IDAPA 35.02.01.500 — SETTLEMENTS

Sections 63-3047, 63-3048, Idaho Code
01.
Grounds for Settlement. The Tax Commission may settle any taxes, penalties, or interest of a case
if one (1) or more of the following circumstances exist:
(3-15-22)
a.
Disputed liability,
(3-15-22)
i.
A disputed liability exists where there is a reasonable disagreement as to the existence or amount of
the correct tax liability under the law. A disputed liability does not exist where the liability has been established by a
final court judgment concerning the existence of the liability.
(3-15-22)
ii.
An offer to settle a disputed liability generally will be considered acceptable if it reasonably reflects
the likelihood the Commission could expect to collect through litigation. This analysis includes consideration of the
IDAHO ADMINISTRATIVE CODE
IDAPA 35.02.01
State Tax Commission
Administration and Enforcement Rules
Section 501
Page 13
hazards and costs of litigation that would be involved if the liability were litigated. The evaluation of the hazards and
costs of litigation is not an exact science and is within the discretion of the Commission.
(3-15-22)
b.
Doubt as to collectibility;
(3-15-22)
i.
Doubt as to collectibility exists in any case where the taxpayer's assets and income may not satisfy
the full amount of the liability.
(3-15-22)
ii.
An offer to settle based on doubt as to collectibility generally will be considered acceptable if it is
unlikely that the tax, penalty, and interest can be collected in full and the offer reasonably reflects the amount the
Commission could collect through other means, including administrative and judicial collection remedies. This
amount is the reasonable collection potential of a case. In determining the reasonable collection potential of a case,
the Commission will take into account the taxpayer's reasonable basic living expenses. In some cases, the
Commission may accept an offer of less than the total reasonable collection potential of a case if there are special
circumstances.
(3-15-22)
c.
Economic hardship of the taxpayer.
(3-15-22)
i.
The Commission may settle where it determines that, although collection in full could be achieved,
collection of the full amount would cause the taxpayer economic hardship. Economic hardship is defined as the
inability to pay reasonable basic living expenses.
(3-15-22)
ii.
An offer to settle based on economic hardship generally will be considered acceptable when, even
though the tax, penalty, and interest could be collected in full, the amount offered reflects the amount the Commission
can collect without causing the taxpayer economic hardship. The determination to accept a particular amount will be
based on the taxpayer's individual facts and circumstances.
(3-15-22)
d.
Promotion of effective tax administration.
(3-15-22)
i.
The Commission may settle to promote effective tax administration where compelling public
policy or equity considerations identified by the taxpayer provide a sufficient basis for settling the liability that is
equitable under the particular facts and circumstances of the case. Settlements pursuant to this paragraph will be
justified only where, due to exceptional circumstances, collection of the full liability may undermine public
confidence that the tax laws are being administered in a fair and equitable manner. The taxpayer will be expected to
demonstrate circumstances that justify settlement even though a similarly situated taxpayer may have paid his
liability in full.
(3-15-22)
ii.
The State Tax Commission may decline a settlement for reasons promoting effective tax
administration if the settlement of the liability would undermine compliance by taxpayers with the tax laws.
(3-15-22)
02.
Agreement Final. A settlement agreement relates to the issues agreed to for the tax periods in
question. The agreement is final and conclusive and neither the Tax Commission nor the taxpayer will be permitted to
open the case again except in the case of changes to the federal return or a showing of fraud or malfeasance or
misrepresentation of a material fact or as provided in the agreement. Recalculation of carryback or carryover items
may not be construed as opening the case and will not affect the tax liability of a closed period or closed issue.
(3-15-22)
03.
Form of Settlement. The taxpayer must submit an offer to settle in writing. An offer may not be
considered accepted until the taxpayer is notified in writing. Acceptance may be made only by a Tax Commissioner
or an authorized delegate. If the offer is rejected, the Tax Commission will promptly notify the taxpayer.
(3-15-22)
04.
Withdrawal of Offer. A taxpayer may withdraw his offer to settle at any time prior to its
acceptance by the Tax Commission.
(3-15-22)