4.18.4  Combination Offers

4.18.4.1  (01-04-2011)
Overview

  1. This section provides procedures for considering combination Offer in Compromise (OIC) requests.

  2. IRC 7122(f), as amended by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), P. L. 109-222, provides that in general any offer in compromise (OIC) shall be deemed accepted if the offer is not rejected, or a determination is not made within 24 months of the submission of the offer. In addition, the new procedures permit taxpayers to file either a doubt as to collectibility (DATC) or a doubt as to liability (DATL), offer but not both.

  3. The TIPRA amendments to IRC 7122 apply to offers in compromise submitted on or after July 16, 2006. However, numerous offers under the previous procedures, which allowed the taxpayer to submit both types of offers, also known as a Combination OIC, may still be in process.

  4. IRC 7122(f) applies to the 24-month period from the time a combination OIC is submitted, including time first worked by Collection to resolve the DATC issue and then sent to Examination to resolve the DATL issue. Therefore, Collection and Examination must observe the overall 24-month period to make a determination in order to protect the government’s interest.

4.18.4.2  (01-04-2011)
Considering Combination Offers Filed Before July 16, 2006

  1. It is possible that a taxpayer who submitted an OIC based on both doubt as to liability and collectibility, and/or effective tax administration still has a case in-process. Combination offers are generally worked in Collection first, and are added to the Collection Automated Offer in Compromise (AOIC) database.

    Note:

    The revision (3-2009) of Form 656, Offer in Compromise, eliminated the option to file a combination Doubt as to Liability (DATL) / Doubt as to Collectibility (DATC) offers. Form 656-L, Offer in Compromise (Doubt as to Liability), was designed for the filing of DATL offers.

  2. If Collection accepts the offer based on doubt as to collectibility, no action will be required of Examination. Collection will take the necessary steps to close the offer.

  3. If Collection rejects the offer, the file will manually be transmitted to Examination for consideration based on doubt as to liability. Examination action/offer consideration should be initiated within 30 days and monthly contact should be maintained with Collection to inform them of the status and projected closure date for those offers that were processable before July 16, 2006.

  4. If the taxpayer also requested consideration on the basis of effective tax administration, Examination will determine the doubt as to liability issues and also provide a recommendation to Collection regarding any Detriment to Voluntary Compliance (DVC) issues related to application of the tax law. See IRM 4.18.3.4, Examination Considerations. Under no circumstance should Collection accept a combination offer on the basis of effective tax administration until doubt as to liability has been considered and determined not to be applicable.

  5. If Examination accepts the offer based on doubt as to liability, they will notify Collection so the controls can be closed. See IRM 4.18.2.6, Doubt as to Liability Offer Accepted.

  6. If Examination rejects the offer based on doubt as to liability and finds no detriment to voluntary compliance issues, Examination Technical Services will prepare and mail the rejection letter addressing both the Examination and Collection issues. (Collection should indicate the reason for their rejection and the appropriate verbiage/reason paragraph in the file).

  7. If Examination rejects the offer based on doubt as to liability but identifies a DVC issue, the file should be forwarded (or returned) to Collection via the OIC Technical Services reviewer with the recommendation from Examination on the DVC issue using Form 3210, Document Transmittal.

  8. Independent Administrative Review (IAR) is completed in Examination Technical Services on the applicable examination provisions/issues and IAR should have already been completed in Collection before the file was received in Examination.

  9. After appropriate approval/signature is obtained on the rejection memorandum and letter, the rejection letter will be dated and sent to the taxpayer by Examination Technical Services. A copy of the signed/dated letter is sent by means of Form 3210 to the Collection unit, from whom the OIC was received, so that Collection's AOIC controls can be updated. If the taxpayer does file a timely appeal request, the offer package will be forwarded to Appeals. If the taxpayer does not appeal, Examination will close the offer case by sending a copy of the workpapers and letter to the PSP OIC Coordinator. In order to complete notification of Collection to close their OIC controls, the PSP OIC Coordinator will then update the "DATL 24 Month Monitoring Tool" maintained by the Brookhaven Campus.

  10. The Technical Services OIC reviewer should periodically, as agreed to by both parties but at least yearly, meet with Collection OIC personnel and/or inspect Collection closed Form 1271, Rejection or Withdrawal Memorandum, and Form 7249, Offer Acceptance Report, to ensure examination issues were appropriately considered and/or coordinated.


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