OFFERS-IN-COMPROMISE.

SEC. 3462. OFFERS-IN-COMPROMISE. (a) Standards for Evaluation of Offers in Compromise.— Section 7122 (relating to offers-in-compromise) is amended by adding at the end the following new subsection: “(c) Standards for Evaluation of Offers.— “(1) In general.— The Secretary shall prescribe guidelines for officers and employees of the Internal Revenue Service 112 STAT. 765to determine whether an offer-in-compromise is adequate and should be accepted to resolve a dispute. “(2) Allowances for basic living expenses.— “(A) In general.— In prescribing guidelines under paragraph (1), the Secretary shall develop and publish schedules of national and local allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for basic living expenses. “(B) Use of schedules.— The guidelines shall provide that officers and employees of the Internal Revenue Service shall determine, on the basis of the facts and circumstances of each taxpayer, whether the use of the schedules published under subparagraph (A) is appropriate and shall not use the schedules to the extent such use would result in the taxpayer not having adequate means to provide for basic living expenses. “(3) Special rules relating to treatment of offers.— The guidelines under paragraph (1) shall provide that— “(A) an officer or employee of the Internal Revenue Service shall not reject an offer-in-compromise from a low- income taxpayer solely on the basis of the amount of the offer; and “(B) in the case of an offer-in-compromise which relates only to issues of liability of the taxpayer— “(i) such offer shall not be rejected solely because the Secretary is unable to locate the taxpayer’s return or return information for verification of such liability; and “(ii) the taxpayer shall not be required to provide a financial statement.”. (b) Levy Prohibited While Offer-in-Compromise Pending or Installment Agreement Pending or in Effect.— Section 6331 (relating to levy and distraint), as amended by sections 3433 and 3444, is amended by redesignating subsection (k) as subsection (1) and by inserting after subsection (j) the following new subsection: “(k) Levy While Certain Offers Pending or Installment Agreement Pending or in Effect.— “(1) Offer-in-compromise pending.— No levy may be made under subsection (a) on the property or rights to property of any person with respect to any unpaid tax— “(A) during the period that an offer-in-compromise by such person under section 7122 of such unpaid tax is pending with the Secretary; and “(B) if such offer is rejected by the Secretary, during the 30 days thereafter (and, if an appeal of such rejection is filed within such 30 days, during the period that such appeal is pending). For purposes of subparagraph (A), an offer is pending beginning on the date the Secretary accepts such offer for processing. “(2) Installment agreements.— No levy may be made under subsection (a) on the property or rights to property of any person with respect to any unpaid tax— “(A) during the period that an offer by such person for an installment agreement under section 6159 for payment of such unpaid tax is pending with the Secretary; “(B) if such offer is rejected by the Secretary, during the 30 days thereafter (and, if an appeal of such rejection 112 STAT. 766is filed within such 30 days, during the period that such appeal is pending); “(C) during the period that such an installment agreement for payment of such unpaid tax is in effect; and “(D) if such agreement is terminated by the Secretary, during the 30 days thereafter (and, if an appeal of such termination is filed within such 30 days, during the period that such appeal is pending). “(3) Certain rules to apply.— Rules similar to the rules of paragraphs (3), (4), and (5) of subsection (i) shall apply for purposes of this subsection.”. (c) Review of Rejections of Offers-in-Compromise and Installment Agreements.— (1) In general.— Section 7122 (relating to compromises), as amended by subsection (a), is amended by adding at the end the following new subsection: “(d) Administrative Review.— The Secretary shall establish procedures “(1) for an independent administrative review of any rejection of a proposed offer-in-compromise or installment agreement made by a taxpayer under this section or section 6159 before such rejection is communicated to the taxpayer; and “(2) which allow a taxpayer to appeal any rejection of such offer or agreement to the Internal Revenue Service Office of Appeals.”. (2) Conforming amendment.— Section 6159 (relating to installment agreements) is amended by adding at the end the following new subsection: “(d) Cross Reference.— “For rights to administrative review and appeal, see section 7122(d).”. (d) Preparation of Statement Relating to Offers-in-Compromise.— The Secretary of the Treasury shall prepare a statement which sets forth in simple, nontechnical terms the rights of a taxpayer and the obligations of the Internal Revenue Service relating to offers-in-compromise. Such statement shall— (1) advise taxpayers who have entered into a compromise of the advantages of promptly notifying the Internal Revenue Service of any change of address or marital status; (2) provide notice to taxpayers that in the case of a compromise terminated due to the actions of one spouse or former spouse, the Internal Revenue Service will, upon application, reinstate such compromise with the spouse or former spouse who remains in compliance with such compromise; and (3) provide notice to the taxpayer that the taxpayer may appeal the rejection of an offer-in-compromise to the Internal Revenue Service Office of Appeals. (e) Effective Dates.— (1) In general.— The amendments made by this section shall apply to proposed offers-in-compromise and installment agreements submitted after the date of the enactment of this Act. (2) Suspension of collection by levy.— The amendment made by subsection (b) shall apply to offers-in-compromise pending on or made after December 31, 1999.112 STAT. 767