IRS can proceed with levy after rejecting inspection agency’s $250,000 settlement offer
Middle Dep't Inspection Agency, Inc. v. Commissioner, T.C. Memo. 2025-99, No. 20018-23L., 2025 BL 351926, Court Opinion
On October 1, 2025, the U.S. Tax Court upheld the IRS’s decision to reject Middle Department Inspection Agency, Inc.’s (MDIA) $250,000 offer to settle over $9 million in excise tax liabilities.
The court ruled that the IRS Independent Office of Appeals did not abuse its discretion when it denied MDIA’s offer and sustained a proposed levy to collect unpaid pension-related taxes from 2000 through 2018.
Why It Matters
The ruling confirms that taxpayers seeking collection relief through offers-in-compromise (OICs) must provide substantial evidence and meet statutory criteria. It also reinforces that the IRS may reject reduced settlement offers when accepting them would undermine compliance or fairness among taxpayers.
Key Facts
Parties: Middle Department Inspection Agency, Inc. (MDIA) v. Commissioner of Internal Revenue
Issue: Whether the IRS abused its discretion by rejecting MDIA’s offer-in-compromise and sustaining a levy.
Statutes Involved: Internal Revenue Code §§ 430, 4971, 6320, 6330, 71…
