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Part 5. Collecting Process

Chapter 8. Offer in Compromise

Section 12. Independent Administrative Review

5.8.12  Independent Administrative Review

5.8.12.1  (09-23-2008)
Overview

  1. IRC Section § 7122(d)(1) requires the Service to conduct an independent administrative review of all proposed OIC rejections. The review must be conducted prior to the rejection being communicated to the taxpayer.

  2. The IAR is responsible for conducting this review. Generally, the IAR should report to the Technical Services manager.

5.8.12.2  (09-23-2008)
Role of the Independent Administrative Reviewer

  1. The IAR is responsible for reviewing each case to determine if the proposed rejection is reasonable based on the taxpayer's facts and circumstances. The IAR is not responsible for conducting a quality analysis of completeness, and accuracy of the documents used to support the case.

5.8.12.3  (09-23-2008)
The Review

  1. The OI's analysis of the taxpayers offer should be reviewed to determine if the basis for the rejection determination was appropriate.

  2. The IAR should consider if the taxpayers rights have been observed during the offer investigation and during communication and discussions with the taxpayer or POA. These considerations should be based on issues that would impact the recommended rejection.

  3. The IAR should compare the amount that the taxpayer offered with the RCP in order to determine if the rejection determination is reasonable. If the file indicates any circumstances that could impact either future earning potential or allowable expenses, the file should document this information and the determinations relating to the taxpayers circumstances.

  4. If the case file indicates issues are raised that meet either ETA or DCSC criteria, as defined in IRM 5.8.11 the case history must address these issues and discuss the determinations made.

  5. The IAR should ensure that all of the facts and circumstances of the case were considered during the investigation and that the decision to reject the offer is reasonable, based on the case analysis.

    Note:

    The IAR is not responsible for conducting a quality analysis of completeness and accuracy of the documents used to support the case decision. That is the responsibility of the manager.

  6. The case file should indicate an attempt to communicate the results of the offer investigation with the taxpayer or POA, prior to recommending the rejection. This communication can be accomplished by personal contact or by letter.

    Exception:

    The only exception is for those cases rejected based on the Screen for Obvious Full Pay criteria as outlined in IRM 5.8.4.5.

5.8.12.3.1  (09-23-2008)
Case File

  1. The following items should be present in the file and used as an aid for the IAR to ensure the decision was appropriate.

    1. Form 656, Offer in Compromise

    2. Form 1271, Rejection or Withdrawal memorandum

    3. Rejection letter

    4. Asset/Equity Table (AET)

    5. Income/Expense Table (IET)

    6. Rejection summary

    7. Collection Information Statements (CIS)

    8. Case history

    9. Any pertinent supporting documents

  2. If any information is missing or unavailable that hinders the IAR in making a determination that the decision was appropriate, the case file should be returned or a memorandum sent to the OI or the manager requesting the missing documentation or supporting information. In the case where the IAR is located off-site, the information needed may be faxed to the IAR for inclusion in the analysis.

5.8.12.3.2  (09-23-2008)
Communication

  1. The IAR should consider if required communication with the taxpayer or POA was attempted and if these communications were reasonable based on the facts of the case. The case file should indicate an attempt to communicate the results of the offer investigation with the taxpayer prior to recommending the rejection.

  2. Communications need not necessarily include phone calls. They may be conducted entirely in the form of letters to the taxpayer or their authorized representative.

  3. The case file should document these communications and any specific issues that are in dispute.

5.8.12.4  (09-23-2008)
Independent Review Process

  1. Prior to the proposed rejection being submitted to the IAR, the authorized official must have reviewed the file and signed the Form 1271 indicating concurrence with the proposed disposition.

  2. Once the approving official has signed the Form 1271, the offer must be re-assigned to the IAR pool on AOIC. The file is then forwarded to an IAR for review using the Form 3210.

  3. Upon receipt of the file by the IAR, AOIC should be updated to reflect the individual IAR assignment number. The IAR should create an Other Investigation on ICS and document receipt of the offer file into their inventory.

  4. Once the offer is reviewed by the IAR, AOIC must be updated to reflect the results of the review. The IAR must also document the results of the review on ICS, and complete the disposition of the assigned Other Investigation.

5.8.12.4.1  (09-23-2008)
Rejections Sustained by the Independent Administrative Review

  1. If the proposed rejection of the offer is sustained by the IAR, the reviewer will:

    1. Update the IAR "Main Screen" on AOIC indicating the appropriate disposition.

    2. Sign the Form 1271 as the reviewer, indicating concurrence with the proposed disposition.

    3. Document the results of their review on ICS indicating concurrence with the proposed disposition and close the OI assignment.

    4. Return the case file to the originator using a Form 3210.

5.8.12.4.2  (09-23-2008)
Rejections Not Sustained by the Independent Administrative Reviewer

  1. If the proposed rejection is not sustained by the IAR, the reviewer will:

    1. Update the IAR "Main Screen" on AOIC indicating the appropriate IAR disposition.

    2. Document the results would not support sustaining the rejection recommendation, and the specifics of the review were noted on the Form 5942, Reviewers Report, on ICS and close the Other Investigation assignment on ICS.

    3. Prepare the Form 5942 providing an explanation of why the determination was not sustained and indicating additional actions necessary by the investigating employee.

    4. Route the Form 5942 and the offer case file to the IAR Manager for approval.

  2. After the IAR Manager approves the Form 5942, the case will be routed as follows:

    1. The original Form 5942 and the offer file will be returned to the OI's manager.

    2. A copy of the Form 5942 will be sent to the OI's second level manager.

    3. A copy of the 5942 will be retained by the IAR group manager.

  3. The following procedures describe necessary actions once the offer file is received by the originating office:

    If… Then…
    Reconsideration of the offer based on recommendations from the IAR results in a determination to accept the offer Process the acceptance recommendation following procedures defined in IRM 5.8.8
    Reconsideration of the offer based on recommendations from the IAR results in a determination to continue to recommend rejection of the offer Update the case file with the additional case actions and any new information and re-submit to the IAR for a second review.
    The investigating employee determines that the rejection is the correct action without further development, after reviewing the Form 5942 The offer file will be returned to the IAR for reconsideration. If necessary, additional history should be included to further support the offer rejection.
    After a second review by the IAR, the rejection is still not sustained by the IAR and the Offer Investigator and the IAR disagree with the decision of the IAR The decision will be raised to the second level manager for resolution.

    • The IAR Manager will forward a memorandum to the Offer Manager with an explanation of why the rejection cannot be sustained.

    • A copy of the memorandum will be forwarded to the second level manager.

    • The IAR manager and the second level manager will discuss the issues to reach a resolution.

    • The final decision will be made by the field second level manager for cases assigned to the field and the second level manager for those cases decided by the COIC sites.

  4. The original Form 5942 and any other documentation regarding second level management involvement and decisions must be retained in the offer file as a record of actions taken during the IAR process.


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