5.19.7  Campus Collection Programs (Cont. 1)

5.19.7.3 
Monitoring Offers in Compromise (MOIC)

5.19.7.3.9 
Processing Accepted OICs

5.19.7.3.9.1  (01-08-2014)
Processing OICs With the Case File on AOIC

  1. Review and compare Form 656 /(Amended) Form 656 and AOIC to ensure all tax modules are included.

    If And Then
    The module is on Form 656 or an amended Form 656 is not on AOIC, Add the module on AOIC.
    The module is not on Form 656 or an amended Form 656 is on AOIC, 1. Contact the investigating employee to determine if the period should be on Form 656 .
    2. If it should be, follow their direction.
    3. If not, zero out the period on AOIC. This will prevent payments from applying to the module.
    4. Enter a full explanation in the History file why this period was deleted.
  2. Refer to the AOIC User Guide, Chapter 5, Receipt of Accepted Offers and Chapter 6, Processing Accepted Offers for instructions on acceptance and control of OICs.

    1. Update the campus Main Screen and assign the offer to a tax examiner.

    2. Update the Balance (Liabilities) Screen.

      Note:

      Ensure that the liability screen matches IDRS, this will prevent TC971/032 errors.

    3. Set up the Journal to post and schedule payments.

    4. Process deposits and payments.

    5. Generate, validate and print Form 3244 (AOIC).

  3. When the campus accepts transfer of an offer on AOIC, the system creates a TSIGN 8500 and TC 130 transaction for each unique TIN in the MFT Screen, then systemically uploads both to IDRS. Tax Examiners should review IDRS Tax modules when an offer is initially assigned to them to ensure the TSIGN 8500 and TC 130 are on each period included in the offer. If not posted within 3 weeks, input manually. Follow- up to monitor for posting.

  4. Review the case file and AOIC to ensure that the correct date has been entered in the waiver and acceptance date field on the Service Center Main Screen. TC 780 uploads to IDRS systemically using this acceptance date when the AOIC record changes to a monitoring status. Therefore, the correction(s) should be made prior to moving the offer to a monitoring status on AOIC. If TC 780 are manually input, remove from the transaction screen when accepting offer into inventory.

  5. If the error is identified after the systemic upload, then the TC 780 should be reversed and manually re-input on IDRS. Be sure to correct the AOIC waiver date and document the case history with your actions.

  6. Update NMF (MFT 20) period(s) by requesting input of TC 780, TC 550 with the new CSED date, and accrued penalty and interest up to offer acceptance date via Form 3177. Send Form 3177 to the Cincinnati NMF unit.

    Note:

    All CSED computation must be reviewed and approved by a manager before a TC 550 may be requested on a NMF.

5.19.7.3.9.2  (01-08-2014)
Processing OICs Without the Case File

  1. The following procedures apply to accepted offers that have been sent directly to FRC or offers missing from a shipment.

  2. Perfection of case files sent directly to the FRC is the responsibility of the originator.

  3. If the file is missing from a shipment (manually monitored cases) for less than one year, attempt to secure a copy of the file from the Public Information file.

  4. Research IDRS to verify that all balance due modules assessed at the time the offer was accepted are included on the AOIC MFT screen. Add any missing periods.

  5. Ensure that TC 480 has posted to each tax period shown on the MFT Screen:

    If Then
    TC 480 is not present, Input TC 480 using CC REQ77. Use the processable date/waiver date shown on AOIC.

    Note:

    Overlooked periods that were assessed prior to the acceptance date should have a TC 480 date of the original Form 656 processable date/waiver date since an amended form 656 is not required for overlooked periods. See IRM 5.19.7.3.8, Overlooked Periods, for instructions on pen and ink changes.

    All TC 480s present do not have the same date, 1. It is assumed that the originating office received an amended offer with new periods.
    2. If there is no indication that an amended offer was filed the TC 480 dates will need to be the same for correct CSED calculations.
    3. Input TC 483 using CC REQ77 on the tax period with the different TC 480 date.
    4. Also input TC 470 using CC REQ77 to prevent balance due notices from issuing.
    5. After the TC 483 posts, re-input TC 480 using CC REQ77 with the correct date, include a posting delay code of 1.

    Note:

    Related offers will not always have the same TC 480 date. The TC 480 date is determined by the date the IRS employee signed the Form 656 and the required fee was received. If an additional fee was requested with the new offer then it is not an amended offer but a new offer.

    NMF period (MFT 20) on MFT screen 1. Verify TC 480 has been input with the correct date. (Waiver date shown on the MFT or AOIC Service Center Main Screen.)
    2. If not present, request input of TC 480 via Form 3177.
    3. If present, verify the waiver date is correct. (If not make the correction via Form 3177.)
  6. Review the terms screen; research IDRS to determine if the taxpayer is in compliance.

    If Then
    The taxpayer is in compliance with the terms of the offer 1. Update AOIC appropriately. (Including the history.)
    2. Journal all payments on AOIC in date order.
    3. Place the offer in the correct AOIC status.
    4. Release Federal Tax Liens, if appropriate. IRM 5.19.7.3.22.4, Releasing the Federal Tax Lien.
    5. Proceed with monitoring the offer.
    The taxpayer is not in compliance with the terms of the offer 1. Update AOIC.
    2. Place the offer in the correct AOIC status.
    3. Send the potential default letter.
    The taxpayer does not respond or adhere to the potential default letter within the allowed schedule time frame 1. Default the offer.
    2. Place the offer in correct default AOIC status. (IRM 5.19.7.3.20 , Default procedures)
  7. Update the AOIC Remarks and status.

5.19.7.3.9.3  (06-17-2015)
Case History Documentation

  1. Initial case review and documentation are required as each case is received into the Tax Examiner inventory and/or re-assigned to another Tax Examiner's inventory. Required documentation includes the following:

    • Case type (IMF, BMF, NMF, Corporate, TFRP)

    • TC 130 (state whether input is required or not required)

    • Related offers (include offer number in history)

    • Collateral agreement (type)

    • Offer type (lump-sum cash, or periodic payment )

    • NFTL (document filed or not filed and also document whether a release is required when the offer is received in MOIC inventory)

    • Offer amount

    • Accepted CDP offer on AOIC with Appeals jurisdiction

    • POA indicated

    • Payments received before acceptance and remaining balance on amount offered

    • Follow-up action and the date required (enter a history narrative and the appropriate date on the AOIC follow-up screen)

      Note:

      If the offer has not been paid in full, a follow-up is required on all cases where liens are on the accounts. The follow-up may not be longer than 21 calendar days.

    • Offers in ML status which have the follow up adjusted due to not finding a payment on IDRS require no additional remark in AOIC since the Follow up will flow to the case remark section. This is only when no action was taken due to a payment not being found

    • Assigned SC status

  2. Accepted offers processed under TIPRA guidelines will have payments applied to the liability while the offer is under consideration and after the liability has been established on AOIC. Take the following actions on all accepted TIPRA offers:

    1. Review pre-acceptance history entries and verify all payments using IDRS.

    2. If the lump-sum or periodic payment offer has been paid in full, take the necessary actions and follow normal processing procedures for full paid offers, including release of the federal tax lien, if appropriate.

    3. If the lump-sum or periodic payment offer has remaining payments due, follow normal processing for each offer type and schedule appropriate follow-ups based on the terms of the offer. If there is a lien on the account, the maximum number of days for the follow-up can not exceed 21 days in order to meet the requirement for timely lien release within 30 days of the final payment.

      Note:

      There should be a prior history entry to indicate how any payments received before acceptance were applied. Both the tax period and the amount applied should be evident in the history and verified using IDRS. MOIC is not responsible for the movement of pre-acceptance payments as long as they are on the correct taxpayers account and were posted to an offer period.

    4. In addition to the above requirement, all initial case actions on all offers, AOIC and manually monitored, must be documented in the history with the appropriate OFP codes from count actions taken.

      Note:

      The TE should only be placing an OFP code in the remarks when a count is taken for their action.

    5. All subsequent case actions, (e.g., journaling of payments, recoupment completed or not applicable and why, checked for lien, lien released, 3439 verified, collateral to exam or returned from exam, letter sent to taxpayer/POA, received response and state the nature of the response, etc.) must be documented.

      Note:

      If taking actions using an IAT/GII tool and multiple transactions are completed due to the tool use, not all actions need to be stated. Example Credit Transfer Completed. No need to state TC 470 transmitted by the IAT tool.

    6. All contacts, written or verbal, with the taxpayer/POA or internal contacts (e.g., collateral package sent or received, phone calls received or made) or any other contacts relevant to the offer must be documented.

  3. AOIC remarks should be documented with the date a letter is issued if it is not the date it was generated.

5.19.7.3.9.4  (06-17-2015)
Timely Acceptance of Incoming OICs

  1. Incoming OICs must be accepted and updated on AOIC within three weeks of receipt (with the maximum time frame of 21 days) when liens are present to ensure timely release of liens on all full paid offers. On offers where no liens are present, the OIC should be accepted and updated on AOIC within 30 days.

    Exception:

    Incomplete offers with missing documents (Acceptance letter, Form 7249, Offer Acceptance Report, the original Form 656, Offer In Compromise and any amendments, Collateral Agreement, if applicable), signatures, etc. require contacting the originator. A history note should be made when requesting additional information from COIC or the Area Office. If documentation indicates the offer is paid in full, verify payment received and posted on IDRS. Take appropriate steps to ensure timely release of liens on such cases.

  2. Appropriate AOIC screens must be updated to an "MX" status or Form 6314 Deferred Payment Offer Payment Record, prepared for incoming accepted cases.

  3. TSIGN 8500 and TC 130 systemically upload when the AOIC status is changed from "NW" (new work unassigned) to "OA" (open assigned).

    Note:

    If the offer is a joint offer then a manual TC 130 should be placed on the related TIN to hold any refunds due to the Service. The TE must input a TC 131 once the recoupment is completed.

  4. When the AOIC status is updated to a "MX" (monitoring) status TC 780 uploads.

    Note:

    When placing an offer in MO (monitor other) status the AOIC history should be updated, stating the reason why the case is being monitored. This will allow anyone researching the file to know what is being monitored.

  5. If incoming accepted offers have not been updated on AOIC within three weeks of receipt, campuses should have the clerical staff make INTST prints and manually input TC 780 to ensure specific restrictions are in place and accounts with recent payments are identified to ensure timely release of the federal tax lien when appropriate. When the case is eventually accepted on the system, delete the systemic upload of TC 780 from the MFT summary screen.

    Note:

    If the amount offered has been paid in full, release of the federal tax lien is required within 30 days of satisfaction of the payment terms of the offer. For payments made by credit/debit cards see IRM 5.19.7.3.22.4(5). If there are delays in posting payments or transferring credits that may impact the timely release of the lien, contact the centralized lien unit.

5.19.7.3.9.5  (01-08-2014)
Automated Offer-In-Compromise (AOIC) Transaction Listing

  1. The AOIC Transaction Listing is a report of error listings for each individual tax examiner and shows all transactions that did not automatically post to IDRS. The report will not give examiners an individual listing, but a listing of all errors for the Campus that is selected. Identify the error by the assigned IDRS number. If there are no employee numbers listed, look up the offer number to determine assignment.

  2. The Daily Transaction Listing on AOIC should be printed daily. Review the information from the report and determine the actions needed on each offer, if any. Some offers may indicate a pending transaction due to another AOIC download. No required action is needed on these. The listing has three parts.

    1. Part one shows the transactions that have been sent for processing.

    2. Part two shows the errors, which must be input manually on IDRS.

    3. Part three shows Non-Master File transactions which must be input manually on IDRS.

    Note:

    Notate AOIC history with corrective actions, including no action required.

  3. To resolve the errors, view TXMOD on IDRS. The unpostables will be notated by a transaction "UPC" code. Refer to the 6209 for the explanation of the unpostable and what code will correct it. Refer to the error listing to see if the transaction is being sent out again. Check on IDRS to see if the unpostable is closed. If it hasn't been closed then you can use CC UPDIS to request how to close or correct with the appropriate transaction. If the control has already been closed, you need to contact the Unpostable Unit (SERP, Who/Where, Campus Directory, Unpostable unit for SC) that issued the transaction. These can be either phoned or faxed. The first two digits of the DLN of the unpostable transaction will show where the code originated. The If/Then table listed below has the required action based upon the error received.

    Note:

    If there is a request for a related offer no further action is required until the related offer is received.

  4. Please see the table below to resolve errors on TC 780/788 errors.

    TC 780/788 Errors

    IF THEN
    Warning: AOIC corrected name cntrl - AOIC sending again Verify on IDRS per ENMOD for valid name control and update AOIC entity screen to correct name control.
    Duplicate Status Requested No action is required.
    Data Not on IDRS - Required Manual entry of Transaction Research IDRS and AOIC to determine correct transaction codes are input on IDRS.
  5. Please see the table below to resolve TSIGN errors:

    TSIGN Errors

    IF THEN
    Error invalid DO/AO code Verify TSIGN is valid on IDRS.
    Duplicate assignment requested Verify TSIGN is valid on IDRS.
    Warning: OIC corrected a Name CNTRL - AOIC sending again Verify IDRS per ENMOD for valid name control and update AOIC entity screen to correct name control.
    Data Not on IDRS - Required Manual entry of Transaction Research IDRS and AOIC to determine correct TIN for input of appropriate transaction code.
  6. Please see the table below to resolve errors on TC 130/131:

    TC 130/131 Errors

    IF THEN
    Duplicate Status Requested No action is required
    Data Not on IDRS - Required Manual entry of Transaction Research IDRS and AOIC to determine correct TIN for input of appropriate transaction code
    Warning: OIC corrected a Name CNTRL - AOIC sending again Verify IDRS per ENMOD for valid name control and update AOIC entity screen to correct name control.
  7. Please see the table below to resolve errors on TC 971:

    TC 971 Errors

    IF THEN
    Warning: OIC corrected a Name CNTRL - AOIC sending again Verify IDRS per Enmod for valid name control and update AOIC entity screen to correct name control.
    Data not on IDRS Research IDRS and AOIC - A balance is showing on the liability screen, liability screen should be updated to reflect no current balance.
    Data not on IDRS TC 971 will not post if TC 780 did not post. Verify posting of the TC780. .Manually input if not post to IDRS.
  8. MF and NMF transaction error corrections must be input on the same day as the listing is generated.

    Note:

    Although NMF corrections can be requested timely the action may take 6 to 8 weeks to show on the account.

5.19.7.3.9.6  (01-29-2014)
Applying or Refunding the Application Fee

  1. Most offers require an application fee when submitted, however, the fee may become refundable on Offers accepted under Effective Tax Administration (ETA) or Doubt as to Collectibility with Special Circumstances (DCSC). Whether the offer will be accepted under ETA or DCSC is not known until completion of the offer investigation.

  2. The Acceptance Letter for ETA or DCSC offers will include a paragraph asking the taxpayer if they want the fee applied or refunded. The taxpayer decides whether the application fee will be refunded or applied.

  3. The taxpayer is given 30 days from the date of the letter to notify us in writing. The paragraph reads:

    Note:

    "Your offer was accepted based on effective tax administration or doubt as to collectibility with special circumstances. The application fee of $186 you paid when you submitted your offer will therefore be applied against the amount of the offer. If you would like the application fee refunded to you rather than applied against the amount of the offer, you must notify us in writing at the address below within 30 days of the date of this letter. If you request a refund, any amount due under the offer will not be reduced by the amount of the fee."

  4. The application fee will be applied to the offer amount and tax liability if the taxpayer does not respond or replies late. Allow an additional 15 days following the 30 days from the date of the letter (total 45 days) before applying the fee.

  5. Applying the application fee from the AOIC application fee screen is similar to processing OIC deposits from the Deposits Screen.

  6. If the fee is larger than the offer amount the balance must be refunded to the taxpayer.

    Example:

    The accepted offer amount is $100. Apply $100 of the fee to the offer amount/tax liability and refund the remaining $86 to the taxpayer.

  7. AOIC provides an "Old Application Fee Refund/Apply Listing." MOIC is required to generate the listing on a weekly basis to verify and authorize the manual refund. The listing will indicate offer numbers on which a refund/apply action is needed.

  8. Offers listed as ETA/DATCSC pertain to accepted offers only and should be resolved by MOIC within 45 days of acceptance.

  9. The AOIC system will generate a Form 2424 and journal the fee through the Journal and Balance screens. The Form 2424 must be mailed or remotely printed to the Accounting function affiliated with the COIC site where the offer was initially loaded. Form 2424 will show the designated application fee fund account.

  10. If the taxpayer requests a refund of the fee, prepare a manual refund, using Form 3753 or Form 5792. See IRM 21.4.4.4.1 Preparation of Form 5792, IDRS Generated Refund and IRM 21.4.4.4.2, Preparation of the Form 3753, Manual Refund Posting Voucher. The Accounting function requires a signature from someone authorized to sign the manual refund request form. After the form has been signed by someone authorized, it should be sent to Cincinnati for refunding. All requests for manual refunds must be controlled and monitored on the Integrated Data Retrieval System (IDRS) by the initiator (or other management designated employee) to prevent duplicate, erroneous refunds. See IRM 21.4.4.5.1, Monitoring Manual Refunds, for more information

    Note:

    The above procedures are for funds being refunded from an IDRS account, these procedures are not necessary for refunds from the 4710 RACS Account.

5.19.7.3.9.7  (01-08-2014)
Accepted OICs Requiring Manual Monitoring

  1. Some offers can not be loaded onto AOIC (e.g., Department of Justice settlements, Doubt as to Liability OICs received prior to August 24, 2012, CDP OIC's received prior to October 1, 2012 and Appeal cases.) and must be manually monitored by CSCO. Upon receipt of these cases:

    1. Prepare Form 2515, Record of Offer in Compromise, to document actions taken on the case. (Use information on Form 656 to prepare Form 2515 and Form 7249 Offer Acceptance Report, total of liability). Item 10 may be left blank since it is a duplication of the information entered on Form 6314.

    2. Prepare Form 6314, Deferred Payment Offer Payment Record (to be attached to Form 2515.)

    3. Prepare Form 6313, Collateral Agreement Payment Record, if offer has a collateral agreement attached.

    4. Verify that Forms 2515, 656, and 7249 have the same tax class and periods and that TC 480 has been input.

      Note:

      If tax class and periods do not agree, notify the originating office.

    5. Review the terms of the offer to ensure the terms match the acceptance letter. If there is a discrepancy, resolve the differences by contacting the originator to verify the correct terms. Include a history narrative identifying the issue and it's resolution.

    6. Input TC 780, TC 130 and TSIGN 8500.

      Note:

      If the offer is a joint offer, then a manual TC 130 should be placed on the related TIN to hold any refunds due to The Service. The TE must input a TC 131 once the recoupment is completed.

    7. Control all manually monitored cases on IDRS and input history on AMS.

5.19.7.3.10  (01-08-2014)
Accepted OICs Requiring Special Handling

  1. The following categories of accepted offers require special or unique handling.

    • OIC Taxpayer has experienced identity theft

    • Federal Employee/Retiree Delinquency Initiative (FERDI)

    • Trust Fund Recovery Penalty (TFRP)

    • Personal Liability Excise Tax (PLET)

    • Bankruptcy Filed After Acceptance

    • Combat Zone

    • Deceased OIC Taxpayer

    • OIC Taxpayers Residing in Disaster Areas

    • Non Master File (NMF) Accounts

    • CAWR Assessments

    • Automated Underreporter (AUR) Assessments

5.19.7.3.10.1  (09-29-2014)
OIC Taxpayer has Experienced Identity Theft

  1. Instances of identity theft can either be alleged by the taxpayer or can be identified by a Service employee. The taxpayer can self identify by providing any of the following:

    • Form 14039, Identity Theft Affidavit

    • police report

    • a statement claiming they are a victim

  2. Below are procedures for inputting the identity theft transaction codes and preparing a referral to report the identity theft case. Prior to inputting an identity theft TC 971 Action Code, review IDRS CC ENMOD to prevent inputting a duplicate TC971 Action.

  3. The Tax Examiner will be responsible for:

    1. Identifying the Identity Theft issue i.e,. by a TC 971 cc 522 on a offer or recoupment year or if the claim is received from the taxpayer in response to a potential default letter.

    2. Working the Identity Theft inventory on a first in first out basis and should take priority over other assignments.

    3. Input TC 971 code. See IRM 10.5.3.2.5, Initial Allegation or Suspicion of Tax-Related Identity Theft - Identity Theft Indicators, Use Tax Administration Source Code "IRSID" for IRS identified suspected Identity theft cases.

      Note:

      Reviewing CC ENMOD is necessary to help prevent duplicative (identical) TC 971 AC 5XX entries. Prior to marking an account with TC 971 AC 522 PNDCLM or IRSID, research CC ENMOD/CC IMFOLE to ensure the account has not already been marked.

      Note:

      When the identity theft victim is the secondary SSN on a joint account, the identity theft indicator is input on the secondary SSN. Identity theft indicators are not input on the primary SSN in these instances. If both primary and secondary taxpayers are victims, place the indicator on both SSN's

    4. In situations where the taxpayer initially asserts identity theft and provides supporting documents at the same time, follow the procedures in IRM 10.5.3.2.6, Overview - Identity Theft Supporting Documentation.

    5. Request supporting documentation, when appropriate. Generally, taxpayers alleging identity theft will be required to provide supporting documentation. However, there are situations where the taxpayer will not be required to submit documentation. See IRM 10.5.3.2.6.1 When to Request Identity Theft Supporting Documents.

    6. Set a follow up on AOIC for 45 days for receipt of taxpayer response.

    7. If the taxpayer does not provide substantiation documentation when requested, proceed assuming the taxpayer is not an identity theft victim. Follow procedures in IRM 10.5.3.7 , Reversing Pending Identity Theft Claims - TC 972 AC 522 NORPLY or NOIDT. or IRM 10.5.3 IMF Only TC 972 AC 522– Reversal of TC 971 AC 522 for additional information on reversing Action Code 522 applied in irror or for other specific reasons.

    8. If the liability was assessed in ASFR, AUR or EXAM, determine the source of the identity theft liability (ASFR, AUR, EXAM, etc.) and forward as appropriate with required documentation.

      Note:

      Complete and Forward a Form 4442 referral and route based on SERP ID Theft Liaison Listing on the Who Where tab.

    9. The liability was not assessed in ASFR, AUR or EXAM. Complete and Forward a Form 4442 referral and route to the Collection Identity Theft liaison. They will determine the validity of the taxpayer's claim and forward to the DITA group if necessary.

  4. Although MOIC may not be working the Identity Theft issue, it is crucial to know the impact the theft has on the monitoring of the offer. If another program is working the identity theft, contact should be made with that program to find out the impact. In some cases, such as a Criminal Investigation (CI) case the program may request you not notify the taxpayer of the pending investigation.

  5. All time associated with working the ID theft issue in MOIC should be reported to OFP Code 813-61910.

5.19.7.3.10.2  (01-08-2014)
Federal Employee/Retiree Delinquency Initiative (FERDI) Cases

  1. OICs may be accepted on federal employees, including IRS employees. However, acceptance should be rare because these offers may be contrary to public policy. Public policy implications must be considered in all cases.

  2. Monitoring of accepted IRS employees' offers should be coordinated with the CSCO Tax Examiner designated to work FERDI cases. See IRM 5.19.1.4.6, Federal Employee/Retiree Delinquency Initiative (FERDI) .

5.19.7.3.10.3  (01-08-2014)
Trust Fund Recovery Penalty (TFRP) Cases

  1. The TFRP is a penalty imposed by IRC 6672 against any person required to collect, account for and pay over taxes held in trust by an employer who willfully fails to perform any of these activities. Taxpayers are assessed the penalty on the IMF equal to the unpaid trust fund amount (TC 240 Reference Number 618) under MFT 55. See IRM 5.19.14 Trust Fund Recovery Penalty.

  2. There are three different possible types of offers related to the TFRP assessment:

    • An offer filed by an employer before the TFRP is assessed against responsible parties

    • An offer filed by an employer after the TFRP is assessed against responsible parties

    • An offer filed by one or more responsible parties assessed the TFRP

  3. When the TFRP has not been assessed the investigating Field Revenue Officer will secure Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, from all responsible parties and prepare Form 2751, Proposed Assessment of Trust Fund Recovery Penalty. A copy of the Form 2750 with the original Form 2751 should accompany the accepted offer file.

    Note:

    If the waiver forms are not included in the file, the investigating Revenue Officer must be contacted to secure the forms.

    1. When the offer amount is paid in full, retain Forms 2750/2751 in the closed offer file.

    2. If an employer defaults, return the forms to the Area Office with the offer file.

  4. When an employer's OIC is accepted and the TFRP assessments have been made, the underlying trust fund tax liability upon which the TFRP is based may no longer exist. The investigating officer may prepare, at the time of acceptance, Form 3870, Request for Adjustment, to adjust related TFRP assessments to zero when the offer amount will full pay the MFT 55 tax assessment. The original adjustment forms will be included in the incoming case file. If adjustment forms are not included in the file, do not request them.

    Note:

    Effective September 2005, (based on Counsel opinion) the Service will continue to collect any remaining trust fund portion of the Form 941, Employer’s Quarterly Federal Tax Return, balance due via TFRP (MFT 55) assessments after the offer amount has been full paid by the employer.

  5. Area Offices should have TSIGNed related TFRP, MFT 55 with a Form 3870 in the case file, assessments to 8500; if they did not, TSIGN these accounts to 8500.

  6. If the employer full pays at the time of acceptance (cash offer) the investigating officer may send Form(s) 3870 directly to the Trust Fund Unit for adjustment of the outstanding trust fund liabilities.

  7. After all offer payments have been received (BMF accounts containing a TC 971 AC 093, or an MFT 55 account that contains a TC 240/RN 618) take the following actions before the accounts are written off:

    Reminder:

    Do not consider TC 538 credits on the Form 941 account, or TC 241 / RN 697 credits on the MFT 55 account, after the date of acceptance as offer payments.

    1. MOIC must contact the TFRP liaison. Brookhaven MOIC will contact Brookhaven TFRP and Memphis MOIC will contact Ogden TFRP. These contacts can be found on SERP under Who/Where.

    2. The TFRP liaison will determine if there is an open TFRP case in current inventory. If so, TFRP will expedite those case actions and close the case. If there is no open case in TFRP inventory, no case actions are required. Then, the TFRP Liaison will inform MOIC that they can proceed with necessary actions to close the offer.

    3. Initiate closing actions on the account per IRM 5.19.7.3.22 ,Closing an OIC.

  8. When the offer amount is paid in full (TC 788 posted) forward any related Form(s) 3870 to your designated TFRP liaison.

5.19.7.3.10.4  (06-17-2015)
Personal Liability Excise Tax (PLET)

  1. The Personal Liability Excise Tax (PLET) under IRC 4103 is a collection tool used to collect certain unpaid excise taxes from responsible person(s) affiliated with a business reported on Form 720, Quarterly Federal Excise Tax Return.

  2. Excise taxes reported on Form 720 subject to PLET assessment are identified on the return as "IRS Numbers " . The abstract IRS numbers listed below are for fuel taxes:

    • 060 (a) - Diesel, tax on removal at terminal rack.

    • 060 (b) - Diesel, tax on taxable events other than removal at terminal rack.

    • 060 (c) - Diesel, tax on sale or removal of biodiesel mixture (not at terminal rack)

    • 104 - Diesel-water fuel emulsion

    • 105 - Dyed diesel, LUST tax

    • 107 - Dyed Kerosene, LUST tax

    • 119 LUST tax, other exempt removals

    • 35 (a) - Kerosene, tax on removal at terminal rack.

    • 35 (b) - Kerosene, tax on taxable events other than removal at terminal rack

    • 69 - Kerosene for use in aviation

    • 77 - Kerosene for use in commercial aviation (other than foreign trade)

    • 111 - Kerosene for use in aviation, LUST tax on nontaxable uses.

    • 014 - Aviation gasoline

    • 079 - Other fuels

    • 62 (a) - Gasoline, tax on removal at terminal rack.

    • 62 (b) Gasoline, tax on taxable events other than removal at terminal rack

    • 13 - Any liquid fuel used in a fractional ownership program aircraft.

  3. The following IRS Numbers are subject to the PLET for liabilities incurred before January 1, 2005:

    • 078 - Dyed diesel fuel used in certain intercity or local buses

    • 058 - Gasoline removed or entered for production of 10% gasohol

    • 073 - Gasoline removed or entered for production of 7.7% gasohol

    • 074 - Gasoline removed or entered for production of 5.7% gasohol

    • 059 - 10% gasohol

    • 075 - 7.7% gasohol

    • 076 - 5.7% gasohol

  4. Separate documents must be prepared for each tax period and separate assessments for each type of excise tax if the Form 720 contains multiple types of excise tax. It is also possible to make the assessment against more than one responsible person.

  5. Unlike the TFRP which is an assessment of a civil penalty under MFT 55, the PLET is an assessment of the actual unpaid tax and is assessed under TC 150 or TC 290 on NMF. The NMF assessment is made under the individual's SSN on MFT 45 using tax class 6, blocking series 600-619, and Doc Code 30. The literal "Section 4103" appears on the face of the balance due.

    Note:

    When master file programming is completed, assessments of the PLET will be made with the individual's SSN on BMF MFT 03. Prior NMF assessments will be moved to the BMF when programming permits.

  6. When the PLET is assessed at the time we accept an offer from a business, we may still collect from the responsible person(s) any amount not paid by the business.

  7. Therefore, if the tax has been assessed at the time of acceptance, the area office will not request abatement when the offer terms have met.

5.19.7.3.10.5  (06-17-2015)
Bankruptcy Filed After Acceptance of an Offer

  1. Taxpayers may file for bankruptcy relief after an offer has been accepted. The offer should not be defaulted and payment should not be solicited while the taxpayer is in bankruptcy. Defaulting the offer or soliciting payments could violate the bankruptcy automatic stay.

  2. The Insolvency Interface Program searches for Status 71 upon receipt of bankruptcy notification from the courts. When the application identifies Status 71, Insolvency should contact and work cooperatively with the local OIC specialist group or the campus sites to maintain close coordination.

  3. A tax liability is either discharged in bankruptcy or excepted from discharge (non-dischargeable). If the taxpayer receives a discharge of a tax liability, any request for payment by the Service would be a violation of the discharge injunction.

  4. If the tax liability is excepted from discharge, the Service is able to take collection action on any remaining unpaid balance. However, the decision to request payment of unpaid offer balances after the bankruptcy depends on the particular facts of each case and direction provided by Insolvency.

  5. You may learn that the taxpayer filed bankruptcy by:

    1. Notification from the taxpayer or the taxpayer's representative.

    2. Notification from the Insolvency Unit.

    3. Discovery of a posted TC 520.

  6. A posted TC 520 indicates that the taxpayer's account is in bankruptcy, Appeals or is involved in some other type of litigation. The function having jurisdiction is determined by the related closing code. Generally, the bankruptcy closing codes range from 60 to 67 and from 81 to 89. See IRM 5.9, Bankruptcy or Chapter 11 of Document 6209 for additional information.

  7. The freeze indicators used for bankruptcy (-V and -W) affect notices, offsets and refunds depending on the closing code used.

  8. Contact Centralized Insolvency Operation (CIO) at 1-855-740-9781. If the case is not assigned to CIO, the CIO caseworker will refer the caller to the Field Insolvency caseworker assigned to the case and provide the caller with the caseworkers telephone number. Depending on the bankruptcy chapter and status of the OIC, Insolvency will provide the appropriate instruction. The following questions must be asked:

    1. What is the docket number?

    2. What is the bankruptcy chapter the taxpayer has filed under? If Chapter 7, ask if assets are involved. See note in item 9 below.

    3. Is there a bankruptcy plan involved? If so, how long is the taxpayer expected to make payments under the plan?

    4. Are the offer periods included in the proof of claim? (Only applies to Chapter 13 otherwise N/A.)

    5. Should we suspend OIC monitoring or should we continue?

    6. When can we resume monitoring?

    7. Will MOIC be notified of the discharge order and provided with appropriate instructions regarding the offer?

  9. Immediately following your contact with the Insolvency:

    1. Document in the AOIC or manual history file including all information secured.

      Note:

      If the taxpayer has already paid the offer amount and the bankruptcy is a Chapter 7 with no assets, the Tax Examiner may continue monitoring as usual. The offer will only be impacted if the taxpayer has a tax liability assessed while the TC 520 is still on the account or fails to comply with any other terms of the offer. Bankruptcy will then need to be notified to see if collection actions may be taken.

    2. Set a six month follow up for the bankruptcy issue.

      Note:

      A 21-day follow-up to check for full payment is still required if there is a lien on the account.

      Note:

      At the 6 month follow up check IDRS for a TC 520 reversal. If the Insolvency contact states that payments are involved and it will be several years of payments then consider a follow up with Insolvency when the last payment is near. The taxpayer could end the bankruptcy by default due to payments

    3. Update the AOIC status to MB.

    Reminder:

    Always follow Insolvency's direction on whether to close or continue monitoring an offer.

  10. The taxpayer's account should be monitored for discharge:

    If the And Then
    tax liability is fully discharged the offer amount has been full paid and the offer is in 5M status Close the offer and move the offer to CF status.
    tax liability is fully discharged the offer amount has been full paid but not in 5M status 1. Input the offer to 5M status.
    2. Delete all 5M systemic uploads except TC 788 using the XMIT screen.
    3. Input the offer to CF status.
    tax liability is fully discharged the offer amount has not been full paid 1. Input the offer to 5M status.
    2. Delete all 5M systemic uploads except TC 788 using the XMIT screen.
    3. To provide a complete audit trail, do not alter any AOIC screen.
    4. Input the offer to CF status.
    5. Input history documentation on AOIC.
    tax liability is partially discharged (excepted) the offer amount has been full paid and all refund recoupments complete 1. Input the offer to 5M status.
    2. Input the offer to CF status.
    tax liability is partially discharged (excepted and TC 521 has posted) the offer amount has not been full paid Contact the Insolvency Unit to ask if we can resume monitoring terms of the offer. (See below)

    Note:

    When placing an offer in CF status, be sure to remove the OIC indicator.

  11. A full discharge of debt in bankruptcy enjoins the collection of the debt of a personal liability of the debtor. Tax liabilities unpaid at the close of the bankruptcy proceedings must be adjusted, reactivated or reported currently not collectible. However, a partial or excepted discharge allows the remaining liability to be collected according to terms of an accepted OIC.

    If Then
    Insolvency states that we should not resume monitoring 1. Input the offer to 5M status to systemically upload transaction codes to write off the remaining liabilities.
    2. Send Letter 2908 to advise the taxpayer that the offer terms have been fully satisfied.
    3. Input the offer to CF status.
    Insolvency states that we should resume monitoring 1. Change the AOIC status from MO to MX.
    2. Send Letter 2908 to advise the taxpayer that we are reactivating the offer in compromise.
    3. If the offer amount exceeds the tax liability, advise the taxpayer of the adjusted offer amount.
    4. Update the AOIC history to indicate the adjusted amount.
    5. Reactivate the offer; start monitoring for payments at the payment that the offer was placed on hold.

    Note:

    Do not adjust the terms or AOIC screens to maintain a complete audit trail.

5.19.7.3.10.6  (06-17-2015)
Combat Zone

  1. IRC 7508 postpones the time for performing various tax acts for individuals serving in the Armed Forces of the United States, or serving in support of such Armed Forces, in a designated combat zone, or when deployed outside the United States away from the individual's permanent duty station while participating in a contingency operation (as defined in 10 U.S.C. Section 101(a)(13)). See IRM 5.19.10.6.3 , Combat Zone Freeze Code.

  2. The postponement lasts for the period of time the individual serves in, or in support of, the combat zone or contingency operation, plus the period of continuous qualified hospitalization attributable to an injury received while serving in, or in support of, such combat zone or contingency operation, plus another 180 days.

  3. The acts postponed include filing any return of income, estate, gift, employment, or excise tax; payment of any income, estate, gift, employment, or excise tax or any installment thereof; filing certain petition with the Tax Court; filing a refund claim; and bringing a refund suit. The time for performing certain acts performed by the Service are also postponed, including giving or making a notice or demand for payment of tax, collecting by levy or otherwise, assessing any tax, charging any penalty or interest, or taking enforcement activities against individuals during the postponement period. This includes attempts to collect offer payments or instituting potential default actions against individuals with an accepted offer.

    Note:

    If contacted by the taxpayer affected by the combat zone freeze, at their request, any postponement may be overridden at their request.

  4. Because Section 7508 only applies to individuals, the relief does not apply to partnerships or personal service corporations (e.g., doctor, dentist, CPA, etc.) where the key individual is/was serving in the combat zone. Thus, while the Service can make an administrative determination to allow additional time to make a payment or to not default the partnership or personal service corporation, interest and penalties (unless reasonable cause exists) will continue to accrue while such key individual is/was serving in a combat zone or contingency operation. Section 7508 does, however, apply to sole proprietorships because the individual in the sole proprietorship is serving in the combat zone or contingency operation, while the partnership or personal service corporation itself is not serving in the combat zone or contingency operation. Thus, no penalties and interest will accrue against an income tax liability of a sole proprietorship during the postponement period. For purposes of employment and excise liabilities, however, penalties and interest will accrue for payments due before August 25, 2005. Section 403(a) of the Katrina Emergency Relief Act of 2005.

  5. Those serving in support of the Armed Forces in a combat zone include any support personnel on official duty in the combat zone such as Merchant Marines, Department of Defense contractors, Red Cross workers, etc.

  6. Determining whether a taxpayer is entitled to section 7508 relief can be based on correspondence, case history entries or telephone contact.

  7. The following provides instructions for handling taxpayers identified as being entitled to section 7508 relief:

    1. Input TC 500 with the appropriate closing code (CC) for the following combat zones:
      . Input TC 500 CC 52 (entry date) or closing code 53 (exit date) - Desert Storm
      . Input TC 500 CC 54 (entry date) or closing code 55 (exit date) - Bosnia
      . Input TC 500 CC 56 (entry date) or closing code 57 (exit date) - Enduring Iraqi Freedom

      Note:

      See IRM 5.19.10.6.3, Combat Zone Freeze Code in evaluating -C Freeze accounts.

    2. Use the current date for an incoming telephone call or the IRS received date for correspondence when a service member advises of impending deployment to a combat zone.

    3. The case should be suspended for 180 calendar days without taking any further action. Cases can be placed in MO status and a follow-up date entered on AOIC (or IDRS if manually monitored).

    4. Management should use the AOIC Follow up Screen to monitor the progress of the case until the TC 500 is reversed.

    5. If a joint offer and the spouse is willing to maintain terms, monitoring may continue.

    6. The Service established an E-mail site that military personnel, support personnel and their families may use to contact the IRS. It is combatzone@irs.gov .

5.19.7.3.10.7  (01-08-2014)
Death of the Taxpayer While Monitoring the OIC

  1. When the Service receives notification that an OIC taxpayer has died while monitoring an offer, the offer must be defaulted or closed, unless it is a joint offer and there is a surviving spouse.

  2. Record or note the taxpayer's date of death on Form 6314 or on the AOIC history, if available.

    If And Then
    The offer is not full paid and the recoupment has not been completed the liabilities have not been written off 1. Default the offer.
    2. Input TC 540 on the tax year of death and update the name line on CC ENMOD.

    Note:

    If the year of death is on a tax year not yet posted, create a dummy module using CC MFREQD.


    3. Do not send the default letter.
    4. Update AOIC to "CX" corresponding with whichever monitoring status the offer case was in.

    Example:

    Offer was in MP then close using CP, if 5M then C5 etc.


    5. Reverse accruals on IDRS by overlaying CC TXMODA with REQ54, input TC 272 and TC 342 for $.00.
    6. Input TC 781 on each offer module by overlaying CC TXMODA with REQ77, using the date of the default letter and a posting delay of 1.
    7. Reverse TSIGN from 8500 to 0000 by overlaying CC ENMOD with ASGNID.
    8. Input TC 131 on ENMOD to stop refund hold by overlaying CC ENMOD with REQ77.
    9. Remove the OIC indicator. Overlay ENMOD with ENREQ and input 1966 by the OIC year.
    10. Input TC 591/75 for the tax year following the death by using CC FRM 49. The unpaid balance due tax periods will return to open collection status and any federal tax liens will remain in priority.
    The offer is full paid and the account is in 5-Year (5M) compliance monitoring Single assessment (FS1, 3, or 4) and the last legally due return was not filed and or paid 1. Default the offer.
    2. Input TC 540 on the tax year of death and update the name line on CC ENMOD.

    Note:

    If the year of death is on a tax year not yet posted, create a dummy module using CC MFREQD.


    3. Generate but, do not send the default letter.
    Update AOIC to C5 status.
    4. Input TC 480, 780 and 781. Overlay CC TXMODA with REQ77 and input TC 480 and 780 with original dates with a posting delay of 2.
    5. Remove the OIC indicator by overlaying CC ENMOD with CC ENREQ, input 1966 by the OIC year.
    6. Input TC 591/75 on the year following the death using CC FRM 49.
    7. Reinstate the tax liabilities.
    The offer is full paid and the account is in 5-Year (5M) compliance monitoring we know the last legally due return was filed and paid, 1. Close the offer.
    2. Update the case or AOIC history.
    3. Input TC 540 and update the name line on ENMOD.

    Note:

    If the year of death is on a tax year not yet posted, create a dummy module using CC MFREQD.


    4. Update AOIC status to CF.
    5. Remove the OIC indicator by overlaying CC ENMOD with ENREQ and input 1966 by the OIC year.
    6. Verify that TC 788 has posted to all modules.
    7. Input TC 591/75 for the tax year following the year of death using CC FRM 49.
    8. Do not reinstate the tax liabilities.
    9. Do not generate or send the default letter.
    The offer is a full paid joint assessment in 5M compliance monitoring the surviving spouse is not in compliance Follow potential default procedures in IRM 5.19.7.3.19.5 Defaults on Joint Offers Due to Non-Compliance.

    Note:

    In the case of a joint offer if one spouse dies and the other remains compliant with the terms of the offer no action is necessary.

  3. If a copy of the death certificate is submitted and there is a physical file, place the copy in the file and return the original to the submitter. If no case file, annotate the AOIC history and return the original to the submitter.

  4. Terminate the offer as directed above unless the offer was accepted by Appeals or DOJ. If the offer was accepted by Appeals or DOJ:

    1. Record the Date of Death (DOD) on Form 6314 or on AOIC.

    2. Prepare a Form 2209, Courtesy Investigation, to request a determination to either keep the offer open or to close the offer without reinstating the liability.

    3. Provide your information source in the "Remarks" section.

    4. Send Form 2209 to the Appeals office that accepted the offer or Area Office where the original DOJ case is on file.

    5. Update AOIC to "OI" status, if the account is on AOIC.

    6. Update IDRS control to reflect Form 2209 issued to Appeals/DOJ, if the account is not on AOIC.

      Note:

      Ex parte communication rules prohibit attempts to influence Appeals. Do not include in the Form 2209 or its attachments any statements directing Appeals to make a particular determination in the death of the taxpayer case.

  5. If Appeals requests the case file, send the case file via Form 3210. Place Form 2275, Records Request, Charge and Recharge, in the suspense file. Request the case file if it was previously sent to FRC.

  6. Upon receipt of Form 2209 response, with or without the case file, follow the directed disposition.

5.19.7.3.10.8  (01-08-2014)
Disaster Relief for OIC Taxpayers

  1. Section 7508A provides the IRS with authority to postpone the time for performing various acts for a taxpayer affected by a federally declared disaster. These acts include, but are not limited: to the filing of certain tax returns; the payment of certain taxes (including any installment of these taxes); the filing of a Tax Court petition; the filing of a claim for credit or refund of tax; and the bringing of a refund suit. See IRC 7508(a) and 7508A(a) and Treasury Regulation 301.7508A-1(c)(1).

  2. Taxpayers identified by the IRS as "affected taxpayers" are eligible for the relief stated in (1) above. These affected taxpayers include any individual whose principal residence, and any business entity whose principal place of business, is located in county, or parish identified as being part of a "covered disaster area" by the IRS.

  3. OIC taxpayers may contact the Taxpayer Advocate Service (TAS) or MOIC stating that they have suffered a disaster, such as a fire, or flood that prevents timely mailing of a payment, return, or other information. Taxpayers should be allowed a reasonable amount of time to adhere to the offer terms. No relief from interest is available unless the disaster is a federally declared disaster, and then only for current year taxes.

    Note:

    Disasters affecting the taxpayer's representative generally would not apply since the taxpayer has the responsibility to maintain terms of the offer. The only exception might be in a federally declared disaster where the representative is located in the covered disaster area and the representative maintains the taxpayer's books and records necessary to meet a filing or payment deadline. In such a circumstance, the taxpayer is considered to be an affected taxpayer.

5.19.7.3.10.9  (01-08-2014)
Non Master File (NMF) Accounts

  1. Non-Master File (NMF) was centralized on September 26, 2006, in Cincinnati (CSPC). All new assessments and/or documents to establish accounts on NMF must be sent to CSPC.

  2. The following NMF account types are established at the Cincinnati Campus:

    • Business Master File (BMF)

    • Internal Revenue Service Closing Agreements

    • Form 7804(c), Embezzlement Cases

    • Form 1120 DISC and 1120 IC-DISC

    • Full Collection Child Support

    • Form CT-2, Employee representative Quarterly Railroad Retirement Tax Returns

    • Individual Master File (IMF)

    • International Returns BMF

    • IRC 6702 Frivolous Income Tax Return Penalty

  3. To find the contact go to SERP, Who/Where, Accounts Management and Accounting Point of Contact, see the Accounting and Cincinnati contact listed.

5.19.7.3.10.10  (01-08-2014)
CAWR Assessments

  1. The IRS CAWR (Combined Annual Wage Reporting) program ensures that employers have paid the proper amount of taxes, withholding, and advanced earned income credit. This is done by comparing the Forms W-3, W-2, W-3C, W-2C totals and the Form 1099-R and W-2G withholding amounts to the amounts reported on the employment tax returns.

  2. The SSA-CAWR program addresses apparent "missing" Forms W-2. These cases are referred to IRS by SSA (Social Security Administration) for follow-up and, if necessary, to make penalty assessments for failure to file.

  3. Cases that are determined to have discrepancies or that are referred by SSA, are loaded onto the CAP (CAWR Automated Program) Tier II SUN at TCC. CAP is a stand alone computer (inventory) application that houses the CAWR programs. All master file actions that affect the taxpayer's account for the years being worked will result in an update to the CAP system. This includes Entity changes, IDRS adjustments and additional Forms W-3, Transmittal of Wage and Tax Statement, and Forms W-2, Wage and Tax Statement, processing by the SSA.

  4. BMF taxpayers identified during processing CAWR may have pending or accepted offers on file with IRS. Additional assessments can be made while the offer is pending but, not after the offer is accepted.

  5. If a TC 780 or TC 788 is on the BMF tax modules, CAWR examiners will forward CAWR CAP documents (Money Screen and Entity Screen) to be associated with the OIC case file.

    Note:

    If the offer file is located at the FRC, create a dummy file to hold the CAWR documents.

  6. Make a note in the history on AOIC or manually monitored file that the CAWR assessments documents have been placed in the case file or a dummy file has been created.

    If Then
    The taxpayer defaults As part of the default process:
    1. Return the documents to CAWR for assessment determination if the tax year is within two years of the current year.
    2. If more than two years, destroy the documents.
    The taxpayer meets all terms of the offer 1. Close the offer. (If the CAWR assessment documents are in the case file, they will remain in the closed case file.)
    2. If in a dummy file, destroy the documents. (No additional assessment will be made.)
  7. In accordance with IRC 6721,a penalty for "intentional disregard" systemically generates for CAWR assessed tax periods. Because the CAP system does not recognize Status 71 on an OIC entity, the penalty assessment will generate and is established under MFT 13.

  8. When this penalty generates following acceptance of an offer:

    If Then
    assessed on any offer tax period the penalty must be abated
    assessed on a non-offer tax period 1. Follow potential default procedures IRM 5.19.7.3.19.4 Failure to Adhere to Compliance Terms.

5.19.7.3.10.11  (01-08-2014)
Automated Underreporter (AUR) Assessments

  1. The Automated Underreporter Program identifies taxpayers who have not reported all of the income on a filed income tax return. The program compares the total amount from all income reporting documents such as Form W-2, Form 1099s, etc. to the amount shown on the filed income tax return.

  2. When an accepted OIC transferred into CSCO's inventory by updating to a MX status on AOIC, a TC 780 (-Y freeze) is generated on IDRS. Input of the TC 780 freezes the tax module and causes attempts to input subsequent underreporter adjustments to unpost.

  3. The Offer Examiner or Offer Specialist must review IDRS before inputting TC780 because AUR issues must be resolved before transferring an accepted OIC into CSCO's inventory.

  4. TC 922 with process code 03 or 06 indicates that AUR has selected the taxpayer's return for processing.

    Note:

    TC 922 without a process code means the return has not been selected. If there is no process code or process code 03 or 06 is the only process code, TC 780 can be input without contacting AUR.

  5. If a TC 922 is present followed by one of the following closure process codes (process codes are shown to the right of TC 922), TC 780 can be input without contacting AUR.

    If Then
    TC 922 is not followed by a process code 1. The case can be transferred to CSCO on AOIC without contacting AUR, if all other review conditions are met.
    2. For manually monitored cases input TC 780 using CC REQ77 without contacting AUR.
    TC 922 is present and followed by one of the following closure process codes:
    10 through 18
    20 through 29
    35 through 53
    61 through 69
    70 through 74 and 76
    80
    82 through 89
    90 through 94
    96
    1. The case can be transferred to CSCO on AOIC, if all other review conditions are meet.
    2. For manually monitored cases input TC 780 using CC REQ77 without contacting AUR.
    TC 922 is present and has a process code other than those shown above 1. Contact AUR Branch to advise that an OIC has been accepted and AUR should close their case. (A list of AUR Coordinator contacts is on SERP.)
    2. Wait 2 cycles for the closure process to post.
    3. Cases on AOIC: Transfer the case to CSCO on AOIC, if all other review conditions are meet.
    4. For manually monitored cases input TC 780 using CC REQ77.

    Note:

    If TC 780 has been input before AUR closes the case, TC 290 .00, using Blocking Series 8XX must be input. Blocking Series 800 is restricted to Collection.

5.19.7.3.10.12  (01-08-2014)
Acceptance of a DATL offer

  1. A DATL offer is filed on Form 656-L and will only be accepted for the tax period (s) in question.

    Note:

    All modules with a balance owed by the taxpayer may not be included in the offer. Compliance is not a requirement for the acceptance of a DATL offer.

  2. No deposit or application fee is required for a doubt as to liability offer.

  3. DATL accepted offers are not monitored for the 5 year payment and filing compliance.

5.19.7.3.10.13  (01-08-2014)
Amended Returns After Acceptance

  1. Taxpayers may attempt to amend a return for a tax period(s) included on the offer, however, once the tax period has been compromised, changes cannot be made to the amount assessed.

  2. If an amended return is received for an offer period return the original form, and remittances (if submitted with the amended return), to the taxpayer with a letter advising that we can not process an amended return on a tax period included in an accepted offer.

  3. If the offer is being monitored with a physical case file make a copy for the file.

  4. Update the AOIC or case file history.

5.19.7.3.10.14  (01-08-2014)
Rescission of an Accepted Offer

  1. During the 5-year compliance monitoring period of an accepted offer, a determination to terminate or rescind an existing compromise agreement may need to be made.

  2. An offer is an agreement which is binding and conclusive on both the taxpayer and the government, and prohibits further action on periods related to the offer unless fraud or a mutual mistake is identified.

  3. Requests regarding rescission of accepted offers are routed to the MOIC area from COIC, the Area offices, Appeals or Counsel. MOIC will take the following action to return the original offer file to the originator as required:

    1. Use AOIC to determine who the originator of the accepted offer was and advise them of the call/contact.

    2. If the offer file is immediately available, MOIC will forward it to the originator on Form 3210 and annotate AOIC or the case file if the offer is manually monitored.

    3. If the offer has been shipped to FRC, MOIC will request the file, forward it to the originator on Form 3210 when received and annotate AOIC or the case file.

    4. The originator will prepare the appropriate letter(s), secure required approval and place a copy of the letter(s) in the case file.

    5. The originator will return the accepted offer file to MOIC via Form 3210 and provide guidance regarding any necessary changes to AOIC and/or IDRS as a result of the rescission.

    6. MOIC will take the required actions, document AOIC as appropriate and return the case file to the FRC.

5.19.7.3.11  (05-06-2014)
OIC Case Maintenance and Inventory Control

  1. The AOIC program provides a report feature to monitor and maintain control of offer inventories, titled the "Employee Inventory Report " . This report should be used to generate a periodic list of all offers in the same status for a certain period of time.

  2. Procedures for accessing the listings/reports are included in the AOIC User Guide.

  3. Offers with a "L" Process Definer code (usually ML status) are required to be reviewed for full payment of the offer every 21 days. This is to ensure the timely release of all liens.

  4. Two of the most important listings are the Journal Payment Due Date List and Follow Up List. The Journal Payment Due Date List must be generated monthly to determine a missed payment.

  5. If a payment is missed or another offer term is not being met, the follow up listing must be used to monitor your attempts to get the taxpayer back into compliance.

  6. Doubt as to Liability offers are not subject to the 5-year compliance monitoring.

  7. In order to assist with OIC case maintenance, the following established schedule for generation of Eureka/DAE reports will be upheld. All related case actions will be completed within 60 days of receipt of the reports:

    • Liens - March 15th and October 15th

    • Refund Recoupments - May 30th and November 30th

    • Compliance - November 15th

    • Aged 5M - January 15th, April 15th, August 15th and December 10th.

    Note:

    Eureka/DAE reports can only verify IMF module information.

5.19.7.3.12  (01-08-2014)
OIC Deposits

  1. Remittances received with an incoming Form 656 that exceed the required amounts, application fee, and initial payment, are considered deposits. Deposits may be received when the offer is submitted, while the offer is pending, or both.

    Note:

    Deposits are not required or necessary for consideration of an OIC.

  2. Deposits received with new or pending OICs are not applied to the taxpayer's liability. See IRM 5.8.9.2, Rescission of Accepted Offers, for further explanation about rescinding an offer.

  3. Deposits are held in a Special Deposit Fund (4710 Account), a non-interest bearing account in Revenue Accounting. Deposits received in Appeals for CDP cases and Examination for Doubt as to Liability OICs will be forwarded to Receipt and Control (R&C) via Form 2515 with notification to the monitoring unit.

  4. All remittances must remain within Receipt and Control's (R&C) secured area.

  5. If a deposit is received while an offer is pending in a Area Office, field personnel must prepare Forms 2515 and Form 3244, then forward the deposit to Cincinnati via overnight express indicating in which 4710 RACS Account the deposit should be placed in. The MOIC state mapping determine's which account the money should be deposited.

  6. Deposits must be processed timely in accordance with IRC 7809(b), which requires a deposit fund account for sums offered to compromise an assessed tax liability.

5.19.7.3.12.1  (01-08-2014)
Processing Deposits on AOIC

  1. Update AOIC with the deposit information from the Form 2515, Form 656, or other documentation. Follow procedures in the Compliance Services AOIC User Guide, Chapter 3.

  2. After the deposit information has been input, generate the Form 3244 CG from AOIC.

  3. Route a copy of the Form 2515 and generated AOIC forms to the RACs Unit through Receipt & Control (R&C), R &C will forward Form 2515 to RACS in Accounting. The remittance will be deposited by R &C.

5.19.7.3.12.2  (01-08-2014)
Processing Deposits on Manually Monitored Cases

  1. Deposits made on offers not controlled by the AOIC program must be processed manually.

  2. Manually processed deposits must be assigned an 8 or 10-digit RACS control number. This number may be created by RACS or the OIC Unit.

    1. Assign one RACS number per offer. If multiple deposits are received on an offer, all deposits will use the same RACS number.

    2. Maintain a log of manually assigned RACS numbers.

  3. Research the RACS Report Control File and determine if a previous remittance was recorded as a deposit for the OIC taxpayer.

    If Then
    The remittance is the initial deposit 1. Assign a RACS control number.
    2. Make a copy of the Form 2515 for RACS (the original form is maintained in the 4710 Account File).
    3. Prepare Form 3244. Enter in the remarks box, ''OIC Pending, Apply to 20X6879 (4710 Account) and show the RACS control number in the lower left corner.
    The remittance is a subsequent deposit 1. Pull the original Form 2515 from the 4710 Account File.
    2. Record the amount and date of the subsequent payment (deposit) on the Form 2515.
    3. Make a copy of the Form 2515.
    4. Re-file the original Form 2515.
    5. Prepare Form 3244,, enter in the remarks box. ''OIC Pending, Apply to 20X6879 (4710 Account) and show the RACS control number in the lower left corner. (Use the same RACS control number that was used for the initial deposit.)
  4. For both initial and subsequent deposits, route the copy of Form 2515 and Form 3244 to the RACS Unit in Cincinnati Accounting. The remittance will be deposited through R & C.

  5. Form 3244 will be returned by Accounting with a journal number and date.

  6. Associate and attach the Form 3244 to the Form 2515 in the 4710 Account File.

  7. Maintain the Form 2515 until the remittance has been either applied or refunded and the 4710 account cleared of the funds.

5.19.7.3.12.3  (01-08-2014)
Disposition of OIC Deposits

  1. When the offer investigation is completed and a determination has been made, deposits in the 4710 Account must be refunded to the taxpayer or applied to the tax liability.

  2. Deposits on accepted offers will be applied to the taxpayer's liability.

  3. Deposits on withdrawn, rejected or returned offers will be refunded to the taxpayer by completing Form 3753, Manual Refund Posting Voucher, unless the taxpayer has provided a written statement or signed Form 3040, Authorization to Apply OIC Deposit to Liability, authorizing the Service to transfer the deposit to the tax liability. This authorization can be secured at anytime during or following the investigation.

    Note:

    The 4710 Account is a non-interest bearing account. Therefore, refunds never include interest.

  4. Although IRM 21.4.4-2, Manual Refund Checklist, instructs employees requesting manual refunds to contact the Financial Management System (FMS), it is not necessary for refunds from the 4710 RACS Account.

5.19.7.3.12.4  (01-08-2014)
Deposit Dispositions for Offers on AOIC

  1. Take the following actions to process deposits through AOIC. (Refer to the AOIC User's Guide, Chapter 3.)

  2. Print the AOIC Offer Deposit Disposition Listing monthly. This listing identifies withdrawn, rejected and returned offers and also indicates the type of disposition. (A=Applied/R=Refund.)

    If the listing Then
    indicates "A" Complete the following actions to apply the deposit to the taxpayer's liability:
    1. On AOIC, use the "Apply" option from the Deposit RACS Screen to generate Form 2424CG.
    2. Verify the taxpayer's address and update if necessary.
    3. Highlight the word "Debit" on the debit copy with a blue marker.
    4. Highlight the word "Credit" on the credit copy with a pink marker.
    5. Attach the source documents. (If an accepted offer, a copy of the acceptance letter. If a withdrawn, rejected, or returned offer, a copy of the Form 3040, Authorization to Apply OIC Deposit to Liability, or a written, statement signed by the taxpayer.)
    6. Route Form 2424CG with appropriate documentation to the RACS Unit to Accounting.
    indicates "R" Note:IRC Section 7809(b) requires deposits to be returned to the maker of a rejected offer. This includes deposits made by a third party. Complete the following actions to refund the deposit to the taxpayer:
    1. Prepare Form 3753. Manual Refund Posting voucher.
    2. Verify the taxpayer's address and update if necessary. Attach a copy of ENMOD.
    3. Attach a copy of the 4710 page that indicates the offer number and amount.
    4. Route the original Form 3753 (with management approval) to the RACS Unit in Accounting.
  3. All monitoring units must apply or refund deposits controlled by their sites.

  4. Although OIC deposits submitted with incoming offers may be physically located in the RACS accounts at another campus, each campus is responsible for the deposit disposition for the states serviced by their site.

    Note:

    Memphis and Brookhaven will apply or refund deposits related to their monitoring inventory only.

  5. When disposing of AOIC offers with deposits residing in the RACS Unit of another campus:

    If Then
    Applying the deposit: 1. Generate and print Form 2424 from AOIC.
    2. Fax the request to the RACS Unit where the deposit resides.
    3. Make a history note on AOIC.
    Refunding the deposit: 1. Prepare Form 3753.
    2. Sort and batch all manual refund requests.
    3. Contact the receiving campus(es) (OIC Unit) to notify requests have been prepared.
    4. Mail to receiving campus OIC Unit.
    Receiving requests for a manual refund ( Forms 3753) 1. Each Form 3753 received from the sending campus must be signed by local management. Note: Each campus RACS maintains a Form 14031, Manual Refund Signature Authorization.
    2. Forward or route to RACS unit.
  6. When a request to refund a deposit is made and it is not on the deposit disposition list, secure written evidence that this is what the taxpayer wants from the requestor (Area, COIC, etc.). R &C requires a source document when refunding deposits.

  7. The Area Office, Exam or Appeals will provide disposition instructions for manually monitored offers when the offer is rejected, withdrawn or returned. If the Area Office does not specify what should be done or does not provide the required documentation, refund the deposit.

5.19.7.3.12.5  (01-08-2014)
Deposit Dispositions for Manually Monitored OICs

  1. Deposits are recorded on Form 2515 and Form 6313 for manually monitored cases. When the manual control card, Form 2515 or Form 656 indicates the taxpayer made a deposit(s):

    1. Check the 4710 Account file and/or the 4710 Monthly report to be sure a credit is available.

    2. Add any additional deposit amounts to Form 2515.

    3. Record transfer of the deposit on Form 2515 (enter the amount and periods where the deposit was applied) to zero out the credit.

    4. Once RACS deposits post secure an INTST print to the date of acceptance to compute the amount(s) to be applied on each period affected by the deposit.

    5. Annotate the 4710 Account list indicating the date, amount and tax examiner making the transfer of the funds to master file.

    6. Re-file Form 2515 in 4710 Account file.

    7. After reconciliation, file Form 2515 in the case file.

  2. Apply the deposit as follows:

    If the deposit is... Then
    to be applied to the taxpayer's liability 1. Prepare Form 2424, Account Adjustment Applied Voucher.
    2. Use the received date of the deposit as the received date of the payment.
    3. Attach the source document. ( Form 3040 or written statement signed by the taxpayer.)
    4. Route or fax Form 2424 with documentation attached to the RACS Unit in Accounting where the deposit is located.
    to be refunded to the taxpayer

    Note:

    IRC Section 7809(b) requires deposits to be returned to the maker of a rejected offer. (This includes deposits made by a third party.)

    1. Prepare Form 3753, Manual Refund Posting Voucher.
    2. Attach the source document (copy of Form 1271 (if available), Rejection, Returned or Withdrawn memorandum).
    3. Attach a copy of ENMOD.
    4. Attach a copy of the 4710 page that indicates the offer number and amount.
    5. Route Form 3753 with attachments to the RACS Unit in Accounting where the deposit is located.
  3. For applying deposits to ANMF tax periods:

    1. Research the ANMF account via AMS or ANMF, if available.

    2. Attach an ANMF print for each applicable period to the Form 2424.

    3. Apply amounts to the oldest CSED on the NMF 1300 Account first.

    4. Mail the form with attachments to the appropriate NMF site.

  4. After month-end reconciliation with Accounting, Form 2515 will remain with the open file until the deposit is either refunded or applied to the taxpayer's liability.

5.19.7.3.12.6  (01-08-2014)
4710 Account Reconciliation

  1. On the 3rd workday of each month the RACS Accounting function closes the 4710 Account activity for the month and forwards the Offers in Compromise Inventory Detail Report showing all OIC deposits in the 4710 Account to Brookhaven and Memphis. The OIC unit at each site must reconcile the OIC deposits with the general ledger balance.

  2. Upon receipt of the RACS report from the RACS 4710 Account Coordinator, an MOIC tax examiner generates a Deposits (RACS) Open Balance Report (selection A on the AOIC Reports menu) to reconcile balance amounts.

  3. The "manual" RACS Report Control File must also be pulled to verify that all credits and debits for the month have been recorded for manually monitored offers.

  4. The MOIC tax examiner must compare the two reports and research all deposits that do not match.

  5. Copies of the following documents that will impact the 4710 account should be routed, on a daily basis, to the designated MOIC employee responsible for reconciling the account:

    • Form 3753

    • Form 2424

    • Bad Check notification

    • Form 2515

  6. If a payment does not appear on both Accounting's report and AOIC/Manual RACS report, take the following actions:

    1. Research to determine where the deposit was applied and the appropriate application.

    2. Determine if the deposit was placed in the 4710 Account using an incorrect RACs number, refunded to the taxpayer or applied to a tax liability.

    3. Contact Accounting and take the appropriate actions to reconcile accounts (submit Form 2424 or Form 3753, etc.).

  7. If the deposit is on AOIC but not listed on the 4710 Account Report:

    If And Then
    The deposit is missing for less than 30 days   Consider the amount reconciled (Accounting has probably not yet posted the amount to the RACS account.)
    The missing deposit is over 30 days the offer is pending 1. Research the AOIC history to verify there was deposit made with the offer.
    2. Call Cincinnati RACS to determine if the deposit is in the 4710 Account.
    3. If the deposit has posted to the account considered the amount reconciled.
    4. If the deposit has not posted to the account; follow the steps below in (8).
  8. Research IDRS to see if the payment was applied to the tax liability.

    If Then
    Found on IDRS Prepare Form 2424 to journal the deposit to the 4710 Account.
    Not found on IDRS Research for a related offer.
    A related offer is found 1. Determine by reading the history if a deposit was received and posted.
    2. Contact RO or OE if unable to make a determination.
  9. If the deposit is not on AOIC but is on the 4710 Account Report:

    If And Then
    The missing deposit is less than 30 days   Consider the amount reconciled. (Accounting has not yet forwarded documentation to MOIC for journalizing AOIC.)
    The missing deposit is over 30 days the offer is not on AOIC 1. Research the history on DI, ICS and IDRS to determine if this is a manually monitored offer.
    2. If so, contact the person assigned the offer investigation for instruction.
    3. If a DATL offer, the research must be forwarded to the Special Case Unit with a monthly follow up until the deposit is disposed.
    The missing deposit is over 30 days the offer is pending on AOIC, but the deposit is not on the Deposit Screen 1. Call Cincinnati RACS for documentation to support the amount shown on the 4710 Report.
    2. When documentation received post deposit on to AOIC.
    Offer has been accepted assigned to a tax examiner Contact the tax examiner to have the deposit applied to the tax liability
    Offer has been rejected, returned or withdrawn   Contact the RO or OE to determine if the deposit should be applied or refunded.
    The deposit RACS number (also the AOIC number) is not on AOIC   Research the TIN, DI and related numbers
  10. As of April 1, 2005, COIC payments may be processed through the Paper Check Conversion System (PCC) at Brookhaven and Memphis. PCC is a process for converting checks into electronic fund transfers. There will not be a paper check if it is processed through PCC.

5.19.7.3.12.7  (01-08-2014)
Undelivered or Uncashed Deposit Refunds

  1. Refunds issued to the taxpayer may be redeposited into the 4710 Account for two reasons:

    • The refund check was returned as undelivered mail.

    • The refund check was not cashed within one year of the issue date.

  2. If the refund check was undelivered, research for a new address.

    If Then
    A new address is found Using the procedures in IRM 5.19.7.3.19.6, Undelivered Potential Default Letter, reissue the refund check.
    A new address is not found The returned deposit must remain in the 4710 Account pursuant to Section 7809 (b)of the Internal Revenue Code.

5.19.7.3.12.8  (01-08-2014)
Deposits with Insufficient Funds

  1. Accounting will notify the OIC Unit when a deposit made by check was returned due to insufficient funds.

  2. A correction should be made to the Deposit RACS screen.

  3. If the deposit is located at your campus and the account is controlled by another campus, notify the other site that the deposit on their records must be reversed due to insufficient funds.

5.19.7.3.13  (06-17-2015)
Applying Payments on Accepted OICs

  1. OIC units at the compliance campuses monitor offer payments based on the offer terms agreed upon at the time of acceptance.

  2. Service policy directs that remittances remain in a secured area. Therefore, in accordance with Service policy, payments received at the Fresno campus are processed by Receipt & Control (R&C) employees who have access to AOIC and are able to research to which module to apply the payment.

  3. Payments processed by Receipt and Control must be timely input through the AOIC system. Action on the offer case should be taken within 30 days of posting on IDRS. This includes payment transfers for misapplied payments and payment tracers for posted but missing payments.

    Note:

    If there is a lien on the account the maximum number of days for the follow-up can not exceed 21 days in order to meet the requirement for timely lien release within 30 days of the final payment

  4. Payments are applied in the best interests of the Government, usually this is the earliest Collection Statute Expiration Date (CSED), not always the earliest tax period. See Section 3 of Rev. Proc. 2002-26. 2002-1 C.B. 746. See also IRM 5.19.10.4.4,Determining the Correct CSED .

    Note:

    If the total offer payments exceed the existing balances on the accepted offer tax modules, determine accruals computed to the acceptance date of the offer, and assess the accruals to the account.When performing a manual calculation of interest follow procedure in IRM 20.2.8.3 (5) (a)

  5. When a payment is received on an accepted OIC, determine which module has the earliest CSED. Use the table in IRM 5.19.7.3.6, Extension of the Statutory Period for Collection , as a guide to determine CSED suspension periods.

    Note:

    If two modules with the same MFT have the same CSED, apply in the order listed on the MFT screen in AOIC.

    Caution:

    When applying a payment to modules with multiple assessments check CC IMFOLT for the CSED (FIRST, LAST, NEXT) and if a CSED is expired, refer the case per Who/Where-CSED referrals campus to statute clear the expired assessment per IRM 5.19.10.4.3.

  6. When moving a credit from one module to another, a TC 470 with no holding code must be input on the module that a credit is bring moved from to stop notices from generating. A follow up should be entered on AOIC to put the module back into ST71.

  7. If the CSED has expired on all the periods compromised by an offer:

    1. Return or refund any subsequent installment payment received after expiration of the CSED.

    2. Send a letter to the taxpayer indicating that the offer has been fully satisfied and no additional payments are necessary due to expiration of the collection period.

    3. Do not make changes to any AOIC screens.

    4. Update the AOIC history.

    5. Close and place the offer in AOIC "CF" status.

  8. Prepare Form 3244 to apply payments.

    1. Use TC 670 with DPC 09 to indicate OIC.

    2. Use the date the payment was received as the transaction date.

    3. For zero balance periods, use TC 570, .00 as secondary code.

  9. Occasionally acceptance letters from the Area Offices, Appeals, Exam or COIC may direct taxpayers to send their offer payment to the wrong monitoring site. When this occurs:

    1. Prepare Form 3244 to process the payment.

    2. Advise the taxpayer that future contacts, payments, or correspondence should be made to the appropriate site. (Provide the site, address and contact name.)

    3. Update the AOIC History.

  10. If there are MFT 30 and MFT 31 accounts for the same tax period due to an innocent spouse claim, payments made by the OIC taxpayer should be applied to the MFT 31 account first.

  11. Monitor the account on IDRS to verify the payment has posted to the non-offer mirrored assessment.

  12. Calculate the remaining balance.

  13. Overpayments of $1.00 or more must be refunded to the taxpayer.

    Note:

    If taxpayer request a refund of less then $1.00 please see IRM 21.4.4.2.1 for procedures

  14. Refund recoupments are not considered offer payments. The credit is, however, applied in the same manner as the offer payment.

  15. Lien units receiving requests for payoffs from taxpayers with an accepted OIC will be referred to MOIC.

5.19.7.3.13.1  (01-08-2014)
Application of OIC Payments on All BMF OICs

  1. ) By signing Form 656, taxpayers agree to Section 3.03(2) of Revenue Procedure 2002-26 which calls for payment application to periods in the order of priority that the Service determines will serve its best interest. The payment will be applied to satisfy the liability for successive periods in descending order of priority until the payment is absorbed.

  2. If the following corporate liabilities are included in the offer, apply OIC payments in the following descending order:

    1. to all Forms 1120 (regardless of CSED).

    2. to all Forms 940 (regardless of CSED).

    3. to the unpaid portions of all Forms 941 periods in earliest CSED order as follows:

      1. non-trust fund portion of tax (employer's share of FICA)

      2. trust fund portion of tax (withholding and employee's share of FICA)

      3. assessed fees and collection costs

      4. assessed penalty

      5. assessed interest

      6. accrued penalty to date of payment

      7. accrued interest to date of payment

5.19.7.3.13.2  (01-08-2014)
Payments on Expired Liabilities

  1. If a taxpayer wishes to make a voluntary payment on a liability with an expired CSED, the payment should be accepted and the taxpayer should be asked to sign a statement indicating that they are aware collection of the tax is barred and the payment will not be credited to a specific liability.

  2. Attach the statement to the payment posting document and process the payment through normal remittance processing. The payment should be applied to Excess Collections.

  3. Do not treat these payments as offer payments.

5.19.7.3.13.3  (01-08-2014)
Processing Payments on AOIC

  1. Check the AOIC Balance (Liability) screen to determine if the payment will full pay the period with the oldest CSED date. If it will, update the balance.

  2. Go to the Journal (payments) screen to generate and print Form 3244CG (AOIC). AOIC applies the payment posting rule systemically.

  3. Refer to Chapter 6 of the AOIC User's Guide.

  4. For offers accepted prior to January 1, 2000, continue to accrue interest per The IRS Restructuring and Reform Act of 1998,( IRM 5.19.7.3.13.8, Interest). The Service has made a policy decision not to compute accruals unless the taxpayer defaults.

  5. If interest computation becomes necessary, the affected modules must reflect correct balances and payment application.

  6. Payments should be applied to these and all other offers based on the balance due amount shown on the INTST prints and updated when the offer was first received into inventory.

5.19.7.3.13.4  (01-08-2014)
Processing Payments Manually

  1. Analyze tax periods being monitored to determine to which period the payment should be applied. This may have been done when the case was initially processed.

  2. Prepare Form 3244 to process the payment. Along with taxpayer entity information Form 3244 should include:

    1. TC 670 with DPC 09 to indicate OIC.

    2. The date of the payment for the transaction date.

    3. TC 570 with 00 as a secondary code for zero balance periods.

  3. Record the payment on Form 6314, Deferred Payment Offer Payment Record.

  4. Payments erroneously applied to IDRS must be moved to NMF with Form 2424.

  5. If the 5 year compliance terms have been met when the final deferred payment is received, use procedures outlined in IRM 5.19.7.3.22, Closing an OIC.

5.19.7.3.13.5  (01-08-2014)
Applying Payments on NMF Accounts

  1. If the tax period(s) is on NMF, the centralized ANMF databases should be accessed.

    1. Use DI or ANMF to verify the payment has been posted and the NMF account and the balance is correct.

    2. Notate on Form 6314, OIC Deferred Payment Record "Verified with NMF" .

  2. ANMF was centralized in Cincinnati on September 26, 2006. All NMF processing is now completed in Cincinnati.

  3. On AOIC or Form 6314, record payments and calculate the remaining balance.

  4. When the final deferred payment is applied to an NMF account:

    1. Review the NMF account.

    2. Attach an ANMF print for the applicable period to the Form 2424.

    3. Apply the final amount to the oldest CSED on the NMF 1300 Account first. Apply payments in the following order; first to tax, second to penalties, interest last.

    4. Abate all remaining liability by reversing the individual transactions and posting a TC 788 on each NMF account covered by the offer.

    5. Mail the form with attachments to the Cincinnati NMF site.

  5. Overpayments of $1.00 or more must be refunded to the taxpayer.

5.19.7.3.13.6  (06-17-2015)
Releasing Continuous Wage Levies

  1. Occasionally the investigating individual overlooks the release of a continuous wage levy.

  2. When this occurs:

    1. Research for the levy source.

    2. Prepare a levy release, Form 668-D.

    3. Obtain authorizing signature i.e, campus revenue officer or follow local procedures.

    4. Mail the release to employer.

    5. Send a letter to the taxpayer regarding the levy release. Insert the text in the note below in an open paragraph of AOIC Letter 2908.

      Note:

      Our records show that there is a levy on your account. This levy needs to be released; a copy of the Form 668–D, Release of Levy/Release of Property from Levy, is attached for your records. We are processing your levy release and it should be effective within 30 days.

    6. Keep a copy of the letters in a file until the offer is closed.

      Note:

      Levy payments received after the TC 780 date are to be refunded to the taxpayer or, at the taxpayer's request, applied to the offer amount..

5.19.7.3.13.7  (01-08-2014)
Cross-Referencing TFRP Payments

  1. The investigating function should guarantee that all TFRP payments made prior to acceptance have been cross-referenced, thus the offer taxpayer's TFRP assessment will show the correct balance due.

  2. Accepting an offer from the employer, or one or more of the responsible officers, does not change the policy that the tax is to be collected only once. All payments should be cross-referenced as they normally would be as if there were no OIC. The TFRP Units will cross-reference OIC payments to the related TFRP accounts. TFRP transcripts will not be forwarded to MOIC.

  3. For one offer filed jointly by husband and wife with identical TFRP assessments, apply OIC payments to the primary taxpayer. A TFRP transcript will issue so the payment will be cross referenced by the TFRP Units to the secondary and related accounts. When all terms are met, both TFRP assessment accounts will be compromised. See IRM 5.19.7.3.13.8, Interest, for IRS policy regarding computation of accruals.

  4. When the offer is full paid, see IRM 5.19.7.3.10.3, Trust Fund Recovery Penalty (TFRP) Cases, for detailed closing requirements.

5.19.7.3.13.8  (06-17-2015)
Interest

  1. For all OICs accepted after December 31, 1999, future interest will also be compromised. Therefore, no interest will accrue on the unpaid balance of an accepted compromise.

  2. If an OIC has an acceptance date prior to January 1, 2000, interest continues to accrue from the date the Service accepts the offer until the amount offered is completely paid.

    Note:

    An offer on an offer using the revised Form 656 (Rev.01–2015) will retain the original Form 656 waiver and interest provisions even though the form is submitted after January 1, 2000.

  3. Compute interest using CC COMPA or the Automated Computation Tool (ACT). Use the Accrued Interest Amount from Form 2515 or AOIC.

    If Then
    Total interest is less than ≡ ≡ 1. Do not assess the interest or contact the taxpayer.
    2. Close the case file. IRM 5.19.7.3.22, Closing an OIC.
    Total interest is more than ≡ ≡ ≡ ≡ AOIC:
    1. Send Letter 277SC/CG.
    2. Enter follow-up date. (Date letter was generated plus 45 days.)
    3. Update status to "MI" .
    Manually monitored cases:
    1. Send Letter 277C.
    2. Update IDRS control.
    3. Suspense for 45 days.
  4. Process taxpayer responses as follows.

    If Then
    The taxpayer makes full payment, 1. Assess the interest using CC REQ54.
    Prepare Form 3244 to post the interest payment using TC 680. When performing a manual calculation of interest follow procedure in IRM 20.2.8.3(5)(a)
    The taxpayer requests an extension of time to pay, Follow procedures in IRM 5.19.7.3.19.2 , Extension of Time to Remit OIC Payment.
    Taxpayer does not respond, Follow procedures in IRM 5.19.7.3.20., Processing Defaulted OICs.
    OICs accepted by Appeals, Examination, DOJ:
    1. Prepare Form 2209 and send case to the Appeals office that accepted the offer.
    2. AOIC: Update the database to "OI" status.
    3. Non-AOIC: Update IDRS control to reflect Form 2209 sent.
    Letter 277C (SC/CG) is returned undelivered, Follow procedures in IRM 5.19.7.3.19.6., Undelivered Potential Default Letters.
    Taxpayer makes a partial payment and the balance due is under ≡ 1. Prepare Form 3244 to post the payment using TC 680.
    2. Close the case file. Refer to IRM 5.19.7.3.22, Closing an OIC.

5.19.7.3.13.9  (01-08-2014)
Dishonored Checks

  1. A dishonored check is a check received and processed as a payment by the IRS, but the bank does not accept the check as valid.

  2. A dishonored check penalty should not be assessed on offer payments.

    Note:

    If assessed, abate the dishonored check penalty.

  3. If a taxpayer's check is dishonored, issue letter 274, Potential Default Letter, and follow guidance in IRM 5.19.7.3.19.1, Failure to Make OIC Payments, if payment is not received.

    If Then
    If the taxpayer sends a replacement check within 30 days, Process the payment per IRM 5.19.7.3.13, Applying Payments on Accepted OICs.
    If the taxpayer fails to send a replacement check within 30 days, Refer to IRM 5.19.7.3.19.1, Failure to Remit an OIC Payment .

5.19.7.3.14  (06-17-2015)
Separate OICs on Joint Liabilities

  1. An offer in compromise may be submitted separately by one or more of the responsible individuals on joint liabilities.

    Note:

    Taxpayers will be required to submit two offers. One for the joint liabilities and one for any BMF or each party must submit an offer that includes all the liabilities. See IRM 5.8.3 , COIC Perfection.

  2. Prior to January 1, 2001, all separately submitted accepted offers on IMF joint accounts were moved to Non-Master File (NMF). After January 1, 2001, split accounts were transferred to master file code, MFT 31. Two MFT 31 accounts were established. The offer taxpayer's balance due was for the offer amount with the remaining balance due(s) placed on the non-offer spouse.

  3. Effective January 1, 2005, OICs on joint liabilities (MFT 30) must be transferred to two MFT 31 accounts which mirror the MFT 30.

5.19.7.3.14.1  (01-08-2014)
Mirror Assessments

  1. The Chief Financial Officer set policy on October 21, 2002, that changed processing of a joint account when one spouse requests tax relief.

  2. The policy states that the Service will split the joint return into two separate modules, one for the primary taxpayer and one for the secondary taxpayer, both mirroring the original return. The policy statement also called for a linkage for transaction codes between the modules and systemic intervention to accommodate payment and credit cross-referencing. The mirror functionality became operational January 2005.

  3. Each taxpayer has a mirrored MFT 31 account under their SSN that accurately reflects his/her tax liability and correct CSED/ASED.

  4. Mirror assessments must be established on master file when:

    • A separate offer is accepted by one or both taxpayers on a joint IMF liability

    • One spouse on a jointly accepted OIC becomes noncompliant during the 5 year or longer compliance period

      Note:

      The Mirroring process should began as soon as it is feasible. Modules that are paid in full by the offer amount should not be mirrored.

  5. This also includes offers submitted separately that are eventually rejected or withdrawn. COIC or the field investigating offices will be responsible for mirroring rejected or withdrawn offers.

5.19.7.3.14.2  (01-08-2014)
Identifying Separate Offers on Joint Liabilities

  1. The majority of accepted offers are controlled on AOIC. If the AOIC MFT screen displays a CSED indicator of P for primary or S for secondary then research IDRS to identify the joint periods that must be mirrored.

    Note:

    The CSED indicator is also displayed on IDRS under the TC 480 posting.

  2. For manually monitored offers review the acceptance letter or the Form 656; if only one name appears and IDRS research of each tax period (CC TXMOD) shows a joint filing status (FS2) then the MFT 30 period(s) must be mirrored to MFT 31.

5.19.7.3.14.3  (01-08-2014)
Preliminary Mirror/MFT 31 Procedures

  1. Review the MFT 30 module(s) before beginning the transfer process to ensure all appropriate actions have been completed.

  2. For accepted offers controlled on AOIC:

    1. Make INTST prints for each tax period to the date of the offer acceptance. See IRM 5.19.7.3.9.4., Timely Acceptance of Incoming OICs.

    2. Update the AOIC Balance Screen.

    3. Set up the AOIC Journal Screen to post and schedule payments.

    4. Apply 4710 Account deposits. If the deposit full pays a period on the offer, do not mirror the module.

    5. Update the AOIC status to "MS" , Monitor Split.

  3. For accepted offers manually monitored:

    1. Make INTST prints for each tax period to the date of the offer acceptance. See IRM 5.19.7.3.9.4., Timely Acceptance of Incoming OICs.

    2. Prepare Form 2515, Record of Offer in Compromise.

    3. Verify Form 2515, Form 656 and Form 7249 have the same tax class and periods. (If the tax class or periods do not agree, notify the originating office.)

    4. Prepare Form 6314, Deferred Payment Offer Payment Record, if necessary.

    5. Apply 4710 Account deposits. If the deposit full pays a period on the offer, do not mirror the module.

    6. Ensure TC 480 has been input on each period, if not, input TC 480 onto the MFT 30 account.

  4. The secondary spouse's SSN must be validated. See IRM 5.19.7.3.14.4 below.

5.19.7.3.14.4  (01-08-2014)
Validating the Secondary SSN

  1. Before beginning the mirror/transfer process the secondary spouse's SSN must be validated. Master file will not create an MFT 31 if the secondary SSN is not valid.

  2. To verify the secondary spouse's SSN use CC IMFOLE to review the entity information:

    If Then
    The SSN is valid Proceed with the mirroring process
    The SSN is invalid (*) Research to determine the reason for the invalid condition:
    • SSN transcription Error

    • Incorrect transcription of surname

  3. Correct the SSN or Name Line using CC ENMOD/ENREQ and monitor until the SSN moves into a valid segment (in about 3 weeks) then continue with the mirroring process.

  4. If you determine that an invalid name control is due to the secondary spouse not notifying the Social Security Administration of a change in surname due to divorce or marriage, then validate the SSN using CC IRCHG. The validation (correction) must be made for each tax period.

  5. Use CC ENMOD to monitor for TC 017 to post (about 3 weeks) then continue the mirroring process.

  6. If unable to validate the secondary SSN, the MFT 30 modules can not be mirrored. They must be transferred to NMF by completing Form 12810 ,Account Transfer Request Checklist, and routing to the appropriate consolidated NMF site as indicated on SERP.

  7. Establish a control on the account being moved to NMF.

  8. Set appropriate follow up dates for all actions taken and update the case history.

5.19.7.3.14.5  (01-08-2014)
Mirror Assessments - MFT 31 Procedures

  1. When all preliminary actions and validations have been completed then the joint liability periods are ready to be mirrored. Follow the steps below using CC REQ77:

    Note:

    Do not change the TSIGN 8500 so that MOIC can maintain control.

    1. Input TC 971 - AC 101, MFT 30 x-ref Primary TIN, Input TC 971 - AC 101, MFT 30 x-ref Secondary TIN .Also input TC 971 - AC 145 on the MFT 30 at the same time with a delay of 2.

      Note:

      Approximately two weeks after input, of the TC 971 -AC 101 "mirror modules" on MFT 31 will generate under each spouse's SSN. Input of TC 971 - AC 145 on the MFT 30 module establishes TC 400 and creates both MFT 31 modules. MFT 31 modules will post in the next cycle. IMF will mirror all transaction from MFT 30 to MFT 31 including the TC 400.

    2. Monitor for MFT 31 modules and posting of TC 400 on MFT 30. For AOIC: Input a 3 week follow up date with an action note: "Check with Mirror MFT 31 posting." For Manually Monitored: Establish a control base on IDRS using CC ACTON.
      - Activity Code "MFT31sXXXX" where XXXX is date to check for posting of MFT 31 (3 weeks from day TC 971 AC 101 and TC 971 AC 145 input.)
      - Category Code "SPC4"
      - Status "M"

      Note:

      Verify there are 3 modules present:
      - one joint MFT 30 module
      - one MFT 31 for the primary
      - one MFT 31 for the secondary

    3. After both MFT 31 modules are established and TC 400 has posted to the MFT 30 and MFT 31 modules, input TC 972-AC 145 on MFT 30 and MFT 31 modules:
      1. Input TC 972-AC 145 on MFT 30.
      2. Input TC 972-AC 145 on MFT 31 Primary SSN
      3. Input TC 972-AC 145 on MFT 31 Secondary SSN
      4. Input TC 470 posting delay 2 (no closing code) to the offer taxpayer's MFT 31 module.

      Note:

      TC 972-AC 145 generates a TC 402 to bring the module balance back on all 3 MFTs. A TC 971-AC132 will systemically generate on the MFT 30 module after the TC 402 posts. TC 971-AC 132 will generate TC 604 to close out the balance due on MFT 30. This will leave a balance due on the MFT 31 modules.

    4. Monitor for the posting of the TCs on MFT 30 and both MFT 31 modules.
      AOIC: Input a follow up date for 3 weeks from the date of input with action" Monitor TC 402 on MFT 31."
      Manually Monitored:
      1. Update the IDRS control base using CC ACTON:
      - Activity Code "Monitor 402"
      - Category Code "SPC4"
      - Status "M"

    5. Input TC 782 and 483 with posting delay of 1 on the MFT 30 module after the TC 604 posts.

    6. Input TC 782 and 483 with posting delay of 1 on the MFT 31 module of the non-offer spouse.

      Note:

      If there were two separate offers that were accepted leave TC 780 on each MFT 31 module.

    7. Input TC 472 to non-offer spouse once all TC's have posted.

  2. As a part of establishing the two MFT 31 modules a TC 370 is systemically generated with one DLN identifying the primary SSN from the copy and both will carry a complete mirror of the MFT 30 module.

  3. If the offer taxpayer is the secondary taxpayer and TC 400 posts, the TSIGN should be reversed back to 0000 and the OIC indicator shut off on primary taxpayer's SSN. (This can be done at the same time of TC 972 - AC145 input.)

    Note:

    When the mirroring of the modules are complete be sure that the non-offer taxpayer's accounts do not restrict penalty and interest.

  4. MFT 31 mirrored modules will generally reflect the collection status immediately prior to Status 29. TC 470 is input on the MFT 31 of the offer taxpayer in order to suppress collection notices that are systemically generated when the mirrored accounts are established on IDRS.

    Note:

    Reverse TC 470 with a TC 472 on the non offer spouse, all applicable modules.

  5. Update the AOIC MFT Screen to reflect the MFT 31 modules.

  6. Update the liability on the MFT screen on AOIC from MFT 30 to MFT 31.

  7. Offer payments received on the offer MFT 31 after mirroring will systemically cross reference to the MFT 31 module of the non offer spouse.

  8. Because the CSED on the mirrored accounts differ, periodically check to see if the offer payment will cross reference to a period of the non offer spouse with an expired CSED.

  9. OIC payments received after the initial mirroring process has begun should be placed in the 4710 account and applied immediately following establishment of the MFT 31 accounts.

  10. Cross referenced payments reduce the unpaid balance of the co-obligor but are nonrefundable.

  11. When an offer with mirrored modules is being placed in monitoring status of 5M, input a TC 972 AC 110 on both MFT 31 modules for the offer to prevent the cross-referencing of any future payments made by the spouse.

    Note:

    If it is determined that a previously mirrored module should be reversed see IRM 25.15.15.6 , Reversing a Mirrored Module, for the appropriate actions to take. Also, ensure that the AC's are for an OIC, not innocent spouse.

5.19.7.3.14.6  (01-08-2014)
Mirror Assessments Due to Non-Compliance

  1. Both taxpayers on a joint tax liability must remain compliant with filing and paying subsequent returns following acceptance of an offer in compromise. The taxpayers must be compliant for the 5-year period following acceptance of the offer or during an extended installment offer payment period, whichever is longer.

  2. If one taxpayer is noncompliant during the compliance period and the other compliant, only the noncompliant spouse will be in default. The account is split and the offer will remain in effect for the compliant taxpayer.

    Note:

    Apply TC 470 with no closing code to prevent notices from issuing on the compliant taxpayer's account.

  3. Tax examiners should first follow Default Procedures in IRM 5.19.7.3.19, OIC Defaults, and correspond only with the noncompliant spouse.

  4. When the noncompliance occurs during the 5-year monitoring (5M), all previously written off tax periods must be reversed and established as a separate MFT 31 account.

    1. Input TC 972 AC 32 to reverse all TC 604 write-offs.

    2. Input TC 480, 780 because after input of TC 788 IDRS no longer reads prior transactions.

    3. Input TC 971 AC 101 to create the MFT 31 account cross referencing the non compliant spouse's SSN. Also input TC 971 AC 101 to create the MFT 31 account for the compliant spouse. The transaction date is the action date.

    4. Input 971/145 with a posting delay.

    5. Monitor for the TC 400 to post.

    6. Input TC 972 AC 145 to the MFT 30 and both MFT 31 mods.

    7. Monitor for the TC 402 to post.

    8. Input 781 to non-compliant taxpayer's MFT 31.

    9. Turn off OIC indicator on the Non-complaint Taxpayer, input ENMOD - ENREQ and enter "1966" for the OIC indicator.

  5. Before inputting any transactions to MFT 31 research IMFOL to ensure that the MFT 31 module(s) have posted with the correct entity.

    Note:

    If the name is not correct all subsequent transactions will go unpostable.

  6. When noncompliance occurs while extended offer payments are being made (usually beyond the 5-year compliance period).

    1. Input TC 971 AC 101 on the MFT 30 account, cross-reference the noncompliant spouses' SSN. The transaction date is the action date.

    2. Remove the Y freeze using CC REQ77 on IDRS:

      Input TC 483, TC 782 or TC 788, whichever is appropriate.
      Input TC 470 (no closing code) to prevent notices from issuing.
    3. Input TC 016 (1966) on ENMOD on the primary SSN (with a one cycle delay) to turn off the OIC indicator, if the default is for the secondary taxpayer.

5.19.7.3.14.7  (01-08-2014)
Innocent Spouse Claims

  1. A taxpayer who files a joint return with a spouse is generally jointly and separately liable for all tax due in that tax year. If a taxpayer believes he/she should not be required to pay the tax (including penalties and interest) for a tax year in which he/she filed a joint return, the taxpayer may be eligible for relief from joint and several liability.

    Note:

    The Innocent Spouse Team will review cases in which the account shows a joint return, but the taxpayer claims no joint return was filed or the taxpayer's signature on the joint return was forged. See IRM 25.15.1.2.3 , Return Signed Under Duress, IRM 25.15.1.2.4 ,, Forged Signatures, and Form 8857 instructions.

  2. Taxpayers generally request Innocent Spouse Relief via Form 8857. The taxpayer filing the Form 8857 is referred to as the requesting spouse or requesting taxpayer. The Form 8857 claim is referred to as an Innocent Spouse claim. Innocent Spouse will indicate on the account with a TC 971 AC 065 when request has been received.

  3. When the spouse filing the Innocent Spouse claim is granted relief the Service may still collect the entire liability from the other spouse. Innocent spouse examiners generally set up an assessment on the other spouse separately via MFT 31. Related Examination paper work will be forwarded to the OIC monitoring unit.

  4. Exam will forward Innocent Spouse determination letters to the back end OIC Unit when there is an unreversed TC 780 on the module. This determination letter should be held in the case file pending closure of the OIC case.

    If And Then
    The OIC taxpayer defaults both account(s) have been moved to NMF (prior MFT 20) 1. Default the offer on the NMF but, do not reopen the MFT 30 account. (The innocent spouse examiner will have abated the NMF assessment on the innocent spouse.)
    2. Retain the Innocent Spouse determination letter in the case file for an audit trail.
    3. Update the AOIC or manual history file.
    The OIC taxpayer defaults the other spouse was granted relief under innocent spouse
    Update the AOIC or manual history file.
    The OIC taxpayer defaults separate MFT 31 accounts were previously established for both taxpayers The innocent spouse examiner will have already abated the innocent spouse MFT 31 account.
    1. Default the OIC taxpayer.
    2. Leave the determination letter in the case file for an audit trail.
    3 Update the AOIC or manual history file.
    The OIC taxpayer complies with all terms of the offer his account(s) remained on MFT 30 1. Contact the innocent spouse examiner to be sure TC 290 with reason code 98 is input on the MFT 30 account.
    2. Establish the MFT 31 on the OIC taxpayer.
    3. Retain the determination letter in the case file for an audit trail.
    4. Update the AOIC or manual history file.
    The OIC taxpayer complies with all terms of the offer both account(s) were moved to NMF or MFT 31 The innocent spouse examiner will have already abated the innocent spouse MFT 31 account.
    1. Close the offer.
    2. Do not return the determination letter to the innocent spouse examiner.
    3. IRS has compromised all of the liabilities.
  5. For instances where the OIC has been closed on MFT 30 (TC 788) prior to processing the innocent spouse claim, Innocent Spouse will issue the letter to the requesting spouse. A copy of the letter will not be sent to the OIC unit because the OIC taxpayer has complied with all terms of the offer and his/her liabilities have been compromised.

5.19.7.3.14.8  (01-08-2014)
Subsequent Payments on Co-Obligor MFT 31 Accounts

  1. A master file account must be established for the co-obligor using current MFT 31 procedures. There may be special circumstances i.e. invalid TIN, requiring an NMF account be established.

  2. If establishment of the co-obligor's account is pending on master file or NMF, prepare a Form 3244 to apply payments on a deferred NMF account.

    Note:

    Per local policy, you may place payments in the 4710 Account while waiting for the account to transfer from master file to non-master file or MFT 31.

5.19.7.3.14.9  (01-08-2014)
Correcting Unpostable TC 788 on MFT 31 Accounts

  1. TC 788 goes unpostable on MFT 31 accounts established from January 2001 through January 2005. The -Y freeze does not release and subsequent refunds due the taxpayer may be frozen.

  2. Although TC 780 displays on IDRS TXMOD, it did not set on master file when the MFT 31 account was created. Without an established TC 780 on the account input of TC 788 goes unpostable.

  3. To correct this condition re-input the OIC transactions using REQ77.

    1. Re-input TC 480, TC 780 and TC 971 (if applicable).

    2. Input TC 788 with appropriate posting delays.

    3. The -Y freeze should then drop off and allow taxpayers to receive refunds due.

5.19.7.3.15  (06-17-2015)
Compromise of an Accepted Offer

  1. When a taxpayer is unable to pay the balance of an accepted offer and/or the balance due under the terms of a collateral agreement, the Service has the option to accept a Compromise of a Compromise if the taxpayer is current with his filing and payment compliance requirements subsequent to the acceptance date of the original offer. . In this situation, the IRS has the option to:

    1. Adjust the payment terms of the offer,

    2. Formally compromise the existing offer, See IRM 5.8.9.5, Compromise of a Compromise

    3. Obtain managerial approval to settle the offer for the amount already paid and not default the offer.

    Note:

    A Compromise of a Compromise is not appropriate if the taxpayer is unable to fulfill his 5-year filing and payment requirement of the existing offer. However, he has the option to file a new OIC,

  2. The taxpayer must submit the request to compromise an accepted compromise in letter format.

    Note:

    Filing a new Form 656 is not acceptable.

  3. Advise the taxpayer that:

    • MOIC is referring the request to the originating office

    • A current financial statement will be required

    • Allow the taxpayer 15 days to submit a written request.

  4. Use Form 2209 (allow 45 days), with a 90-day follow up and update Form 6314 or AOIC.

    1. Route the request to Appeals, COIC or the Area Office where the offer was accepted. The Form 2209 and attachments should be scanned and e-mailed to the drop point.

    2. Include a statement indicating whether the offer is current or is in potential default.

    3. Attach the taxpayer's written request for an offer on an offer.

    4. If the offer is not on AOIC, complete and file the charge-out form and send the original file to the originating office via Form 3210.

      Note:

      If the file is needed from the FRC, the originating office will request the file.

    5. Ex parte communication rules prohibit attempts to influence Appeals. Do not include in the Form 2209 addressed to Appeals or its attachments any statements directing Appeals to make a particular determination in the compromise of an accepted offer case.

  5. The courtesy investigation will be given priority by the field or COIC. An extension request ( Form 2209A) to complete the investigation should be based on extenuating circumstances.

  6. If there is no reply/contact after more than 90 days, the Appeals contact, Area Office or COIC Operations Manager should be contacted.

  7. Upon receipt of the Form 2209:

    If Then
    The compromise offer is accepted Update AOIC or Form 2515 with the appropriate adjustments.
    The compromise offer is not accepted Proceed with default procedures, see IRM 5.19.7.3.19, OIC Defaults.

5.19.7.3.16  (01-08-2014)
Collateral Agreements

  1. A collateral agreement is additional consideration for an Offer in Compromise that enables the Government to collect funds beyond the amount paid with the offer, thereby recouping part or all of the difference between the amount of the offer and the liability compromised.

5.19.7.3.16.1  (06-17-2015)
Types of Collateral Agreements

  1. One or more of the following collateral agreements may be part of the OIC.

    Type Form Used Explanation
    Future Income Form 2261 (IMF)Form 2261 A (BMF) A collateral agreement that creates a potential obligation for the taxpayer to pay a graduated percentage of future income for a specified number of years. The obligation is contingent on the taxpayers income exceeding a negotiated annual income amount.
    Reduction of Basis Form 2261B An agreement by the taxpayer to reduce the basis of specifically identified stock and real or personal property.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    Waiver of Loss Form 2261C An agreement by the taxpayer to waive the benefit of net operating losses, bad debts, capital losses per IRC 166 and non-business capital losses, passive losses and/or unused investment tax credits in the computation of income tax for years stated in the agreement.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  2. Managers are required once a year to review all collateral offers that are over 5 years old to determine if all collateral terms have been met or are correctly listed as an open collateral.


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