Bases for the Compromising or Closing of Claims Involving the United States

A United States Attorney should compromise or close a claim of pursuant to the authority described in

JM 4-3.120

only when one or more of the following bases for such action are present:

The United States Attorney believes that a claim of the United States is without legal merit;

The United States Attorney believes that a claim of the United States cannot be factually proven in court;

The United States Attorney believes that a different claim involving the United States should be selected for the purpose of resolving an open issue of law;

The United States Attorney believes that the full amount of a claim of the United States cannot be collected in full due to the financial condition of the debtor.

There must be a real doubt as to the government's ability to collect in full.

Uncertainty as to the price which property will bring on execution sale may be treated as an uncertainty as to collection. However, claims secured by a mortgage should not be compromised until after sale of the mortgaged property, since the government is generally entitled to both the amount the property will sell for and a deficiency judgment. In the rare instance in which such a compromise may be appropriate, a thorough appraisal by an impartial appraiser is indicated, to determine the value of the mortgaged property and avoid criticism from those who may later say they would have offered more for the property.

A valid and provable claim, which can be collected, cannot be voluntarily relinquished unless necessary to prevent injustice. Compromise requires some mutuality of concession. There must be room for the play of give and take. The adequacy of the concession is to be determined by the exercise of sound discretion.

Hardship, which does not involve inability to pay, is not a proper basis for settlement.

valid and provable claim, which can be collected, cannot be voluntarily relinquished unless necessary to prevent injustice. Compromise requires some mutuality of concession. There must be room for the play of give and take. The adequacy of the concession is to be determined by the exercise of sound discretion.

Hardship, which does not involve inability to pay, is not a proper basis for settlement.

The United States Attorney believes that the cost of collecting a claim of the United States will exceed the amount recoverable (

see

31 C.F.R. § 902.2(a)(3));

The United States Attorney believes that compromising or closing a claim involving the United States is necessary to prevent injustice;

The United States Attorney believes that the enforcement policy underlying a claim of the United States will be adequately served by a compromise;

The United States Attorney believes that it is less costly to compromise a claim against the United States than to undertake further legal action in defense against the claim; or

The United States Attorney believes that, in light of his or her assessment of the litigation risk and the likely amounts involved in the event of full, partial, or no success, settlement is in the interests of the United States.

[updated April 2018]