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A transfer option has been programmed on AOIC in the Headquarters module. Before a case may be transferred it must be accepted into the SC inventory. If a case is in NW the transfer will not be completed. Once the case is in the SC inventory an email may be sent to the Headquarter's analyst requesting the case be transferred to the other MOIC site. Be sure to explain in the email why the transfer is necessary.
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The Department of Justice (DOJ) settles certain tax litigation cases by accepting an Offer in Settlement. DOJ sends accepted Settlement cases to the Area Office Technical Services Advisory function (TSA).
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The Advisory office retains the original accepted case file. If the compromised liability has a deferred payment or collateral agreement, the campus monitors the case to ensure that the taxpayer complies with the terms of the settlement agreement.
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Advisory sends copies of pertinent documents from the DOJ Settlement file on a Form 3210, Transmittal, to MOIC.
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The file should include copies of:
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The offer.
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DOJs acceptance letter.
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DOJs letter concerning any collateral agreement.
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The documents will provide:
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Amount of the offer.
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Amount of the liability.
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MFTs.
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Tax years or periods compromised.
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Terms of the agreement
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Review the DOJ case file to determine if the necessary information is present for monitoring. If any item is missing, send a written request for the missing documentation to the Advisory office. Place the response from Advisory in the case file and follow the guidance provided below to proceed with monitoring actions.
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Do not input TC 480 or TC 780 on DOJ cases. (DOJ generally does not use the IRS Form 656.) Advisory should input TC 520 (litigation) to freeze account during CSCO monitoring period.
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To set up the DOJ case for monitoring;
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Prepare Form 2515, Record of Offer in Compromise. Annotate "DOJOffer in Settlement. "
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Prepare Form 6314, Deferred Payment Offer Payment Record, and maintain in chronological order by payment due anniversary date.
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If a collateral is included in the terms of agreement, prepare Form 6313, Collateral Agreement Payment Record, and file in alphabetical order.
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Payments required by the terms of the agreement are sent directly to CSCO by the taxpayer.
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Payments are deposited as revenue received and applied to tax, penalty and interest of the earliest CSED tax period and to the next earliest CSED tax period of the taxpayers module(s).
If Then Deferred payment is not received within 30 days after the due date. Send Letter 274C to the taxpayer. Payment not received within 45 days after Letter 274C was sent. Prepare Form 2209 with copy of Letter 274C and Form 6314 to the Advisory function requesting DOJ be advised of the taxpayers default. DOJ will take necessary actions to get the taxpayer into compliance or otherwise advise CSCO. -
Payments made based on terms of the collateral are applied in the same manner.
If Then Taxpayer fails to comply with the terms of the collateral agreement within 30 days after the due date. Send Letter 279C. Payment not received within 30 days after Letter 279C sent. Prepare Form 2209, Courtesy Investigation, with a copy of Letter 279C and Form 6313 to the appropriate Advisory function requesting that DOJ be advised of the taxpayers default. DOJ will take necessary actions to get the taxpayer into compliance or otherwise advise CSCO. -
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If the taxpayer requests modifications of the settlement or collateral agreement, immediately notify DOJ through the Advisory function via Form 2209.
Note:
Send copies of any correspondence to the Advisory contact.
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Send to DOJ via Advisory a copy of all Forms 6314 in October of each year and all Forms 6313 in May of each year.
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When the terms of the deferred payment agreement have been fulfilled, input the appropriate adjustments to zero out any remaining open tax periods.
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When the terms of a collateral agreement have been fulfilled, the offer tax examiner should close out the collateral agreement account.
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When all the amounts under the settlement agreement, including accrued interest and amounts due under a collateral agreement have been received, immediately notify DOJ through the Advisory contact.
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Forward copies of Form 6314 and/or 6313.
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Request release of Federal Tax Lien(s).
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When a taxpayer fails to meet any term of an offer, the offer may be defaulted and all liabilities reinstated. Any of the following may result in a default of the offer.
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Failure to remit any OIC payment due (Cash or deferred)
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Failure to return overpayments erroneously refunded.
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Failure to meet terms of a collateral agreement, including payments based on a future income collateral agreement.
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Failure to timely file subsequent tax returns and pay all taxes due during the compliance period.
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Prior to issuance of MOIC correspondence, use IDRS to determine if the AOIC record has the most current address for the taxpayer.
Example:
The OIC was accepted in 2003 and IDRS ENMOD shows an address update for 2005. Update the AOIC.
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Failure to meet any of the above may be due to the death of the taxpayer. IRM 5.19.7.3.14.6, Death of the Taxpayer While Monitoring the OIC.
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If one taxpayer on a joint offer dies and the surviving spouse maintains the offer terms, do not terminate the offer.
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Taxpayers who default an accepted offer do not have appeal rights.
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Review your inventory weekly for missing or overdue OIC payments.
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AOIC Cases: Generate Journal Payment Due Report showing payments due.
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Manually Monitored Cases: Review OIC Deferred Offer Payment Record File.
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When you determine a payment is more than 30 days past due, research IDRS to look for the missing payment.
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If the overdue payment is located, update AOIC or Form 6314 by recording the payment using the TC 670 amount and date.
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If not, contact the taxpayer in writing.
Note:
Contact must be initiated before the payment is 45 days over due.
If Then The offer is controlled on AOIC, 1. Send AOIC Letter 274 SC/CG.
2. On AOIC: Enter follow-up date (date letter generated plus 45 days) on the AOIC Follow up screen and update status to "IP" .
3. Suspense the case for 45 days.Note:
The Journal Screen should not be changed to reflect a new payment due date.
The offer is being manually monitored, 1. Send Letter 274C.
2. Update the IDRS control.
3. Suspense the case for 45 days.
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Process responses as follows:
If the And Then Taxpayer pays in full 1. Process the payment.
2. AOIC: Update AOIC Journal Screen, follow up and status.
3. Non-AOIC: Update the IDRS control and update Form 6314.Taxpayer responds within the 45-day suspense period Requests any change that would revise the terms or conditions of the offer 1.Advise that the request must be in writing and must be received within 15 days.
2. Document AOIC history and input follow-up date. If manually monitored, update IDRS control and Form Form 6314.Taxpayer responds within the 45-day suspense period Requests to pay less than the scheduled payment amount Grant the request if the CSED will not expire before the payment is due. Advise that:
1. The request is granted for the missing payment only.
2. the balance of that payment must be paid within 120 days.
3. If the intent is to revise the payment amount permanently, a written request to compromise the original offer is required and must be received within 15 days.Taxpayer submits a written request to compromise the offer The offer was accepted by COIC, Appeals, Collection, Examination, or DOJ, 1.Prepare Form 2209 stating the taxpayers request.
2. Send the Form 2209 and any related correspondence with a complete print of the AOIC history to the office that accepted the offer or the office that currently works offers that originate from the taxpayer's location.Give the receiving office a 45 day deadline and input a follow up for 90 days.Note:
3. Document AOIC remarks with the taxpayer's requested terms change per the correspondence received.
4. AOIC : Update the database to reflect OI status.
5. Non-AOIC: Update IDRS control to reflect Form 2209 sent.Failure to remit a payment on a lump sum cash offer The taxpayer requests an extension of time to pay (the offer was accepted by Collection or Exam) 1. Grant the request, allowing 120 days to make the payment if the CSED will not blow before the payment is due. If the payment is not received within the extension period, issue the default letter. Follow procedures in IRM 5.19.7.3.21, Processing Defaulted OICs. The offer was accepted by Appeals or DOJ, 1. Prepare Form 2209 stating the taxpayer's request.
2. Send the Form 2209 and any related correspondence with a complete print of the AOIC history to Appeals or Advisory office (for DOJ offers) where the offer was accepted..
3. AOIC: Update the database to reflect "OI" status.
4. Non-AOIC: Update the IDRS control to reflect Form 2209 sent.Taxpayer has a short-term periodic payment or deferred periodic payment offer and requests an extension of time to pay, Follow procedures in IRM 5.19.7.3.20.2 , Extension of Time to Remit OIC Payment. (A taxpayer may be granted an extension of time to repay a missed installment payment if the CSED will not expire before the payment is received. The extension can be no longer than 120 days.) Taxpayer does not respond, The offer was accepted by Appeals or DOJ, 1. Prepare a Form 2209 stating the taxpayer is not in compliance with the offer terms.
2. Send the investigation to the Appeals Office or Advisory (for DOJ offers).
3. Attach a copy of :-
Form 656
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Form 7249
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Taxpayer's letter (if one was sent)
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Complete print of AOIC history
4. AOIC: Update the database to reflect "investigation" status.
5. Non-AOIC: Update IDRS control to reflect Form 2209 sent.The offer was accepted by Examination or Collection, Follow procedures in IRM 5.19.7.3.21 , Processing Defaulted OICs. Letter 274C (SC/CG) is returned undelivered, Follow procedures in IRM 5.19.7.3.20.7 , Undelivered Potential Default Letters. -
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If the taxpayer contacts the Service during any suspense period and states they can not pay, proceed with default actions.
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A taxpayer may be granted an extension of time to make an installment payment if the CSED will not expire before the payment is received. The extension can be no longer than 120 days. All regular installment payments must be made timely during this extended period.
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Offers with an extension to remit a missed installment payment must be monitored closely. If the terms of the extension are not met or another regular installment payment is not received, follow procedures in IRM 5.19.7.3.21, Processing Defaulted OICs, or if applicable, send Form 2209 for Appeals or DOJ offers.
If Then The account is on AOIC, 1. Update the Journal screen to include the additional payment.
2. Update the status to "MP" .
3. Advise the taxpayer in writing that an extension has been granted. Also advise the taxpayer if a subsequent installment payment or payment on the extension is late, the offer will be defaulted.
4. Input a follow up on AOIC for the date the payment was re-scheduled.The account is not on AOIC, 1. Update the IDRS control with follow-up of next payment date. Also include the date of the rescheduled payment on control history.
2. Advise the taxpayer in writing that an extension has been granted. Also advise the taxpayer if a subsequent installment payment or payment on the extension is late, the offer will be defaulted.Example:
The Service accepts a $5,000 offer to compromise $20,000 in tax liability on February 20, 2002. The payment terms are that $1,000 is to be paid every two months on the first of the month beginning April 1. The taxpayer makes the April and June payment but does not remit his payment for August. Following issuance of the potential default letter the tax examiner receives a response from the taxpayer requesting to pay the missed $1,000 installment over the next 4 weeks. On Sept. 4, the tax examiner agrees and advises the taxpayer must make the next $1,000 payment due in October along with a weekly payment of $250 to pay the missed period.
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If the missed payment is not received within 30 days of the extended payment date or a subsequent payment is more than 30 days late, take the following actions.
If Then The offer was accepted by Appeals or DOJ 1. Prepare a Form 2209, attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting office.
2. AOIC: Update the database to reflect "OI" status.
3. Non-AOIC: Update IDRS control to reflect Form 2209 sent.The offer was accepted by Collection or Examination Follow procedures in IRM 5.19.7.3.21., Processing Defaulted OICs. -
Do not grant an extension to pay a missed installment payment more than one time during a 24-month period.
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The Service is entitled to any overpayment of tax or other liability for the tax periods extending through the calendar year the offer is accepted. If an overpayment is erroneously refunded, contact the taxpayer.
Note:
Contact must be initiated as soon as the erroneous refund is identified.
If Then The refund is under ≡ ≡ ≡ ≡ Do not contact the taxpayer for payment. The offer is controlled on AOIC 1. Send Letter 274 SC/CG.
2. On AOIC, enter follow-up date (date letter is generated plus 45 days) on the AOIC follow-up screen and change the AOIC status to "IR" .
3. Suspense the case for 45 days.The offer is being manually monitored 1. Send Letter 276C.
2. Update the IDRS control.
3. Suspense the case for 30 days. -
Process responses as follows:
If the And Then Taxpayer repays the refund in full 1. Apply the refund to the module it refunded from with a TC 570.
2. Wait for the refund to post.
3. Apply the refund to the oldest ASED period.
4. AOIC: Update AOIC.
5. Non-AOIC: Update the control on IDRS.Taxpayer requests an extension of time to repay the refund You may grant up to 120 days for the taxpayer to repay the refund.
1. Update the Journal screen to include the additional payment.
2. Update the status to "MO" .
3. Advise the taxpayer in writing that an extension has been granted. Also advise the taxpayer if a repayment of the refund is late, the offer will be defaulted.
4. Input a follow up on AOIC for the date the refund repayment was re-scheduled.Taxpayer is unable to repay the refund, refuses to repay the refund, or does not respond The offer was accepted by Appeals or DOJ, 1. Prepare a Form 2209 attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting office.
2. AOIC: Update the database to reflect "OI" status.
3. Non-AOIC: Update IDRS control to reflect Form 2209 sent.The offer was accepted by Collection or Examination Follow procedures in IRM 5.19.7.3.21, Processing Defaulted Offers. Letter 274C (SC/CG) is returned undelivered Follow procedures in IRM 5.19.7.3.20.6, Undelivered Potential Default Letters.
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Taxpayers agree, as a term of the offer, to file all tax returns and pay required taxes for five years or until the offer amount is paid in full, whichever is longer . The taxpayer must timely file all tax returns and pay all taxes due during the compliance period.
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The taxpayer is considered in compliance if the taxpayer has submitted an extension to file the current year's tax return.
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This compliance provision is monitored for five years via AOIC listings and / or EUREKA™ reports (for IMF) beginning with the year of acceptance.
Note:
For accepted offers on joint assessments, is if one party fails to remain compliant with the future filing of returns and payment of taxes, the offer will be defaulted for the noncompliant taxpayer only. The taxpayer who remains in compliance will be unaffected. Do not contact the compliant taxpayer. IRM 5.19.7.3.20.5, Defaults on Joint Offers Due to Non-Compliance.
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When checking 5-year compliance and, upon discovery that a subsequent module has been closed using closing code TC 597 or 598 (surveyed/shelved by National Office):
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Verify the taxpayer has a filing requirement via command code IRPTR.
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If no filing requirement, no action is necessary.
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If the taxpayer should file, input TC 592 to reverse and reopen the filing requirement
.
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Update the case history to reflect your actions and process the TDI as indicated below.
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When income information is available and the taxpayer meets requirements for filing status single with one exemption then take the following actions:
If And Then The potential default is due to non filing (status 03 - the return delinquency has reached TDI status) the TDI is assigned to ASFR (TSIGN 8000)
1. Do not send the potential default letter.
2. Update the AOIC history or IDRS control if a manually monitored agreement (MMA).
3. ASFR will work the delinquency following ASFR procedures.
4. Leave the offer in 5M status on AOIC, or update the IDRS control for MMA.the TDI is assigned to a revenue officer (RO) 1. Send AOIC Letter 2909 SC/CG.
2. Input a follow up date (date the letter is generated plus 45 days).
3. Change the AOIC status to I5 or update the for a manually monitored agreement (MMA).
4. If the taxpayer files the return, update the history.
5. If the taxpayer does not file, contact the RO advising that the campus is defaulting the OIC.the TDI is unassigned 1. Check TSIGN. If not 8500, input TSIGN 8500.
2. Send Letter 2909 SC/CG or 2909C.
3. Input a follow up date (date the letter is generated plus 45 days).
4. Change the AOIC status to "I5 or update the IDRS control for a manually monitored agreement (MMA)." .
5. If the taxpayer files the return, update the history.
6. If the taxpayer does not file, default the offer.The taxpayer files the return there is a balance due with no payment
1. Send the potential default letter.
2. Input a follow up date (date the letter is generated plus 45 days).
3. Change the AOIC status to "I5 or update the IDRS control for a manually monitored agreement (MMA)." .
4. If the taxpayer pays the balance, update the history.
5. If the taxpayer does not submit payment, default the offer. -
Process responses to Letter 2909 CG/SC or Correspondex Letter 2909C as follows:
If And Then The taxpayer files the return there is no tax due 1. Input TC 599 with cc 96.
2. Process the return per IRM 5.19.2.
3. AOIC: Update AOIC and change the monitoring status to "5M" .
4. Non-AOIC: Update the IDRS control.The taxpayer files a balance due return without a payment requests an installment agreement 1. Process the return per IRM 5.19.2.
2. Input TC 599 with closing code 94. (Refer to Chapter 11, Doc. 6209)
3. Send AOIC Letter 2909 , select appropriate paragraph.
4. Advise the taxpayer in the open paragraph, that an extension for 120 days or less can be granted.
5. AOIC: Update the AOIC history.
6. Non-AOIC: Update the IDRS history.The taxpayer agrees to the 120 day extension, 1. Send Letter 2908 with the appropriate paragraph verifying approval of the extension.
2. Input TC 470 with a follow up to reinput after 9 cycles. TC 470 will only hold notices for 9 cycles.
3. Set up the manual agreement using the follow up screen.
4. Update AOIC status to MO for the 120 day extension period.The taxpayer cannot pay in 120 days, Default the offer. The taxpayer files a balance due return without a payment requests an extension of 120 days or less to full pay, 1. Process the return per IRM 5.19.2.
2. Send 2908 letter using the appropriate paragraph verifying approval of the extension.
3. Input 470 with a follow up to input after 9 cycles. TC 470 will only hold notices for 9 cycles.
4. Set up the manual agreement using the follow up screen
5. Destroy the transcript.
6. AOIC: Update AOIC and change status to "MO" .
7. Non-AOIC: Update the IDRS control.requests an extension to pay for more than 120 days 1. Process the return per IRM 5.19.2.
2. Deny the request in writing, using letter 2908 appropriate paragraph, advising that only 120 days may be granted.
3. AOIC: Update the database to reflect "I5" status.
4. Non-AOIC: Update IDRS history to reflect OIC letter sent.
5. If no response or a negative response to the proposed 120 extension, default the offer.The taxpayer states the return was previously filed IDRS research now shows a return was filed
1. Update the AOIC or Manual case history.IDRS research shows no record of the return 1. Request a copy of the return with an original signature. The taxpayer submits a signed copy of the missing return 1. Use CC FFINQ or TRDBV to see if the return has been received and is in the pipeline.
2. Process the return as an original if research indicates no record.
3. Input TC 599 with appropriate closing code. (See Document 6209.)The taxpayer responds stating the return was filed another TIN was the primary 1. Research IDRS under the TIN provided to verify the filing.
2. Input the OIC Acceptance year under this TIN using CC ENREQ if a TC 780 is posted.
3. If a TC 780 is not present, compliance for this taxpayer must be manually monitored.
4. Update the AOIC or Manual case history.The taxpayer states that he/she (they) are not required to file 1. Verify by researching SERP and CC IRPOL/SUPOL/IRPTR. the income shown indicates a return should be filed 1. Send the taxpayer a copy of the print requesting a return be filed.
2. Input a follow up on AOIC for 30 days to allow the taxpayer to file the return.
3. Update the AOIC or Manual case history.the income does not require a return 1. Input the correct closing code.
2. Update the AOIC or manual case history. -
When the reason for the noncompliance is failure to pay taxes on a subsequent tax period (status 23, 26 or 60), take the following actions:
If the new balance due period is in And Then Status 23 (Indicates the balance due is below deferral) the amount owed is below ≡ ≡ 1. Consider the account full paid. the amount owed is above ≡ ≡ ≡ 1. Send Letter 2909 SC/CG .
2. On AOIC, enter follow-up date (date letter is generated plus 45 days).
3. Change status to "I5" .
4. Update the AOIC or Manual case history.Status 26 (Indicates the balance due period is in TDA status) TSIGNed to 8500 or to an RO 1. Send AOIC Letter 2909C.
2. Input a follow up date (date the letter is generated plus 45 days).
3. Change status to "I5" or OI status on Form 6314 for manually monitored cases.
4. Update the AOIC or Manual case history.Status 60 (Indicates new balance due period has an installment agreement) Send Letter 279C or 2909 SC/CG. -
Process responses to the potential default letter as follows:
If the And Then Taxpayer pays in full, 1. Process the payment.
2. AOIC: Update AOIC.
3. Non-AOIC: Update the IDRS control.Taxpayer requests an extension to pay of 120 days or less, 1. Send 2908 with appropriate paragraph allowing the taxpayer to pay what is owed in 120 days or less.
2. Input 470 to change module to status 53. (no notice)
3. Manually monitor the payments on the extension.
4. Update AOIC status to MO for the 120 day extension period.Taxpayer requests an extension of more than 120 days, the OIC was accepted by Collection or Examination 1. Advise the taxpayer that the offer will be defaulted.
2. Follow procedures in IRM 5.19.7.3.21, Processing Defaulted OICs.Taxpayer requests an extension of more than 120 days, the OIC was accepted by Appeals or DOJ 1. Prepare Form 2209 attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting Appeals office or territory Advisory contact for DOJ offers.
2. AOIC:Update the status to OI.
3. Non-AOIC:Update the IDRS control to reflect Form 2209 was sent.Taxpayer does not respond the offer was accepted by Collection or Examination 1. Follow procedures in IRM 5.19.7.3.21., Processing Defaulted OICs. the offer was accepted by Appeals or DOJ, 1. Prepare Form 2209, attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting Appeals office or territory Advisory contact for DOJ offers.
2. AOIC:Update the status to OI.
3. Non-AOIC: Update the IDRS control to reflect Form 2209 was sent.Letter 2909C (SC/CG)is returned undelivered, Follow procedures in IRM 5.19.7.3.20.6., Undelivered Potential Default Letters.
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When one of the parties to the compromise fails to remain compliant with filing and payment terms, the offer is only defaulted on the noncompliant spouse.
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The several liability provision applies while payments are being made on a deferred payment offer or during the remaining compliance period following full payment of the offered amount.
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The several liability provision applies to all terms of the OIC including:
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Filing all returns timely,
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Paying all current taxes timely, and
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Complying with collateral agreements.
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Do not contact the compliant spouse. Use the potential default Letter 275C or AOIC Letter 2909C(SC/CG) and address it to the noncompliant spouse.
Note:
A DEFAULT FSC transcript should generate if the primary taxpayer changes filing status in a subsequent filing year. The account for each spouse on the joint offer should then be monitored manually for filing and payment during the compliance period.
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If only one spouse on a joint liability is not compliant, separate accounts will need to be established using MFT 31.
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When a potential default letter is returned as "undeliverable" the tax examiner must follow separate procedures for cash and installment offers. Cash offers must be paid within the prescribed time frame.
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If the missing payment was for a cash offer:
If Then The offer was accepted by Appeals or DOJ, 1. Prepare a Form 2209, attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting Appeals office or territory Advisory contact for the DOJ offer.
2. AOIC: Update the database to reflect "OI" status.
3. Non-AOIC: Update IDRS control to reflect letter undelivered and Form 2209 sent to Appeals or the territory Advisory contact.The offer was accepted by Collection or Examination, Follow procedures in IRM 5.19.7.3.21., Processing Defaulted OICs. -
For installment offers and potential defaults due to other terms of the offer, the tax examiner must research for a new address using appropriate guidelines outlined in IRM 21.3.3.4.14 and IRM 3.13.12.29; and/or available locator services. Then:
If And Then A new address is located, there is a yellow address change sticker provided by the U.S. Postal Service on the original envelope AOIC:
1. Reissue the letter attaching Form 8822, Change of Address.
2. Update AOIC with a follow-up date (date letter reissued plus 30 days).
NonAOIC:
1. Reissue the letter.
2. Suspense for 30 days.
3. Update IDRS control.A new address is not found, the offer was accepted by Appeals or DOJ, 1. Prepare a Form 2209, attach any related taxpayer correspondence and a complete print of the AOIC history. Send to the accepting Appeals office or territory Advisory contact for the DOJ offer.
2. AOIC: Update the database to reflect "OI" status.
3. Non-AOIC: Update IDRS control to reflect Form 2209 sent.the offer was accepted by Collection or Examination, Follow procedures in IRM 5.19.7.3.21., Processing Defaulted OICs.
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When the Service determines the OIC should be defaulted, a default letter is sent to the taxpayer and liabilities previously written off are reinstated.
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Generate and print the default letter from AOIC for signature.
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Secure the signature of the designated official (per Delegation Order No. 5-1, formerly Delegation Order 11, Rev. 29) on the default letter.
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If there is a case file, make a copy of the signed default letter for the file.
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Send the signed letter to the taxpayer.
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The default letter is generated and sent by the MOIC unit. This action can also be taken in response to Form 2209 from the territory Advisory office (DOJ) or Appeals. The default letter can only be generated and printed at the campus once the case is assigned to MOIC.
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If the taxpayer complies before the issuance of the default letter, do not default the offer.
Note:
If the potential default letter is returned undeliverable follow procedures IRM 5.19.7.3.20.6..
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Often taxpayers will comply soon after receiving the default letter. So in addition, allow 15 days following the issuance of the default letter before taking default actions. If the taxpayer complies within this time frame, do not default the offer. It is in the Service's best interest to allow the taxpayer a full 60 days before defaulting (30 days for the POTENTIAL default letter with a 15 day grace = 45 days + 15 days after the default letter = 60 days).
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The AOIC record should be updated to OD status during the 15 day period.
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Research IDRS to determine if the taxpayer complied during the 15 day waiting period. If the taxpayer complied within this time frame, do not default the offer. Write to the taxpayer explaining that the unfiled return or unpaid payment was found and the offer was not terminated.
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Research all tax modules on the offer for an unreversed TC 470 prior to input of TC 781. Input TC 472 to reverse any unreversed TC 470.
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Change the TSIGN to 0000 or a TSIGN requested by the Field Office.
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Federal tax liens will be re-filed by the territory office when the reversed assessments are reissued.
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File the closed paper file in current year closed file.
Note:
If the defaulted offer has TFRP modules, the TFRP liaison should be contacted to update the transactions on the account.
-
The OIC Unit cannot generate a default letter from AOIC for CDP offers that are not entered on AOIC or for DOJ offers.
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In this circumstance, Appeals or DOJ will issue the default letter and forward a copy to MOIC along with the Form 2209 response.
Exception:
If Appeals accepts an offer that originated with Collection and there is a record on AOIC, MOIC can issue the default letter if the Form 2209 response from Appeals or DOJ states to take such action.
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MOIC must manually prepare a default letter for Examination (DATL) offers.
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After allowing 15 days from issuance of the default letter tax, penalty and interest previously written-off must be reinstated.
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Each previously written off tax period should be analyzed to determine if the CSED has expired.
If Then The tax period was previously written off via TC 608 Do not reinstate the tax liability. The CSED has expired Do not reinstate the tax liability. The CSED has not expired and tax period was written off via TC 971 AC 032 Reinstate the tax liability. The tax period was full paid Do not reinstate the tax liability. -
If the offer is controlled on AOIC :
-
Follow default procedures provided in the AOIC User Guide to close cases controlled on AOIC.
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The action date is the date of the default letter.
Note:
The stamped date on the signed default letter (TC 781/action date) should coincide with the date the offer is placed in OD status. If there is a variance, the history must be updated with the correct TC 781 date for a complete audit trail.
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Update the AOIC history indicating the appropriate closed status (CX).
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If the offer is manually monitored OIC:
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Pull the separately maintained control cards, Forms 2515 , 6313, 6314, etc.
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Associate the forms with the offer case file.
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Stamp "Defaulted" and the action date on Forms 656, 2515, 6313, 6314, and on the outside of the case folder.
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Determine the amount of the reassessment to be reinstated using a current transcript.
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Compute and determine if the CSED has expired on any period. If the CSED has expired, do not reinstate the tax liability.
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Input TC 781 and action date using REQ77.
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Update the status using CC STAUP.
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Change the TSIGN to 0000 or a TSIGN requested by the territory office.
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Input TC 972 AC 32 for accounts previously written off with TC 971 AC 32. This will generate a TC 605 to reverse the TC 604 write off.
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Input TC 131 (if necessary) with a delay code of one (1) to release TC 130 (credit offset). TC 130 will need to be re-input with the correct DLN indicator if the liability is on NMF.
-
Use REQ54 to input write-off reversals and manually compute penalty and interest to a current Date of Notice and Demand (23C date).
Caution:
When re-establishing joint accounts on MF, notices must be suppressed.
Caution:
Do not use TC 340, 341, 342,270, or 271 unless the account had restrictions before input of TC 780, which need to be restored.
-
-
Accounting takes the necessary actions for reinstating non-master file accounts. CSCO actions follow:
-
Prepare Form 3177 for TC 480/780 input.
-
Attach a copy of the default letter and a NMF transcript to each Form 3177.
-
Prepare Form 3465 indicating TC 860 with the full amount to be reinstated, 23C date highlighted, and specific transaction codes that were previously written off. Enter in the remarks section to reinstate abated NMF module, for the defaulted offer.
-
Prepare a statutory period worksheet and compute the new statute expiration date.
-
Prepare Form 3177 for input of TC 550 to indicate the new statute expiration date. Attach a current NMF transcript to the Form 3177.
-
Prepare two Forms 3177 for input of TC 781 and TC 483 (using the date of the default letter for the transaction date). Attach current NMF transcripts to both Forms 3177.
-
Wait for these transactions to post.
-
-
Before closing the defaulted/terminated offer:
-
Verify all TCs have posted to IDRS or NMF.
-
Staple Forms 2515, 6313 and/or 6314 together and place in the case file.
Note:
If the defaulted offer contained mirrored modules that previously had a TC 972 AC 110 posted to prevent cross referencing of subsequent payments and the CSED has not expired, manually input a TC 766 to the offer MFT 31 module to credit it for any uncredited payments posted to the spouse's MFT 31. Then input a TC 971 AC 110 cross referencing the spouse's MFT 31. Future payment will be credited on both MFT 31 modules.
-
-
) If the offer being defaulted contains mirrored modules that have previously had a TC 972/110 posted to prevent cross-referencing of subsequent payments, complete the following:
If Then The CSED on the offer taxpayer MFT 31 is expired No action needs to be taken The CSED on the offer taxpayer MFT 31 is not expired -
1.Manually input TC 766 Ref 337 (see IRM 5.19.7.3.25.7(2)) to the offer taxpayer MFT 31 module to credit it for each payment not cross-posted from the non-offer taxpayer MFT 31 module.
-
Input a follow-up for all payments to post and to ensure the module balance is the same for each MFT 31.
-
Input a TC 971/110 to each MFT 31 module, cross-referencing the spouse’s SSN to ensure cross-posting of future payments.
-
-
MOIC requests release of the federal tax lien(s) following full payment of the amount offered and accepted on an offer in compromise. However, if the taxpayer defaults on the offer after the release of a federal tax lien, MOIC must request that Advisory Unit revoke the lien release.
-
The first step MOIC should take is to view the periods covered on each released lien. The paid offer amount may have full paid the liability for the periods shown on the lien.
-
Use the ALS system to research all liens filed on the offer taxpayer. Do not include on the request for revocation any period that has been full paid by any funds received as payments on the offer or by offsets from other periods.
-
Prepare Form 4442, Inquiry Referral, and Form 12474 , Revocation of Certificate of Release of Federal Tax Lien, to request the revocation of the release of lien for tax periods being reinstated due to the default.
-
Use the original data on ALS to prepare the Form 12474 . Include any request to refile the lien, if appropriate and the aggregate account balance meets the criteria to file, on Form 4442 and in the remarks section on Form 12474 . Advisory will sign Form 12474 before filing.
-
E-Mail or fax both forms to an Advisory Group in the appropriate Territory Office.
-
Document the AOIC history.
Example:
The IRS accepted a cash offer from Jerry and Margaret Taxpayer on July 8, 2003 for $5,000 that included the following tax periods:
• 199712, for $1,200
• 199812, for $1,000
• 199912, for $3,500
• 200012, for $4,000
• 200112, for $1,300
There were (3) three separate federal tax liens that covered all (5) five tax periods;
- one lien for 199712,
- another for 199812,
- and the last for 199912, 200012 and 200112.
The offer amount full paid the 199712 and 199812. The offer amount also partially paid the liability for 199912. In August 2005, their offer was defaulted for failure to full pay their liability on their 200412 return of $3,000.
The assigned tax examiner, researched the ALS system to determine which liens had previously been released and determined that because the offer amount full paid the liability for 199712 and 199812, that a request to revoke the release of the FTL (1st lien and 2nd lien) was not necessary for these tax periods. She prepared Form 4442, Inquiry Referral, and Form 12474 for the liens which covered the 199912, 200012, and 200112 periods (3rd lien). Both forms were mailed to Advisory and the AOIC history documented.
-
-
Outstanding revocations on a taxpayer's credit report can be resolved by the filing of a subsequent release of the lien, even if the lien was not refiled after the revocation. The request to release the lien in this instance must be sent to Advisory since this is also a manual process and cannot be accomplished on ALS. Release of refiled liens must also be processed through Advisory as well.
-
Take the following steps to route requests to the appropriate Advisory unit:
-
Go to the SERP web page on the IRS intranet;
-
Click on the "Who / Where" tab at the top of the page;
-
Click on the "Advisory Units Contact List" ;
-
Click the link at the bottom of the page;
-
Scroll to the appropriate area to route the forms.
-
-
A situation may arise where an offer in compromise is defaulted and we later discover that the termination was an error.
Example:
The IRS does not receive a tax return during the 5-year compliance period and the taxpayer does not timely respond to the potential default letter due to circumstances beyond the taxpayer's control. The taxpayer later, via a certified mail receipt, conclusively establishes that the return was in fact filed but somehow was never processed.
-
All requests to reinstate a defaulted offer must be reviewed and approved by a manager and reviewed by P&A prior to any action taken by the Tax Examiner. Requests to re-open an offer will be forwarded via E-mail to the SBSE Headquarters MOIC analysts.
-
If the offer is controlled on AOIC, provide the following information to SBSE Headquarters:
-
Provide the offer number.
-
Briefly state why the offer was defaulted.
-
Include the specific dates of the default actions.
-
State the reason for the reopening.
-
Indicate the SC status code for the offer after reopening.
Note:
If the offer was defaulted by Appeals, the request to reopen should be routed via Form 2209 to Appeals.
-
-
The analysts will decide whether the reinstatement is appropriate and let MOIC know if the request is approved.
-
If approved:
-
Re-input TC 480, TC 780, etc. using the original transaction dates.
-
Re-compute the CSED if necessary.
-
Send the taxpayer correspondence advising of the reinstatement.
-
Update the case or AOIC history stating the reason for the reversal.
-
-
One of the terms/conditions of an OIC is that IRS will keep any refund, including interest, due to the taxpayer because of an overpayment of any tax or other liability, for tax periods extending through the calendar year in which the offer is accepted.
Note:
The only exceptions are:
-
Examination (DATL) offers
-
Department of Justice (DOJ) offers
-
Effective Tax Administration (ETA) (if stated in the terms)
-
-
Refund recoupments should be processed within 30 days from the date the credit is available.
-
Tax examiners should generate an AOIC Open Refund Recoupment Listing or an MR (Monitor Recoupment) Listing on the tax return due date (April 15 for IMF) to determine which offers in their inventory meet recoupment criteria. This list may be generated monthly thereafter for taxpayers who have filed extensions.
-
Additional notification will be issued due to input of TC 130. TC 130 causes a V- freeze and keeps the module from offsetting/refunding.
-
CP Notice 44 (IMF) or CP Notice 188 (BMF) generates to notify CSCO of the available overpayment.
-
An OIC transcript will issue three weeks later for any module where the credit balance was not resolved.
Reminder:
If an account freeze (TC 130) has not been input allowing the Service to cross-reference credits between IMF and BMF, this provision does not apply.
Reminder:
We cannot ask for any refunds to be returned that were issued prior to the submission date (TC 480) of the accepted offer from the responsible party (IMF) of a business, or if TC130 was not input on the IMF account allowing the cross reference credits between IMF and BMF accounts.
-
-
Outstanding available overpayments should be applied to the tax period with the earliest CSED, followed by the tax period with the next earliest CSED.
Reminder:
: Unless the OIC falls under one of the earlier exceptions, overpayments do not apply to the offer balance because the recoupment of a refund is in addition to the offer amount.
-
Procedures for processing refund recoupments through AOIC can be found in the AOIC Compliance Center User Guide.
-
Process refund offsets for modules previously written off per instructions below:
If the Then refund recoupment will be applied to an account adjusted by TC 971 1. Input TC 972 with A/C 32 to re-establish the liability and apply the refund amount.
2. Input TC 470 (no closing code) to prevent notices from issuing.
3. If the TC 788 has posted, re-input: TC 480/780 with delay code 1, TC 971/032 with delay code 2, and TC 788 with delay code 4.overpayment/refund is less than the TC 605 amount 1. Input TC 972 with A/C 32 to re-establish the liability and apply the refund amount.
2. Input TC 470 (no closing code) to prevent notices from issuing.
3. If the TC 788 has posted, re-input: TC 480/780 with delay code 1, TC 971/032 with delay code 2, and TC 788 with delay code 4.overpayment/refund is more than the TC 605 amount 1. Input assessment of accruals using TC 270 and TC 340. Caution: Do not over assess the module.
2. Follow procedures above.overpayment/refund should be applied to an NMF account Prepare Form 2424 to transfer the credit from IDRS to NMF. overpayment amount applies to penalty and interest only on NMF accounts prepare Form 3809, Miscellaneous Adjustment Voucher. liability has been mirrored to MFT 31 or split to an NMF for a co-obligor apply the overpayment to offer taxpayer; the credit will offset systemically to spouses MFT 31 account. For the NMF account manually offset the credit to the co-obligor account. -
When a new assessment is made on a recoupment year and the Service has already applied the overpayment, some or all of the recouped monies will be moved back to offset the new assessment.
If Then The overpayment does not full pay the balance due 1. Follow appropriate default procedures.
2. Adjust the AOIC recoupment screen.Part or all of the overpayment will full pay the balance due 1. Adjust the AOIC recoupment screen.
2. Continue monitoring for compliance. -
If the earliest CSED has been written off by using TC 291 (accounts prior to implementation of TC 971/AC32):
-
Use a bypass indicator to post credits to the .00 balance module(s).
-
Use CC REQ54/TC 290 to assess reversals of the written off tax including accrued penalty and interest due to the date of the payment and limited to the amount of overpayment.
-
Input TC 160 and/or TC 180 with a zero money amount, if necessary.
-
-
Note all actions on the case history sheet or AOIC.
Example:
"2001 refund recoupment applied to 12/31/2000 OIC tax period. Due to acceptance date (02/04/2002) IRS entitled to refund from 2002."
-
If the amount of the refund recoupment full pays the tax liability:
-
Input TC 780, if necessary.
-
Input TC 788 on all the offer periods.
-
Input history on AOIC to explain why there is an open offer balance on the AOIC Main Screen.
-
Turn off the OIC indicator as there is no need to monitor for compliance.
-
Change the AOIC status to CF.
-
-
Manually input TC 131 to reverse the TC 130 freeze if the Service is not entitled to another refund recoupment and additional installment payments are due.
-
If the refund recoupment is the last offer condition/term to be met (no collateral agreement, liens released) set up the file for 5-year monitoring. AOIC will systemically upload TC 131 when changing the status to 5M.
Note:
To prevent an unpostable, if TC 131 was previously input manually, delete the upload via the XMIT screen on AOIC.
-
The Service is not entitled to any additional refund recoupment if a compromise on an offer is accepted since the refund would have been recouped for the original offer.
-
OIC Acceptance Letters are generated from AOIC or local systems by Collection and Appeals.
-
Occasionally, the refund recoupment year(s) may be incorrectly stated. This usually occurs when an offer is accepted at the beginning of the tax year.
-
Regardless of the year(s) stated on the acceptance letter, monitoring units are required to monitor for the refund recoupment as stated in the terms of the OIC contract and required by law.
-
If contacted by the taxpayer or representative regarding recoupment of a refund for a year other than what is stated on the acceptance letter, apologize for the error and advise that we are entitled to the refund as a term of the OIC contract. This includes the year of filing (TC 480) through the year of acceptance (TC 780).
-
When overpayments are erroneously refunded to the taxpayer the Service will contact the taxpayer and request the refund be returned or the offer will be defaulted.
-
Returned refunds are applied to the tax period from which they generate and then applied to the oldest CSED period on the offer. For more information follow procedures in IRM 5.19.7.3.20.3., Failure to Return Refunds (Refund Recoupments).
-
Taxpayers may request the IRS apply a refund for a non recoupment tax year to the offer amount.
-
Generally this situation may arise when a taxpayer is unable to meet payment terms of an OIC. In such situations take the following steps:
-
Request the taxpayer send in written authorization.
Note:
The credit can not be applied without the written authorization.
-
Maintain this correspondence in the OIC case file, if available.
-
Input TC 130 immediately to hold the pending credit and TC 570 (on TXMOD) to stop the credit from offsetting.
-
Update the history.
-
-
When the credit becomes available apply the amount to the outstanding offer amount and oldest CSED period.
-
If the credit becomes available and we have not received written authorization from the taxpayer:
-
Contact the taxpayer making a second request for written authorization.
-
Give the taxpayer 15 days to respond.
-
If the written authorization is not received, release the TC 130 freeze.
-
-
Enter all actions on the AOIC history or note the manually monitored history file.
Reminder:
DO NOT SOLICIT REFUNDS.
-
For the most part an OIC is complete when the taxpayer fulfills all terms of the offer.
-
Offers can be transferred to the compliance monitoring status after the following are met:
-
The offer amount is paid in full including interest, if applicable
-
Co-obligor accounts have been mirrored.
-
Refunds have been recouped
Note:
Terms of collateral agreements may extend beyond the 5-year monitoring period.
-
Terms of collateral agreements have been met
-
-
When the above conditions have been met, update the AOIC status to 5M. AOIC will initiate several systemic uploads to IDRS:
-
Input TC 131 to reverse the V- freeze on the account, if not already done.
Note:
Until AOIC programming can be changed, tax examiners should release the V- freeze manually after the recoupment year to avoid future refunds from offsetting. Delete from the transaction screen or the TC 131 uploading via AOIC will unpost. See IRM 5.19.7.3.22.1
-
Input TC 971 with Action Code (AC) 032 to generate TC 604, TC 604 will abate all remaining liabilities.
-
The account for each unique TIN in the MFT Screen is TSIGNed 0000.
-
TC 788 will generate the release of the Y freeze for each tax period in MFT Screen.
Note:
The TC 788 input is delayed by 16 days to allow the TC 604 to post and abate remaining liabilities.
-
-
Research the Automated Lien System (ALS) to determine where all federal tax liens have been filed on the offer taxpayer. Follow guidelines in IRM 5.19.7.3.24.4, Releasing the Federal Tax Lien.
-
Write or Stamp "Closed" with the closed date on the case file. This file can be sent to the FRC; note the history with box, ascension number, etc.
-
Tax examiners will generate and send Letter 2908 SC/CG from AOIC using selective paragraph "H" and paragraph I, if applicable, advising taxpayers that they have met the paying provisions of the OIC.
-
Closing actions for offers not controlled on AOIC must be input manually.
-
Input the following on each open period via IDRS:
-
Input TC 131 using CC REQ77, if not previously input.
-
Input TC 971 with AC 032 using CC REQ77.
Note:
TC 971 will generate a TC 604 which will abate all remaining liabilities.
-
Wait for the TC 604 to post.
-
TSIGN each TIN to 0000, or as requested by the territory office.
-
Input TC 788 using CC REQ77 with Delay Code 2 to allow TC 971/032 to post. Set a follow-up for 2 cycles to ensure TC 788 input on Masterfile.
-
-
Make a photocopy of Form 6314 (showing the zero offer amount balance due) and write or stamp "Notice to Release Lien" .
-
Notify the territory Case Processing to release the Federal Tax Lien(s). Follow guidelines in IRM 5.19.7.3.24.4, Releasing the Federal Tax Lien.
-
If the offer is submitted by one party of a joint assessment, special rules apply. IRM 5.19.7.3.20, Separate OICs on Joint Liabilities.
-
Note all actions on the case history sheet or AOIC (per campus policy).
-
Write or Stamp "Closed" and the date on the case folder and file the case in the closed file.
-
For NMF accounts on IDRS, prepare a separate Form 1331-B, Notice of Adjustment (Doc Code 54), for each tax period, to adjust tax, penalty and interest.
-
Include in Form 1331-B:
-
The OIC NMF accepted account case
-
Taxpayers name and address
-
Amount compromised
-
Total liability
-
Taxpayers SSN or EIN
-
Type of tax and period(s) ending
-
DLN of the transcript
-
-
Request TC 291 and related TCs (271, 341, etc.) to remove the liability from NMF.
-
If the NMF account is in Status 53, prepare Form 3177 to reactivate the account; request input of TC 531.
-
Send Form 1331-B to the centralized NMF sites:
Cincinnati Sub. Proc. Campus
Post Office Box 12267
Covington, KY. 41012.
-
IRC 6323 allows the Service to file a Notice of Federal Tax Lien (NFTL), which attaches to real and personal property, bank accounts and wages. The NFTL protects the interest of the government and provides other creditors, judgment lien holders, and the public with notice of the government's lien on the taxpayer's assets.
-
When tax, penalty, and interest for all tax periods listed on the NFTL are fully satisfied, the Government releases the lien. The same applies when the full amount of an accepted offer, including interest, (if applicable) has been paid.
Note:
Prepare a written request for a partial release of lien when only one spouse or partner has an accepted offer and has paid the offer amount.
-
Liens must be released not later than 30 days after the date the Secretary determines that the underlying liabilities for which the lien was filed has been satisfied, legally unenforceable, or when an offer amount is paid in full. If there are delays in posting payments or transferring credits that may impact the timely release of the lien, contact the Centralized Lien Unit. Contact number(s) for the centralized lien unit can be found on SERP under the "Who/Where" tab, Case Processing Lien Unit.
-
How the final payment is provided by the taxpayer determines the waiting period for making the release requests:
If Then Final offer payment is made by personal check 1. Verify the payment cleared after 15 workdays.
2. Use CC BDINQ to research for a dishonored check.
3. If not present, research ALS and request the release of all liens filed.
4. If the personal check is dishonored, follow procedures below.Dishonored check penalty is on IDRS. 1. Contact the taxpayer.
2. Follow procedures in IRM 5.19.7.3.17.8 Dishonored Checks and IRM 20.1.10.5, Bad Check Penalty.
3. Abate the penalty.Final payment is a cashiers check or money order, Research and request release of the NFTL via ALS immediately upon receipt of full payment of the amount offered. Caution:
If the final deferred or interest due payment is within 3 months of the due date of the first year Future Income Collateral, delay lien release to verify there is no amount due on the collateral.
-
DO NOT issue an immediate release when credit or debit cards are used to full pay the amount offered. See IRM 5.12.6.5.1.2 (1)(2).
-
If a credit card is accepted to satisfy an offered amount, the lien may not be released until the 120-day charge-back period has expired.
-
If a debit card is used, the lien may not be released until the 100-day charge-back period has expired.
-
Document case history to indicate the method of payment and schedule a follow-up to release the lien based on payment type.
-
-
Notice of Federal Tax Liens, Forms 668-(Y)(c), are generated and printed from the Automated Lien System (ALS). ALS systemically uploads TC 582, FTL indicator.
-
Once the lien is printed the ALS unit mails the printed document to the appropriate court house for filing. A facsimile of the lien or release of a lien can be printed from ALS as needed.
-
Access ALS to research the Automated Lien System (ALS) database for all liens filed on a given taxpayer.
-
A list of liens filed on the taxpayer's TIN will be displayed on ALS. Each lien is assigned a SLID number.
-
In the upper right corner of the ALS display screen is a field that indicates if more than one lien is on file.
-
If, for example, the display says" Selected: 5 Current: 1" this means there are multiple liens filed on this taxpayer not just the one showing on the screen.
-
In this example, press 5 to select the lien and follow the ALS prompts.
Note:
If researching using the ALS slid number the "selected" field won't appear.
-
-
A request to release the federal tax lien must be made for each lien on file.
-
In the upper right corner of the ALS display screen is a field that indicates if more than one lien is on file.
-
If, for example, the display says" Selected: 5 Current: 1" this means there are multiple liens filed on this taxpayer not just the one showing on the screen.
-
In this example, press 5 to select the lien and follow the ALS prompts.
Note:
If researching using the ALS slid number the "selected" field won't appear.
-
-
To request the release select Request a Lien Release from the ALS Menu option or type release at the prompt.
-
You will be prompted by the ALS program to enter data to show that the tax liability has been satisfied.
-
Requests for releases will go into the OIC Unit manager's queue for approval. The manager's queue must be cleared of all lien release requests on a weekly basis and a five-day follow-up placed on any requests that are returned for corrections.
-
Once the manager approves the release it is printed in the ALS unit. ALS examiners batch and mail the releases along with the lien fee payment to the appropriate court houses.
-
Document the AOIC History, or in the manually monitored case file history, the date and to each office the request to release of the federal tax lien has been sent.
-
Taxpayers must agree to future compliance provisions when offers are accepted. The taxpayer must timely file all tax returns and pay all taxes due during the compliance period. The compliance period is five years from the acceptance date or until the offer amount is paid in full, whichever is longer. 5-Year compliance does not apply to Doubt as to Liability offers.
Example:
Taxpayer A has a cash offer accepted on March 14, 2003. As policy directs, MOIC will cease monitoring this offer for compliance on 03/14/2008.
Example:
Taxpayer B's deferred payment offer is accepted on March 14, 2003; his scheduled payments are for seven years beginning 05/01/2003 (05/01/2003 plus 7 years = 05/01/2010.) The taxpayer must file and pay all tax returns until 05/01/2010.
-
Prior to issuance of MOIC correspondence, use IDRS to determine if the AOIC record has the most current address for the taxpayer.
Example:
The OIC was accepted in 2003 and IDRS ENMOD shows an address update for 2005. Update the AOIC.
-
Prior to reaching the above Master File statuses, the taxpayer is reminded of the compliance requirements on each issuance of a return delinquency or balance due notice. The reminder appears as a pop-up paragraph on the notice.
-
Failure to adhere to the compliance terms could result in the default of the OIC and reinstatement of compromised liabilities. IRM 5.19.7.3.20.4., Failure to Adhere to Compliance Terms.
-
If the offer is on a defunct business that has met all terms of the offer and we are not monitoring the individual that owned the business, then there is no need to monitor for 5-year compliance.
-
The following suspense files must be maintained for accepted offers.
-
Maintain a file of Forms 2515 prepared on all manually processed offers which have deposits on RACS. Maintain the forms in the suspense file for 6 months following refund of the deposit to ensure there are no undeliverable issues.
-
Maintain the file in alphabetical order.
-
Update Form 2515 as necessary.
-
-
Maintain a control of all offer deposits based on the Revenue Accounting Control System (RACS) number posted at the top of the Form 2515.
-
Open offer deposits are to be reconciled monthly when the RACS Inventory Report is received.
-
For offers on AOIC, the Form 2515 can be destroyed once the 4710 account is clear of the related funds and the AOIC history is documented as to the disposition of the deposit. Forms 2515 for all manually monitored offers can be placed in the case file once the deposit has been cleared from the 4710 account listing and the case file documented.
-
Maintain a file of all offers accepted with a collateral agreement.
-
The file should be maintained by teams and in alphabetical order.
-
Maintain a file of Forms 6313, Collateral Agreement Payment Records, for all manually processed offers. It is not necessary to maintain a file for any account loaded on AOIC.
-
Maintain the file in alphabetical order.
-
Maintain forms in the file until the collateral is closed.
-
Maintain a file of Forms 6314, Deferred Payment Offer Payment Records, for all manually processed offers. Maintain the file in chronological order by anniversary date of payment, until the offer is closed. It is not necessary to maintain a file for any account loaded on AOIC.
-
Maintain a Form 2515 closed file on all manually processed Offer in Compromise cases with deposits that were closed as Rejected or Withdrawn. These files can be purged one year after the deposit account has been reconciled and the deposit either applied or refunded.
-
Retain all Forms 2515 for deposits that post back into RACS until the funds are either refunded or applied.
-
Maintain the file in alphabetical order.
-
Transcripts are paper documents generated by the Martinsburg Computing Center (MCC) as an alert when an identified transaction or missing action occurs on a tax module. All transcripts are issued on Form FC-4.
-
Transcripts should be processed within 45 days of "receipt."
Note:
Due to the 2001 consolidation, transcripts may generate at another campus and must be sorted and shipped to the correct campus.
-
Transcripts generated on OIC Accounts are:
-
Unreversed TC 470 Transcript/AMO6 W Transcript
-
Diagnostic-Q Transcript/DIAG-Q Transcript
-
Non-Master File Transcript/NMF Transcript
-
MIRRORFAIL Transcripts
-
-
OIC transcripts generate when a tax module changes to a debit balance after TC 788 has posted or when a tax module changes to a credit balance and TC 78X has not been reversed. Tax Examiners must take the following actions to resolve the underlying issues that created the transcript:
-
Manually transfer or refund the credit amount when a credit transcript is received.
-
Adjust balances on TC 78X debit transcripts.
-
Destroy OIC transcripts after the appropriate action has been taken.
-
-
Input of TC 480 generates a Y freeze on the tax module. The freeze generates reason code 33 to Master File. When the reason code remains on the module for over one year, a Diagnostic (DIAG Q) transcript will generate annually to identify potential problem modules on the taxpayer Information File (TIF). The reason code is removed by the reversal of the TC 480.
-
Although not all DIAG-Q's require action, these transcripts provide a means to identify and remove unnecessary modules/accounts from the TIF.
Note:
The following research tools are available to assist in the resolution of the DIAG-Q transcript. Accounts Management Services (AMS), Intergrated Collection System (ICS), Appeals Centralized Database System (ACDS), Automated Offer In Compromise (AOIC), and Intergrated Data Retrieval System (IDRS) using command codes IMFOLI and BMFOLI.
-
DIAG-Q's generated on accounts with Appeals jurisdiction should be forwarded to the Centralized Appeals OIC at the Brookhaven Campus for resolution.
-
Only the numeric DIAG-Q transcripts greater than "1" will be referred. All others should be destroyed.
-
Input a history item on AOIC, IDRS, and AMS.
-
If history show prior year referral to Appeals not resolved, request response from Appeals on expected resolution.
-
Use Form 3210 to refer the DIAG-Q transcripts to the Centralized Appeals OIC.
-
-
Reverse the Y freeze by the following transactions:
-
TC 481, OIC Rejected or Returned
-
TC 482, OIC Terminated or Withdrawn
-
TC 483 Correction of Erroneous Posting of TC480
-
TC 781, Defaulted Account Compromise
-
TC 782, Correction of 780 Processed in Error
-
TC 788, All Collateral Conditions of the Offer Completed
-
-
Upon receipt of the DIAG-Q transcript, review the tax module(s):
If Then TC 480 freeze is valid Destroy the transcript Module should have been previously closed Input the appropriate TCX to close the module Closing code is posted to the module, indicating a systemic problem Report the problem to Information Systems (IS). -
Document receipt and any action taken as a result of the transcript in the case history.
-
Destroy all transcripts after resolution.
-
AMO6W transcripts issue when TC 470 is not reversed on a defaulted offer tax module (TC 781).
-
Research and reverse all TC 470 on each module.
-
NMF transcripts generate when:
-
A second credit posts to a module after issuance of a CP44 Notice and a V freeze created by the TC 130 remains on the taxpayers account.
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A TC 740 posts to the transcript module and creates a credit balance.
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If the NMF transcript cannot be resolved within 14 days from the computer notice date:
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Control the transcript using Category Code CP44 and
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Input in the history section of the control base "NMF."
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If the OIC has been paid in full and the credit is not subject to recoupment, refund the credit to the taxpayer.
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Release the V freeze, if necessary, by inputting TC 131.
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Document receipt and any action taken as a result of the transcript in the case history.
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If the Filing Status (FS) of an identified entity is updated from one FS to another based on the posting of a TC 150 within the five-year period a "DEFAULTFSC" transcript will generate.
Example:
Joint taxpayers Robert and Rose divorce; Rose files as single in the subsequent year. A DEFAULTFSC transcript will generate showing that Roberts filing status changed from joint to single or to head of household.
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Using the example above, if taxpayer Rose had accepted the offer and would be filing future returns under her or a different TIN, the OIC indicator must be placed on her TIN.
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Use Command Code (CC) ENMOD overlaid with CC ENREQ to place the OIC Acceptance year on the new entity. (OIC> 1998 for 1998.)
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This will generate TC 016 in the module.
Caution:
Reports indicate this action may not input the OIC Acceptance year if a TC 780 is not present under the taxpayer TIN. If this is true, manually monitor these cases.
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Using the example above, if Taxpayer Robert was not a party to the offer, the OIC Acceptance year must be taken off. Using ENREQ (see above) enter 1966 to remove the OIC indicator. (OIC>1966.)
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Document receipt and any action taken as a result of the transcript in the case history.
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MIRRORFAIL transcripts generate when a payment does not systemically cross-reference from a mirrored module, TC 971 AC 110, to the other SSN. They may also generate when a TC 766 credit creates a credit balance on a cross-reference MFT 31 module.
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Cross-reference and reversal actions on MFT 31 mirrored accounts will have to be done manually.
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a.To cross reference a payment or other credit that has not systemically cross- referenced from a mirrored module, input a TC 766 Ref 337 using command code REQ54.
(b)To abate a cross-referenced payment or credit, use CC REQ54 and input the amount of the TC 766 reference code 337 that is being reversed.
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Mirrorfail transcripts are to be worked within 30 days of the date of the transcript.
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Form 2209, Courtesy Investigation, is used in MOIC to advise Appeals and DOJ of potential default situations on accepted offers. Campuses should allow a 45 day response deadline and establish a 90 calendar days follow up for a response and take the following actions:
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For offers on AOIC, input a 90 day follow up to monitor for response. For manually monitored offers, input the follow-up in the history section of the tax module.
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Provide as much detail as possible in the remarks section of the Form 2209, attach a copy of any correspondence from the taxpayer and a complete print of the AOIC history.
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Place offers on AOIC in OI status. Place manually monitored offers in a suspense file.
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Record all Form 2209 responses in the OIC case history file for manually monitored offers and include a follow up date. For offers on AOIC, document responses in the AOIC history and set a follow up on the system.
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If a response is not received by the investigation due date, send a list of all overdue courtesy investigations to Appeals contact (to Advisory contact for offers accepted by DOJ) requesting they provide a status update. This list should be sent every 30 days following the initial request for a status update.
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When an OIC is filed, a TC 480 is input with Status 71. TC 480 indicates an OIC is pending.
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For IMF accounts, verify on IDRS using CC TXMOD that the CSED has been suspended on all taxpayers. A letter "P" for primary or "S" for secondary will appear to the right of the CSED, if the CSED has been suspended on only one of the taxpayers.
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Contact the OIC Unit regarding any other concerns.
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Undelivered (UD) mail is any letter, correspondex letter or notice sent to the taxpayer and returned with an indication the taxpayer no longer resides at the address.
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Bad Address is any letter, correspondex letter or notice sent to the taxpayer and the mail is returned or could not be delivered based on the United States Postal Service (USPS) standards and requirements. These may be returned directly from the Correspondence Production Services (CPS) print sites or returned from the USPS as UD mail.
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Address Research (ADR) is a system that researches potential addresses on UD mail. If potential address(es) found by the ADR system, it will send the 2797CG (R-U-There) letter to the taxpayer.
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This section provides general procedures for processing UD mail for CSCO and ACS letters and notices that are not processed through the ADR system. If the procedures below cannot be worked by the ADR employees, then the work is performed in other areas in the CSCO and ACS Support functions. In addition, specific procedures for ACS letters UD mail not processed through ADR should be worked using IRM 5.19.6.19.1, Non-Scanned UD Mail (ACS Input).
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Separate all UD mail in groups as follows:
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Correspondence mail - these are normally return to the originator's IDRS assignment number.
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USPS yellow label - these include CSCO Return Delinquency (RD) notices (excluding ASFR letters) , Balance Due notices and ACS LT letters (including LT-11s).
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ASFR letters - these are the 30–Day (2566 SC/CG) and 90–Day (3219 SC/CG).
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Incarcerated mail - these include RD and Balance Due notices only. Any ACS letters indicating incarcerated will be worked by ACS Support function.
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Deceased mail - these include RD (Sel Code 04) and Balance Due notices only. Any ACS letters indicating deceased will be worked by ACS Support function.
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Out of Business (OOB) UD mail - these include RD and Balance Due notices only.
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Power of Attorney (POA) mail - these include ACS letters, RD and Balance due notices.
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For UD correspondex mail, research IDRS to check the address has been recently changed or in a pending status. If so, send a new correspondex letter overlaying with the new address. Update DI comments (if applicable) to indicate letter sent with new address. If no new or pending address, destroy correspondex letter as classified waste (CW) and update DI comments (if applicable) to indicate correspondex letter received as UD mail. If USPS yellow label is shown, follow procedures below.
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For USPS yellow label, follow below:
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Compare the yellow label entity portion to the name and address on IDRS CC ENMOD or IMFOLE to verify if it is the same taxpayer. If it is the same taxpayer, continue below. If it is not the same taxpayer or you are unsure, check if this letter or notice meets ADR criteria in IRM 5.19.7.5.3 and forward to the ADR unit. If it does not meet ADR criteria, destroy notice and update AMS comments (if applicable).
Note:
Rev. Proc. 2001–18 Section 4.06, allows the Service to change the address when the taxpayer notifies the USPS facility.
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Compare the cycle of current Master File (MF) address shown on CC ENMOD or IMFOLE to the date on the USPS yellow label. If the USPS yellow label date is more recent than the cycle on CC ENMOD/IMFOLE, update address on IDRS using CC ENREQ with the appropriate location code. If not newer, destroy and update AMS comments (if applicable).
Note:
The USPS yellow label with a forwarding address may contain "Forward Time Expired, Return to Sender" which means the Post Office will no longer forward the mail piece usually after 12 months or so. The date of the forward time expired may still be newer than the cycle on IDRS.
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Re-send the letter or notice if possible; otherwise, the next notice issuance will contain the new address. Update AMS comments (if applicable).
Note:
For ACS LT-11s, do not re-send a LT-11, instead use OL-16 to issue another ACS letter. Update AMS comments and indicate the new address.
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For ASFR letters,forward all UD ASFR letters (including letters with USPS yellow label, Deceased, Incarcerated, Refused or Unclaimed to the ASFR Clerical function, as stated in IRM 5.18.1.10.2.2 .
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For Incarcerated mail, these include Return Delinquency and Balance Due notices, process as follows:
If Then The amount of the balance due notice is below≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input TC 530 cc 09 to the notice module or year. The amount of the balance due is above ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Accelerate to ACS by using CC STAUP 2200. The return delinquency is marked PCB (IMF) or LRA (BMF) and the amount is below ≡ ≡ ≡ ≡ ≡ ≡ Input TC 593 cc 82 to the notice module. The return delinquency notice is not a PCB (IMF) or LRA (BMF) and the amount is above ≡ ≡ ≡ ≡ ≡ ≡ (except for Form 1065 ): Accelerate to ACS, see: IRM 5.19.2.6.1.1 . Note:
Do not accelerate to ACS if the IMF account is a Sel Code 13, 14, or 17 as these are ASFR potential and will be systemically sent to ASFR.
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For Deceased mail, these include Return Delinquency and Balance Due notices, process as follows:
If Then The amount of the balance due notice is below≡ ≡ ≡ ≡ ≡ Input TC 530 cc 08 to all modules, as appropriate. Note:
TC 530 generates a TC 540, see IRM 5.19.1.4.3(9) .
The balance due notice is for a single entity, no date of death provided and the amount of the balance is above ≡ ≡ ≡ ≡ ≡ Input TC 540 to current processing year. Accelerate to ACS by using CC STAUP 51 of the notice module. The balance due notice is for a joint entity, the primary taxpayer is deceased, no date of death provided and the amount is below≡ ≡ ≡ Input TC 540 to current processing year. Input TC 530 cc 08 to the notice module. Note:
If the notice module is the same as the current processing year, input TC 530 cc 08 only.
The balance due notice is for a joint entity, the primary taxpayer is deceased, no date of death provided and the amount is above≡ ≡ ≡ ≡ ≡ Input TC 540 to current processing year and a CC STAUP 51. The balance due notice is for a joint entity, the spouse is deceased, no date of death provided and the amount is either above or below≡ ≡ ≡ Input TC 540 to spouse's SSN to the current processing year. Continue to process the UD notice through ADR, see IRM 5.19.7.5.3 The balance due notice has a date of death provided and the amount is above≡ ≡ ≡ ≡ Input TC 540 to the year of death and accelerate to ACS using CC STAUP 51. The return delinquency notice is marked PCB (IMF) or LRA (BMF), no date of death provided and the amount is below≡ ≡ ≡ ≡ ≡ ≡ Input TC 540 to the current processing year. Input TC 593 cc 82 to the notice module. The return delinquency notice is NOT a PCB (IMF) or LRA (BMF), no date of death provided and the amount is above≡ ≡ ≡ ≡ Input TC 540 to current processing module or year. Accelerate to ACS: see IRM 5.19.2.6.1.1. Note:
Do not accelerate to ACS if the IMF account is a Sel Code 13, 14, or 17 as these are ASFR potential and will be systemically sent to ASFR.
The return delinquency notice is NOT a PCB (IMF) or LRA (BMF), date of death is provided for the notice tax module and the amount is above≡ ≡ ≡ ≡ ≡ Input TC 540 on the notice tax module or year. Input TC 591 cc 75 for the subsequent year. Accelerate to ACS: see IRM 5.19.2.6.1.1. Note:
Do not accelerate to ACS if the IMF account is a Sel Code 13, 14, or 17 as these are ASFR potential and will be systemically sent to ASFR.
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For IMF entity changes for deceased taxpayer(s), the name line(s) should be changed as follows:
If Situation Change To Joint taxpayers - Filing status 2 Primary TP deceased John DECD & Mary Pine. Option for second name line use % or c/o Mary Pine. Joint taxpayers - Filing status 2 Secondary TP deceased John & Mary DECD Pine Individual taxpayers - Filing status 1, 3, or 4 If an estate with an administrator or executor exists. Estate of John Pine Individual taxpayers - Filing status 1, 3, or 4. If no estate can be determined. John Pine, DECD Taxpayer representative responds Requesting to be recorded as the contact point for the decedent's account. Input an "in care of" (c/o, %) on the second line of the entity. -
Return delinquency notices indicating OUT OF BUSINESS (OOB) modules with and without dates will be processed as shown below. After the appropriate action is taken, destroy the UD mail as classified waste (CW).
If Then The OOB date is provided, Input TC 591 to the next period. Accelerate or Delay to TDI Status 03, see IRM 5.19.2.6.1.1 The OOB date is not provided, Accelerate or Delay to TDI Status 03, see IRM 5.19.2.6.1.1 For ACS LT letters and the UD mail is marked OOB, Input any useful information or comments. Change the follow-up date to the following day (OAUD,01,TPOOB). -
For Power of Attorney UD mail and includes an USPS yellow label, check CC CFINQ to validate the POA's name and address. If CFINQ's address is older or not updated from the address shown on the yellow label, route POA UD mail on Form 3210, Document Transmittal, to the appropriate centralized CAF site. Indicate on Form 3210, "Update POA address based on USPS yellow label per Rev. Proc. 2001–18 Section 4.06. " Update DI comments, as appropriate. Destroy all other POA UD mail that have no USPS yellow label.
Note:
Refer to SERP under Who/Where tab and click on CAF Contacts to find the appropriate CAF site to route the Form 3210.
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This section provides procedures for Bad Address processing for those letters or notices that are not processed through ADR processing, see IRM 5.19.7.5.3. Bad Address means the address lines are not in compliant with the standards of the United States Postal Service (USPS) and may or may not be delivered to the taxpayer. These Bad addresses may contained Service Center's (SC) Campus address, SC unique zip codes, see IRM 3.10.72.2.3, or incomplete or no address lines. The USPS standards are in Publication 28 and can be found on web site: www.usps.com/publications/pubs/welcome.htm
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If the Bad Address mail is received and is not one of the listed letters or notices to be processed through ADR per IRM 5.19.7.5.3 , do the following:
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If there is a USPS yellow label, follow IRM 5.19.7.5.1(4) , above.
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Research Bad Address on IDRS using CC ENMOD or IMFOLE to check for a recent address change or pending address change. If so, re-send the letter or notice. If cannot re-send the letter or notice, destroy the UD mail and update DI comments, as appropriate.
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If research shows no recent address change or pending address change, destroy UD mail and update DI comments, as appropriate.
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If the Bad Address has incomplete address lines (i.e., missing APT number, street address, etc...) and research shows complete address lines, re-send the letter or notice by overlaying the complete address, if applicable. Do not change the address on CC ENREQ. If you cannot re-send the letter or notice, destroy the notice and update DI comments as appropriate.
Note:
Never update a Bad Address on IDRS CC ENREQ unless the UD mail has a USPS yellow label or you received a response from the taxpayer per Rev. Proc. 2001–18 Section 4.06.
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This section provides procedures for the employees processing UD mail through ADR processing. The UD mail processed through ADR system must contain a 12-digit barcode. After the UD mail is input to ADR system, the notice or letter can be destroyed. The list of letters, notices and Spanish versions input by ADR are as follows:
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160, 163
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501, 503, 504, 601, 603, 604
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521, 522, 523, 621, 622, 623
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59, 259, 759, 959
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515, 516, 518, 615, 616, 618
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2797CG
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ACS LT letters (excluding LT-11)
Note:
All UD ACS LT-11s (including unprocessables USPS yellow labels) and other ACS letters that cannot be processed through ADR (non-scanned UD mail) are forwarded to the ACS Support function per IRM 5.19.6.19, Undeliverable Mail.
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Destroy all notices in the list above marked with Refused or Unclaimed.
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The notices listed above may contained an USPS yellow label that could not be worked from IRM 5.19.7.5.1. These will be also input on ADR.
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ADR will conduct address research of the Corporate Files On-line (CFOL), IRMF, and ChoicePoint on IMF and BMF accounts. Once the notice (case) is input on the ADR system, the timeline may be as follows:
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A STAUP of 7 cycles is systemically initiated and searches for possible address(es) from IRMF.
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If address(es) are found, ADR systemically sends 2797CG R-U-There letter(s) to those address(es).
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Suspends for 45 days to allow enough time for the taxpayer responses.
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After 45 days and no responses, the case systemically moves to ChoicePoint for additional 7 cycles.
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If a new address is found on ChoicePoint, a R-U-There letter is sent.
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After 45 days and no response or no address is found, the case moves out of ADR and resumes normal processing.
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If the taxpayer does respond during any of the processes above, the ADR employees will update the address through ADR and once posted, it moves out of ADR and resumes normal processing.
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The entire maximum time in ADR could be up to 112 days.
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ADR will systemically generate a 2797CG (R-U-There) letter to the taxpayer through the processes above requesting confirmation of any new address(es) found.
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If the 2797CG is returned by the taxpayer verifying the address, input the appropriate response code on the ADR system. Enter the new address on ADR which will be uploaded to IDRS and Master File. If a telephone number is provided, input to ADR to be uploaded to IDRS.
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If the 2797CG letter is returned as UD mail, input the appropriate response code on the ADR system.
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For ACS LT letters (excluding LT-11), when ADR completes research, normally 112 days, the results will systemically be entered onto the comments field of ACS with the source of the new address found. This depends on the number of sources researched, the number of 2797CG letters issued and the receipt of the responses. The comments shown on ACS will appear as follows:
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IDS CB - Trans Union Credit Bureau
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IDS CBRS - Currency and Banking Retrieval System (BMF only)
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IDS CP - ChoicePoint
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IDS UFA - Unverified Forwarding Address
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IDS IRMF - Information Return Master File
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IDS ADR - No Alternative Addresses Found
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