to each one of them for a total of $2,250,000, this settlement would not be referred to the Joint Committee since no one taxpayer receives a refund in excess of $2,000,000.

Finally, if, as part of the settlement a taxpayer agrees to certain deficiencies and overpayments, the refunds will be considered diminished in amount. If pursuant to the settlement the Government and the taxpayer agree upon a $2,300,000 overpayment and a $1,250,000 deficiency, the net refund will be deemed to be $1,050,000, and the case will not be referred to the Joint Committee.

If a settlement or concession on the part of the Government is reported to the Joint Committee as required by section 6405, the amount of such refund, including tax, penalties and assessed interest, must be set forth in the report. Accordingly, it is necessary to immediately request a recomputation of the amount of tax, penalty, and assessed interest to be refunded so the appropriate figures may be submitted to the Joint Committee.

Normally the request for a recomputation should be made as soon as DJ transmits the offer letter requesting the Service’s recommendation. In requesting the recomputation, normal procedures should be followed except that the person preparing the recomputation should be asked to examine the years in question for offsetting adjustments. Since offsetting adjustments could normally be utilized to reduce the amount of the refund, it is crucial to determine whether there are offsetting adjustments in order to verify the refund in question will exceed $2,000,000. While the person preparing the recomputation is asked to review the case for offsetting adjustments, the ultimate responsibility for reviewing the case for such adjustments is with the attorney. This review is generally not de novo review, but the entire administrative file should be surveyed, and at a minimum, the attorney should be aware of those proposed adjustments in the file considered and resolved by the Service at the administrative level.

Letter to Tax Division. The format of a letter recommending acceptance of an offer in a Joint Committee case is identical with the format of a letter recommending acceptance of an offer in a case where a report to the Joint Committee is not required. At the conclusion of the letter DJ should be advised that, since the refund called for under the terms of the offer exceeds $2,000,000, we have examined the case for offsetting adjustments. If none has been found, the following statement should be used: "Our review discloses no offsetting adjustments which would serve to reduce the amount of the refund. " If there are offsetting adjustments, they should be set forth and fully explained.

Tax Division Memorandum in Support of Settlement. Section 6405 requires a referral be made to the Joint Committee giving the name of the person to whom the refund or credit is to be made, the amount of such refund or credit, and the summary of the facts and the decision of the Secretary. At one time this report was prepared by the Office of the Chief Counsel. The substantive portion of the report is now prepared by the appropriate civil trial section attorney with an accompanying summary memorandum prepared by the Office of Review. The report is used to advise the Joint Committee of the proposed refund.

Transmittals. If the Assistant Attorney General, Tax Division, is in favor of the proposed settlement or concession, the Office of Review will transmit to the Joint Committee the memorandum in support of the settlement or concession. On the same date, the Office of Review also will notify Field Counsel or the responsible Associate Chief Counsel office of the submission of the proposed settlement or concession to the Joint Committee. Final action by DJ on the proposed settlement or concession will not be taken until the 30-day review period has expired. If the offer is ultimately accepted or concession approved, the Office of Review will authorize the Service Center to issue the refund and also will advise Field Counsel or the responsible Associate Chief Counsel office of the acceptance of the offer or approval of the concession and also of the authorization of the issuance of the refund.

Before proposing any settlement or concession, in whatever form, in any of such cases, the attorney to whom a case is assigned, whether in the Field or an Associate office, has the responsibility of ascertaining whether such settlement or concession would result in the case having to be first reported to the Joint Committee. Any partial settlement that could potentially result in a refund in excess of $2,000,000 should only be negotiated with the express understanding that it is subject to Joint Committee review if the disposition of the remaining issues by way of settlement or concession results in a net refund in excess of $2,000,000.

In cases pending in a field office in which there is a substantial doubt as to whether the net overpayment resulting from the proposed settlement or concession would make it a Joint Committee case, the field office should request a tentative computation from Appeals. In borderline cases, where there is a substantial doubt as to the interpretation of the guidelines to be applied in determining whether it is a Joint Committee case, the field office should refer the matter to the Office of the Assistant Chief Counsel (Administrative Provisions and Judicial Practice) before proceeding further with the settlement or concession.

With respect to concessions or settlement offers in refund cases pending in the courts of appeals or the Supreme Court, the Field or Associate office attorney has the same responsibility to ascertain whether the proposed concession or settlement would result in a Joint Committee case as with respect to Tax Court cases. Whenever a proposed settlement requires a report to the Joint Committee, the letter to DJ recommending acceptance of the offer shall include the following statement: "An examination of the case has satisfied us that there are no offsetting adjustment that would have the effect of reducing the proposed overassessment below $2,000,000."

When DJ forwards a settlement offer for consideration by the Office, the Field Counsel office will promptly review the substantive and computational matters, whether the computation has been prepared by Justice, the taxpayer’s counsel, or the Service. If Field Counsel recommends acceptance, the Field Counsel attorney will prepare a settlement letter recommending acceptance of the offer. This letter is to be dated and signed on behalf of the Chief Counsel by the Associate Area Counsel.

To speed up the settlement process in refund Joint Committee cases, counsel and DJ have agreed that DJ is authorized to submit to the Joint Committee a report as to each compromise or government concession involving a refund of tax, penalty, and interest paid in excess of $2,000,000 that the Office of Chief Counsel has affirmatively recommended or as to each compromise involving a refund of tax, penalty, and interest paid in excess of $2,000,000 in a case that has been classified S.O.P.

In refund cases, the report to the Joint Committee is prepared by the appropriate civil trial section attorney in DJ and the accompanying summary memorandum is prepared by the Office of Review.

If the Assistant Attorney General, Tax Division, is in favor of the proposed settlement, the Office of Review will transmit to the Joint Committee the memorandum in support of the settlement. On the same date, the Office of Review also will notify Field Counsel or Chief Counsel of the submission of the proposed settlement to the Joint Committee. Final action by DJ on the proposed settlement will be taken after the period for review by the Joint Committee has expired.

Exhibit 35.11.1-28 is an example of the letter DJ will use in reporting the overpayments and transmitting the supporting memorandum to the Joint Committee.

It should also be noted that in accordance with present procedures, if DJ obtains a better settlement than what Counsel has recommended, the case will not be returned to Counsel for consideration.

In court of appeals and Supreme Court cases requiring a report to the Joint Committee, DJ prepares the report and transmits it directly to the Joint Committee.

Pursuant to section 7122, the Attorney General has the authority to compromise any civil or criminal tax case which has been referred to DJ for prosecution or defense. Therefore, DJ must approve any settlement which encompasses a Tax Court case for one year and a pending refund suit for another year. See CCDM 34.5.2.5.

The coordination procedures to be followed when the settlement produces an overpayment that must be reported to the Joint Committee are the same as the coordination procedures that are followed when a report to the Joint Committee is not required.

A qualified offer is a written offer that: (1) is made by the taxpayer to the United States during the qualified offer period; (2) specifies the amount of the taxpayer’s liability (determined without regard to interest); (3) is designated as a qualified offer at the time it is made; and (4) remains open until the earliest of the date the offer is rejected, the date the trial begins or the 90th day after the date the offer is made. It is the Service’s position that, in order to meet the requirement that the offer specifies the amount of the taxpayer’s liability, the offer must establish the taxpayer’s liability (determined without regard to interest) by setting forth the dollar amount of the taxpayer’s offer, as stated above, on all of the adjustments at issue in the proceeding at the time the qualified offer is made.

In general, a prevailing party may recover the reasonable administrative and litigation costs incurred in administrative and court proceedings if the proceedings relate to the determination or refund of any tax, interest or penalty under the Internal Revenue Code. Under the statute, the making of a qualified offer may result in the taxpayer being a prevailing party for purposes of a recovery of costs. A taxpayer is a prevailing party by reason of making a qualified offer if the taxpayer’s liability under the last qualified offer would equal or exceed the amount of the taxpayer’s liability under the judgment entered by the court.

To qualify as a prevailing party under the statute, taxpayers must meet the net worth requirements of section 7430(c)(4)(A)(ii). Furthermore, to qualify for an award, taxpayers must meet the remaining requirements of section 7430, such as not unreasonably protracting the proceedings and, for purposes of an award of litigation costs, exhausting their administrative remedies. On the other hand, a taxpayer qualifying as a prevailing party by reason of having made a qualified offer need not substantially prevail on either the amount in controversy or the most significant issue or set of issues presented. Similarly, whether the positions of the United States in the administrative and litigation proceedings were substantially justified is not relevant for an award under the qualified offer rule.

A taxpayer cannot qualify as a prevailing party under this rule if the determination of the court with respect to the adjustments included in the last qualified offer is entered exclusively pursuant to a settlement. Neither can a taxpayer qualify as a prevailing party under this rule in any proceeding in which the amount of tax liability is not in issue, including any declaratory judgment proceeding, any proceeding to enforce or quash any summons issued pursuant to the Internal Revenue Code of 1986, and any action to restrain disclosure under section 6110(f).

The comparison of the taxpayer’s liability under the qualified offer with the liability under the judgment is central to the operation of the qualified offer rule. Other than the statement in section 7430(c)(4)(E)(ii)(I) to the effect that the qualified offer rule does not apply to any judgment issued pursuant to a settlement, the statute is silent regarding how the liability under the judgment is determined.

The attorney, nevertheless, should ensure that a qualified offer encompasses all of the adjustments at issue at the time the offer is made, and that it be compared to the outcome at the end of the litigation on all of those adjustments and only those adjustments. Thus, the liability under the judgment entered by the court is that liability attributable to the adjustments included in the last qualified offer that were actually determined by the court through litigation, plus the amount of any additional adjustments subject to the last qualified offer that were determined by settlements entered into after the making of the last qualified offer. Adjustments raised subsequent to the making of the last qualified offer by any party are ignored in determining the liability of the taxpayer to be compared with the liability under the last qualified offer.

An award based upon the taxpayer’s having made a qualified offer is limited to those reasonable administrative and litigation costs incurred on or after the date of the last qualified offer. If the taxpayer is a prevailing party without regard to the qualified offer rule, the reasonable administrative and litigation costs to which the taxpayer is thus entitled may not be awarded again by reason of the taxpayer having made a qualified offer.

On the other hand, even though some costs in a proceeding may be awarded without regard to the qualified offer rule, it is possible for other costs in the same proceeding to be awarded under the qualified offer rule. For instance, costs incurred in different portions of the proceedings or with regard to different adjustments at issue may be awarded under the qualified offer rule despite the awarding of other costs without regard to the qualified offer rule.

Aside from the minimum period during which a qualified offer must remain open, a qualified offer must be made during the qualified offer period. That period begins on the date the first letter of proposed deficiency that allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent.

The qualified offer period ends on the date that is thirty days before the date the case is first set for trial. In the Tax Court, cases are placed upon a calendar for trial and at the calendar call cases are scheduled for a specified day for trial during that trial calendar. Consequently, in determining when the qualified offer period ends for cases in the Tax Court and other courts of the United States using calendars for trial, we will consider a case to be set for trial on the date scheduled for the calendar call.

Cases may be removed from a trial calendar at any time. Thus, a case may be removed from a calendar before the date that is thirty days before the date scheduled for that calendar. In order to promote the settlement of such cases, we will consider the qualified offer period to remain open until the case remains on a calendar for trial on the date that is thirty days before the scheduled date of the calendar call for that trial session.

The qualified offer period may not be extended, although the period during which a qualified offer remains open may extend beyond the end of the qualified offer period.

The basic authority of the Attorney General to settle tax cases within the jurisdiction of DJ and related cases pending with the Internal Revenue Service is contained in section 7122(a) of the Code and Executive Order No. 6166, dated June 10, 1933. See C.B. X111-2, 449. Section 5 of that Order provides, in part, as follows:

In the Attorney General’s opinion to the Secretary of the Treasury (Op. A.G. 7, C.B. XIII-2, 445, 38 Op. Atty. Gen. 94) the Attorney General concluded that DJ has the authority to compromise not only the case pending before it, but "*** any other matter germane to the case which the Attorney General may find it necessary or proper to consider before he invokes the aid of the courts; ***." Once the authority of DJ has been invoked in a case pending in any court, the Attorney General has the authority to settle not only such case, but also to settle any related pending Tax Court case, or case involving related years of the same taxpayer, which is pending administrative determination in the Internal Revenue Service if such related matters are germane to the court case referred to DJ.

The authority of the Tax Division to settle related cases should be reflected in the original suit or defense letter. If not so reflected, another suit authorization letter to the Tax Division may be required concerning the tax liability in the event that the settlement authority of the Attorney General over a particular tax liability comes into question.

In actual practice, the Attorney General’s authority is exercised when there is a pending refund or collection suit with DJ, and the taxpayer’s offer of settlement includes not only disposition of the refund or collection suit, but also disposition of a related Tax Court case or a related nondocketed case. It is after DJ has received the recommendation of the Chief Counsel that a final determination on the acceptance or rejection of the offer is made. The authority of the Attorney General also attaches in instances in which an offer of settlement is made to the Service to dispose of not only the Tax Court and/or nondocketed case, but also a pending refund or collection suit.

Often the taxpayer will submit an offer of settlement in the Tax Court case without including a proposal to dispose of the related refund suit. After coordination and clearance, the Service is free to take final action solely with respect to the Tax Court case.

For the settlement of a Tax Court case with dismissal of a related refund suit see CCDM 34.8.1.3.

Settlement procedure agreements approved by the Chief Counsel and the Tax Division provide procedures for the processing of settlement offers in refund suits. The purpose of these agreements is to expedite the consideration and final action to be taken on all offers in settlement in which DJ makes the final determination. These agreements provide for the classification of refund suits as either S.O.P. (settlement option procedure) or Standard. The procedures under the agreements with DJ, insofar as applicable, are to be followed in Tax Court cases having related refund suits and for cases on appeal from the Tax Court. See CCDM 34.8.1.2 for procedures to be followed by field offices submitting recommendations on offers to settle refund suits.

For collection suits or other collection action involving the same liability as that pending in a Tax Court case, DJ usually does not provide advice concerning the merits of the settlements of the tax liability, but in some instances it may do so. Thus, if a related collection suit is pending in a United States District Court, the Attorney General has the same authority over the settlement of the two cases as it does over related Tax Court cases and refund suits.

If the Tax Court case is settled after the refund or collection matter, the Stipulation and Decision filed with the Tax Court must reflect that all or a portion of the related case has been settled by another court. Exhibit 35.11.1-29 contains samples of stipulations and decisions to be filed in the Tax Court case.

A settlement or concession of a Tax Court case may not be made when there is a related refund suit pending in a United States District Court, the Court of Federal Claims, a court of appeals, or the Supreme Court, without prior coordination through the appropriate Associate Chief Counsel Office and with DJ. Likewise, a proposed settlement or concession of a refund suit will be coordinated with the related Tax Court case prior to the Chief Counsel’s recommendation to DJ. See CCDM 34.8.1.2 for Refund Litigation Settlements and CCDM 35.5 for Settlement Procedures for Tax Court cases.  The requirements set forth in this section are applicable in the following situations: