Michael Brown v. Cir

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL D. BROWN, No. 23-70009

Petitioner-Appellant, Tax Ct. No.

11519-20L

v.

COMMISSIONER OF INTERNAL OPINION

REVENUE,

Respondent-Appellee.

Appeal from a Decision of the

United States Tax Court

Argued and Submitted December 7, 2023

Pasadena, California

Filed August 29, 2024

Before: Kim McLane Wardlaw, Kenneth K. Lee, and

Patrick J. Bumatay, Circuit Judges.

Opinion by Judge Wardlaw;

Concurrence by Judge Lee;

Dissent by Judge Bumatay

2 BROWN V. CIR

SUMMARY *

Tax

The panel affirmed the Tax Court’s judgment sustaining

a notice of federal tax lien.

Taxpayer Michael Brown requested a collection due

process hearing pursuant to 26 U.S.C. § 6330 regarding a

notice of tax lien on his property for unpaid taxes. He also

submitted an offer-in-compromise of the tax liability, which

the Appeals Officer responsible for the due process hearing

referred to the Collection Division’s Offer-in-Compromise

Unit for investigation. Within seven months, the Collection

Division returned Brown’s offer-in-compromise because it

was not processable. More than twenty-four months after

the offer-in-compromise was submitted, the Office of

Appeals sustained the notice of tax lien.

Brown petitioned the Tax Court, which issued a final

order and decision sustaining the determination of the Office

of Appeals. The Tax Court rejected Brown’s contention that

his offer-in-compromise was deemed accepted by operation

of law under 26 U.S.C. § 7122(f)—which governs the

submission of an offer-in-compromise of outstanding tax

liability to the IRS, imposes a 24-month deadline for the IRS

to respond to a taxpayer’s offer-in-compromise, and

provides that an offer-in-compromise is deemed accepted if

the IRS fails to reject it within 24 months—because the

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

BROWN V. CIR 3

Collection Division had returned Brown’s offer-in-

compromise within 24 months of submission.

The panel agreed with the Tax Court that Brown’s offer-

in-compromise was not deemed accepted by operation of

law under § 7122(f). The panel rejected Brown’s contention

that, because he submitted his offer-in-compromise during a

collection due process hearing, only the Office of Appeals’

notice of determination can operate as the “rejection” that

terminates § 7122(f)’s 24-month deadline. The Collection

Division’s return of Brown’s offer-in-compromise within

seven months constituted a “rejection” under § 7122(f),

regardless of whether that offer was submitted as part of a

collection due process hearing or not.

Concurring, Judge Lee wrote separately because he

believes the 24-month limitation in § 7122(f) does not apply

to the collection due process proceeding that Brown invoked

under § 6330. There are two separate tracks for the IRS to

process offers-in-compromise: one under § 7122(f) for

standalone offers, which offers no judicial review but

guarantees resolution within 24 months; and one under

§ 6330, which offers judicial review but is not bound by any

timeline. Brown chose the latter track by raising his offer as

part of a collection due process hearing. In doing so, he gave

up the benefits of § 7122(f), including the 24-month

deadline.

Dissenting, Judge Bumatay would reverse the Tax Court.

Together, §§ 6330 and 7122(f) mean that when a taxpayer

demands his rights under a collection due process hearing

only the appeals officer—not the Collection Division—must

have rejected an offer-in-compromise within 24 months or

the offer is deemed accepted. Because the appeals officer

4 BROWN V. CIR

did not return Brown’s offer-in-compromise within 24

months, it should have been deemed accepted.

COUNSEL

Steven R. Mather (argued), Mather Law Corporation,

Beverly Hills, California, for Petitioner-Appellant.

Matthew S. Johnshoy (argued) and Arthur T. Catterall,

Attorneys, Tax Division; David A. Hubbert, Deputy

Assistant Attorney General; United States Department of

Justice, Washington, D.C.; William M. Paul, Internal

Revenue Service, Washington, D.C.; for Respondent-

Appellee.

OPINION

WARDLAW, Circuit Judge:

A taxpayer served with a notice of tax lien on his

property for unpaid taxes has the right to a due process

hearing before an impartial officer under §§ 6320 and 6330

of the Tax Code. The purpose of such a hearing is to ensure

that taxpayers are protected from wrongful IRS levies and

sales of their property. During this proceeding, the taxpayer

may raise any relevant issue relating to the unpaid tax or

proposed levy, including collection alternatives such as an

offer-in-compromise of the tax liability. 26 U.S.C.

§ 6330(c)(2). The Appeals Officer issues a determination of

the propriety of the noticed lien, and the taxpayer may

challenge an adverse determination by filing a petition for

review by the Tax Court. 26 U.S.C § 6330(d). The statute

BROWN V. CIR 5

carefully outlines issues that the Appeals Officer must

consider, but provides no statutory time limit within which

the Office of Appeals must make its determination.

Meanwhile, a more specific statute dictates how the

offer-in-compromise, whether submitted in the course of a

collection due process hearing over a lien or as a stand-alone

offer, is to be handled by the IRS. Section 7122 of the Tax

Code governs the submission of an offer-in-compromise of

outstanding tax liability to the IRS and provides procedures

and guidelines for evaluating such offers. In contrast to

§ 6330, § 7122 does set forth a deadline within which the

IRS must respond to an offer-in-compromise made by a

taxpayer. Initially, when the statute was enacted in the

1950s, there was no such deadline. However, in 2006,

Congress became concerned that offers-in-compromise were

languishing within the IRS, and so as part of the Tax Increase

Prevention and Reconciliation Act (“TIPRA”), it added a

provision imposing a 24-month deadline for the IRS’s

consideration of such offers. Congress also imposed a

stringent enforcement mechanism: If the IRS fails to reject

an offer-in-compromise within 24 months, it will be deemed

accepted. 26 U.S.C. § 7122(f). A returned offer—i.e., one

sent back to the taxpayer on the basis that it could not be

processed—is also treated as a “rejection” for the purpose of

this provision. See 26 C.F.R. § 301.7122-1(d)(2).

Petitioner Michael D. Brown received a notice of federal

tax lien based on his outstanding tax liability for the 2009

and 2010 tax years exceeding $3 million. He requested a

collection due process hearing under § 6330 and also

submitted an offer-in-compromise, which the Appeals

Officer responsible for the due process hearing referred to

the Collection Divisions’ Offer-in-Compromise Unit for

investigation. Within seven months, in November 2018, the

6 BROWN V. CIR

Collection Division acted: It returned Brown’s offer-in-

compromise because it was not processable.

In August 2020 (more than twenty-four months after the

offer-in-compromise was submitted), the Appeals Officer

sustained the notice of lien, ruling against Brown, who

petitioned for review to the Tax Court. The Tax Court held

that because Brown’s offer-in-compromise was returned in

November 2018, within the § 7122(f) 24-month period, it

was rejected. Brown now appeals the Tax Court’s

determination that the return of the offer stopped the running

of the 24-month clock. He argues that his offer should have

been “deemed accepted” because the Appeals Officer

conducting the § 6330 due process hearing did not issue his

final notice of determination within § 7122(f)’s 24-month

period.

Because we conclude that Brown’s argument improperly

conflates the procedures set forth in the separate provisions

of the Tax Code at issue here, and disregards the plain

statutory language of each, we agree with the Tax Court, and

we affirm its decision. 1

I.

This case marks Brown’s third collection due process

hearing, fourth petition to the Tax Court, and third

appearance before this court to challenge the IRS’s attempts

to collect on his outstanding tax liability. 2 These prior cases

1

This opinion affirms not only the outcome reached by the Tax Court

but its reasoning, which the IRS advances in support of its arguments on

appeal.

2

See Brown v. Commissioner, 111 T.C.M. (CCH) 1372, 2016 WL

1746177 (April 28, 2016), aff’d, 697 Fed. App’x 1 (D.C. Cir. 2017);

Brown v. Commissioner (Brown I), 118 T.C.M. (CCH) 260, 2019 WL

BROWN V. CIR 7

arose from collection actions related to Brown’s 2001–2007

and 2014 tax years liability. The present case arises from the

IRS’s attempt to collect on Brown’s 2009 and 2010 tax years

liability. As of July 31, 2020, Brown owed more than $50

million in federal taxes for eleven tax periods.

This is also not the first time that Brown has submitted

an offer-in-compromise to the IRS in an effort to settle his

outstanding tax liability. In November 2016, Brown

requested a collection due process hearing with the Office of

Appeals in response to the IRS’s filing of two notices of

federal tax lien for his 2007 and 2014 tax years liability.

Brown v. Commissioner (Brown I), 118 T.C.M. (CCH) 260,

2019 WL 4415190, *1–2 (Sept. 16, 2019), aff’d in part,

vacated in part, and remanded, Brown v. Commissioner

(Brown II), 826 Fed. App’x 673 (9th Cir. 2020). Brown

submitted an offer-in-compromise as a collection

alternative, offering to settle his total outstanding tax

liability for all years for $400,000. Id. at *2. The Office of

Appeals sent Brown’s offer to the IRS’s Centralized Offer-

in-Compromise Unit which, after determining that the offer-

in-compromise was processable, forwarded the offer to the

Collection Division’s Long Beach Group for further

investigation. Id. at *3. At the conclusion of its

investigation, the Long Beach Group returned the offer-in-

compromise to Brown, concluding that the offer was no

longer processable because Brown was the subject of an

ongoing “abusive tax avoidance transaction” investigation.

Id. On August 11, 2017, the Office of Appeals issued a

4415190 (Sept. 16, 2019), aff’d in part, vacated in part, and remanded,

Brown v. Commissioner (Brown II) (Hurwitz, Bress, and Bumatay, JJ.),

826 Fed. App’x 673 (9th Cir. 2020); Brown v. Commissioner, 122

T.C.M. CCH 199, 2021 WL 4316861 (Sept. 23, 2021), aff’d Brown v.

Commissioner, 54 F.4th 1064 (9th Cir. 2023).

8 BROWN V. CIR

notice of determination sustaining the notices of federal tax

lien, explaining that the Office of Appeals “concurs that the

basis determined by Collection to return your Offer in

Compromise was appropriate” because “there were other

investigations pending at the Collection’s level that might

affect your delinquent tax account sought to be

compromised.” Id.

Brown petitioned the Tax Court for review. One of the

arguments that Brown raised was that the IRS had not

formally rejected his offer-in-compromise within 24 months

after it was submitted, and it was therefore “deemed

accepted” by operation of law under § 7122(f). Id. at *7.

The Tax Court rejected this argument, explaining that

§ 7122(f)’s 24-month “deemed acceptance” period ends

when an offer-in-compromise is rejected or returned. Id.

Therefore, because Brown submitted his offer on November

16, 2016, and the Long Beach Group returned the offer on

April 6, 2017, Brown’s offer was not accepted by operation

of law under § 7122(f). Id.

Brown appealed the Tax Court’s decision to our court,

and we affirmed on this issue, albeit in a nonprecedential

disposition. See Brown II, 826 Fed. App’x. at 674. 3 We

explained that an offer-in-compromise “will not be deemed

to be accepted if the offer is, within the 24-month period,

rejected by the IRS, or returned by the IRS to the taxpayer

as nonprocessable or no longer processable.” Id. (quoting

3

Brown II also vacated Brown I in part and remanded to the Tax Court

to determine whether it had jurisdiction to consider Brown’s challenge

to the IRS’s refusal to refund the payment accompanying his offer-in-

compromise. Brown II, 826 Fed. App’x at 674. On remand, the Tax

Court determined that it lacked jurisdiction to refund the payment.

Brown, 122 T.C.M. (CCH) 199, aff’d, 58 F.4th 1064 (9th Cir. 2023).

BROWN V. CIR 9

IRS Notice 2006-68, § 1.07, 2006-2 C.B. 105, 106)

(alternations omitted). We therefore concluded that, because

“[t]he IRS returned Brown’s offer well before 24 months had

elapsed since the submission of the offer-in-compromise,” it

was not accepted by operation of law under § 7122(f).

While the litigation in Brown I and Brown II proceeded,

Brown requested the collection due process hearing at issue

in this case. Endeavoring to collect Brown’s outstanding tax

liabilities for the years 2009 and 2010, the IRS filed a notice

of federal tax lien covering these liabilities on November 9,

2017. In turn, Brown again requested a collection due

process hearing, checking the box for “Offer in

Compromise” as a collection alternative. Brown’s due

process hearing was assigned to Settlement Officer (“SO”)

James Feist in the IRS Independent Office of Appeals, who

wrote to Brown’s counsel, Steve Mather, proposing a

telephone conference on April 12, 2018. SO Feist’s letter

explained that “[o]ur office is separate from, and

independent of, the IRS office taking the action that you

disagree with,” and that “[w]e review and resolve disputes

in a fair and impartial manner by weighing the facts

according to the law and judicial decisions.” The letter also

informed attorney Mather that “[t]he Office of Appeals may

ask the Collection function to review, verify and provide

their opinion on any new information you submit.”

On April 12, 2018, following a call with SO Feist

discussing the collection due process hearing, Brown

submitted an offer-in-compromise package to SO Feist.

This package was not limited to the 2009 and 2010 tax years

that were the subject of the due process hearing, but offered

to settle all of Brown’s outstanding tax liabilities for the

years 2001–2007, 2009, 2010 and 2014 for $320,000.

Brown proposed payments of $1,000 a month for 23 months

10 BROWN V. CIR

and a balloon payment of $297,000 at the end of the 24-

month pay period. The Office of Appeals acknowledged

receipt of Brown’s offer-in-compromise on May 2, 2018.

SO Feist forwarded the offer-in-compromise to the IRS’s

Centralized Offer-in-Compromise Unit, which

acknowledged receipt on May 19, 2018, and which in turn

referred the package to the Collection Division’s Laguna

Group, located near Brown’s residence in Orange County,

California, for investigation and consideration.

On November 5, 2018, the Laguna Group issued a letter

to Brown returning the offer-in-compromise, stating:

We have closed our file on your offer and are

returning your Form 656, Offer in

Compromise for the following reason(s):

Other investigations are pending that may

affect the liability sought to be compromised

or the grounds upon which it was submitted.

The Laguna Group also notified Brown that “[a]s of the

date of this letter, we are considering your offer closed.”

Attached to the letter was a copy of Brown’s offer-in-

compromise with the word “Returned” handwritten on it and

the date, “9/18”. The document, depicted below, was also

crossed out by hand:

BROWN V. CIR 11

12 BROWN V. CIR

On November 15, 2018, Brown’s attorney, Mather,

wrote to SO Feist acknowledging the IRS “letter returning

the Offer in Compromise for Michael D. Brown due to an

‘other investigation,’” and asserting “[t]his reason to return

the Offer is bogus.” In a phone call on February 22, 2019,

Mather asked SO Feist to reconsider the return of the offer-

in-compromise. SO Feist responded in a letter dated

February 28 explaining that “[t]he Office of Appeals will

maintain jurisdiction of your case, but I have requested

further assistance from the Revenue Officer to address the

issue of how much should be due,” in an apparent reference

to a determination of Brown’s ability to pay. In a

conversation on March 28, 2019, SO Feist told Mather that

it would be difficult to overturn the reasons for the return of

Brown’s offer-in-compromise, but that the collection due

process hearing would remain open during the pendency of

the “other investigations” identified in the Laguna Group

letter. 4

Over a year later, Mather faxed SO Feist announcing his

“position on the pending [collection due process] appeal” for

Brown. He informed SO Feist that Brown had been making

the $1,000 payments to the IRS proposed in his May 2018

offer-in-compromise and that the IRS was deemed to have

accepted the offer-in-compromise by operation of law.

Mather elaborated:

The 24-month TIPRA statute in I.R.C.

7122(f) has expired. The 24 months started

4

The investigation ultimately determined that there was collection

potential beyond what Brown had offered in the returned offer-in-

compromise. Due to the ongoing federal litigation regarding Brown’s

tax liability and SO Feist’s personal health issues, the collection due

process hearing was suspended well into 2020.

BROWN V. CIR 13

on May 7, 2018, the received date stamped on

Form 656 (p. 9). IRM 5.8.8.12(1). Even if

the 30-day extension from the COVID

declaration applies, more than 24 months

have lapsed. Collection’s letter could not

return the OIC. Only Appeals could do that.

Appeals did not return the OIC. The taxpayer

has made all of the payments and complied

with all other terms of the OIC. This OIC is

now deemed accepted by operation of law.

On August 12, 2020, the Office of Appeals sustained the

notice of federal tax lien for the 2009 and 2010 tax years. In

its notice of determination, the IRS stated: “The request to

find that the Offer in Compromise return letter dated

November 5, 2018 was returned in error for lack of basis is

denied. The May 2018 Offer in Compromise was correctly

returned by the collection division.” In the “Summary and

Recommendation,” the Office of Appeals further explained

that the 24-month TIPRA tolling period ended as of

November 5, 2018, the date Brown’s offer-in-compromise

was returned. While the Office of Appeals acknowledged

that it could have accepted the offer-in-compromise in the

course of the collection due process hearing, it explained that

the return letter satisfied the TIPRA provision’s 24-month

deadline. The Office of Appeals also explained that, on the

merits, Brown’s offer-in-compromise of $320,000 did not

warrant acceptance because the IRS had taken collection

action, attaching the first $3 million of an $8 million

payment for the sale of an asset attributed to Brown.

14 BROWN V. CIR

II.

On August 31, 2020, Brown petitioned the Tax Court to

challenge the Office of Appeal’s notice of determination. 5

Brown moved for summary judgment under the theory that

his offer-in-compromise had been accepted by operation of

law pursuant to § 7122(f) because the Office of Appeals

issued its notice of determination in August 2020, more than

24 months after the offer was submitted. In opposition, the

Commissioner argued that the operative rejection for

purposes of § 7122(f) was the Laguna Group’s return of the

offer in November 2018, which was well within § 7122(f)’s

24-month “deemed acceptance” period.

On June 23, 2022, the Tax Court denied Brown’s motion

for summary judgment, agreeing with the Commissioner

that Brown’s offer-in-compromise had been “rejected by the

Secretary” in November 2018 when the Laguna Group

closed the file and returned the offer to Brown. See Brown

v. Commissioner (Brown III), 158 T.C. No. 9, 2022 WL

2255736, at *4 (June 23, 2022). The Tax Court concluded

that the time that the Office of Appeals spent reviewing the

Laguna Group’s decision to return the offer was not included

as a part of the 24-month “deemed acceptance” period, and

therefore, because the Collection Division had returned

Brown’s offer within 24 months of submission, Brown’s

offer-in-compromise was timely rejected and not deemed

accepted by operation of law under § 7122(f). Id.

5

Brown’s petition initially raised three issues: (1) whether SO Feist

verified that proper procedures were followed; (2) whether Brown’s

offer-in-compromise was accepted by operation of law under § 7122(f);

and (3) whether the return of Brown’s offer was otherwise proper.

Brown later conceded the first and third issues.

BROWN V. CIR 15

On October 28, 2022, the Tax Court issued a final order

and decision sustaining the determinations set forth in the

Office of Appeal’s August 12, 2022, notice of

determination. 6 This appeal followed.

III.

We have jurisdiction to review final decisions of the Tax

Court under 26 U.S.C. § 7482(a)(1). “We review the Tax

Court’s decision under the same standard as civil bench trials

in district court.” Fargo v. Commissioner, 447 F.3d 706, 709

(9th Cir. 2006); see also 26 U.S.C. § 7482(a)(1).

“Accordingly, we review the Tax Court’s conclusions of

law, including interpretations of the I.R.C., de novo.”

Laidlaw’s Harley Davidson Sales, Inc. v. Commissioner, 29

F.4th 1066, 1070 (9th Cir. 2022).

IV.

A.

We begin with an overview of the provisions of the

Internal Revenue Code at issue here: 26 U.S.C. §§ 6320 and

6330, which set forth the procedures governing collection

due process hearings, and 26 U.S.C. § 7122, which grants

the IRS authority to compromise tax liabilities.

6

After the Tax Court denied Brown’s motion for summary judgment, the

Commissioner moved for partial summary judgment on October 25,

2022, which was, in substance, a cross-motion on the § 7122(f) issue.

On October 26, 2022, the parties jointly filed a stipulation of settled

issues in which Brown conceded the two remaining issues raised in his

petition. Finding that its June 23, 2022 opinion required a ruling for the

Commissioner on the § 7122(f) issue as a matter of law, the Tax Court

granted the Commissioner’s partial motion for summary judgment on

October 28, 2022.

16 BROWN V. CIR

1. Sections 6320 and 6330

When a taxpayer neglects or refuses to pay the taxes he

owes to the federal government, “a lien in favor of the United

States [arises] upon all property and rights to property”

belonging to the taxpayer. 26 U.S.C. § 6321. To protect this

lien, the IRS files a notice of federal tax lien on the

taxpayer’s property. 26 U.S.C. § 6323(a). Section § 6320

provides that, upon filing of a notice of lien, the IRS must

provide the taxpayer with written notice of the filing and the

opportunity to request a hearing. 26 U.S.C. § 6320(a)(3).

Similarly, 26 U.S.C. § 6330 prohibits the IRS from levying

upon a taxpayer’s property unless the Secretary has notified

the taxpayer of the intent to levy and the right to a hearing.

26 U.S.C. § 6330(a)(1). A taxpayer who elects to challenge

a notice of federal tax lien under § 6320 or the IRS’s intent

to levy under § 6330 is entitled to a collection due process

hearing before the Office of Appeals. Id. §§ 6320(b)(1),

6330(b)(1). 7

Congress created the Office of Appeals as an entity of

“strict impartiality as between the taxpayer and the

Government,” 26 C.F.R. § 601.106(f)(1), in response to the

concern that “taxpayers who get caught in the IRS hall of

mirrors have no place to turn that is truly independent and

structured to represent their concerns,” Lewis v.

Commissioner, 128 T.C. 48, 60 (2007) (quoting 144 Cong.

7

Both § 6320 and § 6330 hearings are governed by the procedures set

forth in § 6330(c)–(e) and § 6330(g). See 26 U.S.C. § 6320(c) (“For

purposes of this section, subsections (c), (d) (other than paragraph (3)(B)

thereof), (e), and (g) of section 6330 shall apply.”). Therefore, although

Brown requested the instant due process hearing under § 6320 to contest

the IRS’s filing of a notice of federal tax lien, § 6330 sets forth the

procedural provisions that govern Brown’s collection due process

hearing.

BROWN V. CIR 17

Rec. 14689 (1998) (statement of Senator Roth)). A

collection due process hearing is therefore intended “as

something more than just a rubber stamp for the

Commissioner’s determinations.” Id. at 60. Rather, “the

entire purpose behind the creation of the [collection due

process] hearing was to provide taxpayers with greater due

process to contest the IRS’s levy and sale of their property.”

Zapara v. Commissioner, 652 F.3d 1042, 1045 (9th Cir.

2011).

To this end, § 6330(c)(2) allows a taxpayer to “raise at

the hearing any relevant issue relating to the unpaid tax or

the proposed levy.” 26 U.S.C. § 6330(c)(2)(A). This

includes offers of collection alternatives, such as offers-in-

compromise. See 26 U.S.C. § 6330(c)(2)(A)(iii). The IRS’s

Internal Revenue Manual explains that an offer-in-

compromise submitted during a collection due process

hearing is first sent to the Centralized Offer-in-Compromise

Unit, which conducts the initial investigation and determines

whether the offer-in-compromise is processable. See

Internal Revenue Manual (“IRM”) 5.8.4.15 (Sept. 24, 2020),

8.22.7.10.1.1(1) (Aug. 26, 2020). If the offer is found

processable, it is then assigned to a Collection Division field

office for further investigation to determine whether the

offer should be accepted, rejected, or returned to the

taxpayer. See IRM 8.22.7.10.1.1(2) (Aug. 26, 2020).

At the conclusion of the collection due process hearing,

§ 6330(c)(3) mandates that the assigned Appeals Officer

issue a notice of determination that: (1) verifies that all

applicable laws and procedures have been satisfied;

(2) addresses all issues raised by the taxpayer under

§ 6330(c)(2), including any offers-in-compromise made by

the taxpayer; and (3) explains whether the proposed

collection action balances the government’s need for

18 BROWN V. CIR

efficient collection of taxes with the taxpayer’s concern that

the collection be no more intrusive than necessary. 26

U.S.C. § 6330(c)(3); see also 26 C.F.R. § 301.6330-1(e)(3)

(Q&A-E8) (explaining that a notice of determination must

“respond to any offers by the taxpayer for collection

alternatives”). Section 6330 does not set forth any time limit

within which the Office of Appeals must consider these

issues or make its determination. Indeed, the relevant IRS

regulations expressly state that there is no “time within

which Appeals must conduct a [collection due process]

hearing or issue a Notice of Determination.” 26 C.F.R.

§ 301.6320-1(e)(3) (Q&A-E9). After the Office of Appeals

issues this notice, the taxpayer may challenge the Appeals

Officer’s determination by petitioning the Tax Court for

review of the determination. 26 U.S.C. § 6330(d)(1).

2. Section 7122

One of the collection alternatives the taxpayer may raise

during a collection due process hearing is an offer-in-

compromise. Section 7122 authorizes the “Secretary” to

“compromise any civil or criminal case arising under the

internal revenue laws prior to reference to the Department of

Justice for prosecution or defense,” and sets forth the

exclusive procedures for doing so. 26 U.S.C. § 7122(a);

Laurins v. Commissioner, 889 F.2d 910, 912 (9th Cir. 1989)

(“The regulations and procedures for compromises under 26

U.S.C. § 7122 are the exclusive method of settling claims.”)

(citing Schumaker v. Commissioner, 648 F.2d 1198, 1199–

1200 (9th Cir. 1981)). As used in § 7122, “Secretary” refers

to “the Secretary of the Treasury or his delegate.” Compare

26 U.S.C. § 7701(a)(11)(B) (emphasis added) (defining

“Secretary” as “the Secretary of the Treasury or his

delegate”), with 26 U.S.C. § 7701(a)(11)(A) (defining

“Secretary of the Treasury” as “the Secretary of the

BROWN V. CIR 19

Treasury, personally, and shall not include any delegate of

his.”). The Tax Code further defines “delegate” as “any

officer, employee, or agency of the Treasury Department

duly authorized by the Secretary of the Treasury directly, or

indirectly by one or more redelegations of authority, to

perform the function mentioned or described in the context.”

26 U.S.C. § 7701(a)(12)(A)(i). Thus, § 7122(a) permits any

duly authorized delegate of the Secretary of the Treasury to

compromise a taxpayer’s liability. Because “[t]axpayers can

offer to compromise their tax debt at many different points

during the return-to-audit-to-assessment-to-collection

lifecycle of their tax year…the IRS’s system has developed

in a way that directs [offers-in-compromise] to different IRS

locations at different stages of collection.” Mason v.

Commissioner, 121 T.C.M. (CCH) 1485, 2021 WL

2018666, at *6 (May 20, 2021).

Congress delegated authority to the Secretary to

promulgate regulations “to determine whether an offer-in-

compromise is adequate and should be accepted to resolve a

dispute.” 26 U.S.C. § 7122(d)(1). Pursuant to these

regulations, the IRS may accept a taxpayer’s offer-in-

compromise (1) when there is a genuine dispute as to the

existence or amount of the taxpayer’s liability; (2) when

there is doubt as to collectability, such as in the circumstance

that the taxpayer’s assets and income are less than the full

amount of liability; or (3) to promote effective tax

administration and prevent economic hardship to the

taxpayer. 26 C.F.R. § 301.7122-1(b)(1)–(3)(i). Even if a

taxpayer is unable to satisfy one of these three grounds, the

IRS may compromise the taxpayer’s liability if the taxpayer

provides compelling public policy or equitable

considerations for doing so. 26 C.F.R. § 301.7122-

1(b)(3)(ii). However, the IRS may not compromise a

20 BROWN V. CIR

taxpayer’s liability if doing so would undermine taxpayer

compliance with tax laws. 26 C.F.R. § 301.7122-

1(b)(3)(iii).

When a taxpayer submits an offer-in-compromise, the

offer “becomes pending when it is accepted for processing”

by the IRS. 26 C.F.R. § 301.7122-1(d)(2). The IRS may

respond to a pending offer-in-compromise in one of three

ways: it can accept the offer, 26 C.F.R. § 301.7122-1(e); it

can reject the offer, 26 C.F.R. § 301.7122-1(f); or it can

return the offer if the IRS determines it was submitted solely

to delay collection or was otherwise “nonprocessable,” 26

C.F.R. § 301.7122-1(d)(2). “An offer returned following

acceptance for processing is deemed pending only for the

period between the date the offer is accepted for processing

and the date the IRS returns the offer to the taxpayer.” Id.

In 2006, Congress grew concerned over the length of

time that the IRS was taking to respond to taxpayer offers-

in-compromise. See H.R. Rep. No. 109-455, at 234 (2006)

(Conf. Rep.). To remedy this issue, Congress enacted

§ 7122(f), titled “Deemed acceptance of offer not rejected

within certain period,” as part of the Tax Increase Prevention

and Reconciliation Act of 2005 (“TIPRA”), Pub. L. No.

109–222, § 509(b)(2), 120 Stat. 345, 363 (2006). That

provision reads as follows:

Any offer-in-compromise submitted under

this section shall be deemed to be accepted by

the Secretary if such offer is not rejected by

the Secretary before the date which is 24

months after the date of the submission of

such offer. For purposes of the preceding

sentence, any period during which any tax

liability which is the subject of such offer-in-

BROWN V. CIR 21

compromise is in dispute in any judicial

proceeding shall not be taken into account in

determining the expiration of the 24-month

period.

26 U.S.C. § 7122(f). This provision effectively operates as

a statute of limitations on the IRS—if the IRS fails to act

upon a taxpayer’s offer within two years of its submission,

the IRS loses its ability to reject that offer, and the offer is

accepted by operation of law. The statute expressly tolls the

running of the 24-month period for “judicial proceedings,”

but IRS Notice 2006-68 makes clear that “[t]he period

during which the IRS Office of Appeals considers a rejected

offer in compromise is not included as part of the 24-month

period.” Notice 2006-68, § 1.07, 2006-2 C.B. 105, 106.

This is “because the offer was rejected by the Service within

the meaning of section 7122(f) prior to consideration of the

offer by the Office of Appeals.” Id. The Notice also clarifies

that “[a]n offer will not be deemed to be accepted if the offer

is, within the 24-month period, rejected by the Service, [or]

returned by the Service to the taxpayer as nonprocessable or

no longer processable.” Id. Accordingly, the IRS’s return

of an offer qualifies as a “rejection” under the TIPRA

provision. See also 26 C.F.R § 301.7122-1(d)(2).

B.

Brown and the dissent argue that because he submitted

his offer-in-compromise during a collection due process

hearing, only the Office of Appeals’ notice of determination

can operate as the “rejection” that terminates § 7122(f)’s 24-

month period. This is plainly incorrect. The Collection

Division’s return of an offer-in-compromise constitutes a

“rejection” under § 7122(f), regardless of whether that offer

22 BROWN V. CIR

was submitted as part of a collection due process hearing or

not.

Brown’s offer-in-compromise was accepted for

processing by the Centralized Offer-in-Compromise Unit in

May 2018, at which point it became “pending” and the 24-

month clock started. See 26 C.F.R. § 301.7122-1(d)(2). The

offer was then sent to the Laguna Group, which subsequently

determined that the offer was nonprocessable on account of

an ongoing investigation. The Laguna Group thereafter

returned the offer-in-compromise to Brown in November

2018, at which point the offer was no longer pending. 8 Id.

Because the offer was “returned by the Service to the

taxpayer as nonprocessable” less than seven months after it

was submitted, the offer was not pending for more than 24

8

This chain of events also demonstrates that there are not “two tracks for

the Internal Revenue Service to process offers-in-compromise,” as Judge

Lee finds in his concurring opinion. Conc. Op. 30. A closer examination

of the path that Brown’s offer-in-compromise traveled before being

returned as nonprocessable makes this point readily apparent. After

Brown requested a collection due process hearing and submitted his

offer-in-compromise, SO Feist at the Office of Appeals—the entity in

charge of collection due process hearings under §§ 6320 and 6330—

forwarded Brown’s offer to the Centralized Offer-in-Compromise

Unit—the entity responsible for processing and investigating all offers-

in-compromise in accordance with the current procedures adopted by the

Commissioner. The Centralized Offer-in-Compromise Unit then

referred Brown’s offer to the Collection Division’s Laguna Group for

investigation. Once the Laguna Group returned Brown’s offer-in-

compromise as nonprocessable, the Office of Appeals hearing officer

reviewed the propriety of that rejection as part of the due process hearing,

and deemed it correct. Moreover, Brown could not appeal the rejection

of the offer-in-compromise by the Collection Division to the Tax Court;

it was only the Office of Appeals’ determination that the rejection was

proper that renders it appealable to the Tax Court (and our court). See

26 U.S.C. § 6330(d)(1).

BROWN V. CIR 23

months and, thus, was not “deemed to be accepted” for

purposes of § 7122(f). Notice 2006-68, § 1.07, 2006-2 C.B.

105, 106. Notice 2006-68 makes this conclusion abundantly

clear. Section 1.07 provides that “[t]he period during which

the IRS Office of Appeals considers a rejected offer in

compromise is not included as part of the 24-month period

because the offer was rejected by the Service within the

meaning of section 7122(f) prior to consideration of the offer

by the Office of Appeals.”

Brown submits—and the dissent agrees—that because

he made the offer during a collection due process hearing,

§ 6330’s requirements alter the foregoing analysis. He

argues that only the Office of Appeals’ notice of

determination can effectuate a § 7122(f) “rejection” because

it is the notice of determination, not the Collection

Division’s return, that is final and appealable. Brown points

to § 6330’s mandate that the Office of Appeals must address

and make the final determination on any collection

alternative, including offers-in-compromise, raised during a

collection due process hearing. See 26 U.S.C.

§ 6330(c)(2)(A)(iii), (3)(B). He also argues that it is the

Office of Appeals’ notice of determination, not the

Collection Division’s initial decision to return the offer, that

the Tax Court has jurisdiction to review. See 26 U.S.C.

§ 6330(d)(1). Therefore, according to Brown, the duties that

§ 6330 impose upon the Office of Appeals render the

Collection Division’s role in the context of the due process

hearing “procedurally meaningless.”

But both Brown and the dissent conflate two distinct

statutory requirements—§ 6330’s mandate that Office of

Appeals issue a final notice of determination following a

collection due process hearing, and § 7122(f)’s requirement

that the IRS act on an offer-in-compromise within 24 months

24 BROWN V. CIR

to prevent a “deemed acceptance.” There is no authority,

statutory or otherwise, that would indicate that the

“rejection” required to terminate the 24-month period under

§ 7122(f) is the same action as the Office of Appeals’ final

determination of the collection due process hearing, in which

the offer-in-compromise was but one collection alternative.

Rather, the relevant statutory provisions, regulations, IRS

guidance, and caselaw all clearly establish that the

Collection Division may make the initial determination to

return a taxpayer’s offer, and that the Collection Division’s

return of that offer, not the Office of Appeals’ notice of

determination, stops the 24-month clock.

The Internal Revenue Manual explains that the Secretary

has delegated the initial review of all offers-in-

compromise—including those submitted during a collection

due process hearing—to the Collection Division. See IRM

5.8.5.15 (Sept. 24, 2020), 8.22.7.10.1.1(1) (Aug. 26, 2020). 9

Although “[t]he Internal Revenue Manual does not have the

force of law and does not confer rights on taxpayers,” Fargo,

447 F.3d at 713 (9th Cir. 2006), it is not “legal error for the

Commissioner to be guided by his own guidelines,” Keller

v. Commissioner, 568 F.3d 710, 721 (9th Cir. 2009); see also

Marks v. Commissioner, 947 F.2d 983, 986 n.1 (D.C. Cir.

1991) (“It is well-settled … that the provisions of the manual

are directory rather than mandatory.”).

9

The Commissioner amended certain provisions of the IRM in the fall

of 2020, soon after the Office of Appeals issued the notice of

determination here on August 12, 2020. However, these provisions are

substantially identical to those in place at the time that Brown’s

collection due process hearing was ongoing. The dissent’s speculation

that the IRS changed these IRM provisions because of Brown’s case, see

Diss. Op. 52, is just that—speculation.

BROWN V. CIR 25

Pursuant to the Internal Revenue Manual’s guidance, the

Collection Division makes the initial determination as to the

offer’s processability, and then “investigates the offer and

can either accept it, provide a recommendation to reject it, or

determine whether the offer should be returned to the

taxpayer.” Brown I, 2019 WL 4415190, at *5 (citing IRM

8.22.7.10.1.1(2) (Sept. 23, 2014)); see also IRM

8.22.7.10.1.1(2) (Aug. 26, 2020) (same). If the Collection

Division returns the offer, the Office of Appeals must “first

confirm that the return was appropriate” and then note “that

the basis for the return was correct” in its final notice of

determination. IRM 8.22.7.10.1.1(4). But the Internal

Revenue Manual makes clear that it is the Collection

Division’s initial return of the offer, not the Office of

Appeals’ determination of whether that return was proper,

that “will result in the closing of the TIPRA 24-month

period.” IRM 8.22.7.10.1.3(5) (Aug. 26, 2020).

Indeed, Brown has previously tried, and failed, to

advance his theory that the timing of the Office of Appeals

determination controls the § 7122(f) period in proceedings

over tax years other than the two before us now. As here,

the litigation in Brown I and Brown II began with Brown’s

request for a collection due process hearing after receiving

notice of the filing of a notice of federal tax lien for his then

outstanding tax liability. Brown I, 2019 WL 4415190, at *1–

2. And, as here, Brown submitted an offer-in-compromise

as a collection alternative to the Office of Appeals. Id. at *3.

After receiving the offer on November 16, 2016, the Office

of Appeals forwarded it to the Collection Division’s Long

Beach Group. Id. On April 6, 2017, the Long Beach Group

sent a letter to Brown returning his offer-in-compromise. Id.

On August 11, 2017, less than a year after Brown submitted

the offer, the Appeals Officer issued a notice of

26 BROWN V. CIR

determination concluding that “the basis determined by

Collection to return your Offer in Compromise was

appropriate.” Id.

In Brown I and Brown II, Brown argued that the Appeals

Officer assigned to his case abused her discretion in

conducting the collection due process hearing and, thus, the

notice of determination was void. Because he asserted there

was no valid determination from the Office of Appeals

within 24 months, Brown argued that his offer was accepted

by operation of law under § 7122(f).

The only difference between Brown’s collection due

process hearing in Brown I and Brown II and his collection

due process hearing at issue here is that in the prior litigation,

both the Collection Division’s return of the offer and the

Office of Appeal’s notice of determination were issued

within two years of the offer’s submission. But this did not

stop Brown from making the same argument that he makes

here—that the § 7122(f) 24-month time period stopped

running when the Office of Appeals issued its determination,

and not when the Collection Division returned the offer-in-

compromise as nonprocessable—and that the IRS failed to

reject his offer-in-compromise within 24 months after it was

submitted, and therefore it was “deemed accepted” by

operation of law under § 7122(f). Id. at *7. The Tax Court

rejected this argument, concluding “[t]he Long Beach Group

correctly returned [Brown’s] [offer] on April 6, 2017, at

which point his [offer] was considered closed. Accordingly,

[Brown’s offer-in-compromise] is not deemed accepted by

operation of law under the provision of section 7122(f).” Id.

We agreed. See Brown II, 826 Fed. App’x at 674. Therefore,

both the Tax Court and our court, in Brown I and Brown II,

previously held that when a taxpayer submits an offer-in-

compromise in the context of a collection due process

BROWN V. CIR 27

hearing, the Collection Division’s return, not the Office of

Appeals’ notice of determination, terminates the 24-month

period in § 7122(f).

Brown has not submitted any authority that would

support his contrary view of the law. Indeed, the governing

regulations, Notice 2006-68, the Internal Revenue Manual,

Brown I, and Brown II all confirm that the IRS’s initial

decision to return an offer-in-compromise constitutes a

“rejection” under § 7122(f)’s “deemed acceptance”

provision. 10

We see no conflict between this conclusion and § 6330’s

purpose of “provid[ing] taxpayers with greater due process

to contest the IRS’s levy and sale of their property.” Zapara,

652 F.3d at 1045. The Collection Division’s return of an

offer-in-compromise simply stops the running of the 24-

month period and precludes acceptance of the offer by

operation of law. This action does not interfere with the

Office of Appeals’ statutory obligation to render the final

decision on any offer-in-compromise raised during a

collection due process hearing, nor does it prevent the Office

of Appeals from further considering the propriety of an

offer-in-compromise, or the propriety of the Collection

Division’s return of the offer-in-compromise, as the Office

of Appeals did here. See 26 U.S.C. § 6330(c)(3); Mason,

2021 WL 2018666, at *10 (explaining that the Office of

Appeals must independently review an offer-in-compromise

10

The dissent, much like Brown himself, offers no authority other than

its own creative interpretation of the statutory text to support its

conclusion, and urges us to ignore the abundance of existing authority

supporting the IRS’s position that the initial decision to return an offer-

in-compromise is a “rejection” under § 7122(f). See generally Diss. Op.

We decline to do so.

28 BROWN V. CIR

submitted during a collection due process hearing to fulfill

its duties under § 6330). SO Feist reviewed the Collection

Division’s reasons for returning Brown’s offer and

determined the return was correct. But SO Feist also

considered the merits of Brown’s offer and concluded that it

was inadequate because “at least $3 million can be paid

toward the federal tax debt and perhaps much more.” The

Collection Division’s return of the offer did not prevent SO

Feist from fulfilling his statutory duty to conduct an

independent review of the offer-in-compromise before

rendering the final decision.

Furthermore, an Appeals Officer must consider all issues

raised by the taxpayer during a due process hearing. 26

U.S.C. § 6330(c)(2). Although some taxpayers request due

process hearings for the sole purpose of submitting an offer-

in-compromise, a taxpayer “may raise at the hearing any

relevant issue relating to the unpaid tax,” including

challenges to the underlying liability or appropriateness of

the collection action, spousal defenses, or other collection

alternatives. Id. (emphasis added). As the Tax Court

explained, this could take “a considerable amount of time

and possibly prolong the [hearing] beyond 24 months.”

Brown III, 158 T.C. No. 9, at *7. “[T]here is no reason to

believe that Congress, in enacting section 7122(f), intended

to place a limit on the duration of the [collection due process]

proceeding,” merely because offers-in-compromise are one

type of issue that can be raised during these hearings. Id.

The dissent offers no authority indicating that § 7122(f) was

enacted to cut short due process hearings, which are

designed to protect a taxpayer from wrongful levy and sale

of their property. Indeed, the regulations governing

collection due process hearings are to the contrary: they

explain that there is no limit on the “time within which

BROWN V. CIR 29

Appeals must conduct a [collection due process] hearing,”

and require only that an Appeals Officer “attempt to conduct

a [collection due process] hearing and issue a Notice of

Determination as expeditiously as possible under the

circumstances.” See 26 C.F.R. § 301.6320-1(e)(3) (Q&A-

E9).

Finally, the IRS’s conduct here satisfied the objectives

of § 7122(f). Congress enacted this provision so that

taxpayers who submit offers-in-compromise would not be

left waiting years before they learned whether their offers

were rejected. Here, the IRS acted on Brown’s offer in less

than seven months. Brown then had the opportunity to

contest the reasons for the return during the course of his due

process hearing. Although Brown was unsuccessful in

overturning the Collection Division’s rejection of his offer,

similarly situated taxpayers might be able to successfully

amend their offers to secure a different outcome during the

due process hearing.

V.

We conclude that Brown’s offer-in-compromise was not

deemed accepted by operation of law under § 7122(f). The

judgment of the Tax Court is AFFIRMED.

LEE, Circuit Judge, concurring in the judgment:

Albert Einstein once wisecracked, “The hardest thing in

the world to understand is income taxes.” While that quip

was obviously hyperbolic, it has a kernel of truth to it, as this

case shows: we have three separate opinions with vastly

different readings of two fairly brief provisions in the tax

code.

30 BROWN V. CIR

We confront this thorny issue of statutory interpretation

because Michael Brown failed to pay his taxes and now has

a whopping $50 million tax liability. He, however, claims

he owes nothing more because he submitted and paid an

offer-in-compromise of $320,000 that the government

implicitly accepted by failing to reject it within 24 months.

I agree with Judge Wardlaw that we should affirm the tax

court’s ruling that the offer-in-compromise was not deemed

accepted through operation of law. Judge Wardlaw’s

opinion maintains that the IRS rejected Brown’s offer-in-

compromise within 24 months as required under 26 U.S.C.

§ 7122(f). But Judge Bumatay’s dissent (and Brown) argue

that the offer-in-compromise was not timely denied under

the statute because the wrong person in the IRS rejected it.

I write separately because I believe that the 24-month

time limitation in § 7122(f) does not even apply to the

§ 6330 proceeding that Brown invoked. The text and

structure of the tax code, along with common sense, suggest

that Congress created two tracks for the Internal Revenue

Service to process offers-in-compromise.

The first track is § 7122—an expedited administrative

process dealing solely with standalone offers-in-

compromise, which offers no judicial review but guarantees

resolution within 24 months. The second is § 6330—a

broader proceeding addressing a wide range of due process

concerns related to the IRS’s lien or levy on a taxpayer’s

property, which offers judicial review but is not bound by

any timeline.

By raising his offer-in-compromise as part of a collection

due process hearing under § 6330, Brown opted to proceed

under the second track. On appeal, he tries to have it both

ways: He demands to receive the benefits of the first type of

BROWN V. CIR 31

proceeding (the 24-month time limit) but also enjoy the

additional due process protections of the second type of

proceeding (judicial review). But the tax code is not Burger

King—Brown cannot have it his way. Brown elected to

raise his offer-in-compromise under the statutory provision

that offered him increased due process, the ability to

adjudicate a greater number of issues, and even the very

opportunity to appeal to this court. In exchange, he gave up

the benefits of § 7122(f). So whether the government timely

rejected his offer-in-compromise within 24 months is beside

the point.

* * * *

Taxpayers seeking to settle their tax debt for less than the

full amount owed may make an offer-in-compromise to the

IRS. There are two main tax code provisions relevant to

taxpayers’ offers-in-compromise: § 7122 and § 6330.

Section 7122: This section creates an administrative

process meant for addressing a taxpayer’s standalone

submission of an offer-in-compromise. See generally 26

U.S.C. § 7122(b)–(f). Although Congress left the IRS with

significant discretion in formulating guidelines for

evaluating whether to accept those offers, see id. § 7122(d),

it provided two important procedural restrictions.

First, Congress tasked the IRS with creating

administrative review procedures for a rejected offer-in-

compromise. Id. § 7122(e). The IRS has assigned

processing and investigation of offers-in-compromise to the

IRS’ Centralized Offer-in-Compromise (COIC) Unit and

Collection Division. See, e.g., IRS Manual 8.22.7.10.1.1

(Aug. 26, 2020). If those branches reject the taxpayer’s

offer-in-compromise, then under § 7122(e)(2), he can appeal

only to the Independent Office of Appeals, an independent

32 BROWN V. CIR

organization within the IRS. See also 26 C.F.R. § 301.7122-

1(f)(5). There is no right to judicial review.

And second, in the case that the IRS neither accepts nor

rejects the taxpayer’s offer-in-compromise within 24

months, it is “deemed to be accepted” under § 7122(f). As a

result, the § 7122 process is (relatively) quick and easy: the

IRS is effectively subject to a 24-month statute of limitations

on processing offers-in-compromise, and the taxpayer is

limited to administrative review.

Section 6330: In contrast to § 7122, § 6330 prescribes a

robust process meant for addressing a host of due process

concerns, including offers-in-compromise. When a taxpayer

is delinquent on his tax debts, the federal government may

impose a lien on the taxpayer’s property. 26 U.S.C. § 6321.

But before the IRS can file a notice of lien or levy on that

property, it must provide the taxpayer with notice of his right

to a collection due process (CDP) hearing. Id. §§ 6320(a),

6330(a). At that CDP hearing, the taxpayer may raise “any

relevant issue relating to the unpaid tax or the proposed

levy,” including “appropriate spousal defenses,” “challenges

to the appropriateness of collection actions,” and “offers of

collection alternatives,” one form of which is an offer-in-

compromise. Id. §§ 6320(c), 6330(c)(2)(A)(i)–(iii).

The Independent Office of Appeals—the same branch

that hears administrative appeals of rejected offers-in-

compromise in a § 7122 proceeding—is not the appellate

body in a § 6330 proceeding. Rather, it is charged with both

conducting CDP hearings, id. §§ 6320(b)(1), 6330(b)(1),

and with issuing “determination[s]” that consider, among

other things, all issues properly raised by the taxpayer, id.

§§ 6320(c), 6330(c)(3). Importantly, § 6330 does not bind

the Independent Office of Appeals to any timeline. See, e.g.,

BROWN V. CIR 33

26 C.F.R. § 301.6320-1(e)(3) (Q&A–E9) (there is no set

“period of time within which Appeals must conduct a CDP

hearing”). But once the determination has issued, a

dissatisfied taxpayer has the option of judicial review: the

taxpayer may appeal the agency’s determination to the tax

court and then ultimately to a circuit court of appeals. 26

U.S.C. §§ 6320(c), 6330(d)(1).

These two procedures stand in contrast to each other.

Section 7122 creates a procedure that is narrow but efficient.

Section 6330 creates a procedure that is comprehensive,

judicially appealable, and adjudicated in the first instance by

§ 7122’s appellate body—but is potentially less timely. This

is a trade-off common in the law. For example, an arbitration

may be faster and more cost-effective than litigation, but it

offers limited appealability, is not overseen by an Article III

judge, and only covers issues committed to arbitration. 1

Brown’s primary argument is that he should be able to

reap the benefits of both proceedings. After the IRS filed a

notice of federal tax lien against Brown to recover on his

outstanding 2009 and 2010 tax liabilities, Brown requested

a § 6330 CDP hearing during which he submitted an offer-

in-compromise. Despite having raised his offer-in-

compromise under the § 6330 CDP proceeding, Brown

contends that § 7122(f)—the statutory subsection that

creates the 24-month limitations periods for the IRS to

process standalone offers-in-compromise—should apply.

And because, his argument goes, the Independent Office of

Appeals is charged with adjudicating CDP hearings, only

1

And, of course, the process prescribed in § 6330 is not available to all

taxpayers. If the IRS has not filed a notice of federal tax lien or attempted

to levy on a taxpayer’s property, for example, then he may only submit

a standalone offer-in-compromise under § 7122.

34 BROWN V. CIR

that branch’s rejection of Brown’s offer-in-compromise

could have stopped the clock for § 7122(f)’s purposes.

But Brown’s argument founders as a matter of statutory

interpretation. To start, the text of § 7122(f) states that it

applies only to “[a]ny offer-in-compromise submitted under

this section”—i.e., any offer-in-compromise submitted

under § 7122. 26 U.S.C. § 7122(f) (emphasis added). So,

by its own terms, § 7122(f)’s 24-month limitations period

does not apply to offers-in-compromise submitted under

§ 6330 as part of a CDP hearing.

At oral argument, the parties assumed that all offers-in-

compromise—whether made as standalones or during a CDP

hearing—are submitted under § 7122, as it is the only

section that authorizes the IRS to compromise tax cases. See

26 U.S.C. § 7122(a). But while § 7122(a) creates the sole

authority for the IRS to accept an offer-in-compromise,

§ 7122 does not create the only path for a taxpayer to submit

an offer-in-compromise. Taxpayers can submit offers-in-

compromise under either § 7122 or § 6330—the IRS’s

statutory authority to accept, as granted in § 7122(a), applies

equally to both, and says nothing about the rules mandated

for each procedural vehicle.

Further, nothing in the text or structure of § 6330

suggests that the procedural requirements for processing an

offer-in-compromise under § 7122 are incorporated into

§ 6330. For example, we know that § 7122(e) is not

incorporated into a § 6330 CDP proceeding because

§ 7122(e) states that the IRS “shall establish procedures . . .

which allow a taxpayer to appeal any rejection of such

[offer-in-compromise] to the Internal Revenue Service

Independent Office of Appeals.” 26 U.S.C. § 7122(e)(2)

(emphasis added). As noted earlier, the Independent Office

BROWN V. CIR 35

of Appeals serves as the appellate body in a § 7122

proceeding but it acts as the initial decision-maker in a

§ 6330 CDP hearing (which has the courts as the appellate

body). So subsection § 7122(e)—which refers to the

Independent Office of Appeals as the appellate body—

cannot apply to a § 6330 CDP hearing (in which the

Independent Office of Appeals serves as the initial decision-

maker). 2

The government also cites various regulations and

administrative materials indicating that the IRS applies

§ 7122(f)’s 24-month clock to offers-in-compromise

submitted during CDP hearings. But we need not accept the

IRS’s interpretation of the tax code—after all, we must

“exercise [our] independent judgment in deciding whether

an agency has acted within its statutory authority.” Loper

Bright Enters. v. Raimondo, 144 S. Ct. 2244, 2273 (2024).

Finally, it makes little sense to import § 7122(f)’s 24-

month limitations period to a § 6330 CDP hearing. During

a CDP hearing, the Independent Office of Appeals might

have to address any number of complex issues raised by the

taxpayer because the statute allows a taxpayer to raise “any

2

The Independent Office of Appeals referred Brown’s offer-in-

compromise to the IRS’ COIC Unit for processing, which in turn referred

Brown’s offer to the IRS’ Collection Division’s Laguna Group for

investigation. The Collection Division’s return of Brown’s offer was

eventually incorporated into the notice of determination issued to Brown

by the Independent Office of Appeals. It is unclear from the text of

§ 6330 whether the Independent Office of Appeals, which is charged

with “consider[ing]” Brown’s offer-in-compromise, 26 U.S.C.

§ 6330(c)(3), may offload the investigation of that offer onto another

branch of the IRS. But because the parties have not raised this issue, I

assume without deciding that the Independent Office of Appeals acted

within its statutory authority.

36 BROWN V. CIR

relevant issue relating to the unpaid tax or the proposed

levy.” 26 U.S.C. § 6330(c)(2)(A). For example, a taxpayer

may claim that she’s wrongfully on the hook for reporting

errors made by her spouse. See, e.g., id. § 6330(c)(2)(A)(i);

26 C.F.R. § 301.6330-1(e)(3) (Q&A–E4). Or she may

attempt to negotiate the posting of a bond instead of the

imposition of a lien on her property. See, e.g., 26 U.S.C.

§ 6330(c)(2)(A)(iii); 26 C.F.R. § 301.6330-1(e)(3) (Q&A–

E6). Typically, a § 6330 CDP hearing has no time limit

because that section imposes none. But if we follow the

parties’ interpretation of the statute, then § 7122(f)’s 24-

month limitations period comes into play during a § 6330

CDP hearing only if a taxpayer happens to raise an offer-in-

compromise.

So if a taxpayer raises these complex issues—but does

not make an offer-in-compromise—then the IRS would not

have to resolve them within 24 months. But if a taxpayer

raises these same complex issues—and raises an offer-in-

compromise at the same time—then the 24-month clock

starts ticking. In other words, the agency has a 24-month

time limit only if it has even more issues on its plate,

according to the parties’ reading of the statute. That makes

no sense.

Nor would a 24-month limitations period even be

particularly meaningful to a taxpayer who chooses to submit

his offer-in-compromise under § 6330. After all, one of the

key benefits of submitting an offer-in-compromise during a

CDP hearing is the possibility of judicial review. If the

Independent Office of Appeals issues a notice of

determination rejecting or returning the taxpayer’s offer-in-

compromise, then he may petition for review to the tax court,

then a circuit court, and perhaps even the Supreme Court. 26

U.S.C. §§ 6330(d)(1), 7482(a)(1). That process could easily

BROWN V. CIR 37

take years. Brown, for example, submitted the offer-in-

compromise relevant to this appeal around six years ago, in

2018. Through § 6330, Congress intended to offer taxpayers

increased due process—but here, the price of due process is

time.

In short, I believe that § 7122(f) does not apply to offers-

in-compromise submitted during CDP hearings under

§ 6330. Brown’s offer-in-compromise could thus have

never been deemed accepted through operation of law. For

that reason, I concur in the judgment.

BUMATAY, Circuit Judge, dissenting:

When the Internal Revenue Service hits a taxpayer with

a tax assessment, Congress provides several ways to settle

the bill. Of course, paying the bill is one. Challenging the

liability may be another. But Congress has said that a

taxpayer may try to reach a compromise with the IRS for less

than the amount owed. When a taxpayer seeks a

compromise, it’s called an “offer-in-compromise.” 26

U.S.C. § 7122. The Tax Code sets out procedures and

deadlines to resolve “offers-in-compromise,” including

requiring that offers be “rejected by the Secretary” within 24

months or else be “deemed . . . accepted.” Id. § 7122(f).

But that’s not all that Congress has offered taxpayers.

The Tax Code also entitles taxpayers extra protection when

they face a lien or levy—review by an “[i]mpartial officer”

within the IRS Independent Office of Appeals. See id.

§§ 6320(b)(1), (3), 6330(b)(1), (3). This review is called a

Collection Due Process (“CDP”) hearing. As its name

implies, its purpose is to afford taxpayers added procedural

38 BROWN V. CIR

due process by officials not involved in the tax assessment.

The Tax Code creates a right to a CDP hearing and provides

the procedures for those hearings. See id. §§ 6320, 6330.

During a hearing, the taxpayer may “raise . . . any relevant

issue” that the IRS should consider before it collects,

including an “offer-in-compromise.” Id. § 6330(c)(2)(A).

But what happens when these two tax provisions

intersect? Michael Brown received a notice of an IRS tax

lien based on failing to pay taxes. See id. § 6323. Brown

requested a CDP hearing as the law entitles him. After being

assigned an appeals officer in the Independent Office of

Appeals, Brown submitted an offer-in-compromise. Rather

than decide the offer himself, the appeals officer forwarded

it to the IRS’s Centralized Offer-in-Compromise Unit

(sometimes called “COIC”) within the Collection Division.

The Collection Division is not part of the Independent Office

of Appeals. And the Collection Division later sent Brown a

letter closing the file on his offer-in-compromise and

“returning” it because of other pending investigations

against Brown.

Brown disagreed with the Collection Division and

promptly raised it with the appeals officer hearing his case.

The appeals officer did not act quickly. After 24 months had

passed from his submission of the offer, Brown notified the

appeals officer that he believed his offer must be “deemed

. . . accepted” under § 7122(f). This prompted the appeals

officer to respond. The officer concluded that the Collection

Division’s letter stopped the clock under § 7122(f) and then

independently determined that the Collection Division’s

return of the offer was correct. On appeal, the Tax Court

agreed with the appeals officer and Brown now appeals to

our court.

BROWN V. CIR 39

So this case requires us to answer the “who” and “when”

of the rejection of an offer-in-compromise raised in a CDP

hearing. Who has the power to reject the offer-in-

compromise within the IRS? And when must they act?

As should always be the case, the answer lies in the

ordinary meaning of the text. And the text governs

regardless of the IRS’s guidance on the law. After all, it has

always been our job to “apply [our] judgment independent

of the political branches when interpreting the laws those

branches enact.” Loper Bright Enters. v. Raimondo, 144 S.

Ct. 2244, 2273 (2024) (simplified). Gone are the days when

we deferred to the government’s interpretation of the law

simply because it’s the government.

Turning to that text, the answer is clear. For who, an

“[i]mpartial officer” within the IRS Independent Office of

Appeals must make the decision on the offer-in-

compromise. Id. § 6330(b)(1)–(3). For when, the offer-in-

compromise must be “rejected by the Secretary” of the

Treasury within 24 months or it “shall be

deemed . . . accepted.” Id. § 7122(f). Together, these

provisions mean that the appeals officer here—not the

Collection Division—must have “reject[ed]” Brown’s offer-

in-compromise within 24 months. Simply, when the

taxpayer demands his rights under a CDP hearing, Congress

had said that the appeals officer is the only decider. Because

the appeals officer did not decide here, Brown’s offer should

be deemed accepted.

But the IRS claims otherwise. It asserts unfettered

discretion to delegate who makes the decision on the offer-

in-compromise. This position is as novel as it is wrong.

Back in 2013, and until 2020, the IRS expressly agreed with

Brown that an appeals officer must accept, reject, or return

40 BROWN V. CIR

the offer-in-compromise before the 24-month deadline or it

would be deemed accepted. The IRS’s latest flipflop doesn’t

control this case. As I’ve said before, “we are [a] nation of

laws, not bureaucrats” and “[i]t’s the plain meaning of the

Tax Code that governs this case—not the whims of [the]

IRS[.]” Seaview Trading v. Comm’r of Internal Revenue, 62

F.4th 1131, 1139 (9th Cir. 2023) (en banc) (Bumatay, J.,

dissenting).

Because the offer-in-compromise was not rejected

within the time set by Congress, I would reverse the Tax

Court and respectfully dissent.

I.

A.

The Tax Law Framework

This case involves the interplay of two important tax

provisions. First, § 7122 governs offers-in-compromise and

imposes various procedural and substantive requirements for

considering those offers. Second, §§ 6320 and 6330

establish CDP hearings for taxpayers, like Brown, who

receive an IRS notice of a lien or levy. Resolving this case

requires understanding both.

1.

Offers-in-Compromise

Start with offers-in-compromise. An offer-in-

compromise is an agreement between the IRS and the

taxpayer to settle a tax debt for less than the full amount

owed. See Brown v. Comm’r of Internal Revenue, 58 F.4th

1064, 1065 (9th Cir. 2023). Several grounds for compromise

exist, such as a taxpayer’s inability to pay the full amount or

economic hardship. See 26 C.F.R. § 301.7122-1(b)(2)–(3).

BROWN V. CIR 41

Section 7122 governs offers-in-compromise. In it,

Congress ordered the IRS to “prescribe guidelines for [its]

officers and employees . . . to determine whether an offer-in-

compromise is adequate and should be accepted to resolve a

dispute.” 26 U.S.C. § 7122(d)(1). For rejected offers-in-

compromise, Congress directed the IRS to “establish

procedures” “for an independent administrative review of

any rejection of a proposed offer-in-compromise” before

communicating a rejection to the taxpayer. Id. § 7122(e)(1).

Congress also granted “appeal [of] any rejection of such

offer or agreement to the [IRS] Independent Office of

Appeals.” Id. § 7122(e)(2). And finally, Congress set time

limits for consideration of offers-in-compromise:

Any offer-in-compromise submitted under

this section shall be deemed to be accepted by

the Secretary if such offer is not rejected by

the Secretary before the date which is 24

months after the date of the submission of

such offer. For purposes of the preceding

sentence, any period during which any tax

liability which is the subject of such offer-in-

compromise is in dispute in any judicial

proceeding shall not be taken into account in

determining the expiration of the 24-month

period.

Id. § 7122(f). 1 Thus, when the IRS fails to “reject[]” an offer

within 24 months, it is deemed “accepted” and the taxpayer

gets his compromise.

1

The second sentence of § 7122(f) effectively tolls the 24-month limit

during the pendency of “any judicial proceeding” related to the tax

liability involved in the offer-in-compromise. During oral argument, the

42 BROWN V. CIR

As directed by Congress, the IRS has promulgated

regulations governing offers-in-compromise. Those

regulations provide for four options. First, the offer may be

rejected on the merits. 26 C.F.R. § 301.7122-1(f). Second,

the offer may be accepted. Id. § 301.7122-1(e). Third, the

offer can be withdrawn by the taxpayer. Id. § 301.7122-

1(d)(3). And fourth, the offer can be “returned” by the IRS.

Id. § 301.7122-1(d)(2). The IRS may “return” the offer if

(1) it does not “contain sufficient information” and the

taxpayer does not submit additional information within a

reasonable time, (2) it “was submitted solely to delay

collection,” or (3) it “was otherwise nonprocessable.” Id.

The IRS’s view of “returns” is ultimately contradictory.

According to the IRS, a “return” is both a rejection and not

a rejection. On the one hand, when the IRS returns the offer,

the IRS will not consider it a “rejection” for appellate

purposes under § 7122(e). See id. § 301.7122-1(f)(5)(ii)

(“Where a determination is made to return offer documents

because the offer to compromise was

nonprocessable, . . . the return of the offer does not

constitute a rejection of the offer for purposes of this

provision and does not entitle the taxpayer to appeal the

matter to Appeals[.]”). So, in the normal course, a taxpayer

has no right to appeal a “return” of an offer-in-compromise.

On the other hand, when it comes to § 7122(f)’s requirement

of a rejection within 24 months, the IRS treats the “return”

differently. In that situation, the IRS views a “return” as a

“rejection” to stop the 24-month clock. According to the

IRS, “[a]n offer will not be deemed to be accepted if the offer

IRS belatedly suggested that this provision may apply here because of

Brown’s other tax litigation. But this argument was not raised in its

briefing and so it’s waived.

BROWN V. CIR 43

is, within the 24-month period, . . . returned by the Service

to the taxpayer as nonprocessable or no longer processable.”

IRS Notice 2006-68, § 1.07, 2006-2 C.B. 105, 106. So, there

you have it—the IRS considers a “return” a “reject[ion]”

under § 7122(f) but not a “rejection” under § 7122(e). Like

the wave-particle duality of light, this is hard to

comprehend. 2

In line with Congress’s directive, the IRS has a multi-

step procedure for adjudicating offers-in-compromise

submitted outside the CDP context. First, an employee in

the Collection Division will assess the offer. IRS Manual

(“IRM”) 5.8.4. (Sept. 24, 2020); IRM 8.22.7.10.1.1 (Aug.

26, 2020). If an offer is returned, the taxpayer will generally

not be allowed to have that decision reviewed. 26 C.F.R.

§ 301.7122-1(d)(2), (f)(5). If the offer is rejected, “an

independent administrative review of the proposed

rejection” will occur before it’s communicated to the

taxpayer. Id. § 301.7122-1(f)(2). A taxpayer may then

appeal the rejection to the Independent Office of Appeals.

Id. § 301.7122-1(f)(5). There’s no further avenue of appeal

to the Tax Court. Thus, the traditional review process

roughly looks like this:

2

And how is the taxpayer supposed to know a return’s effect on

§ 7122(f)? It’s not in the regulations. To find this answer, the taxpayer

must dig into what’s known as an IRS Tax Bulletin—an IRS

pronouncement that does not have the “force and effect” of IRS

regulations but is nonetheless “precedent.” Why is there no clear notice

provided in IRS regulations? Again, I do not know. Perhaps putting

these two contradictory readings together in one regulation was too much

for the IRS. In any case, this duality isn’t the subject of this appeal. I

accept that the “return” here is properly a “rejection” under § 7122(f).

44 BROWN V. CIR

BROWN V. CIR 45

2.

Collection Due Process Hearings

That brings me to “collection due process” procedures.

In 1998, Congress created CDP procedures “to provide

taxpayers with greater due process to contest the IRS’s”

actions that deprive them of property. Zapara v. Comm’r of

Internal Revenue, 652 F.3d 1042, 1045 (9th Cir. 2011).

Taxpayers are entitled to these greater protections when they

receive a notice of tax lien, 26 U.S.C. § 6320, or a notice of

intent to levy, id. § 6330. In either case, the taxpayer has a

“right” to a hearing if requested. See id. §§ 6320(b)(1),

6330(b)(1). Congress specified the procedures and

substantive requirements of CDP hearings. It included

everything from who must hold the hearing, to what matters

must be considered if raised, to how an appeal may be taken

from a final determination. Id. §§ 6320, 6330. Several

provisions are important here.

First, Congress expressly authorized taxpayers to bring

offers-in-compromise within CDP proceedings. Under the

law, a taxpayer “may raise . . . any relevant issue relating to

the unpaid tax or the proposed levy, including . . . offers of

collection alternatives, which may include . . . an offer-in-

compromise.” Id. § 6330(c)(2)(iii).

Second, Congress prescribed who decides the issues

raised in CDP hearings. And Congress could not be clearer:

any hearing “shall be held by the [IRS] Independent Office

of Appeals.” Id. §§ 6320(b)(1), 6330(b)(1). Unless waived,

Congress further provided that the hearing “shall be

conducted” by an “[i]mpartial officer”—meaning “an officer

or employee who has had no prior involvement with” the

assessment of “the unpaid tax.” Id. §§ 6320(b)(3),

6330(b)(3). In making a “determination” in the hearing, the

46 BROWN V. CIR

“appeals officer” must verify that the IRS has met “any

requirements of any applicable law or administrative

procedure,” consider the “issues raised” by the taxpayer, and

balance the “need for the efficient collection of taxes with

the legitimate concern” that any collection not be “more

intrusive than necessary.” Id. § 6330(c)(1), (3). If the

taxpayer disagrees with an appeals officer’s

“determination,” the taxpayer may appeal directly to the Tax

Court. Id. §§ 6320(d)(1), 6330(d)(1). And, unlike in the

normal course, both rejections and returns are appealable.

Id. §§ 6320(d)(1), 6330(d)(1).

And what about the Independent Office of Appeals?

What’s so special about that office? It was another IRS

office designed by Congress to safeguard taxpayers. See id.

§ 7803(e). Congress established the office to “resolve

Federal tax controversies without litigation,” and to do so in

a way that is “fair and impartial,” “promotes a consistent

application and interpretation of, and voluntary compliance

with, the Federal tax laws,” and “enhances public confidence

in the integrity and efficiency of the [IRS].” Id.

§ 7803(e)(3). So the role of the Independent Office of

Appeals is to decide tax disputes without any thumb on the

scale for the IRS.

Thus, regardless of any internal procedures the IRS

implements for offers-in-compromise in the normal course,

Congress mandates that an “appeals officer” within the

Independent Office of Appeals decides the issues in CDP

hearings. Compared to the traditional process above, the

CDP review process should go like this:

BROWN V. CIR 47

B.

Independent Office of Appeals Must Reject Offer

Within 24 Months

Given this statutory framework, whenever a taxpayer

raises an offer-in-compromise in a CDP proceeding, an

appeals officer within the Independent Office of Appeals—

48 BROWN V. CIR

and that officer alone—must act on the offer within 24

months under § 7122(f). The IRS argues that the Collection

Division may “return” the offer and that “return” counts as a

“rejection” under § 7122(f). But this ignores the crucial

distinction between CDP hearings and traditional IRS

proceedings. They are not the same and cannot be treated

the same. When we’re in the realm of CDP hearings,

Congress mandates that the appeals officer decide the issue

and any action by the Collection Division is irrelevant under

the law. Simply put, when a taxpayer raises an offer in a

CDP hearing, only the Independent Office of Appeals may

stop the clock. Since that didn’t happen, Brown’s offer

should have been deemed accepted.

1.

Let’s zero in on the operative text of the time limit.

Section 7122(f) requires that an offer-in-compromise is

deemed accepted if it is “not rejected by the Secretary before

the date which is 24 months after the date of the submission

of such offer.” 26 U.S.C. § 7122(f) (emphasis added). First,

“the Secretary” refers to “the Secretary of the Treasury or his

delegate.” Id. § 7701(a)(11). And “his delegate” means

“any officer, employee, or agency of the Treasury

Department duly authorized by the Secretary of the Treasury

directly, or indirectly by one or more redelegations of

authority, to perform the function mentioned or described in

the context[.]” Id. § 7701(a)(12). To “reject” means “to

refuse to accept, consider, submit to, take for some purpose,

or use” or “to refuse to hear, receive, or admit.” Merriam-

Webster’s Collegiate Dictionary 1050 (11th ed., 2007).

The IRS claims the Treasury Secretary has broad

discretion to delegate the authority to reject an offer-in-

compromise. In the non-CDP setting, that may be true.

BROWN V. CIR 49

Generally, Congress wanted the IRS to prescribe guidelines

to adjudicate offers-in-compromise. See 26 U.S.C.

§ 7122(d)(1). And the IRS asserts that the Secretary has

delegated that authority to the Commissioner of the IRS,

who has further delegated it to the Collection Division and

to the Centralized Offer-in-Compromise Unit in particular.

Under traditional IRS proceedings, this may be appropriate.

But the IRS ignores the regime change that comes with

CDP proceedings. Once a CDP hearing is demanded,

Congress took some things out of the hands of the IRS. No

longer can it prescribe whatever rules it wants or delegate

decisionmaking to whomever it wishes. The IRS must

follow the rules of §§ 6320 and 6330. See RadLAX Gateway

Hotel v. Amalgamated Bank, 566 U.S. 639, 645 (2012)

(observing the well-known canon of interpretation that the

“specific governs the general,” especially when “a general

permission or prohibition is contradicted by a specific

prohibition or permission”). And for CDP hearings,

Congress specified that an “appeals officer” from the

Independent Office of Appeals must make the

“determination” for “issues raised” by the taxpayer,

including “an offer-in-compromise.” See 26 U.S.C.

§ 6330(c). So regardless of the IRS’s general procedures,

Congress established separate, specific rules for CDP

hearings.

Even though this case involves a CDP proceeding, the

IRS acts like nothing has changed. The IRS asserts

shockingly broad power for itself, claiming that the IRS

“Commissioner is ultimately free to act on the offer through

whatever process he chooses.” Wrong. The Commissioner

cannot do whatever he pleases when it comes to CDP

hearings. Instead, Congress superseded the Secretary’s

delegation of authority and itself delegated the determination

50 BROWN V. CIR

to the “appeals officer” for CDP hearings. So the

Commissioner cannot delegate some decisions within the

province of a CDP hearing to the Collection Division. As

the Tax Court recently noted, the Tax “Code tells us that any

[offer-in-compromise] raised in a CDP hearing is to be

considered independently (not just reviewed) by” the

appeals officer. Mason v. Comm’r of Internal Revenue, 12

T.C.M. (CCH) 1485, 2021 WL 2018666, at *10 (T.C. 2021).

By placing CDP hearings within the Independent Office

of Appeals, Congress made a deliberate choice. It chose for

taxpayers to face judgment before an official with

congressionally mandated independence. It is no accident

that Congress housed the hearings within the office required

by law to resolve tax disputes with “fair[ness] and

impartial[ity].” Id. § 7803(e)(3). And the IRS may not

reroute decisionmaking in CDP proceedings around the

Independent Office of Appeals. Otherwise, it makes the

benefits of a CDP hearing completely illusory. If the IRS

could delegate determination of an offer-in-compromise to

any IRS official, then CDP hearings would become nearly

indistinguishable from traditional IRS proceedings.

And contrary to the concurring opinion, there’s no

conflict with enforcing both the rules of CDP hearings under

§§ 6320, 6330 and the time limit of § 7122(f). After all, our

duty is to interpret the law “as a symmetrical and coherent

regulatory scheme” and “fit, if possible, all parts into an

harmonious whole.” FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 133 (2000) (simplified). Congress

enacted both the CDP hearings and the offer-in-compromise

time limit to aid taxpayers. And neither provision requires

the taxpayer to choose between the two. Indeed, nothing in

text of either provision prevents a taxpayer from “rais[ing]”

the “issue” of an offer-in-compromise “submitted under”

BROWN V. CIR 51

§ 7122 in a CDP hearing. See 26 U.S.C. §§ 6330(c)(2)(A),

7122(f). So the taxpayer gets both the benefit of the 24-

month timeframe to decide offers-in-compromise and the

independence of an appeals officer in a CDP hearing. 3 And

this is true no matter how difficult it may be for appeals

officers to work within the congressionally established time

limits, as the lead and concurring opinions focus on.

In sum, the CDP requirements mean only an Independent

Office of Appeals’ officer can stop the § 7122(f) clock.

Unlike in traditional proceedings, the Collection Division

may not make any “determination” resolving a CDP-based

offer. See id. § 6330(c). That Division can’t decide an issue

in a CDP hearing any more than an IRS human resources

specialist or a stranger on the street can. Not that the

Independent Office of Appeals can’t seek a recommendation

from others within the IRS. The Collection Division might

offer its views to the appeals officer. But that

recommendation, by an official with no power over CDP

proceedings, cannot be construed as a “reject[ion] by the

Secretary” for purposes of § 7122(f). Much like a district

court judge adopting a report and recommendation of a

magistrate judge, only the appeals officer can give binding

effect to the recommendation of the Collection Division.

2.

IRS guidance confirms this plain-meaning approach to

§ 7122(f)’s framework. Not long ago, the IRS expressly

agreed with Brown’s view—that only the Independent

Office of Appeals may decide an offer-in-compromise

3

Besides, it’s enough that the IRS conceded that Brown’s offer-in-

compromise was “submitted under” § 7122 and that § 7122(f)’s time

limit applies here. I would hold the IRS to its concession.

52 BROWN V. CIR

submitted during a CDP hearing for § 7122(f) purposes. It

wasn’t until after this dispute that the IRS started changing

its views. And while the IRS’s “guidance documents do not

control our analysis and cannot displace our independent

obligation to interpret the law,” that it “has repeatedly issued

guidance to the public at odds with the interpretation it now

asks us to adopt” is reason to doubt that its “current position

represents the best view of the law.” Bittner v. United States,

598 U.S. 85, 97 (2023). So once again, we should take the

“IRS’s litigation position with a grain of salt.” Seaview

Trading, 62 F.4th at 1142 (Bumatay, J., dissenting).

Starting in 2013, until after Brown submitted his offer-

in-compromise, IRS guidance stated, “[w]hen an [offer-in-

compromise] is submitted in CDP, Appeals has 24 months

to make a determination. If the offer is not rejected, returned

or withdrawn within 24 months of submission, it is deemed

accepted.” IRM 8.22.7.10.1.3 (Sept. 23, 2014); see also

Memorandum for Appeals Employees, IRS Control No. AP-

08-0713-03 (July 18, 2013). This provision remained in the

IRS Manual through 2020. So it was effective when Brown

submitted his offer-in-compromise in April 2018 up through

the end of the 24-month deadline. Thus, under the IRS’s

prior guidance, Brown is correct that the Collection

Division’s “return” of his offer-in-compromise doesn’t

count as a rejection under § 7122(f) and his offer should

have been deemed accepted.

Even parts of the updated 2020 IRS Manual reflect this

prior understanding. It says, for all “offers submitted during

a CDP hearing,” the Collection Division’s Centralized

Offer-in-Compromise Unit must make a “processability

determination” and then inform the Office of Appeals. IRM

5.8.4.15(1)–(2) (Sept. 24, 2020). In all cases, “a CDP [offer-

in-compromise] must be returned to Appeals with no less

BROWN V. CIR 53

than 270 days (9 months) remaining on the 24-month time

frame in order for Appeals to make its final determination.”

Id. at (4). Meanwhile, the IRS Manual tells appeals officers

that “[t]o be certain the . . . 7122(f) [time period] is closed

prior to the end of the 24-month period[,] . . . be sure to

communicate to the taxpayer the final disposition of the

[offer] in your Determination or Decision Letter.” IRM

8.22.7.10.5(4) (Aug. 26, 2020). Finally, even now, the

Manual seems to hedge its bets—stating, “[w]hen an [offer-

in-compromise] is submitted in CDP, Appeals generally has

24 months to make a determination. If the offer is not

rejected, returned or withdrawn within 24 months of

submission, it is deemed accepted.” IRM 8.22.7.10.1.3(1)

(Aug. 26, 2020) (emphasis added).

Only in 2020 did the IRS change its tune. The IRS

Manual today carves out “return[s]” from Appeals’

province. It now states that a “[r]eturn” by the Collection

Division “will result in the closing of [§ 7122(f)’s] 24-month

period.” Id. at (5). The IRS even claims that an

“[e]rroneously issued rejection letter” by the Collection

Division would stop the clock. Id.

So, in 2013, the appeals officer had to make the decision

on a CDP offer-in-compromise—whether it be a return,

rejection, or acceptance. In 2020, after it had mangled

Brown’s case, the IRS decided that’s no longer the case and

that the CDP can return the offer. But the IRS’s refresh can’t

hide the plain terms of § 6330 or its inconsistent prior

guidance.

That the IRS shifted its positions during the pendency of

this very case isn’t a reason to defer to it. If anything, that

the IRS so easily “speaks out of both sides of its mouth,”

Bittner, 598 U.S. at 97 n.5, means that we should question

54 BROWN V. CIR

its views and “use every tool at [our] disposal to determine

the best reading of the statute,” Loper Bright Enters., 144 S.

Ct. at 2266. So we shouldn’t surrender our “interpretive

toolkit,” see id. at 2271, and simply defer to the IRS’s view

of its delegation authority. Whether Brown deserves a

compromise is irrelevant. The lead opinion’s judicial

rewrite of the Tax Code is a debt that won’t just be paid by

Brown—it will be borne by every taxpayer who has now lost

a vital statutory protection. All the worse for the separation

of powers and the rule of law.

3.

Finally, the lead opinion commits a cardinal sin of

appellate practice in our circuit—it relies on an unpublished

memorandum disposition as a precedential statement of law.

Over and over, seemingly at every judicial conference or

bench-and-bar meeting, judges of the Ninth Circuit warn

litigants and district courts against relying on our

unpublished memorandum dispositions. For good reason.

Generally, “[u]npublished dispositions . . . are not

precedent,” 9th Cir. R. 36-3(a), and, “[u]nlike an opinion for

publication which is designed to clarify the law of the circuit,

a memorandum disposition is designed only to provide the

parties and the district court with a concise explanation of

this Court’s decision.” 9th Cir. General Order 4.3.a. The

very point of unpublished dispositions is to “keep[] the

books from being cluttered with dicta that could result in

confusion for lawyers and tribunals addressing similar

issues.” In re Burns, 974 F.2d 1064, 1068 (9th Cir. 1992).

Even so, the lead opinion presses on and claims that we

have already decided the issue in this case by memorandum

disposition. See Op. 26–27 (“[We] previously held that

when a taxpayer submits an offer-in-compromise in the

BROWN V. CIR 55

context of a collection due process hearing, the Collection

Division’s return, not the Office of Appeals’ notice of

determination, terminates the 24-month period in

§ 7122(f).”) (citing Brown v. Comm’r of Internal Revenue,

826 F. App’x 673, 674 (9th Cir. 2020) (unpublished)).

Even if it were proper to look to our unpublished

dispositions, the lead opinion still gets it wrong. The panel

never reached whether the appeals officer must return or

reject the offer within 24 months because it was uncontested

that the appeals officer in that case did so. I should know; I

was on the panel of that decision. The lead opinion then does

exactly what we’ve always forbidden—taking

nondispositive language “out of context” from an

unpublished decision and inferring the wrong law from it. In

re Burns, 974 F.2d at 1068.

II.

Because the panel here has split three ways, none of our

pronouncements today carry the weight of precedent.

Hopefully, a future panel will sort this out. But based on the

plain text of the Tax Code, I would reverse the Tax Court

and hold that the appeals officer here needed to return

Brown’s offer-in-compromise within 24 months. When the

appeals officer blew through that deadline, Brown’s offer

should have been deemed accepted. Because the lead

opinion and concurring opinion deny Brown his accepted

offer, I respectfully dissent.