5.8.11  Effective Tax Administration

Manual Transmittal

August 05, 2015

Purpose

(1) This transmits revised IRM 5.8.11, Offer in Compromise, Effective Tax Administration.

Material Changes

(1)

5.8.11.2 revised to include guidance on actions required prior to consideration of an Effective Tax Administration offer when doubt as to liability issues are present
5.8.11.2.2.1 (2) revised to further define documentation required from the taxpayer when IRS error is the basis for the offer
5.8.11.2.2.1 (4) revised to discuss factors to consider when evaluating an offer when the fraudulent acts of a payroll service provider (PSP) are involved and to incorporate other information from interim guidance memorandum number SBSE-05-0914-0068 discussing fraudulent acts of a PSP.
5.8.11.2.2.1 (9) added to incorporated guidance provided in interim guidance number SBSE-05-0914-0068
5.8.11.3(5) revised to discuss that an amended offer may be required prior to acceptance if the basis for compromise was changed
5.8.11.4.1 (3) revised to include reference to when complete financial review may not be required
5.8.11.4.1(7) revised to include discussion with the taxpayer prior to forwarding to the NEH-ETA group relative to whether additional documents are available to evaluate under DATC or hardship criteria
5.8.11.4.1(7) Note added to discuss when contact with the NEH-ETA group may be appropriate in DATC-SC offer investigations
5.8.11.4.2 revised to incorporate guidance relative to securing and reviewing financial information in certain PSP cases
5.8.11.4.3.1 added to incorporate PSP IG guidance on facts to consider when evaluating an offer involving the fraudulent acts of a PSP.
5.8.11.5 revised to incorporate provisions of PSP IG relative to the exceptions allowed in certain PSP offer investigations.
5.8.11.6 revised table to provide guidance on when an amended offer should be secured prior to acceptance based on a change in the basis of the offer listed on Form 656

(2) Editorial changes were made throughout this IRM to update terminology, website addresses, legal references, IRM references, and revised forms.

Effect on Other Documents

This material supersedes IRM 5.8.11 dated November 26, 2013 and incorporates Interim Guidance Memorandum SBSE-05-0914-0068 titled Interim Guidance for Offers in Compromise from Taxpayers when Payroll Service Provider Issues are present dated September 16, 2014.

Audience

SB/SE Compliance employees

Effective Date

(08-05-2015)


Kristen E. Bailey
Director, Collection Policy

5.8.11.1  (08-05-2015)
Overview

  1. As part of the IRS Restructuring and Reform Act of 1998 (RRA 98), Congress added section 7122(c) to the Internal Revenue Code. That section provides that the Service shall set forth guidelines for determining when an offer in compromise (OIC) should be accepted. Congress explained that these guidelines should allow the Service to consider:

    • Hardship,

    • Public policy, and

    • Equity

    Treasury Regulation § 301.7122-1 authorizes the Service to consider OIC's raising these issues. These offers are called Effective Tax Administration (ETA) offers.

  2. The availability of an ETA offer encourages taxpayers to comply with the tax laws because taxpayers will believe the tax laws are fair and equitable. The ETA offer allows for situations where tax liabilities should not be collected even though:

    • The tax is legally owed, and

    • The taxpayer has the ability to pay it in full

  3. No compromise to promote ETA may be entered into if compromise of the liability would undermine compliance by taxpayers with the tax laws.

  4. If a taxpayer submits an ETA offer, first investigate the offer for:

    • Doubt as to Liability (DATL), and/or

    • Doubt as to Collectibility (DATC)

  5. An ETA offer can only be considered when the Service has determined that the taxpayer does not qualify for consideration under DATL and/or DATC.

  6. The taxpayer must include the Collection Information Statement (CIS) (Form 433-A (OIC) and/or Form 433-B (OIC)) when submitting an offer requesting consideration under ETA.

    Exception:

    Refer to IRM 5.8.11.4.2 relative to when complete financial information may not be required on certain offers involving the fraudulent acts of a PSP.

  7. Economic hardship standard of CFR § 301.6343-1 specifically applies only to individuals. Refer to IRM 5.8.11.2.1, Economic Hardship.

5.8.11.2  (08-05-2015)
Legal Basis for Effective Tax Administration Offer

  1. Compared to Doubt as to Collectibility (DATC)

    1. In a DATC offer, the tax liability equals or exceeds the taxpayer's reasonable collection potential (RCP) which is:

      • Net equity, plus

      • Future income, and

      • Other components of collectibility

    2. In an ETA offer the tax liability is less than the taxpayer's RCP. The RCP shows the taxes owed can be collected in full either:

      • In a lump sum, or

      • Through an installment agreement (IA)

    3. A DATC offer does not convert to an ETA offer if the Offer Examiner/Offer Specialists(OE/OS) and the taxpayer cannot agree on an acceptable offer amount.

  2. Compared to Doubt as to Collectibility with Special Circumstances (DCSC)

    1. Taxpayers may qualify for an ETA offer when their RCP is greater than the liability but there are economic or public policy/equity circumstances that would justify accepting the offer for an amount less than full payment.

    2. Taxpayers may qualify for a DCSC offer when they cannot fully pay the tax due but have proven special circumstances that warrant acceptance for less than RCP. Factors establishing special circumstances under DATC are the same as those considered under ETA. Refer to IRM 5.8.4.2.

    Example:

    The taxpayer owes $ 20,000. The RCP is $ 25,000. The taxpayer could have an offer accepted for less than the total liability of $ 20,000 under the ETA provisions if economic hardship, or public policy/equity issues exist which would support an acceptance recommendation.

    Example:

    The taxpayer owes $20,000. However his RCP is $15,000. The offer does not meet the legal basis for an ETA because the RCP is lower than the liability. However, applying the same factors of economic hardship, or public policy/equity, an offer could be accepted for less than the RCP ($15,000) under DCSC provisions.

  3. Compared to Doubt as to Liability (DATL)

    An offer can be considered under ETA provisions only when there are no DATL issues.

  4. In reaching these determinations:

    If… Then…
    During the offer investigation, the Service determines that there is doubt as to the amount of the liability the taxpayer owes Taxpayer is not eligible for ETA consideration. The taxpayer should withdraw the offer submitted under ETA and submit the appropriate documents, i.e. amended return, etc, so the correct tax may be determine. If appropriate, an OIC may be considered based on the DATL issue by submitting a Form 656-L. If after any adjustments or consideration of a DATL offer are completed, a balance due remains, the taxpayer may submit a DATC or ETA offer.
    The Service determines that the taxpayer's equity in assets plus future income (RCP) does not exceed the amount of the tax liability Taxpayer is not eligible for an ETA offer. The OIC is considered based on DATC. However, hardship or public policy/equity may be present in the case to allow consideration under DCSC.
    The Service determines the taxpayer is not eligible for compromise based on DATL or DATC and the taxpayer can demonstrate that collection of the tax liability in full would create economic hardship, or demonstrate that there is compelling public policy or equity issues in the case that would provide sufficient basis for compromise The taxpayer would be eligible for ETA consideration.
  5. Before we can consider any ETA OIC based on economic hardship or public policy/equity considerations, three factors must exist:

    1. A liability has been or will be assessed against taxpayer(s) before acceptance of the OIC

    2. The sum of net equity in assets, future income, and the other components of collectibility making up RCP must be greater than the amount owed.

    3. Exceptional circumstances exist, such as the collection of the tax would create an economic hardship, or there is compelling public policy or equity considerations that provide sufficient basis for compromise.

5.8.11.2.1  (08-05-2015)
Economic Hardship

  1. When a taxpayer's liability can be collected in full but collection would create an economic hardship, an ETA offer based on economic hardship can be considered.

  2. The definition of economic hardship as it applies to ETA offers is derived from Treasury Regulations § 301.6343-1. Economic hardship occurs when a taxpayer is unable to pay reasonable basic living expenses. The determination of a reasonable amount for basic living expenses will be made by the Commissioner and will vary according to the unique circumstances of the individual taxpayer. Unique circumstances, however, do not include the maintenance of an affluent or luxurious standard of living.

    Note:

    Because economic hardship is defined as the inability to meet reasonable basic living expenses, it applies only to individuals (including sole proprietorship entities). Compromise on economic hardship grounds is not available to corporations, partnerships, or other non-individual entities.

  3. The taxpayer's financial information and special circumstances must be examined to determine if they qualify for an ETA offer based on economic hardship. Financial analysis includes reviewing basic living expenses as well as other considerations.

  4. The taxpayer’s income and basic living expenses must be considered to determine if the claim for economic hardship should be accepted. Basic living expenses are those expenses that provide for health, welfare, and production of income of the taxpayer and the taxpayer’s family. National and local standard expense amounts are designed to provide accuracy and consistency in determining taxpayer’s basic living expenses. These standards are guidelines and if it is determined that a standard amount is inadequate to provide for a specific taxpayer’s basic living expenses, allow a deviation. Request the taxpayer provide reasonable substantiation to support the deviation and document the case file.

  5. In addition to the basic living expenses, other factors to consider that impact upon the taxpayer's financial condition include:

    • The taxpayer's age and employment status,

    • Number, age, and health of the taxpayer's dependents,

    • Cost of living in the area the taxpayer resides, and

    • Any extraordinary circumstances such as special education expenses, a medical catastrophe, or natural disaster.

    Note:

    This list is not all-inclusive. Other factors may be considered in making an economic hardship determination.

  6. Factors that support an economic hardship determination may include:

    1. The taxpayer is incapable of earning a living because of a long term illness, medical condition or disability, and it is reasonably foreseeable that the financial resources will be exhausted providing for care and support during the course of the condition.

    2. The taxpayer may have a set monthly income and no other means of support and the income is exhausted each month in providing for the care of dependents.

    3. The taxpayer has assets, but is unable to borrow against the equity in those assets, and liquidation to pay the outstanding tax liabilities would render the taxpayer unable to meet basic living expenses.

    Note:

    These factors are representative of situations the Service regularly encounters when working with taxpayers to resolve delinquent accounts. They are not intended to provide an exhaustive list of the types of cases that can be compromised based on economic hardship.

  7. The following examples illustrate the types of cases that may be compromised under the economic hardship standard.

    Example:

    The taxpayer has assets sufficient to satisfy the tax liability and provides full time care and assistance to a dependent child, who has a serious long-term illness. It is expected that the taxpayer will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. The taxpayer's overall compliance history does not weigh against compromise.

    Example:

    The taxpayer is retired and the only income is from a pension. The only asset is a retirement account and the funds in the account are sufficient to satisfy the liability. Liquidation of the retirement account would leave the taxpayer without adequate means to provide for basic living expenses. The taxpayer's overall compliance history does not weigh against compromise.

    Example:

    The taxpayer is disabled and lives on a fixed income that will not, after allowance of adequate basic living expenses, permit full payment of the liability under an installment agreement. The taxpayer also owns a modest house that has been specially equipped to accommodate for a disability. The equity in the house is sufficient to permit payment of the liability owed. However, because of the disability and limited earning potential, the taxpayer is unable to obtain a mortgage or otherwise borrow against this equity. In addition, because the taxpayer's home has been specially equipped to accommodate the disability, forced sale of the taxpayer's residence would create severe adverse consequences for the taxpayer, making such a sale unlikely. The taxpayer's overall compliance history does not weigh against compromise.

  8. The economic hardship standard authorizes compromise regardless of the cause of the liability, provided compromise does not undermine compliance by other taxpayers.

    Example:

    The taxpayer submitted an ETA offer based on economic hardship. The financial statement appears to support the offer. When a research of the county property records is conducted, it is noted that the home was transferred to a child for $100 plus love and affection. The transfer of the home was made after the tax was assessed. The taxpayer does not provide any information or documentation to demonstrate the transfer of property was an arms length transaction, so it appears the transfer was to avoid the payment of the tax liability; therefore, the offer should not be accepted.

  9. In economic hardship cases, an acceptable offer amount is determined by analyzing the financial information, supporting documentation, and the hardship that would be created if certain assets, or a portion of certain assets, were used to pay the liability.

    Example:

    The taxpayer was diagnosed with an illness that eventually will hinder any ability to work. Although currently employed, the taxpayer will soon be forced to quit their job and will use personal funds for basic living expenses. The taxpayer owes $ 100,000 and has a reasonable collection potential of $ 150,000. An offer was submitted for $ 35,000. Through the investigation, it is determined that collecting more than $ 50,000 would cause an economic hardship for the taxpayer. A determination on economic hardship was made due to the fact the taxpayer’s reasonable living expenses, including ongoing medical costs will exceed their income once the taxpayer is unemployed. The taxpayer is advised to raise the offer to $ 50,000 since it is the amount the Service can collect without creating an economic hardship.

  10. The existence of economic hardship criteria does not dictate that an OIC must be accepted. An acceptable offer amount must still be determined based on a full financial analysis and negotiation with the taxpayer. When hardship criteria are identified but the taxpayer does not offer an acceptable amount, the OIC should not be recommended for acceptance.

5.8.11.2.2  (08-05-2015)
Public Policy or Equity Grounds

  1. Acceptance of an OIC based on considerations of equity and public policy will generally be based on a combination of facts and circumstances. It is important that appropriate cases are identified and forwarded to the non-economic hardship - effective tax administration (NEH-ETA) group in Austin, TX for consideration. Generally, the circumstances should be such that acceptance of the offer is fair and equitable and promotes ETA.

  2. Where there is no DATL, no DATC, and the liability could be collected in full without causing economic hardship, the Service may compromise to promote ETA where compelling public policy or equity considerations identified by the taxpayer provide a sufficient basis for accepting less than full payment. Compromise is authorized on this basis only where, due to exceptional circumstances, collection in full would undermine public confidence that the tax laws are being administered in a fair and equitable manner.

  3. The Service recognizes that compromise on these grounds will often raise the issue of disparate treatment of taxpayers who can pay in full and whose liabilities arose under substantially similar circumstances. Taxpayers seeking compromise on this basis bear the burden of demonstrating circumstances that are compelling enough to justify compromise notwithstanding this inherent inequity.

  4. All non-hardship ETA offers should meet the following requirements:

    • The taxpayer has remained in compliance since incurring the liability and overall their compliance history does not weigh against compromise;

      Note:

      A taxpayer is deemed to meet the compliance requirement, if they incurred a related liability, caused by the fraudulent acts of a PSP.

    • The taxpayer must have acted reasonably and responsibly in the situation giving rise to the liabilities; and

    • The circumstances of the case must be such that the result of the compromise does not place the taxpayer in a better position than they would occupy had they timely and fully met their obligations, unless special circumstances justifying the compromise are present.

    Note:

    Generally, tax liabilities associated with the taxpayer’s participation in abusive tax avoidance transactions will not be compromised under these procedures.

5.8.11.2.2.1  (08-05-2015)
Public Policy or Equity Compelling Factors

  1. Compromise may promote ETA where a taxpayer’s liability was directly caused by a processing error on the part of the Service and would otherwise have been avoided. Compromise to remedy the mistake may be appropriate to the extent correction of the mistake (such as through abatements, reversal of credits, etc.) does not put the taxpayer back in the same position that he or she would have occupied if the error had not been made.

    Example:

    The taxpayer is a closely-held corporation. The IRS audited the taxpayer’s tax returns for 2010, 2011, and 2012 and determined that the taxpayer was a personal holding company liable for personal holding company tax. The taxpayer agreed to immediate assessment of the tax, but attempted to take advantage of the deduction for deficiency dividends under section 547. Although the taxpayer made the distributions necessary to qualify for the deduction, the IRS made several errors in executing the required agreements and other paperwork. As a result, the taxpayer could not avail itself of the section 547 deduction. Under the statute, applicable regulations, and pertinent case law, there is no means by which the mistakes can be corrected to allow the taxpayer to take advantage of the deduction. There is documentary evidence that all of the required Service officials intended to complete the processing of the agreements and that, but for their failure to do so, the taxpayer would have qualified for the deduction. The taxpayer has no prior history of noncompliance.

    Note:

    The fact that the tax liability was caused solely by an error on the part of the Service supports the determination that collection in full would cause other taxpayers to question the fairness of the tax system. Furthermore, the policies underlying the imposition of the personal holding company tax and the rules regarding deficiency deductions are not undermined by compromise under these circumstances. The Service may consider accepting a compromise that would reflect the amount the taxpayer would now owe had the Service not made an error.

  2. Compromise may promote ETA where the taxpayer incurred the liability because of having followed erroneous advice or instructions from the Service. The advice or instructions caused the taxpayer to incur a tax liability that would not otherwise have been incurred. In these instances, the taxpayer must be able to show through some form of documentation when the advice was provided and the IRS employee involved. Refer to IRM 20.1.1.3.3.4.1, Written Advice from IRS and IRM 20.1.1.3.3.4.2, Oral Advice from IRS .

    Example:

    The taxpayer is a salaried sales manager at a department store who has been able to place $ 2,000 in a tax-deductible IRA account for each of the last two years. The taxpayer learns that a higher rate of interest can be earned on his IRA savings by moving the savings from a Money Management account to a Certificate of Deposit at a different financial institution. Prior to transferring the savings, the taxpayer submits an E-mail inquiry to the IRS at its Web Page, requesting information about the steps needed to preserve the tax benefits currently enjoyed and to avoid any penalty. The IRS responds in an answering E-mail that the taxpayer may withdraw the IRA savings from the neighborhood bank, but it must be redeposited in a new IRA account within 90 days. The taxpayer withdraws the funds and redeposits them in a new IRA account 63 days later. Upon audit, the taxpayer learns that he has been misinformed about the required rollover period and is now liable for additional taxes, penalties and interest for not redepositing the amount within 60 days. Had the advice provided been accurate, the taxpayer would have redeposited the funds in a timely manner. The taxpayer is able to provide documentation that demonstrates the taxpayer was provided incorrect information. The taxpayer's overall compliance history does not weigh against compromise.

    Note:

    Because the tax liability in this example was caused by relying on the Service's erroneous statement, and the taxpayer clearly could have avoided the liability had the Service given correct information, it is reasonable to conclude that collection in full would cause other taxpayers to question the fairness of the tax system. The Service may consider accepting a compromise that would reflect the amount the taxpayer would now owe had the Service not made an error.

  3. If actions or inaction of the Service unreasonably delayed resolution of the taxpayer’s case and interest or penalty abatement is not available, compromise may still be warranted if the circumstances are sufficiently compelling. An OIC should not be accepted under ETA provisions, in lieu of abatement under IRC Section 6404(e), when appropriate.

  4. Compromise may promote ETA and allow for relief if the taxpayer demonstrates that the criminal or fraudulent act of a third party is directly responsible for the tax liability.

    1. In any case involving a fraudulent act of a third party, the taxpayer should be able to provide supporting documentation that the act occurred and was the direct cause of the delinquency. The taxpayer should also be able to show that the nature of the crime was such that despite prudent and responsible business actions the taxpayer was misled to believe the tax obligations were properly addressed. There should be evidence that the funds required for the payment of the taxes were segregated or otherwise identified and were available to pay the taxes in a timely manner. Compromise would promote ETA in such situations only where the failure to comply is directly attributable to intervention by a third party and where the taxpayer has made reasonable efforts to comply and taken reasonable precautions to prevent the criminal or fraudulent acts at issue. If appropriate, the taxpayer’s efforts to mitigate the damages by pursuing collection from the third party should also be considered. Compromise for this reason would only promote ETA where there is a very close nexus between the actions at issue and the failure to comply.

    2. In situations where the actions of a payroll service provider (PSP) contributed to the delinquency, once the offer specialist (OS) has determined sufficient supporting information or documents are available to verify the PSP was the cause of the delinquency and the taxpayer acted in a reasonable manner, the OS may proceed with minimal additional documentation, refer to IRM 5.8.11.5.
      Factors which demonstrate the taxpayer was acting reasonably may include, but are not limited to:
      - the manner and frequency of monitoring federal tax deposits via EFTPS or other means,
      - verifying references prior to entering into the arrangement with the PSP, determining if the PSP was bonded or licensed as required by state laws and regulations and if any corporate filings and licenses required by the state were up to date;
      - the fact immediate steps to remedy the problem after learning of the PSP’s misconduct were taken and
      - whether mitigating factors were involved that may have hampered the ability to identify and correct the problem, e.g. serious illness, natural disaster, etc., as well as a determination as to whether consideration of the taxpayer's offer under ETA Hardship is a more appropriate resolution

    Example:

    A taxpayer contracted with a PSP to handle all the payroll tax matters of the business. The taxpayer utilized a PSP that had been in business for several years and contacted references of other businesses using the PSP who stated the PSP had acted appropriately. The taxpayer monitored the federal tax deposits via their bank account withdrawals and EFTPS. When it was determined the PSP may have missed deposits, the business immediately started verifying federal tax deposits on their due date. No other factors weigh against acceptance of an offer. Since the taxpayer acted in a reasonable manner, an acceptance of an offer under ETA Public Policy is appropriate

    Example:

    A taxpayer contracted with a PSP from outside the community and took no action to verify whether the PSP had clients who were satisfied with their manner of business. The taxpayer never monitored their deposits and when they received a notice from the IRS it was provided to the PSP. The PSP stated they would resolve the issue and the taxpayer never took any follow-up actions to determine if the delinquency issues had been resolved. In this situation the taxpayer is not deemed to have acted in a reasonable manner, so an offer should not be accepted.

    Note:

    The Service will not compromise on public policy or equity grounds solely on the argument that the acts of a third party caused the unpaid tax liability. Third parties include: Representatives, Partners, Agents, or Employees.



    The actions of the third party may be part of a fact pattern that, viewed as a whole, present compelling public policy or equity concerns justifying compromise.

    Note:

    This section does not apply to TEFRA liabilities. Refer to Example 2 under paragraph (7) in this subsection for discussion of TEFRA cases.

  5. Compromise under ETA may be appropriate where there is clear and convincing evidence that rejecting the OIC, and pursuing other collection alternatives, would have a significantly negative impact on the community in which the taxpayer lives or does business, i.e. does the taxpayer provide essential services to the community that would be lost if the tax liability was collected in full? The taxpayer should be asked to provide documentation that full payment of the tax liabilities would likely result in the inability of the business to provide these essential services. The businesses that would typically qualify under this provision are not for profit, charitable, or exempt organizations.

    Example:

    A non-profit organization provides quality health and human services to indigent, low-income and under-served residents in two counties. Rejecting the offer and pursuing collection action for full payment would result in forcing the center to choose between paying the delinquent taxes or providing competent medical care.

  6. Compromise may promote ETA where the taxpayer was incapacitated and thus unable to comply with the tax laws.
    In these situations, the taxpayer should be provided the opportunity to withdraw the offer, so the Service can first work with the taxpayer and attempt to prepare accurate returns for the tax years in question and adjust the taxpayer's account accordingly. The Service should also work with the taxpayer to secure the filing of any missing returns and complete any allowable abatement(s). Following that if the taxpayer is unable to obtain a result which approximates the amount the taxpayer would have been assessed had he been able to comply with his filing and paying requirements, the Service should consider accepting a compromise that would approximate the amount the taxpayer would have been assessed had he been able to comply in a timely manner. Such a compromise would be fair and equitable to the taxpayer and, under these circumstances, would advance the public policy of voluntary compliance with the tax laws

    Note:

    It would not promote ETA to compromise with the taxpayer, if the investigation revealed that the taxpayer was able to attend to financial matters during the time of the illness. For example, assume the taxpayer, paid all other bills and continued to successfully operate a business during the illness. Under such circumstances, compromise would not promote ETA, and could serve to undermine compliance by other taxpayers.

  7. Compromise on public policy or equity grounds is not authorized based solely on a taxpayer’s belief that a provision of the tax law is itself unfair. Where a taxpayer is clearly liable for taxes, penalties, or interest due to operation of law, a finding that the law is unfair would undermine the will of Congress in imposing liability under those circumstances.

    Example:

    The taxpayer argues that collection would be inequitable because the liability resulted from a discharge of indebtedness rather than from wages. Because Congress has clearly stated that a discharge of indebtedness results in taxable income to the taxpayer it would not promote ETA to compromise on these grounds. See Internal Revenue Code (IRC) 61(a)(12).

    Example:

    In 2010, the taxpayer invested in a nationally marketed partnership which promised the taxpayer tax benefits far exceeding the amount of the investment. Immediately upon investing, the taxpayer claimed investment tax credits that significantly reduced or eliminated the tax liabilities for the years 2007 through 2010. In 2011, the IRS opened an audit of the partnership under the provisions of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). After issuance of the Final Partnership Administrative Adjustment (FPAA), but prior to any proceedings in Tax Court, the IRS made a global settlement offer in which it offered to concede a substantial portion of the interest and penalties that could be expected to be assessed if the IRS's determinations were upheld by the court. The taxpayer rejected the settlement offer. After several years of litigation, the partnership level proceeding eventually ended in Tax Court decisions upholding the vast majority of the deficiencies asserted in the FPAA on the grounds that the partnership's activities lacked economic substance. The taxpayer has now offered to compromise all the penalties and interest on terms more favorable than those contained in the prior settlement offer, arguing that TEFRA is unfair and that the liabilities accrued in large part due to the actions of the Tax Matters Partner (TMP) during the audit and litigation. Neither the operation of the TEFRA rules nor the TMP's actions on behalf of the taxpayer provide grounds to compromise under the equity provision of 5.8.11.2.2. Compromise on those grounds would undermine the purpose of both the penalty and interest provisions at issue and the consistent settlement principles of TEFRA. Furthermore, reducing the risks of participating in tax shelters would encourage more taxpayers to run those risks, which would undermine compliance. Depending on the taxpayer's particular facts and circumstances, however, compromise may be authorized on the grounds of Doubt as to Collectibility (DATC), or because collection of the full liability would cause an economic hardship within the meaning of section 5.8.11.2.1.

    Note:

    In both of these examples, the taxpayers are essentially claiming that Congress enacted unfair statutes and are arguing that the Service should use its compromise authority to rewrite those statutes based on a perception of unfairness. Compromise for that reason would not promote ETA. The compromise authority under Section 7122 is not so broad as to allow the Service to disregard or override the judgments of Congress.

  8. There may be other circumstances involved in a case that would lead a reasonable third party to conclude that acceptance of the OIC would be fair, equitable, and promote effective tax administration. Other factors not discussed above or in the IRM, may be present to support the conclusion that the case presents compelling public policy or equity considerations sufficient to justify compromise. Documentation of the presence of those factors which weigh in favor of compromise to promote effective tax administration must be thoroughly documented in the case file. Because these cases have the potential to establish new policy for the IRS in this area, offers recommended for acceptance under this paragraph should be routed through the National OIC Program Manager in order to obtain concurrence of the Director of Collection. The Office of Appeals should establish within their IRM a level of concurrence commensurate with the Director of Collection so the issue of establishing new policy is addressed.

  9. As is the case with all compromise determinations, referrals, and acceptance/rejection decisions, employees need to exercise good judgment. This good judgment needs to be clearly evident and articulated in the case file documentation and should be supported by the known case facts, circumstances, and supporting documents. There is no clearly defined formula to follow in ultimately making these decisions, and each case needs to be evaluated on its own unique set of facts and circumstances. Particularly in regard to acceptance/rejection decisions, the recommendation report must clearly explain the reasoning behind our actions.

  10. Once it has been determined that a case raises compelling public policy or equity considerations, Refer to IRM 5.8.11.4.3, Determining Acceptable Offer Amount.

5.8.11.2.3  (09-23-2008)
Compromise Would Not Undermine Compliance With Tax Laws

  1. Compromise under the ETA economic hardship or non-economic hardship provisions are permissible if acceptance does not undermine compliance. The public should not perceive that the taxpayer whose offer is accepted benefited by not complying with the tax laws.

  2. Factors supporting (but not conclusive of), a determination that compromise would undermine compliance includes; but is not limited to:

    • The taxpayer has an overall history of noncompliance with the filing and payment requirements of the Internal Revenue Code

    • The taxpayer has taken deliberate actions to avoid the payment of taxes.

    • The taxpayer has encouraged others to refuse to comply with the tax laws.

      Note:

      There may be other situations where compromise would be undermined.

5.8.11.3  (08-05-2015)
Initial Processing of Effective Tax Administration Offers

  1. Offers submitted on the grounds of ETA will be worked either by the COIC units or field offer specialists.

  2. Taxpayers seeking a compromise under ETA will submit the Form 656 selecting ETA along with the CIS (Form 433-A (OIC) and/or Form 433-B (OIC)). Taxpayers must complete Section 3 (or attach a separate statement) and document their special circumstances. The documentation should explain why collection of the liability in full would cause economic hardship, or the public policy/equity issues present that would justify compromising the liability. An attachment can be provided if additional space is needed. If the taxpayer does not submit a financial statement with the offer, normal correspondence activity should be undertaken to secure the financial statement, and any other data determined necessary for evaluation of the offer. If the taxpayer fails to provide the requested information, normal "return" procedures should be followed since ETA criteria cannot be considered until all other bases have been addressed.

  3. Like all other offers, the Service will only consider an ETA offer when taxpayers have met the processability criteria (e.g. paid the application fee or checked the low-income waiver box on the Form 656) , submitted the required initial TIPRA payment with the offer or qualified for a waiver, and are not a debtor in bankruptcy. Refer to IRM 5.8.3 for initial processing of offers.

  4. Elements necessary to perfect an OIC also apply to ETA offers. The requirement to submit complete financial statements for ETA offers is the same as for DATC offers, unless the taxpayer meets exception listed for offers impacted by fraudulent acts of a PSP discussed in IRM 5.8.11.4.2. Refer to IRM 5.8.3.11 for procedures on perfecting offers when financial statements are not provided.

  5. ETA offers are initially added to AOIC as DATC offers. Once the offer investigation reveals that the taxpayer's assets and future income exceed the tax liability thereby indicating no basis for a DATC, the offer should be considered under the ETA provisions. AOIC must be updated to reflect the correct basis for the compromise (e.g. ETA) and the OE/OS must secure an amended offer if the offer is being accepted under a basis other than listed on the original Form 656. Refer to IRM 5.8.11.6 below for a full discussion of requirements to update AOIC prior to final processing of ETA and DCSC offers.

5.8.11.4  (09-23-2008)
Evaluation of Offers

  1. ETA offers cannot be considered if the taxpayer qualifies for DATC or DATL. Refer to IRM 5.8.4, Evaluation of Offers, for DATC issues and determining reasonable collection potential (RCP).

  2. If the assets and future income do not exceed the tax liability and special circumstances exist, the taxpayer's offer must be considered under DCSC. The taxpayers may have checked the ETA box and given an explanation of circumstance on the Form 656, however unless they have the ability to full pay the liability, the offer would not meet the legal standard for ETA consideration. The offer must be considered under DCSC.

  3. If the taxpayer submits an offer based on DATC but collection potential exceeds the liability and there are special circumstances, the offer should be considered on the basis of ETA. The employee that investigates the OIC is required to address any potential special circumstances during first contact with the taxpayer or POA. This will be accomplished in conjunction with the current requirement to verify receipt of Publication 1 and Publication 594 and must be documented in the OIC case history. This requirement does not apply where the only taxpayer contact is through correspondence.

  4. If the offer is rejected, the narrative should describe the considerations of both bases. If the offer is accepted the offer report must reflect the basis upon which the offer is accepted.

5.8.11.4.1  (08-05-2015)
Public Policy/Equity Processing

  1. OIC's submitted under the Public Policy/Equity provisions are authorized under these guidelines only when there are exceptional circumstances..

  2. In order to develop consistency in the interpretation and application of Treasury Regulations (TD 9007) published on July 22, 2002, a Specialty Group has been established in Austin, TX to work these offers.

  3. Only after consideration has been given to all other potential bases for acceptance (e.g. DATL, DATC, DCSC, and/or ETA based on economic hardship) will ETA-Public Policy/Equity be considered. Therefore, all cases must have been completely developed under all other bases before transfer will be accepted by the Austin Group, unless the taxpayer meets the exception provided to taxpayers who may have been impacted by the fraudulent acts of a PSP as discussed in IRM 5.8.11.4.2.

  4. After all other potential bases have been considered, which include a discussion with the taxpayer relative to their ability to fully pay the liability for ETA offers or the RCP computation if the offer is being considered under DCSC; complete Exhibit 5.8.11-1 "Non-Economic Hardship Effective Tax Administration (NEH-ETA) OIC Check Sheet." The check sheet must be completed and sent to the Austin group before any cases are transferred. The purpose of the check sheet is to document that all issues other than Public Policy/Equity ETA have been evaluated and to provide information on the non-economic ETA factors present.

  5. The completed check sheet and a copy of the entire Form 656 should be faxed to offer Group Manager in Austin. The sender should include a copy of any letter or document presented by the taxpayer to support the special circumstances. The group will evaluate the information and respond to the sender within 10 workdays. This response will either be an explanation of why the taxpayer's offer cannot be investigated under Public Policy/Equity ETA provisions, or a request to transfer the offer to the Austin group.

  6. If the Austin group determines that the offer cannot be investigated under the Public Policy/Equity ETA provisions, the information will be faxed back to the sender who will be responsible for issuing the proposed rejection letter to the taxpayer, covering all factors considered.

  7. If the Austin group determines that the information presented requires further analysis, the sender will be notified to transfer the case to the Austin group. Referrals of cases to the ETA group should include the OE/OS recommendation as to what would constitute an acceptable compromise amount.

    • The sender should contact the taxpayer by telephone and advise the taxpayer of the results of the collectibility and liability portions of the offer investigation prior to transfer. If the taxpayer cannot be reached by phone then a standard transfer letter should be sent. The taxpayer should be advised during this discussion that the transfer is for consideration of the public policy or equity issues, any additional documents or information relative to hardship or collectibility should be provided prior to the transfer so the OE/OS can thoroughly consider the taxpayer's situation.

    • The file should be sent by overnight mail on a Form 3210 to the Austin group.

    • At the time of mailing, the case should be transferred on AOIC to Area 05 (OIC Territory 2).

    • A history item should be added to AOIC to show the case is being sent to the Austin group, Area 05 (OIC Territory 2).

    • The Austin group will maintain the faxed copies of all check sheets received and appropriate documentation on all offers accepted for transfer. This documentation will provide a historical record to support a decision to accept or reject the offer.

    Note:

    In situations in which the taxpayer is requesting consideration under public policy/equity, the OE/OS should request the Austin group review the taxpayer's request, if the offer cannot be accepted under DATC or hardship criteria and the offer is not being returned, withdrawn, or terminated. The guidance should be solicited by preparing the check sheet and documenting the issues involved in the case.

5.8.11.4.2  (08-05-2015)
Financial Statement Analysis

  1. Offers submitted under ETA require the same full financial analysis as DATC offers in order to determine RCP and to determine an acceptable offer amount. Procedures for financial analysis are contained in IRM 5.8.5, Financial Analysis.

    Exception:

    Once a determination is made that the fraudulent activity of a PSP was the reason for the delinquency, if the offer amount is equal to the full amount of tax, exclusive of penalty and interest, no financial analysis is required including review of financial statements, Forms 433-A (OIC), Collection Information Statement for Individuals and 433-B (OIC), Collection Information Statement for Business. A statement from the taxpayer that they have the ability to fully pay the liability should be secured.

  2. A determination whether the OIC qualifies for consideration under ETA or DATC will be made after the calculation of RCP.

  3. If the taxpayer's assets and future income exceed the tax liability, the taxpayer's OIC can be considered under the ETA basis.

5.8.11.4.3  (08-05-2015)
Determining an Acceptable Offer Amount

  1. An acceptable offer amount, based on economic hardship, is determined by analyzing the financial information and the hardship that would be created if certain assets, or a portion of certain assets, were used to pay the liability.

    Example:

    The taxpayer has a $100,000 liability and a RCP of $125,000. To avoid economic hardship, it is determined that the taxpayer will need $75,000. The remaining $50,000 should be considered the acceptable offer amount.

  2. In OIC's based on Public Policy/Equity, the Service would expect the taxpayer to offer an amount that is fair and equitable under the circumstances. The Service does not anticipate accepting compromises offering only nominal or token funds. Rather, the amount accepted should be determined by reference to the factors giving rise to the decision that compromise is appropriate. For example:

    1. In cases compromised under IRM 5.8.11.2.2.1 above, paragraphs 1, 2, and 3, an acceptable offer would be expected to result in the taxpayer being placed in the same position as if the error or delay on the part of the Service had not occurred.

    2. In cases compromised under IRM 5.8.11.2.2.1 above. paragraphs 4 and 5, the taxpayer’s financial condition may be a relevant consideration, after considering all other facts and circumstances. The justification for a particular amount to be accepted should be clearly documented.

    3. When compromising based on IRM 5.8.11.2.2.1 paragraphs 4, 5, and 8, in business cases in particular, the offer amount should be for an amount deemed reasonable based on the specific facts of the case, generally the Service will insist that a compromise with an operating business provide for payment of the full amount of the remaining tax balance, exclusive of interest and penalties. If the taxpayer is an operating business impacted by the fraudulent act of a PSP, the full amount of the remaining tax balance, exclusive of interest and penalties, may not be required based on the taxpayer’s situation. Refer to IRM 5.8.11.4.3.1, Determining an Acceptable Offer Amount (Fraudulent Acts of a PSP).,

  3. Generally, it is the responsibility of the taxpayer to make decisions and take the appropriate actions needed to fund the acceptable offer amount. However, due consideration of these funding options is often needed for the Service to arrive at an acceptable offer amount. For example, based on the taxpayer’s situation and geographic location, funding options may allow the taxpayer to tap into available equity without creating economic hardship. When appropriate, these options should be taken into consideration in determining an acceptable offer amount for an ETA offer based on economic hardship.

5.8.11.4.3.1  (08-05-2015)
Determining an Acceptable Offer Amount (Fraudulent Acts of a PSP)

  1. In offers involving the fraudulent acts of a PSP, it is in the best interests of the taxpayer and the United States to determine an acceptable offer amount that will not jeopardize the financial viability of an otherwise compliant taxpayer business. Facts to consider in making this determination include, but are not limited to:

    Will payment of the calculated RCP or the remaining tax balance, exclusive of penalty and interest:

    • Negatively impact the ability of the taxpayer to pay current and future expenses in a timely manner?

    • Negatively impact the ability of the taxpayer to meet other tax obligations?

    • Potentially result in the need for the taxpayer to lay-off employees?

    • Result in the reduction of goods and/or services provided to the community?

    • Impair the ability of the taxpayer business to remain operational?

    • Negatively impact the local economy if the taxpayer business fails?

  2. If the taxpayer has been reimbursed or if it is certain they will be reimbursed through a civil action, bonding company, or insurance, then the taxpayer’s liability up to the amount reimbursed or the amount they will be reimbursed should be taken into consideration.

    IF THEN
    Taxpayer has received reimbursement from a third party and the amount received has not been paid toward the liability The amount received must be included in the acceptable offer amount
    Taxpayer is expected to receive reimbursement from a third party, i.e. bonding company, within 30 days of acceptance of the offer. The amount the taxpayer is certain to receive should be included in the acceptable offer amount.
    Taxpayer may receive reimbursement from a third party, i.e. civil suit, in the future. A collateral agreement should be secured for payment from any future recovery. The OE/OS will coordinate with Area Counsel to use an existing collateral agreement form or draft language to be included as an attachment which addresses the reimbursement issue. Refer to IRM 5.8.6 - Collateral Agreements.

5.8.11.5  (08-05-2015)
Documentation and Verification

  1. To verify the taxpayer's special circumstances and support a basis of ETA, the OE/OS should exercise sound judgment in determining the degree of verification which is necessary and should only request supporting documentation based on the taxpayer's situation.

    Note:

    Verification of a health problem or hardship issue could be a doctor’s letter, copies of medical expenses, or proof the taxpayer has qualified for supplemental security income (SSI).

  2. An offer requesting consideration under ETA must include: Form 656, a statement discussing the specific issue(s) which would allow for acceptance of the offer, and financial statements, Forms 433-A (OIC), Collection Information Statement for Individuals and 433-B (OIC), Collection Information Statement for Business, along with appropriate documentation and verification. Refer to (3) of this section relative to documentation required when the taxpayer was impacted by the fraudulent actions of a PSP.

  3. The documentation required with the submission of the Form 656, when fraudulent activity of a PSP is involved, should include:

    • Form 656, along with a statement which discusses the specific fraudulent activity of the PSP and the cause(s) of the delinquency.

    • If the offer amount is equal to the full amount of the remaining tax, exclusive of penalty and interest, financial statements, Forms 433-A (OIC), Collection Information Statement for Individuals and 433-B (OIC), Collection Information Statement for Business are not required. Yet, additional information may be requested by the investigating employee, if deemed necessary. If no financial statements are submitted, the taxpayer should provide a statement that they have the ability to fully pay the outstanding tax liability.

    • If the offer amount is for less than the full amount of remaining tax, exclusive of penalty and interest, the taxpayer must include complete financial statements, including Forms 433-A (OIC), Collection Information Statement for Individuals and 433-B (OIC), Collection Information Statement for Business with the appropriate documentation.

    Note:

    The TFRP investigation and recommendation against the PSP or individuals within the PSP must be considered during the OIC investigation. While an Other Investigation (OI) should be issued to Field Collection for a TFRP investigation for the PSP or individuals within the PSP, the issuance of the OI will not delay investigation of the offer or acceptance processing. If the TFRP investigation is not completed prior to the acceptance of the offer, AOIC remarks should be noted with the name and phone number of the RO conducting the investigation, so MOIC may contact the RO prior to input of the TC 788 and TC 604 to discuss the impact completing the adjustment will have on any ATFR calculation.

    Example:

    A taxpayer, who is the victim of a PSP that embezzled the tax deposits of the business, submits a Form 656 requesting consideration of an OIC in the amount of the remaining tax, exclusive of penalty and interest. In addition to the Form 656, a statement providing details on the embezzlement demonstrating the taxpayer acted in a responsible manner and a statement the taxpayer has the ability to fully pay the outstanding liability are included with the offer submission. The offer may be accepted without any additional documentation.

    Example:

    A taxpayer, who is the victim of a PSP that embezzled the tax deposits of the business, submits a Form 656 requesting consideration of an OIC in the amount of the remaining tax, exclusive of penalty and interest. In addition to the Form 656, a statement providing details on the embezzlement demonstrating the taxpayer acted in a responsible manner and a statement the taxpayer has the ability to fully pay the outstanding liability are included with the offer submission. It appears from IDRS research the amount reported on the Forms 941 are not in agreement with the wages and withholding reported on the Forms W-2 submitted by the taxpayer. The OS may need to request additional documents or information from the taxpayer to resolve the discrepancy prior to offer acceptance. If appropriate, if any adjustments or abatements are required, federal tax deposits should be moved to the correct tax periods prior to the adjustment or abatement being processed.

    Example:

    A taxpayer, who is the victim of a PSP that embezzled the tax deposits of the business, submits a Form 656 for an amount that is less than the remaining tax, exclusive of penalty and interest. The offer is first evaluated to determine if acceptance of the taxpayer's offer under Doubt as Collectibility (DATC) is appropriate. If the offer cannot be accepted under DATC, the facts and circumstances should be analyzed to determine if acceptance of an offer for less than the remaining tax balance is appropriate under hardship or public policy criteria..

  4. When special circumstances are found to exist, the amount offered will be less than RCP. For an ETA offer, the RCP is always greater than the full liability. In the report narrative, clearly explain the special circumstances and the rationale for acceptance of the amount offered. The documentation must include reasons why some or all of the equity in certain assets is not being included in the offer amount, how the offer amount is being funded, and any other pertinent information that describes how the amount offered was determined to be acceptable

    Exception:

    When third party PSP involvement is the basis for the offer, documentation relative to equity in assets and how the offer is being funded may not be required, if the taxpayer’s offer is equal to the remaining tax balance, exclusive of penalty and interest. The following statement may be used in lieu of the recommendation report discussed in IRM 5.8.8.6(8) when unique issues are not involved, "This offer is being recommended for acceptance under Effective Tax Administration (ETA). The taxpayer meets ETA criteria since they have submitted information to demonstrate they have the ability to fully pay the liability, they acted in a reasonable manner, have shown they were a victim of a fraudulent act of a payroll service provider, and the offer amount is equal to the full amount of remaining tax, exclusive of penalty and interest, for each of the tax periods listed on the offer." .

  5. In addition to the verification of the actions of the third party and the receipt of appropriate verification, the offer specialist should make a determination that the tax assessments are correct prior to acceptance of the offer. This would include verifying the correct wages were reported by matching the W-2s and 941 tax returns for the tax periods included on the offer. If there are discrepancies, the OS should advise the taxpayer they must submit amended 941 returns and/or corrected W-2s. Any amended returns must be processed and the account adjusted prior to offer acceptance. This verification may be accomplished by utilizing IDRS information.

    Note:

    A determination needs to be made by the OS whether the adjustment will take place in a timely manner or whether the taxpayer should withdraw the offer or the offer must be returned until all adjustments post.

    Prior to acceptance, the OS should also determine if any future abatement of penalties for tax periods not on the offer might cause an overpayment. If abatement of penalties is appropriate, the OS should process any abatement in accordance with current procedures prior to acceptance of the offer, if it appears a future abatement may cause a refund to be issued after the offer acceptance.

    Example:

    A FTD penalty in the amount of $ 2,000 was assessed on the 941 tax period ended March 31, 2012. The PSP clearly used funds designated by the same taxpayer for taxpayer’s liability for the quarter ended June 30, 2012 to pay the penalty. The June 30, 2012 tax period is included on the OIC. If the abatement of the penalty is appropriate, the abatement should take place and the payment applied to the appropriate quarter prior to the offer acceptance.

5.8.11.6  (08-05-2015)
Final Processing

  1. Prior to final processing, AOIC must be updated to indicate the correct basis for closing the offer. This will ensure that all final closing reports generated from AOIC reflect the correct basis. The approval levels indicated on closing reports and letters must be consistent with the basis for closure.

  2. The following is a guide to these determinations:

    If… And… Then…
    The offer was submitted under ETA An economic hardship has been determined to exist, but the RCP is less than the liability balance due
    1. Update the AOIC offer screen to indicate a "C" under the offer type.

    2. Generate all closing reports with the proper approving official for DCSC.

    Note:

    If basis on Form 656 is ETA, an amended offer to update basis to DATC is required.

    The offer was submitted under DCSC An economic hardship has been determined to exist, and the RCP is greater than the liability balance due
    1. Update AOIC offer screen to indicate "A" under offer type.

    2. Generate closing reports with the proper approving official for ETA offers.

    Note:

    If basis on Form 656 is DATC, an amended offer to update basis to ETA is required.

    The offer was submitted under ETA The offer is being recommended for acceptance under DATC with the offer exceeding the RCP
    1. AOIC offer screen does not require updating for special circumstances. The type of offer on AOIC should reflect "C" for DATC.

    2. Generate closing reports with the proper approving official for DATC without special circumstances.

    Note:

    If basis on Form 656 is ETA, an amended offer to update basis to DATC is required.

    The offer was submitted under Doubt as to Collectibility with item 3 of Form 656 completed with circumstances that do not meet any of the elements that define economic hardship, or Public Policy/Equity criteria The offer cannot be recommended for acceptance under DATC.
    1. Generate closing reports with the proper approving official for DATC without special circumstances.

    2. Address in the history, why the circumstances described in item 3 do not meet defined economic hardship, or Public Policy/Equity criteria.

    The offer was submitted under ETA with item 3 of Form 656 completed with circumstances that do not meet ETA criteria The taxpayer does not qualify for ETA because the RCP is less than the liability and the offer cannot be recommended for acceptance under DCSC.
    1. Update AOIC offer screen to indicate a "C" under special circumstances.

    2. Generate closing reports with the proper approving official for DCSC.

    The offer was submitted under ETA with item 3 of the Form 656 completed with circumstances that the investigation reveals do not meet ETA criteria The offer cannot be recommended for acceptance and the RCP exceeds the liability
    1. Update AOIC offer screen to indicate "A" under offer type.

    2. Generate closing reports with the proper approving official for ETA offers.

    The offer was submitted under ETA The special circumstances meet economic hardship, or Public Policy/Equity criteria and the RCP exceeds the tax liability. However, the offer cannot be recommended for acceptance.
    1. Update AOIC offer screen to indicate "A" under offer type.

    2. Generate closing reports with the proper approving official for ETA offers.

    The offer was submitted under DCSC The special circumstances meet economic hardship, or Public Policy/Equity criteria and the RCP is less than the tax liability, however, the offer cannot be recommended for acceptance. Generate closing reports with the proper approving official for DCSC.

5.8.11.6.1  (09-23-2008)
Rejection/Return/Withdrawal Processing

  1. The procedures in IRM 5.8.7 should be followed when processing ETA rejected, withdrawn or returned offers.

  2. The procedures in IRM 5.8.4 should be followed when processing ETA offers secured during a Collection Due Process hearing.

  3. IRM 5.8.12 provides instructions for IAR review of rejected offers.

  4. See IRM 1.2.44.2 – Delegation Order No. 5-1 for the official with delegated authority based on ETA. The delegated official’s signature is required on the Form 1271 and the closing letter

5.8.11.6.2  (09-23-2008)
Acceptance Processing

  1. The procedures in IRM 5.8.8, Acceptance Processing, should be followed when processing accepted ETA offers.

  2. Area Counsel’s opinion is required on ETA offers where the unpaid amount of tax assessed (including any interest, addition to the tax, or assessable penalty) is $50,000 or more.

  3. See IRM 1.2.44.2 – Delegation Order No. 5-1 for the official with delegated authority based on ETA. The delegated official’s signature is required on the Form 1271 and the closing letter

Exhibit 5.8.11-1 
Effective Tax Administration Non-Hardship OIC Check Sheet

This is a two-page check sheet used for ETA Non-hardship OIC's.

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