25.15.8  Revenue Officer Procedures for Working Innocent Spouse Relief Cases (Cont. 1)

25.15.8.6 
Claim for Relief — Impact on the Collection Statute Expiration Date

25.15.8.6.1 
Effect of Amendments to IRC § 6015 on the CSED

25.15.8.6.1.2  (08-17-2010)
Claims Filed Before December 20, 2006

  1. Depending on the type of relief claimed, claims filed before December 20, 2006, will prohibit collection action and suspend the CSED in either of the following ways:

    1. beginning on December 20, 2006, not on the date the claim for relief was received, if the RS only requested relief under IRC § 6015(f).

    2. beginning on the date the claim for relief was received if the RS requested relief under IRC § 6015(f) and also requested relief under IRC § 6015(b) or IRC § 6015(c).

25.15.8.6.2  (08-17-2010)
Case Considerations Regarding Non-Mirrored Modules

  1. Generally only one MFT 31 account (not "mirrored" ) is set-up when only one spouse has a TAS case, agrees to the tax increase, or petitions Tax Court.

  2. Certain case conditions require the establishment of " mirrored" modules. When a joint MFT 30 assessment is mirrored, independent MFT 31 modules are created for each spouse and the mirrored modules have independent CSEDs. "Mirroring" is required with the following types of case conditions::

    1. Bankruptcy filed by only one spouse

    2. Innocent Spouse Claim

    3. Offer in Compromise (OIC) filed by only one spouse

    4. Joint OIC defaulted by only one spouse

    5. Taxpayer Advocate Case on only one spouse

    6. Agreement to tax adjustment by only one spouse

    7. Tax Court petition filed by only one spouse

  3. Some cases cannot be mirrored. IRM 25.15.15.2.1 , Exceptions to Mirroring Modules, lists situations preventing mirroring of modules.

25.15.8.6.2.1  (08-17-2010)
Non-Mirrored Modules

  1. Joint modules are closed due to the IS indicator when an IS claim is received, so generally, there is no need to "monitor" collection of the non-requesting spouse since the joint MFT 30 assessment is mirrored with independent MFT 31 modules for each spouse with independent CSEDs. In some cases, however, the CSED may be an issue when a module cannot be mirrored. In those cases, the liability remains a joint liability until a determination has been made to grant full or partial relief.

  2. The statute on a joint module is not automatically extended during the claim for relief consideration period or after the consideration period, if the claim is denied.

  3. Once the relief determination has been made (but only when the case can't be mirrored):

    • a MFT 31 is established for the responsible spouse only.

    • and the MFT 30 account is closed.

  4. Once the mirroring process has been completed, the result is:

    • the requesting spouse's module is under the control of the IS unit.

    • the non-requesting spouse's module will return to the collection status where it left off.

      Note:

      The case will be sent to FC for assignment. Systemically, it is not possible for the Master File to retain the original IDRS case assignment number of the RO to whom the case was originally assigned.

25.15.8.6.2.1.1  (08-17-2010)
Non-Mirrored Module Procedures

  1. Refer to IRM 25.15.15.2.1, Exceptions to Mirroring Modules, for additional guidance.

  2. Take any appropriate collection action on the non-requesting spouse. You may need to update the CSED on the joint module non-mirrored module(s). The CSED is systemically computed on the mirrored modules.

  3. Ensure you take no collection action against the requesting spouse while you retain the module until one of the three events which end the suspension of the CSED occurs.

    1. IRM 25.15.8.6.

25.15.8.6.3  (08-17-2010)
Updating the CSED

  1. The decision to update the CSED of a collection case assigned to you is at your discretion, however, certain conditions must apply:

    1. future collection potential against the RS must exist, and

    2. the ability to monitor the case must exist.

  2. See IRM 25.15.2.4.2, Innocent Spouse Indicator Transaction Code (TC) 971/972, for guidance about when and how the CSED should be updated.

  3. Take appropriate collection action on the non-requesting spouse.

  4. Ensure you take no collection action against the requesting spouse until one of the three events which end the suspension of the CSED occurs.

    1. IRM 25.15.8.6.

25.15.8.7  (03-21-2008)
Collection Action While the Claim is Pending

  1. IRC § 6015(e)(1)(B) generally prohibits levies (or seizures) and judicial collection proceedings against the requesting spouse (RS) while a claim for relief is pending. However:

    1. Refund offsets are not prohibited by statute.

    2. The Service has made a policy decision not to offset refunds while a claim is pending.

    3. The collection prohibition does not apply if a termination assessment under IRC § 6851 or a jeopardy assessment under IRC § 6861 has been made.

  2. See IRM 5.17.15, Termination and Jeopardy Assessments and Jeopardy Collection.

  3. At any time, regardless of whether the Service has mailed a notice of final determination to the RS, the RS may waive the restrictions on collection.

    1. See IRM 25.15.3.10, Waivers.

  4. Routine case processing calls for the discontinuance of collection action against the RS during the pendency of the claim for relief. However, the TM may approve the continuance of collection action against the RS if collection is in jeopardy.

  5. Review all of the pertinent facts of the case to determine whether or not collection is in jeopardy.

  6. Seek guidance from your group manager (GM) and/or coordinate with Advisory and/or Counsel, as necessary, to make this determination.

    1. Follow the IRM procedures to determine if a jeopardy assessment is appropriate.

    2. IRM 25.15.8.7.2.

25.15.8.7.1  (08-17-2010)
Application of Payments While Claim is Pending

  1. Follow the applicable procedures below when you have a case where:

    1. the non-requesting spouse (NRS) makes a payment — IRM 25.15.8.7.1.1.

    2. the taxpayer is due a refund — IRM 25.15.8.7.1.2.

    3. the requesting spouse (RS) has an existing installment agreement (IA) — IRM 25.15.8.7.1.3.

25.15.8.7.1.1  (08-17-2010)
Application of Payments from NRS

  1. Apply any involuntary payments and/or undesignated voluntary payments received from the NRS and/or from his/her assets in the order below:

    1. individual liability

    2. joint liability

25.15.8.7.1.2  (11-13-2014)
Impact on Refund Offset Procedures

  1. The Service has made a policy decision not to offset the RS's refund while an innocent spouse claim is pending. See IRM 25.15.3.4.5,Prohibitted Collection Actions. If you secure a return from the RS for which a refund is due or obtain information indicating a refund is due the RS, the refund will not offset to any balance due module for which the claim was filed (because of the TC 971 AC 065 input and the resulting TC 130 refund freeze).

  2. See IRM 5.1.12.9, "Innocent Spouse," and IRM 5.1.12.202 , Refund Offset, for guidance on refunds.

  3. Take the appropriate action to issue a refund to the RS to the extent that an overpayment exceeds any balance due on tax modules not under consideration for IRC § 6015 relief.

25.15.8.7.1.3  (11-13-2014)
Impact on an Installment Agreement

  1. When the requesting spouse (RS) has an existing installment agreement (IA), he/she will need to decide whether to maintain, renegotiate, or default the IA.

  2. Discuss the IA with the RS. Do not unilaterally default an existing IA with the RS because of the request for relief.

  3. Try to ensure the RS understands that the decision to maintain, renegotiate, or default the IA will have significant consequences.

    1. Refer to IRM 25.15.2.2.1, Installment Agreements in Effect, for an explanation of these consequences.

    2. Refer to IRM 5.14.4.4, Joint and Several Liability Relief Under IRC Section 6015 and Installment Agreement Requests for additional guidance in innocent spouse cases.

  4. Do not route a request for an IA to CCISO if the RS requests an IA after submission of Form 8857.

  5. Follow the procedures in IRM 5.19.1.5.3, Full Pay Within 60 or 120 Day Agreement, and IRM 5.14.4.4, Joint and Several Liability Relief Under IRC Section 6015 and Installment Agreement Requests, to process an installment agreement for the RS after submission of Form 8857 or if the NRS requests an installment agreement.

25.15.8.7.2  (08-17-2010)
Collection in Jeopardy

  1. Document the case file regarding the results of your review and your determination that collection is in jeopardy.

  2. Take the following steps to secure approval from the TM to continue collection action against the RS.

    1. Prepare a report memorandum in electronic format.

    2. Include all of the pertinent facts of the case to show how you determined collection is in jeopardy.

    3. Prepare an e-mail message requesting your GM to forward the report memorandum to the TM.

    4. Include the report memorandum as an attachment to the message.

    5. Send the message to your GM via secure e-mail.

    Note:

    Management action is required:


    The GM must:

    1. decide whether or not to forward the message to the TM, and

    2. include the assigned RO's name on the Cc line of the message if he/she forwards the report, or

    3. advise the assigned RO that he/she will not forward the report and provide a rationale for the decision.

    The TM must:

    1. decide whether or not to approve the continuance of collection action against the RS, and

    2. inform the GM of his/her decision.

    3. document the ICS case history with approval or disapproval of continuing collection action against the RS.

  3. Discontinue all collection action on the years included in the claim for relief against the RS until you receive approval from the TM to continue collection action.

  4. Continue collection action against the requesting spouse on the tax period(s) not included in the claim for relief.

  5. Continue collection action against the non-requesting spouse (NRS) on:

    1. the tax years included in the claim for relief, and

    2. tax years not included in the claim for relief.

  6. Create a separate name line on ICS with only the name of the NRS. This will ensure any requests contain only the name of the NRS, including the filing of NFTL(s) on the NRS.

  7. Make no master file changes to the entity name.

  8. Follow the applicable procedures below, depending on whether the TM disapproves or approves.

    1. IRM 25.15.8.7.2.1.

    2. IRM 25.15.8.7.2.2.

25.15.8.7.2.1  (08-17-2010)
Territory Manager Disapproves

  1. Continue collection action:

    1. on the NRS for all applicable periods

    2. on the RS for tax years not included in the claim for relief

  2. Follow the applicable procedures below if the TM disapproves the continuance of collection action against the RS.

    1. IRM 25.15.8.7.2.2.1.

    2. IRM 25.15.8.9. , Collection Action — While an Appeal is Pending.

    3. IRM 25.15.8.10. , Collection Action — After the Final Determination.

25.15.8.7.2.2  (08-17-2010)
Territory Manager Approves

  1. Follow these procedures after the TM has documented approval in the ICS case history.

  2. Continue collection action against the RS on:

    1. tax years included in the claim for relief, and

    2. tax years not included in the claim for relief.

  3. Consider instituting and carrying out a lawsuit to protect the government's interests. See IRM 5.17.4, Suits by the United States.

25.15.8.7.2.2.1  (11-13-2014)
Suit to Reduce Tax Claim to Judgment

  1. When the RS has made any payments on the liability, a successful claim under IRC § 6015(b) or IRC § 6015(f) may result in a refund to the RS without adequate time to collect from the NRS. In these circumstances, a suit to reduce the tax claim/assessment to a judgment may be necessary to protect the government's interest.

  2. Consider recommending that the Department of Justice file a suit to reduce the tax assessment(s) to a judgment against the NRS if the RS has made any payments on the liability.

    1. See IRM 5.17.4.7, Suit to Reduce Tax Claim to Judgment, for a discussion of this type of suit.

    2. See IRM 25.3.2, Suits by the United States, to assist in determining if it is feasible to recommend reducing a tax claim to judgment.

  3. Coordinate with Advisory and/or Counsel, as necessary.

25.15.8.8  (08-17-2010)
Collection Action — While Collection Action is Pending upon Receipt of a Claim

  1. Follow the appropriate IRM procedures if you determine that collection is in jeopardy.

  2. IRM 25.15.8.7.2.

  3. Follow the applicable procedures depending on whether the TM disapproves or approves.

    1. IRM 25.15.8.7.2.1.

    2. IRM 25.15.8.7.2.2.

  4. Make the final determination regarding the release of pending collection action according to the information displayed in the table below.

    Release of Pending Collection Action
    If Then
    ...the TM determines the pending collection action should not be released... Do not release any levy(ies) or seizure(s), including any continuous wage levy(ies), served prior to the claim for relief
    ...the TM determines the pending collection action should be released... Release any levy(ies) or seizure(s), including any continuous wage levy(ies), served prior to the claim for relief.
  5. Release any levy(ies) or seizure(s), including any continuous wage levy(ies), served prior to the claim for which funds have not been remitted, unless the Territory Manager (TM) determines they should not be released.

  6. Do not release any levy(ies) or seizure(s), including any continuous wage levy(ies), served prior to the claim for relief if the TM determines they should not be released.

25.15.8.8.1  (08-17-2010)
Required Action — Federal Payment Levy Program

  1. Determine if a module covered by a pending claim for relief is subject to an active FPLP levy.

    1. Look for the presence of TC 971 AC 062 on IDRS.

      Reminder:

      AC 062 should be generated by FPLP after the input of TC 971 AC 065 results in systemic reversal of TC 971 AC 060.

  2. Release the FPLP levy, if necessary.

    1. Do not use Form 668-D, Release of Levy/Release of Property from Levy, as a means to release a FPLP levy.

    2. Refer to IRM 5.11.7.2.6.1, Requesting Assistance from the FPLP Coordinator on Certain Emergency Levy Release Situations.

25.15.8.9  (08-17-2010)
Collection Action — While an Appeal is Pending

  1. It is Service policy not to begin collection action after a notice of appeal is filed unless the expiration of the statute of limitations is imminent or collection will be jeopardized by the delay.

  2. Collection action may be resumed while an appeal is pending from the date the RS files a timely notice of appeal of the Tax Court's decision unless the RS files an appeal bond pursuant to the rules of IRC § 7485.

  3. Determine if either of the following apply when the RS has not filed an appeal bond:

    1. the expiration of the statute of limitations is imminent, or

    2. collection will be jeopardized by the delay during the pendency of the appeal.

  4. Follow the above procedures regarding collection in jeopardy if you determine the statute is imminent or collection will be jeopardized.

    1. IRM 25.15.8.7.2.

25.15.8.10  (09-01-2006)
Collection Action — After the Final Determination

  1. As discussed above, CCISO will notify Collection of the final determination by sending an informal statement via secure e-mail.

    1. IRM 25.15.8.5.3.2.

  2. Collection action may be resumed after any of the following have occurred:

    • 90 days have elapsed from issuance of the final determination letter on the claim and no notice is received of a Tax Court petition filing

    • The Tax Court decision becomes final

    • The taxpayer has waived the collection restrictions. Refer to IRM 25.15.6.4.2.1, Waivers, for additional guidance.

    • The collection of the tax is in jeopardy

  3. Granting relief relieves the RS of personal liability for the applicable joint income taxes. However, community property of the RS remains subject to collection against the NRS. Refer to IRM 25.15.3, Technical Provisions of IRC 6015 and IRM 25.15.5, Relief from Community Property Laws/Community Property States, for technical and procedural guidance on relief from joint and several liability and relief from the application of community property laws.

  4. Refer to IRM 25.15.1.8, Statute of Limitations on Collection, and IRM 5.1.19.3.6, Relief from Joint and Several Liability on Joint Returns/Innocent Spouse, for information on the collection statute.

25.15.8.10.1  (11-13-2014)
Balance Due Module Re-issuance

  1. The final determination on the taxpayer's claim for relief may affect the entity and the original balance due module(s).

  2. The table below displays:

    1. the impact of the final relief determination upon the entity and the original balance due module(s)

    2. the entity changes CCISO will make, if any, because of the relief determination

      Note:

      CCISO will make any necessary entity (name & address) changes whether relief is granted or not. CCISO will correct the name line and filing status when it is determined the joint election was invalid.

    Relief Impact on the BAL DUE(s)
    If Then
    No relief is granted (the IRC § 6015 relief provisions do not apply.) CCISO will make any necessary entity changes even if no relief is granted.
     
    Full relief is granted (the IRC § 6015 relief provisions fully apply.) CCISO will transfer the Master File or Non-Master File balance due module(s) to the NRS.
    FC is not required to take any action to make the entity change.
     
     
    Partial relief is granted (the IRC § 6015 relief provisions partially apply.) CCISO will transfer the joint balance due module (MFT 30) to the campus showing the corrected amount owed by both taxpayers.
    FC is not required to take any action to make the entity change.
    The campus will issue:
    • separate balance due module(s) (MFT 31) for the portion of the original assessment for which the RS is separately liable, if any.

    • separate balance due module(s) (MFT 31) for the portion of the original assessment for which the NRS is separately liable.

     
     
  3. Continue appropriate collection action against the NRS.

  4. Take any appropriate collection action after the final determination.

    1. IRM 25.15.8.10.1.2. , Collection Action after a No Relief Determination

    2. IRM 25.15.8.10.1.3. ,Collection Action after a Full Relief Determination

    3. IRM 25.15.8.10.1.4. , Collection Action after a Partial Relief Determination

25.15.8.10.1.1  (11-13-2014)
Case Closing Letter

  1. In addition to any other necessary action when you close a case, a case closing letter needs to be issued to the taxpayer(s) (and any authorized representative(s), as applicable), when you have concluded the collection investigation on the taxpayer entity.

  2. See IRM 5.1.1.4, Case Closing Letters.

25.15.8.10.1.2  (11-13-2014)
Collection Action after a No Relief Determination

  1. Resume appropriate collection against the RS on all outstanding module(s) upon notification of the determination of no relief after any of the four following events:

    1. 90 days have elapsed from issuance of the final determination letter on the claim and no notice is received that the taxpayer filed a Tax Court petition.

    2. the Tax Court decision becomes final.

    3. the taxpayer has waived the collection restrictions. See IRM 25.15.6.4.2.1, Waivers.

    4. FC determines that the collection of the tax is in jeopardy and has secured proper approval from the TM. IRM 25.15.8.7.2.

25.15.8.10.1.3  (08-17-2010)
Collection Action after a Full Relief Determination

  1. Resume collection against the RS on any other outstanding module(s) when notified of the full relief determination in favor of the RS:

    1. Take no collection action against the RS on any applicable period(s) (i.e., period(s) with full relief granted).

    2. Request any necessary adjustments to the account. IRM 25.15.8.10.2.

    3. Request partial or full lien releases, when necessary. IRM 25.15.8.11.

    4. Continue appropriate collection activity against the RS on any applicable period(s) (i.e., period(s) with no relief granted).

  2. Do not take any collection action against the RS on any module(s) when full relief was granted in favor of the RS on those module(s).

25.15.8.10.1.4  (08-17-2010)
Collection Action after a Partial Relief Determination

  1. Resume collection against the RS on any applicable outstanding module(s) when notified of the partial relief determination in favor of the RS:

    1. Take appropriate collection action against the RS on any applicable period(s) (i.e., period(s) with Partial Relief granted).

    2. Request any necessary adjustments to the account. IRM 25.15.8.10.2.

    3. Request partial lien releases, when necessary. IRM 25.15.8.11.

    4. Continue appropriate collection activity against the RS on any applicable period(s) (i.e., period(s) with no relief granted).

25.15.8.10.2  (08-17-2010)
Necessary Refund Action

  1. Request release of the TC 130 freeze immediately after a determination that relief is fully granted and there are no other liabilities to which funds can be applied.

  2. Monitor the case to ensure the systemic refund of the residual amount to the taxpayer.

  3. Request offset of refunds immediately after final determination that the claim is fully or partially denied and the RS's claim is no longer being considered by the Service or a court, if necessary.

25.15.8.10.3  (08-17-2010)
CCISO Processing - After the Final Determination

  1. Refer to the following IRM sections for information about Cincinnati Centralized Innocent Spouse Operation (CCISO) procedures for processing innocent spouse cases after the request was determined to be:

    • disallowed,

    • partially disallowed,

    • nonqualifying, or

    • allowed in full.

    1. IRM 25.15.8.10.3.1. , Modules not Mirrored.

    2. IRM 25.15.8.10.3.2. , Mirrored Modules.

25.15.8.10.3.1  (08-17-2010)
Modules not Mirrored

  1. Refer to IRM 25.15.9, Account Processing of Requests for Relief from Joint and Several Liability , for information.

25.15.8.10.3.2  (08-17-2010)
Mirrored Modules

  1. Refer to IRM 25.15.15, Mirror Modules for Requests for Relief from Joint and Several Liability for information.

25.15.8.11  (03-21-2008)
Notice of Federal Tax Lien

  1. A Notice of Federal Tax Lien (NFTL) may have been filed on a joint income tax balance due module before a claim for relief was made. The original NFTL will remain in force until the relief determination is made. If innocent spouse relief is denied, no change to the original NFTL is necessary.

  2. Follow the applicable procedures below depending on whether the claim is pending or a final determination has been made.

25.15.8.11.1  (08-17-2010)
NFTL — While the Claim is Pending

  1. Do not request release of any NFTL against the requesting spouse (RS) while the claim for relief is pending.

    Note:

    Advisory will not release or modify a NFTL until a determination is made.

  2. Consider the provisions of Policy Statement 5-16 prior to filing a NFTL when a taxpayer has filed a claim for relief from joint and several liability and the determination is pending. Refer to IRM 1.2.14.1.4 , Policy Statement 5-16, for guidance.

  3. Create a separate name line on ICS with only the name of the NRS. This will ensure any requests contain only the name of the NRS, including the filing of NFTL(s) on the NRS.

  4. Make no master file changes to the entity name.

  5. File a NFTL against the non-requesting spouse (NRS), if needed.

25.15.8.11.2  (08-17-2010)
NFTL — After the Final Determination

  1. Notify the Centralized Lien Unit (CLU) that NFTL action is required depending on whether full or partial relief is granted.

    Note:

    ALS is programmed to systemically partially release a NFTL(s) based on the relief determination and after the account has been adjusted to show that relief was allowed.

  2. Follow the applicable procedures below depending on whether the full or partial relief is granted.

    1. IRM 25.15.8.11.2.1..

    2. IRM 25.15.8.11.2.2..

25.15.8.11.2.1  (11-13-2014)
Full Relief Granted

  1. Notify the Centralized Lien Unit (CLU) that the balance due module(s) is(are) now satisfied for the requesting spouse (RS) only.

    Note:

    ALS is programmed to issue a partial NFTL release(s) for the RS when it receives systemic confirmation of allowed relief. account has been adjusted to show that relief was allowed.

  2. CLU will not release the original NFTL.

  3. Monitor the case to ensure that the partial release comes through.

    Note:

    There may be a circumstance where you need to request an immediate partial release. In that case, you will need to work directly with CLU.

    1. Contact CLU for an immediate partial release, when applicable.

      Note:

      There may be an occasional circumstance where it will assist the RS to have a certificate of nonattachment. This is a manual process and should be carefully considered because it duplicates the partial NFTL release.

    2. Request a partial release of the lien A spouse files a joint return so that the spouse is liable that the time the return is filed.

      Note:

      An NFTL is originally filed bearing both names. Later, when the RS gets innocent spouse relief, the NFTL is partially relieved as to that spouse.

    3. Request a certificate of nonattachment for the RS via manual processing, when applicable.

      Note:

      A partial Lien release is generally more appropriate than the filing of a certificate of non-attachment.

    4. See IRM 5.12.10.13, Certificate of Nonattachment for guidance.

    5. Contact CLU for assistance if you need help.

  4. Do not take any collection action on the module(s) for which relief is granted.

25.15.8.11.2.2  (08-17-2010)
Partial Relief Granted

  1. Take the following action upon notification that partial relief is granted:

    1. Treat the reissued joint assessment as if there had been a partial abatement of the original balance due module.

    2. Do not take action on the original NFTL until the reissued joint liability is fully paid.

    3. Release the lien(s) when the module(s) is(are) fully satisfied.


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