The following four components of collectibility will ordinarily be included in calculating RCP for offer purposes:

Within 15 calendar days of the date an offer is assigned to an OE in COIC or within 30 calendar days of the date an offer is assigned to an OS, the assigned employee must complete the following actions:

Prior to the issuance of offer cases to the field, COIC will have made all processability determinations and completed initial internal case building actions. In some cases, no additional information will be needed from the taxpayer to complete the investigations. In these situations, the next appropriate action(s) should be scheduled in a manner that ensures the timely resolution of the case.

In situations where the Field OS are not co-located with the group manager, an additional 5 days will be allowed from the assignment date to complete the initial case actions. This time accounts for the need to transship the case files to remote locations. Situations where this transit time routinely takes more than 5 days to accomplish should be reported to the Area OIC Coordinator to determine the cause for the delays.

Generally, the AOIC assignment date will be the assignment date of record.

Prior to the income and expense analysis of an individual offer where the taxpayer submitted a Form 656-A certification, the OI will determine whether the household income and family unit size at the time the offer was submitted supported the decision not to pay the application fee or the required TIPRA payment. If the OI concludes that the income for the family size exceeds the levels for which a Form 656-A certification was allowed (i.e. the taxpayer should have paid the application fee and/or the required TIPRA payment), contact the taxpayer and request the required initial payment and application fee be submitted. If the taxpayer does not respond in a reasonable amount of time, the offer will be returned. Return the offer using letter code "RET-AB" for failure to pay the application fee and required initial TIPRA payment.

If the taxpayer submitted the Form 656-A, the required TIPRA payment, and the application fee, treat the payments as a deposit. If during the investigation, the OI determines the taxpayer does not qualify for the waiver, the taxpayer will be notified. Request MOIC move the money to the taxpayer's liability(s), and continue working the offer. If the offer was a periodic payment offer, discuss the requirements with the taxpayer, and request the taxpayer to make all payments from the date of submission to the date of discovery. The taxpayer must also make payments through the remainder of the investigation. Allow a reasonable amount of time for the taxpayer to submit the funds. If the taxpayer fails to make up the payments, or cannot make the required TIPRA payments, return the offer, unless special circumstances prohibit the taxpayer to submit the funds. See IRM 5.8.3.5 for more information.

If additional information is required to make a decision, contact the taxpayer or POA to request the additional supporting documents. If it is determined no information is necessary, issue a decision letter.

If the taxpayer or their representative requests an extension of time to comply with the request for additional information, a reasonable amount of time should be granted. Generally, a minimum of 15 and a maximum of 30 calendar days should be allowed. If the taxpayer of representative requests additional time beyond the 30 calendar days, the additional time should be allowed. However, if it appears that the representative or taxpayer are delaying the progress of the offer investigation or if the taxpayer or representative fail to meet the deadline, initiate the "No Reply" procedures as defined in IRM 5.8.3.17. Document the ICS or AOIC history indicating the new deadline for the response.

Cases transferred from one Area office to another should have an AOIC transfer letter sent advising the taxpayer of the location of the office where the case has been transferred and providing the taxpayer with a local contact telephone number. The transferring office will be responsible for sending the transfer letter.

If assignment to an offer specialist does not or will not take place within 45 days of the transfer:

If the request for information is in writing, the correspondence must include:

If the request for information is in person (e.g. by telephone, office, or field visit) the contact must include the following information:

Cases transferred from one office to another should have an AOIC transfer letter sent within 15 calendar days of the transfer advising the taxpayer of the location of the office where the case has been transferred and providing the taxpayer with a local contact telephone number. Since cases are often reassigned to a POD once received in the Area office drop point, the receiving office will be responsible for sending the transfer letter. If the case cannot be assigned immediately, the taxpayer should be advised of the anticipated date of assignment to an OS. A follow up letter should be sent to the taxpayer advising of any delay in assignment if the case is not assigned by the date specified in the original letter.

To eliminate the potential for misrouted cases, the procedures outlined in IRM 3.13.62, Media Transport and Control, will be followed.

IRC Section 7122(c), as amended by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), requires OIC's submitted on or after July 17, 2006 (and not subject to waiver with respect to low income taxpayers or offers submitted based solely on DATL) must be accompanied by partial payment of the proposed offer amount. These payments are applied to the tax liabilities included on the offer and are in addition to any application fee imposed. See IRM 5.8.3 for additional information.

The form of these partial payment depends on the taxpayer’s proposed offer and its terms.

While a periodic payment offer is being evaluated by the Service, the taxpayer must make subsequent proposed payments as they become due. There is no requirement that the payments be made monthly or in equal amounts.

The Service is not bound by either the offer amount or the terms. The offer investigator may determine that the proposed offer amount is too low or the payment terms too protracted to recommend acceptance. In this situation, the offer investigator may advise the taxpayer that a larger amount or different terms would likely be recommended for acceptance.

Taxpayers who qualify for waiver of the $150 application fee based on their income level at the time they submit an offer are also exempt from making the required TIPRA payment(s). If during the investigation it is discovered that the taxpayer does not qualify for the waiver, contact the taxpayer and request the required payment(s) and the application fee. Allow a reasonable amount of time for the taxpayer to submit the payment(s) and fee. If the taxpayer fails to submit the payment and the fee, return the offer. However, if the taxpayer submitted the application fee, and TIPRA payment in addition to the Form 656-A Waiver, and it is discovered that the taxpayer doe not qualify for the waiver, the offer investigator will:

If the taxpayer submitted a periodic payment offer, the offer investigator will request that the taxpayer make up the past due payments from the date of submission to the date of discovery. A reasonable amount of time must be allowed for the taxpayer to send the requested funds. The taxpayer will then be required to make payments in accordance to the terms of the offer when submitted during the remainder of the investigation. If the taxpayer cannot or fails to make the payments by the deadline, the offer will be returned without further consideration.

Taxpayers may designate how the required TIPRA payments are to be applied to the taxpayer's liabilities. The request for designation must be made in writing when the offer is submitted (in the case of the initial partial payments) or when the payment is made (in the case of subsequent installment payments made for a periodic payment offer). Once a designation of payment is made, it cannot be changed at a later time. The written payment designation must clearly explain how these payments are to be applied to specific tax periods or liabilities (e.g., income taxes, employment taxes, trust fund portions of employment or excise taxes, etc.). This written payment designation must become part of, and remain with, the offer case file.

In the absence of any written payment designation by the taxpayer when the offer was submitted or when the payment is made, the Service will apply the payments in the best interest of the Government.

COIC will process the required initial TIPRA payment accompanying periodic payment offers prior to transferring an offer to an OI. For offers submitted by corporations to compromise trust fund taxes, COIC will apply the initial payment(s) to the tax liability with the earliest unexpired CSED. OI's assigned to investigate these offers are responsible for transferring the partial payment(s), if necessary, in the best interest of the government as defined in 5.8.4.7.2.1 below.

In order to ensure timely case processing, all in-process offers must have follow-up dates scheduled for the next appropriate action.

Throughout the investigation, the scheduling of timely follow-up actions should be reasonable and appropriate, based on the facts of the case. In order to be considered timely, follow-up actions should be significant actions that can reasonably be expected to move the offer investigation toward resolution. Generally, follow-up actions should occur:

Follow-up actions may include:

Case Recommendations

Closing Actions – Case must be submitted for closing actions (i.e. - dating/mailing of letters, closing on AOIC, ICS, etc.) within the defined 10 to 15 calendar days as described above.

During initial analysis of an offer, IDRS should be checked to verify there are no actions for any periods either included or not included on the offer; such as, open audits, underreporter cases, TEFRA proceedings, or amended returns pending but not yet assessed. Pending examination cases may be identified by:

If any potential adjustments are identified the assigned Examination or AUR function or employee should be contacted to determine the status of the audit and informed that an offer based on DATC has been received. The decision on how to proceed with the offer should be based on the status of the potential adjustment. The table below provide some examples.

Within 7 to 14 calendar days prior to accepting an offer, IDRS should be rechecked to ensure that there are no new audit issues pending.

When one spouse files a claim for relief from joint and several liability and the other spouse submits an offer, the Service employee considering the section 6015 claim should be contacted prior to proceeding to ensure there are no reasons to delay the offer investigation until the 6015 claim is resolved.

If a taxpayer files a DATC offer but raises relief from joint and several liability issues during the investigation, the issue should be discussed with the taxpayer. If appropriate, the offer should be withdrawn and the claim should be forwarded to the Cincinnati Centralized Innocent Spouse Operations Unit (CCISO).

If IDRS indicates that the taxpayer has an open claim for relief from a joint and several liability, or if a DATC offer and a claim for joint and several liability are filed simultaneously the taxpayer should be requested to withdraw the offer unless CCISO advises that the claim will be closed immediately with no change. If CCISO indicates that the claim appears valid and the taxpayer will not withdraw the offer it should be suspended pending disposition of the section 6015 claim.

During a CDP or equivalent hearing (EH) assigned to Appeals, an offer may be submitted by the taxpayer. Taxpayers also occasionally submit a DATC offer during an appeal of a proposed audit deficiency. Appeals retains jurisdiction of both these types of offers, but may send an Appeals Referral Investigation (ARI) to Collection.

An ARI requesting CIS verification of a complex nature should be assigned to a field RO. The results of the investigation will be reported via memorandum to Appeals and Appeals will conclude the investigation. Requests for any expeditious treatment of an ARI will be decided on a case by case basis through a discussion between the two functional managers.

Offers based on DATL on TFRP or PLET assessments must be reviewed upon receipt to ensure that the case is not pending or was not already heard in Appeals. If a DATL assessment had previously been determined in Appeals or is found to be currently assigned to an Appeals office, the offer should be removed from AOIC and transferred to Appeals. Coordination should be made with Appeals to ensure that the TC 480 (and if applicable Command Code STAUP to Status 71) is re-input with the proper Appeals jurisdiction code, since removing the offer from AOIC will reverse the TC 480.

If an offer based on DATC only is received and there is an open case pending in Appeals, contact Appeals to determine who will have jurisdiction of the offer.

All offers submitted during a CDP hearing or EH meeting COIC criteria will be investigated in a COIC site.

COIC is responsible for making a processability determination. Once a determination is made, COIC will notify Appeals using the form provided in Exhibit 5.8.4–4.

Procedures defined in this section apply only to those cases meeting COIC criteria, which consists of wage earners and self-employed taxpayers with gross receipts up to $500,000 and no employees. See IRM 5.8.2.8, Processing Offers to be Assigned to Area Offices From Centralized Offers in Compromise Sites, for the categories of cases to be worked by the field. All other cases can be worked by COIC.

Open criminal investigations can be identified on IDRS by an unreversed TC 914 or TC 916. When these transaction codes are discovered contact must be made with the assigned Special Agent and procedures in IRM 5.1.5 followed. It may be necessary for the group or unit managers to discuss with the Criminal Investigation (CI) manager to determine the next appropriate action. A decision will need to be made on the appropriate actions to take (including disposition of any application fee or deposit) and what may or may not be discussed with the taxpayer.

Once a taxpayer has been advised of the open criminal investigation, if the assigned Special Agent has no objection, the taxpayer may be asked to withdraw the offer until the criminal matter is resolved. If the taxpayer declines to withdraw the offer a joint decision should be made whether it should be closed as a return or held open until the investigation is closed.

When it is determined that an offer is submitted solely to delay collection, the offer should be returned to the taxpayer without further consideration. The term solely to delay collection means an offer was submitted for the sole purpose of avoiding or delaying collection activity. A determination that an offer is submitted solely for the purpose of delaying collection should be apparent to an impartial observer. See IRM 5.8.3.19, Offers Submitted Solely to Delay Collection, for a complete discussion of this topic and procedures to follow when a case meeting this criteria is identified.

Trust fund taxes are taxes withheld or collected from an individual and paid over to the government on that person’s behalf. See IRM 5.7.3 for a list of tax returns used to report trust fund taxes and where assessment of the TFRP based on the liabilities reported on the returns is possible.

When an offer is accepted to compromise trust fund tax owed by an operating business, the taxpayer is relieved of a significant operating expense. The effect is to grant the delinquent taxpayer an economic advantage over competitors who are in tax compliance. Recovery of the unpaid trust fund tax amount is a significant issue when considering an offer from a business taxpayer. In the interest of fairness to all taxpayers the Service must be cautious to avoid providing financial advantages to those taxpayers through the forgiveness of employment tax debt, as this may be detrimental to competitors who are remaining in compliance with their tax obligations. The following procedures apply to all In Business Trust Fund (IBTF) taxpayers, including sole proprietorships, partnerships, as well as corporations.

Before an offer to compromise trust fund tax will be investigated, for entities in which the trust fund recovery penalty is applicable (in business or out of business) all the issues outlined in IRM 5.8.4.13.1 above should be considered. In addition, as a prerequisite, the trust fund portion of the taxes must be paid, the TFRP must be assessed against all responsible persons, or the trust fund package forwarded for assessment.

It is the Service's policy that the amount offered to compromise a liability subject to assertion of the TFRP will represent what can be collected from the employer. If the Service enters into a compromise with an employer for a portion of the trust fund tax liability, the remainder of the trust fund taxes may still be collected from a responsible person pursuant to Section 6672 of the Internal Revenue Code.

Revenue officers have two options when they negotiate with the entity principals. This applies to trust fund liabilities in status 26, with any unpaid trust fund amount still within the TFRP Assessment Statute Expiration Date (ASED). They are:

Offers submitted on accounts in Status 26 before assessment of the TFRP but prior to the responsible person(s) being advised that an offer will not be considered unless the TFRP has been assessed or the trust fund paid in full. Otherwise, the offer will be returned as solely to delay collection. The assigned RO will retain the balance due case, and annotate this on From 657. The offer will be returned by COIC without input of ST 71 in accordance with the Form 657.

Only the amount that can be collected from the entity (including dissipated assets) will be considered in the RCP calculation of an acceptable offer. The Service will pursue collection of the TFRP assessed against the responsible person(s), unless the trust fund portion has been full paid.

During initial analysis of an offer received from an entity subject to the assertion of the TFRP and involving unpaid trust fund tax the offer specialist must determine the ASED of each period and take immediate steps to protect it if expiration is imminent.

The following actions should be taken based on the facts of the case:

In the situation where the amount offered by a corporation combined with the payments already made on related TFRP assessments exceeds the total employment tax liability of the corporation for the same tax periods:

Partnership employment tax liabilities are not "joint and several" as are joint income tax assessments. The Service's ability to collect from the partners is based on state law.

When a partnership liability is compromised for any individual general partner our ability to collect from all other general partners may be affected. Therefore, the amount offered to compromise a partnership tax liability must include what we can collect from the partnership plus what can be collected from each of the general partners. No offer should be accepted to compromise only one partners individual liability for the partnership debt.

When investigating partnership offers a CIS should be secured from the partnership and from all general partners. The RCP for the partnership must equal what could be collected from the partnership plus what could be collected from all general partners. Generally, an offer based on DATC from a partnership will not be accepted when the RCP of one or more of the general partners cannot be determined. When it is not possible to secure a CIS from one or more of the general partners, because they cannot be located or they refuse to cooperate or join in the offer, the offer may still be accepted if the investigation is able to establish that there is no collection potential from the non-participating partners.

While the Service is charged with collecting certain child support obligations, we do not have the authority to compromise them. These accounts are identified on the Non-Master-File with a MFT code of 59.

If a taxpayer proposes a compromise that includes a child support liability, Service employees should request that the offer be amended to remove the child support obligation. If the offer is acceptable it can be compromised without including the child support debt. If the taxpayer refuses to remove the child support liability the offer should be rejected using the public policy reason and the open paragraph stating that "We do not have authority to compromise child support obligations" .