Tax Settlement
Civil tax controversies in the courts are either resolved by settlement
or by judicial decision. Litigation and settlement are twin aspects of the
Tax Division's role in tax policy and tax administration.
In settlement, as in every aspect of civil litigation handled by the
Tax Division, it is the Trial Attorney who has the laboring oar. The Trial
Attorney has the primary responsibility on an ongoing basis of evaluating
the litigation potential (and, thus, the settlement potential) of a case.
It is the Trial Attorney who negotiates a compromise, prepares the written
justification therefor, and, in the subsequent correspondence and
implementation of a settlement, assures that the Government gets all that
it bargained for and gives away no more.
While there are some cases that should be litigated rather than settled
and others that, ideally, should be settled but that, for one reason or
another, cannot be, the Division settles many cases in whole or in part.
Compromises result when the terms negotiated are both just and in the
Government's best interests. And, to the extent that the Government's
position is clearly wrong, an issue or a case should be conceded.
Generally, settlement is most readily achieved in refund cases (where
the Government already has the money, and the taxpayer wants it back).
Refund cases involving counterclaims are the next easiest to settle --
typically, the taxpayer is at least represented by counsel, and has taken
the initiative to pay for the institution of litigation. On institution of
every refund suit, the taxpayer is sent a sheet setting out general
information concerning the settlement of such suits.
Clearly, settlement becomes more difficult to the extent that
collection is involved, since in many of these cases the Service has tried
and failed to collect administratively. Suits to reduce assessments to
judgment, fraudulent conveyance actions, etc., are substantially more
difficult to settle. Bankruptcy cases are so varied that no general
estimate can be made about the degree of difficulty in settlement;
specific problems with respect to bankruptcy are discussed subsequently.
