4.18.5  Review, Closing and Reporting Requirements

4.18.5.1  (12-28-2010)
Overview

  1. This section provides administrative review, closing and reporting procedures for Offer-in-Compromise (OIC) requests.

  2. Examination is responsible for the investigation and processing of offers in compromise (OIC) based on doubt as to liability.

  3. Technical Services is responsible for case closing procedures and the administrative review. This occurs after the investigation and processing of offers in compromise are completed in Examination. The offer can be rejected, withdrawn, returned, terminated, or accepted.

4.18.5.2  (12-28-2010)
Case Closing Procedures

  1. After consideration of an OIC case is completed in the field, the file is forwarded to the Exam OIC reviewer in Technical Services for further action using Form 3210, Document Transmittal.

  2. After review, the Exam OIC reviewer in Technical Services will send a copy of the determination letter and workpapers to the PSP OIC Coordinator, using Form 3210, who will then enter the closing data onto the "DATL 24 Month Monitoring Tool" on the Brookhaven Campus Shared Drive at the following location: DATL 24 Month Monitoring Tool

  3. Independent administrative review is required for offers with a rejection recommendation.

  4. Form 7249, Offer Acceptance Report, or Form 1271, Rejection or Withdrawal Memorandum, is forwarded with the case file for the appropriate approval and signatures. See IRM 4.8.8.8 for additional guidance regarding Technical Services’ procedures.

  5. The OIC file should contain the following:

    1. Form 656, Offer in Compromise, or Form 656-L, Offer in Compromise (Doubt as to Liability),

    2. Letter to the taxpayer,

    3. Withdrawal letter from the taxpayer,

    4. Form 7249, Offer Acceptance Report or Form 1271, Rejection or Withdrawal Memorandum,

    5. Form 3040, Authorization to Apply Offer in Compromise Deposit of Liability,

    6. Form 2848, Power of Attorney and Declaration of Representative,

    7. Tax return (original, copy or RTVUE),

    8. Original workpapers/report, and

    9. Revised workpapers and Form 4549, Income Tax Examination Changes, if applicable.

4.18.5.3  (12-28-2010)
Independent Administrative Review Procedures (IAR)

  1. IRC 7122(d) requires the Service to provide for independent administrative review of all proposed rejections of offers in compromise prior to the rejection being communicated to the taxpayer.

  2. For Examination, this review should occur within the Technical Services function where one reviewer shall be designated as the Independent Administrative Reviewer (IAR). The IAR cannot be anyone who works on the case or is a part of the initial rejection or acceptance decision.

  3. The grade level of the IAR should be the same or greater than the individual making the initial rejection or acceptance decision.

  4. The IAR should be independent, defined as "free from the influence, guidance, or control of others." This indicates the review should be made by one who is not influenced by the maker of the original rejection decision, i.e. not an employee who reports to the reviewer. In instances where the IAR is the supervisor of the OIC coordinator, the supervisor must clearly make an independent judgment after a full review of the case. To the extent that an immediate supervisor may defer too much to the judgment of the OIC coordinator, the supervisor should not be appointed as the IAR. In instances where the OIC coordinator made the rejection recommendation, to avoid any possible question concerning independence, the area may want to consider appointing someone other than the OIC coordinator’s immediate supervisor as the IAR.

  5. The IAR will review all proposed rejections of offers in compromise prior to any indication or notification of such action being given to the taxpayer. The purpose of the review is to evaluate the case and determine if rejection was the correct decision.

  6. The following review criteria will be considered (but not limited to) for evaluation of the case:

    1. Whether IRM requirements were followed [procedural & mathematical accuracy];

    2. Whether the tax law was correctly considered and applied;

    3. Whether the facts/circumstances were thoroughly developed and the law applied.

  7. If the rejection is sustained, the IAR will:

    1. Sign Form 1271, Rejection or Withdrawal Memorandum, as reviewer signifying concurrence with the recommendation;

    2. Provide a brief comment in the remarks section (findings/conclusions from review);

    3. Return the case file to the delegated official for signing, dating and mailing the rejection letter to the taxpayer.

  8. If the IAR determines that the rejection is not appropriate, the case file will be returned to the examiner, using Form 3990, Reviewers Report, with an explanation on the activity record stating why the rejection was inappropriate. The IAR will allow 21 days for a response. If an agreement cannot be reached between the examiner and the IAR, or the 21 day time frame has passed, the issue will be elevated to management levels (Group Managers or above) by either the field examiner or IAR, as appropriate.


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