If the IRS is seeking to collect interest, then the taxpayer in a CDP hearing can challenge the liability for interest. Urbano v. Commissioner, 122 T.C. 384, 390 (2004); Montgomery v. Commissioner, 122 T.C. 1, 8 (2004). A challenge to liability for interest can be premised on the interest-abatement provisions of section 6404(e)(1).

With the exception of this limited power of review over abatement, this Court generally lacks jurisdiction over issues concerning interest. Urbano v. Commissioner, 122 T.C. 384, 390 (2004); see also Med James, Inc. v. Commissioner, 121 T.C. 147, 151 (2003). Section 6404(h), by cross-referencing section 7430(c)(4)(A)(ii), imposes a "net worth" requirement on any taxpayer seeking review in the Tax Court.

The Commissioner is authorized to fully settle tax liabilities through a closing agreement with any person regarding his or her liability for any taxable period. Sec. 7121(a); Urbano v. Commissioner, 122 T.C. 384, 393 (2004). Section 7121 sets forth the exclusive means by which a closing agreement between the Commissioner and a taxpayer may be accorded finality.

We generally lack jurisdiction over issues concerning interest computations. Urbano v. Commissioner, 122 T.C. 384, 390 (2004); see also Med James, Inc. v. Commissioner, 121 T.C. 147, 151 (2003). Congress authorized the Commissioner to abate interest for reasons specified in section 6404, subject to abuse-of-discretion review by this Court.

Section 7121 sets forth the exclusive means by which a closing agreement between the Commissioner and a taxpayer may be accorded finality. Urbano v. Commissioner, 122 T.C. 384, 393 (2004). Closing agreements are final, conclusive, and binding on the parties as to matters agreed upon, and may not be annulled, modified, set aside, or disregarded in any suit or proceeding unless there is a showing of fraud, malfeasance, or misrepresentation of a material fact.

“The failure to question our jurisdiction is not a waiver of the right to do so, for if we lack jurisdiction over an issue, we do not have the power to decide it.” Urbano v. Commissioner, 122 T.C. 384, 389 (2004). Accordingly, the Court has an independent obligation to consider mootness sua sponte.

Section 7121(a) permits the IRS to enter into closing agreements, which are final and conclusive and bind the parties as to matters agreed upon. Sec. 7121(b); Urbano v. Commissioner, 122 T.C. 384, 393 (2004). The IRS has prescribed two forms of closing agreements.

See McCauley v. C.I.R., 56 T.C.M. (CCH) 134 (1988). However, inUrbano v. C.I.R., 122 T.C. 384 (2004), a Tax Court identified two situations in they have jurisdiction over redetermination of interest: to determine an overpayment of interest or to conduct a review for an abuse of discretion of the Commissioner's refusal to abate interest. Here, Plaintiffs' Complaint is in part a request for an abatement of interest, and in part a contention that the Commissioner abused his discretion by refusing to abate the disputed interest.

See Breman v. Commissioner, 66 T.C. 61, 66 (1976). Generally, this Court lacks jurisdiction over issues concerning interest computed (as will be done by the IRS in this case) under section 6601(a).Urbano v. Commissioner, 122 T.C. 384, 390 (2004). We do, however, have jurisdiction to redetermine such interest primarily in two types of situations.

The "underlying tax liability" for this purpose refers to the tax imposed under the internal revenue laws, including additions to tax and statutory interest. See Urbano v. Commissioner, 122 T.C. 384, 392-393 (2004); Katz v. Commissioner, 115 T.C. 329, 339 (2000). At the conclusion of the hearing, the Appeals officer must determine whether and how to proceed with collection and shall take into account: (1) the verification that the requirements of any applicable law or administrative procedure have been met; (2) the relevant issues raised by the taxpayer; (3) the taxpayer's challenges to the underlying tax liability, where permitted; and (4) whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the taxpayer that the collection action be no more intrusive than necessary.