5.19.7  Campus Collection Programs

Manual Transmittal

June 17, 2015

Purpose

(1) This transmits a revised procedural update for IRM 5.19.7 Compliance Services Collection Operations (CSCO) Programs.

Material Changes

(1) IRM 5.19.7.3.19.4 (1) add Note: Failure to Adhere to Compliance Terms add Note: As a matter of policy, if there is no other basis to default the taxpayer's offer, the non-payment of an individual shared responsibility payment (SRP) will not default an offer. The SRP amount that the taxpayer owes is not subject to failure-to-pay penalties or to lien and levy enforcement actions

(2) IRM 5.19.7.2.19 (4) changed reference to 5.8.4.18

(3) IRM 5.19.7.2.19(5) changed reference to 5.8.4.19

(4) IRM 5.19.7.2.4.1(1) (i) add authorized under IRC 7121 (e.g. Forms 866 or 906)

(5) IRM 5.19.7.2.4.1 (m) add When the liability is due entirely, or in part, to an erroneous refund.

(6) IRM 5.19.7.2.6 (4) (f) add to Note: If the offer was submitted containing multiple tax years but not all tax years were previously considered by Appeals, request an amended offer. Submit one offer for the offer which was previously considered by Appeals and a second offer for any additional year (s) that were not previously considered by Appeals.

(7) IRM 5.19.7.2.15.2.1 (1) (c) add Preliminary

(8) IRM 5.19.7.2.15.2 (6) add The review must be conducted prior to the final determination of rejection being communicated to the taxpayer.

(9) IRM 5.19.7.2.15.3.1 (1) (c) add The original Form 1271 and any other documentation regarding second level management involvement and decisions must be retained in the offer file as a record of actions taken during the IAR process

(10) IRM 5.19.7.2.16 (6) change IRM reference IRM 5.8.8.6, Required Actions Prior to Closing an OIC as an Acceptance.

(11) IRM 5.19.7.3.9.3(2)(e) add 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.

(12) IRM 5.19.7.3.10.5 (8) Updated questions to CIO.

(13) IRM 5.19.7.3.9.4 change to say: 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 within 30 days.

(14) IRM 5.19.7.2.16(4) add If Counsel does not sign or check the ‘disagree’ box for legal sufficiency on the Form 7249, then the IRS has the legal right to accept the offer. However, rejecting Counsel advice is not a preferred course of action.”

(15) IRM 5.19.7.1.1 (6) Change CSCO to either MOIC or DATL

(16) IRM 5.19.7.2.3(1) remove from COIC

(17) IRM 5.19.7.2.4.1(1)(c) Change under consideration an offer based on to an open offer being considered based on

(18) IRM 5.19.7.2.4.1(1)(i) change for which to The offer includes periods for which

(19) IRM 5.19.7.2.4.1(1)(j) change for offers submitted on cases to the offer is submitted on a case

(20) IRM 5.19.7.2.4.1(1)(j) remove for offers where and and capitalize T in There

(21) IRM 5.19.7.2.4.1(1)(l) remove last sentence

(22) IRM 5.19.7.2.5.1(1) if management agrees with the RO's recommendation

(23) IRM 5.19.7.2.9(1)(a) change innocent spouse wording

(24) IRM 5.19.7.2.9(2) add request for Innocent Spouse

(25) IRM 5.19.7.2.14(2)Note Added instruction on how to find the correct Postmark Date on USPS Certified when the Postmark Date is missing.

(26) IRM 5.19.7.2.20(1) add Taxpayers have the right to retain an authorized representative of their choice by submitting a properly executed Form 2848, Power of Attorney and Declaration of Representative, or to seek assistance from a Low Income Tax Clinic if they cannot afford representation.

(27) IRM 5.19.7.2.20(2) reword

(28) IRM 5.19.7.2.20(4) reword

(29) IRM 5.19.7.2.20(7) reword

(30) IRM 5.19.7.2.20(11) reword

(31) IRM 5.19.7.3 add note DATL accepted offers are not monitored for 5-year payment and filing compliance.

(32) IRM 5.19.7.3.1(3) add note An exception may be allowed to the five month payment requirement when more flexible payment terms are warranted. Also, in these cases, while they may be submitted and considered as cash offers, the RCP should be calculated as a periodic offer (24 months). See IRM 5.8.4.

(33) IRM 5.19.7.3.4(1) change to say Area Offices, Compliance Campus, DATL and Appeals Area Office

(34) IRM 5.19.7.3.4(2)(c) add The Appeals segment is designed to assist the Appeals staff up to the point the offer is rejected, withdrawn or accepted.

(35) IRM 5.19.7.3.4(2)(d) add The DATL segment is also designed to assist the DATL staff up to the point the offer is rejected, withdrawn, return or accepted.

(36) IRM 5.19.7.3.6 change title to include and Suspension

(37) IRM 5.19.7.3.6(6) 2nd box include because the CRTRA inadvertently removed the suspension provision from the IRC.

(38) IRM 5.19.7.3.6(6) third box include Enactment of the Job Creation and Worker Assistance Act of 2002 on March 9, 2002, reinstated the suspension.

(39) IRM 5.19.7.3.6(7) add Note: Several events can suspend or extend the statute. Guidance is provided in IRM 5.19.10.4.4. In addition, the is a downloadable CSED calculator, CCalc, which can assist in complex calculations of the CSED.

(40) IRM 5.19.7.3.9(1) add and settlements referred to the IRS by the Department of Justice.

(41) IRM 5.19.7.3.9(3) add The IRS generally does not have the authority under IRC 7122 to compromise periods DOJ is litigating or for which DOJ has secured a judgment.

(42) IRM 5.19.7.3..10.4(2) remove 071 Dyed disel fuel used in trains, 120 Compressed natural gas 035(a) kerosine

(43) IRM 5.19.7.3.10.6(3) add Note: If contacted by the taxpayer affected by the combat zone freeze, at their request, any postponement may be overridden at their request.

(44) IRM 5.19.7.3.15(1) add subsequent to the acceptance date of the original offer

(45) IRM 5.19.7.3.16.1 restrict wording

(46) IRM 5.19.7.3.19.4(1) remove or until the offer amount is paid in full, whichever is longer and add a Note:filing a notice of federal tax lien, or levy on the taxpayer's property.

(47) IRM 5.19.7.3.20(4) define comply, (take the actions requested of them in the potential default letter)

(48) IRM 5.19.7.3.20.2.(1) add may be reinstated as appropriate per the chart below

(49) IRM 5.19.7.3.20.3(1) add and the IRS defaults the offer

(50) IRM 5.19.7.3.22.4(1) update and add IRC 6323 allows the Service to file a Notice of Federal Tax Lien (NFTL), which

(51) IRM 5.19.7.3.22.4(4) add paragraph to read Self-released liens occur when the statutory period for refiling for each module on the NFTL has expired and no refile was filed. Self-released liens do not have a release document issued systemically nor do they require one unless the taxpayer specifically requests it. MOIC is not required to request a release of these liens. Any request involving a self released lien should be referred to CLO..

(52) IRM 5.19.7.3.22.4(5) add Note: If the status of the lien is "new" on ALS then a request to release the lien must be sent to CLO using form 13794.

(53) IRM 5.19.7.3.22.5(2) remove court house and add office designated by the state

(54) IRM 5.19.7.2.4.1(b) add The CSED for which the liability is in dispute is expired and it is the only tax period included on the offer.

(55) IRM 5.19.7.2.4.1(g) add Note: The exception are innocent spouse requests filed under IRC 6015(f), in which relief was solely denied due to the two year rule. These are processable requests.

(56) IRM 5.19.7.2.5(4)(d) change to say A DATL offer is filed by a corporation against which a nominee lien was filed. Since there is no assessment made against the corporation, there is no liability to compromise. The taxpayer should be advised to contact the Revenue Officer to discuss the nominee lien filing.

(57) IRM 5.19.7.2.4.1(m) change terminated to defaulted

(58) IRM 5.19.7.2.5.(4)(e) add See IRM 5.8.10.12,Offer and Compromise Submission with Frivolous, Delaying, or Impeding Issues, .and IRM 5.8.4.20,Offer Submitted Solely to Delay Collection, for guidance in identifying and asserting the frivolous penalty on a frivolous filed OIC.

(59) IRM 5.19.7.2.20(7) add bullet The taxpayer may use Form 656-L to authorize a third party designee to discuss the offer with the IRS.

(60) IRM 5.19.7.2.10.1(4) change wording in Note:

(61) IRM 5.19.7.3.6(6) first box change to say All extensions secured prior to December 31, 1999, and extended beyond December 31, 2002, expired on December 31, 2002 or the original CSED date whichever is later. (Offers that were accepted for processing prior to December 31, 1999, but remained pending after that date were treated the same.)

(62) IRM 5.19.7.3.9(13) remove exception

(63) IRM 5.19.7.3.10.7(2) second box under Then change number 7 to say Reinstate the tax liability

(64) IRM 5.19.7.3.13(4) add see also 5.19.1.4.4 Determining the correct CSED

(65) IRM 5.19.7.3.15 (1) (b) add see also 5.8.9.5 Compromise of a Compromise

(66) IRM 5.19.7.3.18.1(2) (a) change to A copy of Judgment

(67) IRM 5.19.7.3.19.4(8) add When the reason for the noncompliance is failure to pay taxes on a subsequent tax period or liabilities assessed after offer acceptance on tax periods not included in the offer, IRM 5.19.7.3.20(4) add (take the actions requested of them in the potential default letter)

(68) IRM 5.19.7.3.13(5) add Caution: When applying a payment to modules with multiple assessments check 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 5.19.10.4.3

(69) IRM 5.19.7.2.4.1 add Caution CSEDs on modules with multiple assessments do not automatically clear 5.19.10.4.3. Check IMFOLT for the CSED (FIRST, LAST, NEXT) and if a balance remains associated with an expired CSED refer the case per Who/Where-CSED referrals campus to clear the CSED.

(70) IRM 5.19.7.2.7(9) changed to include two telephone contacts to the taxpayer and internal research must be completed before contact with the taxpayer and POA.

(71) IRM 5.19.7.3.10.5 add to NOTE or fails to comply with any other terms of the offer

(72) IRM 5.19.7.3.14 (1) add See IRM 5.8.3 COIC perfection to Note.

(73) IRM 5.19.7.18(1) change to say accepted Settlement cases to the Collection Advisory office responsible for that geographic area. See Pub. 4235 for a list of Collection Advisory offices by state.

(74) IRM 5.19.7.3.11 (7) change 45 to 60

Effect on Other Documents

IRM 5.19.7 dated January 8, 2014 is superseded. This document includes incorporated interim guidance: IPU 14U0205 issued 01-29-2014, IPU 14U0820 issued 05-06-2014, IPU 14U0967 issued 06-05-2014, IPU 14U1209 issued 08-05-2014, and IPU 14U1394 issued 09-29-2014.

Audience

The target audience is Small Business Self Employed (SB/SE) campus employees who process Collection work.

Effective Date

(06-17-2015)

Related Resources

For additional information please visit SERP to view the Automated Offer in Compromise (AOIC) Job Aide at http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/5.19.dr/5.19.7.dr/5.19.7a.htm .

For information and listings for the OIC Program see the SBSE web site at: http://sbse.web.irs.gov.Collection/Programs/OIC/OIC.htm .

/s/ Kristen E. Bailey, Director Collection Policy

5.19.7.1  (06-17-2015)
Compliance Services Collection Operations (CSCO) Programs Overview

  1. This section contains instructions for the following Compliance Services Collection Operations (CSCO) Programs:

    • Centralized Doubt as to Liability (DATL) Offers in Compromise

    • Monitoring Offers in Compromise (MOIC)

  2. The CSCO programs discussed in this section are primarily paper-based programs that may involve both paper and telephone contact with taxpayers. Each of these programs may require research specific to that program including accessing IDRS.

    Note:

    Effective, September 24, 2011, all DATL offers, including open CDP Appeals jurisdiction cases are loaded to the Automated Offer in Compromise (AOIC) system. The AOIC system will be the primary tool for tracking and monitoring offers.

5.19.7.1.1  (06-17-2015)
Usage of IAT Tools

  1. .IAT provides tools that simplify research, reduce keystrokes, eliminates repetitive typing, and increases the accuracy of regular work processes.

  2. .The use of IAT is mandatory and limited to the certain IAT Tools listed below. For User Guides, see the IAT web site at http://iat.web.irs.gov/JobAids/iat.asp

  3. .If an IAT tool is not available, or an employee has a problem with the IAT Task Manager, the case should be processed through IDRS, following established procedures. See the IAT Website, for how to report/fix problems with IAT tools.

  4. .Additional IAT tools will be added to the following list when one is deemed beneficial and seen as adding quality to Campus Collection work processes.

  5. .IAT tool users can visit the IAT Website, to become a subscriber to the IAT newsletter. The iNews details all ongoing IAT activity with tool retirements and rollouts.

  6. The use of IAT tools are mandatory, if applicable, during the work process. Below is a list of IAT tools used in either MOIC or DATL.

    • Manager Security Tool (MST)

    • Refund Hold

    • Manual Refund

    • Erroneous Refund

    • Stop Refund

    • Reissue Refund

    • Missing Refund

    • Disclosure (Phone Calls Only)

    • REQ54

    • Compliance Suite - Suggested Use

    • Credit Transfer

    • Fill Forms

5.19.7.1.2  (01-08-2014)
Employee Protection

  1. If the Potentially Dangerous Taxpayer indicator or Caution upon Contact (CAU) indicator is on IDRS refer to IRM 25.4, Employee Protection.

5.19.7.2  (01-08-2014)
Centralized Doubt as to Liability (DATL) Offers in Compromise

  1. Taxpayers who have a legitimate doubt that they owe part or all of a tax debt, may file an offer in compromise under the Doubt as to Liability basis. Doubt as to liability exists where there is a genuine dispute as to the existence or amount of the correct tax debt under the law.

  2. Offers submitted based solely on doubt as to liability are received in COIC and Field Collection Area Offices and forwarded to the Centralized DATL processing units located at the Brookhaven campus

  3. Offer in Compromise (Doubt as to Liability), DATL offers are submitted on Form 656-L.

5.19.7.2.1  (06-17-2015)
Centralized Doubt as to Liability (DATL) Processing

  1. The Centralized DATL processing unit located at the Brookhaven campus will receive from COIC and Collection area offices all Forms 656-L submitted on the basis of DATL , except those offers involving Trust Fund Recovery Penalty (TFRP) or Personal Liability for Excise Tax (PLET). COIC and collection area offices will process TFRP and PLET offers.

    Note:

    TFRP cases are identified by the MFT 55 with a reference code 618. PLET cases can be identified by a Master FIle Transaction (MFT) 45 on Non-Master File (NMF) or by an assessment on an SSN for a BMF MFT 03. For additional information, seeIRM 5.19.7.3.10.3, Trust Fund Recovery Penalty (TFRP) Cases and IRM 5.19.7.3.10.4, Personal Liability Excise Tax (PLET)

5.19.7.2.2  (06-17-2015)
Timeliness of Offer Investigations

  1. The timeliness of case actions in an offer investigation is important not only to ensure the efficiency of the process but also is a key component of taxpayer satisfaction.

  2. The guidelines for timely case actions defined in this IRM are intended to provide structure for the overall offer process and to ensure investigations are completed in a responsive and efficient manner.

  3. Managers and employees must make sure communications from taxpayers are addressed in a timely manner. Timeliness of case actions ensures the length of the offer investigation process is appropriate given the taxpayers specific set of facts and circumstances

  4. On July 16, 2006, the Tax Increase Prevention Reconciliation Act of 2005, TIPRA was implemented. TIPRA mandates an acceptance of any offer where a decision is not made in 24 months. If a liability included in the offer is disputed in any court proceeding, that time period is not included when calculating the two-year time frame. Issuance of a determination letter stops the 24 month time frame. The 24 months does not include the time that a protested, rejected offer is under consideration in Appeals.

  5. If a mandatory acceptance is warranted refer to IRM 5.8.8.11, 24 month Mandatory Acceptance under § 7122 (f)

5.19.7.2.3  (06-17-2015)
Initial Processing of DATL Offer in Compromise

  1. Upon receipt of the offer , the following actions will be performed by the clerical function:

    1. Date stamp the form, upon receipt, in the IRS Received Date Stamp block of Form 656-L

    2. Query the AOIC system by the taxpayer's TIN to ensure the receipt is a new offer and to identify any previous offers filed by the taxpayer that were loaded to AOIC. If another offer is found, annotate that case file. If there is another open offer on AOIC, do not load the new case. Forward the new offer to the Tax Examiner who has the related offer to determine appropriate action.

    3. Load the offer to AOIC if no additional open offers are found.

    4. Enter a history item on the AOIC and AMS system to indicate the DATL offer was received in CSCO and the date it was received.

      Note:

      If the IRS received date is older than two weeks, the offer should be flagged as an expedite

    5. Write the AOIC offer number on the top right corner of the Form 656-L

    6. Write the AOIC offer number in blue or black ink in the upper left hand corner of the Form 2515 if a deposit was received with the offer. Update AOIC remarks with the deposit information.

    7. Assign the offer on AOIC to a Tax Examiner.

  2. Tax Examiners will perform initial offer actions within 15 days of IRS received date. These actions include:

    • Processability Determination, See IRM 5.19.7.2.4, Processability

    • Requesting internal research documents

    • Requesting additional information from the taxpayer

    • Offer evaluation when further information is not required

    • Verify the jurisdiction of the offer. See IRM 5.19.7.2.4.2, Routing Cases Based on Jurisdictional Responsibility

    • Research IDRS for entity verification, bankruptcy, cross reference TINS and freeze codes.

    • Research CC CFINK. If valid POA information is found, load the information on the AOIC POA screen.

      Note:

      If Form 2848 or Form 8821, are identified in the case file, load the information to the POA screen and forward the forms to the CAF unit for processing

5.19.7.2.4  (06-17-2015)
Processability

  1. Tax Examiners are solely responsible for determining processability on all DATL offers received and worked by the Service, with the exception of those offers listed in IRM 5.19.7.2.1, Centralized Doubt as to Liability (DATL) Processing

  2. Each new receipt will fall into one of the following categories:

    • Not processable - The taxpayer does not meet one or more of the minimum established criteria for offer consideration.

    • Processable - The taxpayer meets the minimum criteria for offer consideration.

5.19.7.2.4.1  (06-17-2015)
Not Processable Offers

  1. An offer will be deemed not processable if one or more criteria below are present:

    1. The taxpayer offers no consideration (i.e., zero dollar amount offered or the dollar amount is blank)

    2. The CSED for which the liability is in dispute is expired and it is the only tax period included on the offer.

      Caution:

      CSEDs on modules with multiple assessments do not automatically clear IRM 5.19.10.4.3. Check CC IMFOLT for the CSED (FIRST, LAST, NEXT) and if a balance remains associated with an expired CSED, refer the case per Who/Where-CSED referrals campus to clear the CSED.

    3. The taxpayer currently has an open offer being considered based on DATC or ETA for any of the liabilities listed in Section 2 of Form 656-L.

    4. It is clearly not the taxpayer's intention to compromise the tax liability based on the belief that it is incorrect. Example: The taxpayer offered $1000. In Section 5 the taxpayer states he does not have the money to pay the tax in full. It is clear the taxpayers intent was to file a DATC offer.

    5. If the liabilities involve Bureau of Alcohol, Tobacco and Firearms and Explosives penalties, forward the case to the appropriate regional office.

    6. The taxpayer is currently involved in a bankruptcy proceeding

    7. An innocent spouse claim was previously denied by the Service and the taxpayer is arguing that there is DATL because the taxpayer is entitled to innocent spouse relief. See IRM 25.15.2.4.2, Innocent Spouse Indicator Transaction Code TC 971 TC972.

      Example:

      The taxpayer is questioning the liability on a tax year where an innocent spouse claim was previously denied by the Service.

      Note:

      The exception are innocent spouse requests filed under § 6015(f), in which relief was solely denied due to the two year rule. These are processable requests.

    8. The taxpayer seeks to compromise a tax period for an unassessed liability:
      1.) pending in Automated Underreporter (AUR), Substitute for Return (SFR/ASFR), combined annual wage reporting (CAWR) or Federal Unemployment Tax Adjustment (FUTA).
      2.)still under examination ("-L" freeze, CC AMDISA area office status codes 10 - 56), for which the 30-day letter reporting the examination changes or statutory notice of deficiency has been issued.
      3.)currently pending in appeals ("-L" freeze, CC AMDISA area office status codes 80 -89).

    9. The offer includes periods for which a determination is pending before or upheld in a final determination made by the Tax Court, other courts or by the Commissioner's final Closing Agreement authorized under IRC 7121 (e.g., Form 866 or Form 906).

      Note:

      Research for any open or closed TC 912 or TC 914 which indicates criminal investigations activity. If found notify Criminal Investigations that an offer was filed.

    10. The offer is submitted on a case under the jurisdiction of the Department of Justice (DOJ), refer to IRM 5.19.7.2.4.2, Routing Cases Based on Jurisdictional Responsibility.

      Note:

      Defining a DOJ case; Any module in status 72 and/or with an un-reversed TC 520 cc: 70, 75, 80, 82 or any module with a TC 550 and definer code 04 (judgment). Actions on cases where DOJ is litigating or has secured a judgment, without DOJ concurrence/approval, may have a negative and serious impact on the ongoing litigation or secured judgment. Users should refer to IRM 21.5.6.4.46 regarding a -W freeze, IRM 21.5.6.4.44 (3) regarding a -V freeze.

    11. There is an open control on IDRS for the same tax period as the offer. In such a case, forward only the attached documentation on a Form 3210 to the appropriate area.

    12. The offer is submitted solely for the purpose of delaying collection. See IRM 5.19.7.2.5, Solely to Delay Collections

    13. For offers requesting compromise for the same tax period that the taxpayer included in an accepted DATL or DATC offer, and the IRS later defaulted the offer.

    14. When the liability is due entirely, or in part, to an erroneous refund.

  2. If the Tax Examiner is unclear as to what the taxpayer is requesting, the Tax Examiner needs to make a phone call to the taxpayer.

  3. If any of the conditions mentioned above apply, follow procedures in IRM 5.19.7.2.4.3, Closing the Offer as a Not Processable Return.

  4. All other offers will be deemed Processable.

5.19.7.2.4.2  (06-17-2015)
Routing Cases Based on Jurisdictional Responsibility

  1. The following table provides guidance when it has been determined that the Collection function does not have jurisdictional responsibility:

    If responsibility lies with.... Then....
    Department of Justice (DOJ) Contact Area Counsel to determine the status of the pending bankruptcy or litigation and whether Collection has jurisdiction to process the offer. If the DOJ request the offer be sent directly to them, delete the offer from the AOIC system and forward the case to the DOJ. Add a history narrative to the Accounts Management System (AMS) that the offer was sent to DOJ. Ensure all TC 480 or Staup's have been input, as appropriate.
    Appeals See IRM 5.19.7.2.6, Processable DATL Offers. For additional information. See Exhibit 5.8.3-1, Form 3210 - To Appeals with Open TIPRA Statute. Ensure all TC 480 or Staup's have been input, as appropriate.
    Exam (prior audit TC 300)
    1. Change the jurisdiction code by manually inputting a TC 480. Use the date the IRS employee signed Section 9 of Form 656-L, as the transaction date. Input jurisdiction code "2" , for each period listed in Section 2 of Form 656-L.

      Note:

      On all BMF cases a TC 483 must be input prior to the TC 480. The TC 480 should include a posting delay.

    2. Add a history narrative to AMS and AOIC that the offer was transferred to the area office Examination function and also annotate any manual input of transaction codes.

    3. Forward the offer and all attachments, via Form 3210 , Document Transmittal, to the appropriate Area Office Examination function Contact Point for consideration.

    4. Send AOIC transfer letter notifying the taxpayer of the transfer.

    5. Assign case to the appropriate area office on AOIC.

    6. If the offer is based only on ID Theft, follow procedures in IRM 5.19.7.2.10, Identity Theft Overview.

5.19.7.2.4.3  (06-17-2015)
Closing an Offer as a Not Processable Return

  1. For offers that are deemed not processable:

    1. Issue an AOIC return letter using the appropriate paragraph(s).

    2. Obtain appropriate signature approval on the return letter see Del. Order No. 5-1 ( Rev. 3) at IRM 1.2.44.2.4, Return Authority.

    3. Stamp the Form 656-L"Returned" and write the date the offer was determined to be not processable. Cross out all prior IRS received dates with a red X

    4. Do not sign the Form 656-L.

    5. Add a history narrative to the Accounts Management System (AMS) that the offer was returned, not processed, and the reason(s) for the return.

    6. Annotate the AOIC remarks with the deposit information, if this was not previously addressed and include specific reason(s) for the not processable determination.

    7. Managers and Tax Examiners may sign and date the letter and close the case on AOIC with a final disposition code of 10.

      Exception:

      See IRM 5.19.7.2.5, Solely to Delay Collections.

    8. Caution should be exercised to ensure that no IDRS prints or other internally generated documents are sent to either the taxpayer or the POA. All internal documents should be destroyed.

  2. If the offer was originally determined processable, but it was later concluded that the determination was made in error, processing should stop. The case should be closed using not processable procedures defined above. In these cases, it is important to ensure AOIC is updated to "not processable" to reverse the TC 480(s). This will result in the generation of a TC 483 posting to the appropriate modules.

  3. If payment was received with the offer, prepare the Form 3753, Manual Refund Posting Voucher, for a manual refund or Form 2424, Account Adjustment Voucher if the taxpayer elects to have the deposit applied to their tax liability. The designated payment code (DPC) will be 99. See IRM 5.19.7.2.17, Disposition of DATL Good Faith Deposits.

    Note:

    The unsigned forms will be forwarded to MOIC with attached documentation to support either the refund or application of the deposit. Include the AOIC case history which should contain all appropriate documentation MOIC will need to take action. MOIC will complete the process by either faxing the Form 3753 to Cincinnati or applying the deposit to the liability.

  4. Keep the original Form 656-L, all attachments and a copy of the return letter for closed file retention.

  5. Send the Form 656-L, the return letter, Publication 1, Your Rights as a Taxpayer and Publication 594, The IRS Collection Process to the taxpayer along with all other documents originally sent. If a POA is authorized to receive correspondence, send the representative a copy of the letter. If disclosure issues exist, use the appropriate paragraph to indicate this in the return letter, and do not send a copy to the representative.

    Note:

    Tax Examiners should make telephone contact with the taxpayer or representative to educate them in regards to the DATL offer process when offers are returned as not processable. If the taxpayer indicates they can not pay the liability, send them the Form 656-B instruction booklet.

5.19.7.2.5  (06-17-2015)
Solely to Delay Collections

  1. When it is determined that an offer is submitted solely to delay collection, the offer can be returned to the taxpayer without further consideration. The term solely to delay collection means an offer was submitted for the sole purpose of avoiding or delaying collection activity. A determination that an offer is submitted solely for the purpose of delaying collection should be apparent to an impartial observer.

  2. The group manager and the unit manager have delegated authority to return an OIC if it was submitted solely to delay collection.

  3. An offer is not considered submitted solely to delay collection just because there is an imminent CSED issue or if an offer has been rejected after investigation and the taxpayer exercised appeal rights.

  4. The following claims and/or circumstances should be considered as possible reasons for returning an offer as Solely to Delay Collection:

    1. Claims that the liability stems from the operation of a law which is unfair (e.g., liability based on withdrawing funds from a 401 (k) plan)

    2. Claims based on a divorce decree which stipulates the spouses each owe only portions of a joint liability (the government is not party to such agreements).

    3. Claims which do not provide a reason for DATL basis.

      Example:

      Section 5 of Form 656-L is left bank and there is no attached statement disputing the liability.

    4. Claims which are based on a Transferee, Nominee/Alter Ego Lien situations when there is no assessment against the party submitting the offer.

      Example:

      A DATL offer is filed by a corporation against which a nominee lien was filed. Since there is no assessment made against the corporation, there is no liability to compromise. The taxpayer should be advised to contact the Revenue Officer to discuss the nominee lien filing.

      .

    5. Frivolous or patently groundless offers such as those that assert the types of tax arguments listed in IRS Notice 2010-33located at http://www.irs.gov/irb/2010-17_ IRB/ar13.html.

      Example:

      The taxpayer crosses out line item D"I or we agree to waive time limits provided by law" or the blurb above their signature that relates to signing under the penalty of perjury. This is one example but also includes any alteration to the language in the Form 656-L.

      Note:

      See IRM 5.8.10.12,Offer and Compromise Submission with Frivolous, Delaying, or Impeding Issues, .and IRM 5.8.4.20,Offer Submitted Solely to Delay Collection, for guidance in identifying and asserting the frivolous penalty on a frivolous filed OIC.

    6. The taxpayer submits an offer that is not materially different from a previous offer that was considered.

  5. When only claims as per the above are cited, with the exception of E, contact should be made by telephone to advise the taxpayer why their offer can not be considered. When one of the above is cited, along with other processable issues, the DATL OIC should be processed as normal.

5.19.7.2.5.1  (06-17-2015)
Procedures for Processing Forms 657 Submitted Solely to Delay

  1. The DATL team will:

    • Screen out all Forms 657.

    • Make all Forms 657 a priority.

    • Promptly process; and

    • Immediately return the offer as solely to delay collection, if management agrees with the RO’s recommendation.

  2. Form 657 serves to establish coordination between the field RO group and the site to provide case documentation regarding these determinations, and to ensure collection action is not pursued until the offer is closed.

  3. A DATL offer may be returned as solely to delay if a Revenue Officer has submitted Form 657, Offer in Compromise-Revenue Officer Report, with the "Yes" block checked for item 9 and includes an acceptable explanation for the decision, including required approval of management. See IRM 5.8.3.1 Offers Submitted Solely to Delay Collection per Forms 657.

    Note:

    If the liabilities covered by Form 656-L are in IDRS Status 26 and a Form 657 was not received, contact should be made either by telephone or email to the RO assigned the balance due account to advise them a DATL offer was received. Request Form 657 to determine whether to process the offer. Two contact attempts should be made over a one week period. If no response is received from the RO, make the offer processable and continue with the offer investigation. The final processability determination should not be made until the Form 657, is received or the time frame for receipt has passed.

  4. If the DATL unit manager agrees with the determination , the DATL manager or employee will contact the originating RO to advise them the return letter has been issued.

  5. If the DATL unit manager disagrees with the determination, discussions should be initiated with the field RO manager to reach an agreeable solution.

5.19.7.2.6  (06-17-2015)
Processable DATL Offers

  1. Although other remedies are available (audit reconsideration, amended returns, request for penalty abatements) as an alternative, taxpayers may submit DATL offers to compromise liabilities based on a variety of issues that can be addressed within the campus environment. The role of the DATL unit is to utilize campus resources to resolve legitimate issues raised relative to the underlying liabilities. Examples of these issues include:

    • Payment tracer or credit transfer research.

      Note:

      Follow procedures in IRM 21.5.7, Account Resolution - Payment Tracer. See also IRM 21.5.7.4.4 Payment Tracer Forms, IRM 21.5.7.4.4.2 Form 8765, IDRS Control File Credit Application.

    • Comparison of filed returns with information now claimed by the taxpayer.

      Example:

      Amended Returns

    • Claims concerning bankruptcy discharges.

    • Claims involving expiration of the statutory collection period.

    • Disagreement with assessed examination deficiencies.

      Exception:

      See IRM 5.19.7.2.4.2, Routing Cases Based on Jurisdictional Responsibility.

    • Reasonable cause for penalties.

    • Administrative abatement of interest.

    • Missing payment application.

    • Disagreement with AUR, SFR/ASFR assessments.

    • Disagreement with CAWR or FUTA assessments.

    • Claims made after the Service assessed a liability, the taxpayer appealed the decision and Appeals sustained the liability. Follow procedures in IRM 5.19.7.2.4.2, Routing Cases Based on Jurisdictional Responsibility and forward to Appeals.

      Example:

      The taxpayer was assessed a liability through an audit. The taxpayer appealed the decision and Appeals sustained the decision. The taxpayer submits a DATL offer and does not provide any new information.

    Note:

    When working an offer with an AUR, SFR/ASFR, CAWR or FUTA assessment, see applicable IRM references.

  2. Taxpayers may submit Form 656-L prepared incorrectly or claim DATL without supporting documentation to prove their position. If the Form 656-L is prepared incorrectly or the merits of the offer cannot be judged without additional information, contact the taxpayer or his representative by telephone or send the taxpayer and POA an additional information letter specifying corrections or additional information required. The AOIC COMBO letter is used for this purpose. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Examples of Form 656-L perfection issues, time frames and documentation to be requested from the taxpayer depending on the grounds of the DATL claim include the following:

    • Section 2 of Form 656-L lists tax periods not addressed in the taxpayer's reason for submission of a DATL offer.

    • Original tax returns if the taxpayer disputes an ASFR or SFR assessment.

    • Documentation to support reasonable cause claims for penalty offers.

  4. For processable offers take the following actions to perfect the offer:

    1. If there is another related DATL offer either in a centralized unit, area office or Appeals for the liability(ies) listed in Section 2 of Form 656-L, forward it to the unit or area where the related offer is assigned;

    2. If there is an open criminal investigation (Z freeze code) on any tax period, whether included on the Form 656-L or not, contact the Criminal Investigation area assigned to the case.

    3. Verify the taxpayer has submitted the most current Form 656-L.

    4. If the offer seeks to compromise liabilities in conjunction with an open Appeals CDP case:
      Open CDP cases: research ACDS to ensure the CDP is still open. In addition to researching ACDS, the tax Examiner must contact the Appeals Settlement Officer to determine if the CDP is still open and if the taxpayer is legally able to challenge the liability in CDP. If the taxpayer is able to challenge the liability, the offer will be transferred to the Appeals hearing officer. If Appeals advises that the CDP case is closed or the CDP case is still open but the taxpayer is legally precluded from raising the liability in CDP, the DATL tax examiner will proceed with offer processing.

      Note:

      Contacting Appeals and discussing the details listed above is a permissible ex parte communication. See section 2.03(2) of Rev. Proc. 2012-18 regarding ministerial, administrative or procedural matters.

      Note:

      Do not send to Appeals if the following two situations are present: If the notice of determination was issued by Appeals during the CDP process or the notice of determination preceded the original assessment.


      a. Update the processability code to "Y"
      b. Generate and send the taxpayer a AOIC COMBO letter acknowledging that the offer can be processed and the offer was transferred to the Appeals office where the taxpayer is located. Include the address the offer was transferred to in the letter.
      c. Assign the offer on AOIC to AO 21.
      d. Forward the offer and attachments via Form 3210, Document Transmittal to the Appeals settlement officer assigned to the CDP case.

      Note:

      Ensure an acknowledged copy of the 3210 is received within 30 days of transferring the case. If not, follow-up to secure the required acknowledgement.


      e. Update AOIC remarks to reflect the CDP offer was transferred to Appeals.
      f. Add a history narrative to AMS that the offer was forwarded to Appeals:

    5. In certain instances, Appeals may request a review of additional documents submitted by the taxpayer.
      In these situations, an Appeals Referral Investigation (ARI) will be routed to the DATL group manager. These offers will not be transferred to the DATL on AOIC, so appropriate controls will need to be established by the group manager.
      These investigations should be assigned expeditiously, and if possible, closed within 45 days of receipt. If the ARI is not completed within 45 days of receipt, Appeals should be contacted to request an extension. Upon return to Appeals, the ARI must be noted if there remains less than 180 days on the TIPRA statute.

      Note:

      Since the offer remains under Appeals’ jurisdiction, ex parte rules apply to any discussions with or documents provided to the Appeals employee.

      ,

    6. For all other offers where the liability was determined or sustained by appeals, reject the offer. The offer will only be sent to Appeals if the taxpayer submits a timely appeal as a response to the rejection. These offers may include but are not limited to the following:
      1. determined by Appeals (TC 30X with a 3-digit Appeals location code present, unless the ACDS closing code is 10 or 17);
      2. previously sustained by Appeals, such as the denial of a reasonable cause request for penalty abatement (TC 29X with DLN blocking series 96, penalty reason codes 039-042);

      Note:

      Offers on assessments of this nature that were determined by Appeals or that received an Appeal hearing should have a rejection letter mailed to provide the taxpayer appeal rights. Collection is not responsible for any initial development of the case or securing the closed administrative file. The rejection letter should state the offer is being rejected since the initial determination was made by Appeals. The offer file should be transferred to Appeals for consideration if a timely appeal is submitted. If the offer was submitted containing multiple tax years but not all tax years were previously considered by Appeals, request an amended offer. Submit one offer for the tax year (s) which was previously considered by Appeals and a second offer for any additional year (s) that were not previously considered by Appeals. The number of offers will depend on the number of issues the taxpayer is addressing.


      3. denied innocent spouse treatment by Appeals (TC 971 AC 065) and the Innocent Spouse Tracking System IRM 25.15.14, Relief from Joint and Several Liability, Innocent Spouse Tracking System Inventory Validation Instructions.;

    7. If the offer is based on a claim of Identity Theft, See IRM 5.19.7.2.10.1, Identity Theft Procedures.

5.19.7.2.7  (06-17-2015)
Processing DATL Offers

  1. Update Processability code to "Y" .

  2. Complete the Terms Screen on AOIC.

  3. Sign and date Form 656-L, in section 9 on behalf of the IRS.

  4. Update the AOIC MFT screen to include tax periods listed in the offer.

  5. Update status to ST 71, if applicable.

    Note:

    Do not change status if the module is in status 53, 12, 60,23 or 61.

  6. Document the AOIC history.

  7. For processable offers that do not require internal document requests or additional information from the taxpayer, send the AOIC Combo A letter indicating taxpayer contact in 45 days from the date of the letter and proceed with the offer evaluation.

    Note:

    On initial contact, the tax examiner should include Publication 1, Your Rights as a Taxpayer and Publication 594 , The IRS Collection Process with correspondence addressed to the taxpayer and the taxpayer's representative, if applicable.

  8. For offers that are deemed processable and an internal document request is needed, send the AOIC Combo A letter indicating you will contact the taxpayer 45 days from the date of the letter. The tax examiner's follow up date will be 30 days from the date of the internal document request. Document AOIC remarks of action taken.

    Note:

    To ensure the 45 day contact time frame is met the internal document request should be made at the same time the initial letter is sent to the taxpayer.

  9. For processable offers that do not require internal document requests but require additional information from the taxpayer, contact the taxpayer or the representative by telephone. Generally, two attempts to contact the taxpayer/representative via telephone must be made before correspondence is sent requesting a return phone call or additional information. The contacts or attempted contacts must be documented in the history. The attempts to contact the taxpayer should be made within three business days. If the tax examiner is unable to reach the taxpayer or POA by phone or does not receive a response then send the AOIC Combo A letter requesting the additional information. Document AOIC remarks summarizing the information requested.

    Note:

    All cases must have internal research performed prior to contact with the taxpayer or POA. Examples of this would be when working ASFR cases the AMS system should be researched for prior case activity and actions taken. When working AUR cases the AUR system should be checked for prior case activity and actions taken. Internal research is not limited to the two examples listed.

  10. A time frame of 30 days should be given to the taxpayer to send in all requested documentation. Document the AOIC history indicating the deadline for the response. The Combo B will be post-dated five calendar days from the date it was prepared. Allow an additional five days for mail time. Set the follow-up for 45 days from the date the letter was generated. If the taxpayer or their representative requests an extension of time to comply with the request for information, a reasonable amount of time should be granted.

    Note:

    In all circumstances when contact with the taxpayer/POA is needed to clarify an issue or request additional information, the TE should make every attempt to make contact via a phone call.

  11. If the request is made by telephone, give the taxpayer 14 calendar days to provide the documentation. The taxpayer must be advised that the failure to submit the requested documentation within this time frame may result in the offer being returned without further consideration. Document AOIC remarks.

    Note:

    The time frames listed above are a guideline. Tax Examiners should allow an appropriate amount of time to supply information based on the documentation requested.

  12. TEs are required to initiate the next appropriate action within 10 calendar days on cases where the taxpayer has responded to the Combo letter or have received internal documents that were requested. All follow up actions must be taken within 10 calendar days of an established deadline.

  13. The TE should also remember the initial contact time frames are the maximum time frames for contact. Wherever possible, the TE should strive to make initial contact as soon as possible after case receipt to avoid unwarranted delays.

  14. If the taxpayer or the representative does not send all requested documentation by the follow up date, return the offer as a Processable return. See IRM 5.19.7.2.8, Processable Return Procedures.

  15. If the examiner completely agrees with the taxpayer's position regarding the correct tax liability, take the action necessary to resolve the assessment(s), wait for the adjustment(s) to post to IDRS. Once all actions are taken to reconcile the taxpayer's account including the release of -K freeze, TC 820, etc., then send a AOIC combo letter with paragraph V and provide a copy of the account transcript(s) to the taxpayer and the POA if applicable. Advise the taxpayer that the liability(ies) which were the subject of the offer are resolved and that a compromise is not necessary, and a withdrawal of the offer is recommended.

  16. If the examiner partially agrees with the taxpayer's position regarding the correct tax, take the appropriate action necessary to adjust the liability(ies). Wait for the adjustment(s) to post to IDRS. Once all actions are taken to reconcile the taxpayers account including the release of -K freeze, TC 820, etc. then send AOIC combo letter with paragraph V and provide a copy of the account transcript(s) to the taxpayer and the POA, if applicable. Advise the taxpayer that the assessment(s) which were the subject of the offer have been adjusted and a balance remains, for which the Service expects full payment. Include the amount due, projecting accrued penalty and interest for 30 days. Also, advise that, if the taxpayer agrees with the IRS determination, it is necessary to withdraw the offer.

  17. If the examiner does not agree with the taxpayer's position regarding the correct tax liability and, therefore, no changes will be made to any of the periods that were the subject of the offer, advise the taxpayer that the balance is still due. Include the amount due, projecting accrued penalty and interest for 30 days. Also, advise that if the taxpayer agrees with the IRS determination, it is necessary for the taxpayer to withdraw the offer.

  18. If the taxpayer withdraws the offer, follow procedures in IRM 5.19.7.2.13, Withdrawn DATL Offers, to close the offer.

  19. If the taxpayer does not withdraw the offer, follow procedures, in IRM 5.19.7.2.14, DATL Offer Rejections, to reject the offer.

5.19.7.2.8  (01-08-2014)
Processable Return Procedures

  1. Prepare an AOIC return letter citing all reasons for the return.

    1. Generate the POA letter for any authorized representative. If a disclosure issue exists, use the appropriate paragraph to indicate this in the return letter, and do not send a copy to the representative

    2. Obtain appropriate approval and signature on the return letter see Del. Order No. 5-1 (Rev. 3) at IRM 1.2.44.2.4, Return Authority.

    3. Stamp the Form 656-L"Returned" , annotate the date below the stamp, and cross out all prior IRS received dates with an "X" .

    4. Keep the original Form 656-L with attachments, and a copy of the return letter for closed file retention.

    5. Mail the return letter, copies of Form 656-L and attachments, to the taxpayer as well as a copy of the return letter to the taxpayer's representative if one is on file.

    6. Close the case on AOIC as a "return" once the letter is signed.

    7. If there is a deposit and the taxpayer has requested that the deposit be applied to the tax liability, input "A" in the prompt for disposition of the offer and mail a copy of the taxpayer's written request for application of the funds to the appropriate MOIC Unit. If there is a deposit and the taxpayer has asked for a refund or provided no instructions for disposition, input "R" in the prompt for disposition of the offer, to refund the deposit.

    8. Add a history narrative to AMS and AOIC with the necessary information that the offer was returned.

    9. Prepare a Form 3177, Notice of Action for Entry on Master File, to request input of a Transaction Code (TC) 481 to reverse the TC 480 for any NMF tax period that is listed on the MFT screen and not on Form 656-L

    10. If the file or case history reflects a TC 480 was manually input, it must be manually reversed by the person inputting closing actions on AOIC. Ensure all TC 480s are reversed with a TC 481.

5.19.7.2.9  (06-17-2015)
DATL Innocent Spouse Processing

  1. If relief from joint and several liability ("innocent spouse" claim) is the only issue present in the offer, and if:

    1. The innocent spouse claim was not previously denied, and is not currently being evaluated by the Innocent Spouse Unit, contact the taxpayer and suggest the taxpayer withdraw the offer and file a Form 8857, Request for Innocent Spouse Relief (see IRM 25.1.2.7I, Offer in Compromise (OIC), and IRM 4.11.34.6, Offers in Comprise); or signed statement is filed (if not currently under consideration by the Innocent Spouse unit - see IRM 25.15.1.2.7, Offer in Compromise (OIC) and IRM 4.11.34.6, Offers in Compromise which, in most cases, will expedite processing of the claim;

    2. The taxpayer withdraws the offer, follow the guidance provided later in this section for withdrawn offers; or

    3. The taxpayer declines to withdraw, reject the offer following procedures in IRM 5.19.7.2.14, DATL Offer Rejections.

      Note:

      A Form 8857 is no longer required to file an Innocent Spouse claim as long as the required information i.e., year and type of relief requested such as IRC 6015 (b), IRC 6015 (c) or IRC 6015 (f) is included and the statement is signed under penalties of perjury.

  2. If Form 8857, Request for Innocent Spouse Relief or a signed statement is received:

    1. Forward Form 8857 to the Innocent Spouse unit.

    2. Return the offer for other investigations pending.

5.19.7.2.10  (01-08-2014)
Identity Theft Overview

  1. Identity theft occurs when someone uses an individual’s personal information, such as name, Social Security Number (SSN), or other identifying information without permission, to commit fraud or other crimes. Taxpayers should notify the IRS when they believe they have experienced an identity theft incident. Tax Examiners should become familiar with the IRM 10.5.3, Identity Protection Program for additional information regarding Identity Theft procedures

  2. Taxpayers who have experienced identity theft are already victims, either emotionally or financially. IRS employees need to be aware of that impact and handle the contact with an additional level of sensitivity and understanding.

  3. Identity theft can affect tax administration in two primary ways:

    • Employment or Income Related - This occurs when the identity thief uses the Victim’s SSN to obtain employment, resulting in what may appear as unreported income under the victims account.

    • Refund Related - This occurs when the identity thief uses the victims SSN to file a false federal income tax return to obtain funds. If the thief files before the victim, the victim may not receive his or her refund within a reasonable time.

  4. The Identity Theft issue can be discovered during your offer investigation or the taxpayer can self identify by providing any of the following;

    • Form 14039, Identity Theft Affidavit

    • police report

    • information provided on Form 656-L.

    • statement provided by the taxpayer claiming they are a victim

  5. In these instances, taxpayers must provide documentation to establish their identity and documentation to support the claim of identity theft.

5.19.7.2.10.1  (06-17-2015)
Identity Theft Procedures

  1. The Tax Examiner will be responsible for:

    1. Identifying the Identity Theft issue.

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

    3. Researching what documentation was received with the offer and if additional information is needed to perfect the Identity theft claim.

      Note:

      Incomplete or illegible documents will be returned to the taxpayer with a request to resubmit clear complete information. Advise the taxpayer to respond within 30 days to avoid processing delays.

    4. Inputting the appropriate TC 971 code. See IRM 10.5.3.2.5, Initial Allegation or Suspicion of Tax-Related identity Theft - Identity Theft Indicators .

      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. If the exact coding already exists for the tax year, do not input it a second time. No tax year should have duplicate identical codes input for that specific year,

      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 SSNs

    5. Identifying and addressing the need for input of TC 971/522 on a case with an EIN. Refer to IRM 10.5.3.3, BMF Identity Theft Procedures.

    6. 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.

    7. Requesting 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.

    8. Setting a follow up on AOIC for 45 days for receipt of taxpayer response.

    9. If the taxpayer does not provide substantiation documentation when requested, proceed with case resolution assuming the taxpayer is not an identity theft victim. Follow procedures in IRM 10.5.3.2.7, Reversing Pending Identity Theft Claims - TC 972 AC 522 NORPLY or NOIDT. Refer to IRM Exhibit 10.5.3-13, IMF Only TC 972 AC 522 - Reversal of TC 971 AC 522 for additional information on reversing Action Code 522 applied in error or for other specific reasons.

    10. Ensuring the statute is protected when receiving multiple returns.

    11. Upon receipt of Identity Theft documentation, research the taxpayer’s account to determine if the assessment that caused the liability was the result of an ASFR, AUR or Exam assessment. If the liability was due to a prior assessment, the ID theft determination will be made by the function that input the TC 300 or TC 290 See IRM 5.19.7.2.10.3, Identity Theft Referral Procedures

    12. Reporting Time spent on Identity Theft issues - All time associated with working ID theft issues in DATL should be reported to 810 – 61972.

    13. For complex issues where the DATL tax examiner can not make the Identity theft determination; refer the case to the Collection Identity Theft Liaison for technical review on Form 4442, Inquiry Referral.

5.19.7.2.10.2  (06-17-2015)
Identity Theft Offer Determinations

  1. Determine if the Identity Theft issue was the only basis for the offer or the issue did not affect the tax year in question. See table below for closing instructions:

    If ... Then ...
    The Identity theft was the only basis for the offer
    1. Send AOIC Return letter for other investigations pending. In an open paragraph explain to the taxpayer the Identity Theft issue was transferred to the appropriate area.

    2. A TC 470 CC 90 must be input on the account to suspend collection activity. If the account is in status 71 take the following actions:

      • Monitor for reversal of status 71

      • Input TC 470 CC 90 once status 71 is reversed.

    3. Document AMS.

    4. Document AOIC remarks.

    ID Theft was claimed by the taxpayer but did not impact the tax year of the offer
    1. Follow normal processing guidelines for working the offer.

    2. Follow TC 971/522 guidelines and referral procedures to address the Identity Theft claim.

    3. Call the taxpayer and explain you will continue working the offer and forward the Identity Theft claim to the appropriate area.

    4. Document AOIC Remarks.

    5. Document AMS.

5.19.7.2.10.3  (06-17-2015)
Identity Theft Referral Procedures

  1. Determine the source of the ID theft liability (Exam, SFR. AUR).

  2. Go to SERP, "Who Where" tab and click on ID Theft Liaisons to determine the correct area to route the referral to.

  3. Prepare Form 4442, Inquiry Referral. Annotate "ID Theft " and attach any documentation received from the taxpayer or representative. If the Identity theft claim was made on theForm 656-L ,before forwarding ensure the ,Form 656-L is stamped, "Returned."

  4. Send the taxpayer Letter 86 C, indicating the ID theft issue has been transferred.

  5. To address the offer disposition, Refer to IRM 5.19.7.2.10.2, Identity Theft Offer Determinations.

  6. Document AMS.

  7. Document AOIC remarks with all available research and methods of resolution used to determine the validity of the liability.

5.19.7.2.10.4  (06-17-2015)
Determining Receipt of Paid Preparer Misconduct Issues

  1. To determine receipt of Paid Preparer Misconduct issues take the following actions:

    1. Follow guidance in SERP Alert # 13A0463 to research account and request documentation from the taxpayer.

    2. Forward documentation to Collection Identity Theft liaison on Form 4442, Inquiry Referral, for a determination on the validity of the taxpayer’s claim.

    3. Set an AOIC follow up for 14 calendar days to ensure a timely response is received from the liaison.

    4. To address the offer disposition, Refer to IRM 5.19.7.2.10.2, Identity Theft Offer Determinations.

    5. Document AMS.

    6. Document AOIC remarks.

5.19.7.2.11  (06-17-2015)
Bankruptcy Filed During DATL Investigation

  1. If a taxpayer files bankruptcy during investigation of a DATL offer, stop the investigation and close the offer as a return.

  2. Follow procedures provided above in IRM 5.19.7.2.8, Processable Return Procedures, but cite the bankruptcy filing as reason for return in the return letter.

5.19.7.2.12  (01-08-2014)
Death of a Taxpayer-Termination of Consideration

  1. When the Service is notified of the death of a taxpayer who submitted an offer (or either spouse on a joint offer) that is currently under consideration, the Service can no longer consider the offer. A termination letter will be generated and the offer closed.

  2. Offers closed as terminations do not require preparation of the Form 1271, Rejection Memorandum.

  3. The following actions should be taken to close an offer as a termination;

    1. Prepare an AOIC termination letter inserting the termination paragraph;

    2. Submit termination letter and offer file to the authorized approving official see Del. Order No. 5-1(Rev.3) at IRM 1.2.44.2.5, Termination Authority for review and concurrence. The approving official will indicate concurrence by signing the termination letter;

    3. Date and copy the termination letter for closed file retention;

    4. Mail the termination letter to the taxpayer's address of record and a copy to the taxpayer's representative if one is on file;

    5. Input of TC 540 if the exact date of death is confirmed;

    6. Document the history indicating the date of death and how notification was received.

    7. Add a history narrative to AMS that the offer was terminated.

    8. Document AOIC history.

    9. Prepare the Form 3177, Notice of Action for Entry on Master File, to request input of a TC 482 to reverse the TC 480 for any NMF tax period that is listed on the MFT screen and not on Form 656-L.

    10. If the file or case history reflects a TC 480 was manually input, it must be manually reversed by the person inputting closing actions on AOIC. Ensure all TC 480s are reversed.

      Note:

      If the date of death is prior to the TC 480, when closing the offer on AOIC, use the pending date of the TC 480.

5.19.7.2.13  (06-17-2015)
Withdrawn DATL Offers

  1. If the examiner can resolve the issue to the mutual satisfaction of the taxpayer and the Service, a compromise is not required. In such cases, the examiner should take the appropriate action as agreed and request that the taxpayer withdraw the offer.

  2. The taxpayer may also decide to withdraw the offer for other reasons unrelated to the examiner's determination.

  3. A voluntary withdrawal request may be made orally, by fax, or in writing.

  4. Receipt of a withdrawal request (either in writing or orally) must be clearly documented in the case file as well as how the request was received.

  5. See IRM 4.18.2.7 (2), Doubt as to Liability Offer Withdrawn, for examples of written statements the taxpayer may submit to withdraw the offer. Inform the taxpayer that the act of withdrawal the offer forfeits any appeal rights. The AOIC Withdrawal Letter includes a statement the taxpayer must sign to indicate the disposition of any deposit.

  6. If the taxpayer withdraws the offer:

    1. There is no requirement to prepare Form 1271, Rejection or Withdrawal Memorandum.

    2. The effective date of the withdrawal will depend on the method of receipt of the request to withdraw. The following chart shows the correct date to use as the withdrawal date:

      If taxpayer withdraws an offer in compromise by ....... Then the offer will be considered withdrawn .....
      personal delivery when notification of the withdrawal is received by the Service.
      mailing written notification of the withdrawal via U.S. certified mail on the date the Service receives the certified mail
      non-certified mail or fax on the date the Service mails (date of the correspondence), or personally delivers a written letter to the taxpayer acknowledging the withdrawal
      phone on the date the Service mails, or personally delivers, a written letter to the taxpayer acknowledging the withdrawal
    3. Review the AOIC record to ensure the information is accurate.

    4. Generate a withdrawal letter on AOIC, inserting the appropriate paragraph. Use the chart above to determine the correct date to use as the effective date of the withdrawal.

    5. Generate the POA letter for any authorized representative, if applicable.

    6. Submit the withdrawal acknowledgement letter and offer file to the authorized approving office see Del. Order No. 5.1 (Rev. 3) at IRM 1.2.44.2.3, Withdrawal Authority for review and concurrence. Approving official will indicate concurrence by signing the letter.

    7. Date and photocopy the letter for closed file retention.

    8. Mail the withdrawal acknowledgement letter to the taxpayer.

    9. Close the case on AOIC as withdrawn after approval has been received. If there is a deposit and the taxpayer has requested that the deposit be applied to the tax liability, input "A" in the prompt for disposition of the offer and mail a copy of the taxpayer's written request for application of the funds to the appropriate MOIC Unit. If there is a deposit and the taxpayer has asked for a refund or provided no instructions for disposition, input "R" in the prompt for disposition of the offer, to refund the deposit.

    10. Add a history narrative to AMS and AOIC with the necessary information that the offer was withdrawn.

    11. Prepare a Form 3177, Notice of Action for Entry on Master File, to request input of a Transaction Code (TC) 482 to reverse the TC 480 for any NMF tax period that is listed on the MFT screen and not on Form 656-L

    12. If the file or case history reflects a TC 480 was manually input, it must be manually reversed by the field or DATL person inputting closing actions on AOIC. Ensure all TC 480s are reversed.

5.19.7.2.14  (01-08-2014)
DATL Offer Rejections

  1. When the offer is rejected, the taxpayer will be notified in writing and the letter will explain how the taxpayer may exercise their appeal rights. Information received from the taxpayer in response to a conversation or letter must be considered before proceeding with the rejection.

  2. Generally, rejections on offers based on DATL are because the tax is believed to be correct as assessed.

  3. If the taxpayer does not agree with the examiner's conclusion and does not withdraw the offer take the following actions:

    1. Update the proposed disposition on AOIC;

    2. Prepare Form 1271, entering the reason(s) for the action;

    3. Prepare an AOIC rejection letter citing the reason(s) for the action;

    4. Submit the Form 1271 and offer file to the authorized approving official see Del. Order No. 5-1(REV. 3) at IRM 1.2.44.2.2, Rejection Authority for review and concurrence. Approving official will indicate concurrence by signing the Form 1271 ;

    5. Forward the Form 1271 to the Independent Administrative Reviewer (IAR);

    6. Input a follow up on AOIC for one week to ensure cases are received back from the IAR timely:

    7. Document AOIC remarks.

    8. If the IAR sustains the rejection recommendation they indicate approval by signing Form 1271 as reviewer, See IRM 5.19.7.2.15.3, Rejections Sustained by the Independent Administrative Reviewer;
      1. obtain appropriate managerial signature on the rejection letter;
      2. date the letter to the taxpayer;
      3. enter the date of the rejection letter in the corresponding field on Form 1271 ;
      4. copy the rejection letter for the file and for the representative, if one is indicated;
      5. mail the letter(s) to the taxpayer and representative if appropriate.
      6. Assign the case on AOIC to the 30 day hold file.

    9. If the IAR does not sustain the rejection recommendation, follow guidance outlined in IRM 5.19.7.2.15.3.1, Rejections Not Sustained by the Independent Administrative Reviewer.

5.19.7.2.14.1  (01-08-2014)
Rejection Not Appealed

  1. Treasury Regulation 301.7122-1 (f) (5) provides that the 30-day period to request an appeal starts the day after the date on the rejection letter. The rejected offer must be suspended during this 30-day period to allow the taxpayer an opportunity to request an appeal, even if the taxpayer advises the Service that no appeal is desired. These cases should be monitored for receipt of a request for appeal.

    Note:

    IRC 7508 provides for postponement of certain acts, including submission of an appeal in OIC cases, during the period of time a taxpayer is in a combat zone (CZ) plus 180 days. This postponement would be in addition to the 30 days allowed in the rejection letter. If the taxpayer enters a CZ during the appeal period, the appeal period would be the time the taxpayer is in the CZ, plus any remaining time in the appeal period, plus 180 days.

  2. Rejected offers should be held in the suspense file for 15 calendar days past the 30-day deadline to allow time for an appeal request to be received and associated with the offer file.

  3. If no appeal request is received by the 45th day from the day after the date on the rejection letter, the following actions should be taken:

    1. Close the offer record as a rejection with no appeal on AOIC.

    2. If there is a deposit and the taxpayer has requested that the deposit be applied to the tax liability, input "A" in the prompt for disposition of the offer and mail a copy of the taxpayer's written request for application of the funds to the appropriate MOIC Unit. If there is a deposit and the taxpayer has asked for a refund or provided no instructions for disposition, input "R" in the prompt for disposition of the offer, to refund the deposit.

    3. Add a history narrative to AMS and AOIC with the necessary information that the offer was rejected.

    4. Prepare the Form 3177, Notice of Action for Entry on Master File, to request input of a TC 481 to reverse the TC 480 for any NMF tax period that is listed on the MFT screen and not on Form 656-L.

    5. If the file or case history reflects a TC 480 was manually input, it must be manually reversed by the person inputting closing actions on AOIC. Ensure all TC 480s are reversed.

    6. Route the offer file to the closed files.

5.19.7.2.14.2  (06-17-2015)
Taxpayer Response to DATL Rejection Letter

  1. If the taxpayer responds timely to the rejection letter with new information sufficient to adjust the liability, make the appropriate adjustments as indicated by the new documentation. Contact the taxpayer to advise of the results following consideration of the additional information and:

    1. if the new information results in the complete resolution of the assessment(s) in question, follow procedures in IRM 5.19.7.2.7(17), Processing DATL Offers.

    2. if the new information results in partial resolution of the liability(ies) in question and the taxpayer filed a timely appeal, follow procedures in IRM 5.19.7.2.7(15) to adjust the account. Then follow procedures (3) below to forward the case to Appeals for further consideration.

    3. If the taxpayer responds by sending in a signed withdrawal, agreeing in full with the tax examiners decision, follow procedures in IRM 5.19.7.2.13, Withdrawn DATL Offers, to close the offer.

  2. If a request for an appeal is received within 30 calendar days of the date after the date of the rejection letter, the case must be forwarded to Appeals function for consideration.

    Note:

    If the 30th day falls on a Saturday, Sunday, or holiday the date for timely submission will be the next business day. For example, the 30th day for appeal falls on Saturday, August 4, 2014. The request for the appeal is dated Monday August 6, 2014. This is considered to be a timely appeal because it was postmarked on the first regular business day following the 30th calendar day. If the Postmark Date is missing on USPS Certified Mail, go to https://tools.usps.com/go/TrackConfirmAction_input, type in the Tracking Numbers, and find the Acceptance Date.

    Note:

    Special rules apply in determining the postmark date for documents sent by private delivery service. See IRM 3.10.72.6.2.3, What is a Designated Private Delivery Service (PDS) or IRM 3.10.72.6.2.4, Determining Postmark Date

    .

  3. Timely appeals - Upon transfer of the case to Appeals, notify the taxpayer that the case is being transferred and provide the telephone number of Appeals Customer Service. Notification may be verbal or in writing but should be documented. Written notification may be completed using the AOIC transfer letter, paragraph B.

  4. Assign on AOIC to the appropriate Appeals area.

  5. Untimely appeals - Notify the taxpayer that the appeal was not timely and will not be forwarded to Appeals for consideration. Notification should be in writing and should be documented. Written notification may be completed using AOIC transfer letter, paragraph C.

  6. If the request for appeal is unsigned, the request will not be considered timely and the taxpayer should be notified appropriately.

    Note:

    If you receive an unsigned request for appeal, give the taxpayer or the taxpayer's POA an additional 15 calendar days from the date the request was received to perfect the request. This is in addition to the 30 calendar days initially provided for the appeal request. In all cases, the taxpayer is entitled to at least 30 calendar days from the day after the date of the rejection letter, but no more than 45 days if the request required perfection.

  7. If a joint offer is rejected and only one spouse signs the request for appeal, an effort should be made to perfect the request. Contact the taxpayers and have the other spouse sign the request for appeal. The spouse who initially signed the appeal may provide a statement affirming that they are appealing on their spouse's behalf. If there is no response to the request for perfection, then the appeal will only be considered for the spouse who signed the request for appeal. Manually input TC 481 for "B" and reinput TC 480 for "P" or "S" , as needed, using the same date as the original TC 480. Change the AOIC entity to the name of the spouse who requested the appeal. Appeals will secure an amended Form 656-L if the offer is ultimately accepted.

  8. The taxpayer should provide specific information with the appeal letter, including a list of items of disagreement and evidence to support any of those items. If the letter provides new information not previously considered, the case must be reassigned to a tax examiner for reconsideration.

  9. The taxpayer is entitled to an appeal of the offer rejection, even if items of disagreement are not provided or argued. If it can reasonably be determined that the letter is a request for an appeal, the taxpayer should be afforded that right.

  10. If an appeal is received that includes additional or new information to consider but it does not change the rejection determination:

    1. Attempt to reach the taxpayer by phone to advise that we have received and considered the information provided, however, the decision to reject the offer has not changed, so the offer will be forwarded to Appeals for consideration as requested.

    2. Refer to Rev. Proc. 2012-18 , IRM 5.1.9.5, Communications with Appeals and IGM 05-0812-062 for information regarding Ex-Parte communication with Appeals to determine what information should be included in the case file going to Appeals.

    3. Assign the case to Appeals on AOIC.

    4. Mail the case to the appropriate Appeals Area office.

  11. If the taxpayer's documentation changes the determination then adjust the account and follow the withdrawal procedures. If the taxpayer does not agree to the withdrawal forward the case to Appeals.

    Note:

    A new rejection letter will not be sent.

5.19.7.2.14.3  (01-08-2014)
Appeals Consideration of Rejected DATL Offers

  1. After consideration of a rejected offer, Appeals will make the final determination, adjust accounts, if applicable and close the case on AOIC.

  2. Appeals will send DATL offers it accepts to the MOIC function for final processing.

  3. Appeals will not send any offers under their jurisdiction back to the DATL Unit.

5.19.7.2.15  (01-08-2014)
Independent Administrative Review Overview

  1. IRC § 7122(e) requires the Service to conduct an independent administrative review of a proposal to reject an OIC. The review must be conducted prior to the rejection being communicated to the taxpayer.

  2. The Independent Administrative Reviewer (IAR) is responsible for conducting this review.

5.19.7.2.15.1  (01-08-2014)
Role of the Independent Administrative Reviewer

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

5.19.7.2.15.2  (06-17-2015)
The IAR Review

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

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

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

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

  5. When circumstances dictate, the employee should use problem solving and negotiation techniques, and in so doing consider the taxpayer’s/POA/third party’s perspective when working toward case resolution.

  6. The review must be conducted prior to the final determination of rejection being communicated to the taxpayer.

5.19.7.2.15.2.1  (01-08-2014)
IAR Case File

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

    1. Form 656-L, Offer in Compromise

    2. Form 1271, Rejection or Withdrawal Memorandum

    3. Preliminary Rejection letter

    4. Rejection summary

    5. Case history

    6. Any pertinent supporting documents

  2. If any information is missing or unavailable that hinders the IAR in making a determination that the decision was appropriate, the case file should be returned or a memorandum sent to the tax examiner or the manager requesting the missing documentation or supporting information.

5.19.7.2.15.3  (01-08-2014)
Rejections Sustained by the Independent Administrative Reviewer

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

    1. Update the IAR "Check Sheet" on AOIC indicating the appropriate disposition.

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

    3. Return the case file to the originator using a Form 3210 , Document Transmittal.

    4. Assign the offer back to the DATL manager.

5.19.7.2.15.3.1  (06-17-2015)
Rejections Not Sustained by the Independent Administrative Reviewer

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

    1. Update the IAR "Check Sheet" on AOIC indicating the appropriate IAR disposition.

    2. Document AOIC check sheet providing an explanation of why the determination was not sustained and indicating additional actions necessary by the investigating employee.

    3. Route the case back to originator on a Form 3210 .The original Form 1271 and any other documentation regarding second level management involvement and decisions must be retained in the offer file as a record of actions taken during the IAR process.

5.19.7.2.16  (06-17-2015)
DATL Acceptances

  1. An offer to compromise a tax liability should set forth the legal grounds for compromise and should provide enough information for the Service to determine where the offer fits within its acceptance policies. Doubt as to liability exists where there is a genuine dispute as to the existence or amount of the correct tax liability under the law. Doubt as to liability does not exist where the liability has been established by a final court decision or judgement concerning the existence of the liability.

  2. An offer to compromise based on doubt as to liability generally will be considered acceptable if it reasonably reflects the amount the Service would expect to collect through litigation.

  3. An acceptable offer may be for an amount greater than the taxpayer offered on the original Form 656-L . If you have determined a new offer amount is acceptable, request an amended Form 656-L from the taxpayer. Mark the amended Form 656-L with "amended" on the top margin of page one of the Form 656-L,. Update AOIC by inputting "A" (amended) on the summary screen of the AOIC record to reflect receipt of an amended offer. Do not change the offer pending date.

  4. Counsel is required to review offers when the total unpaid amount of tax assessed (including any interest, additions to tax, and penalties) for all related offers from the same taxpayer is $50,000 or more at the time the offer was submitted. The purpose of Counsel's review is to determine whether the offer legally meets the standards of Doubt as to Liability (DATL). Counsel also reviews the offer to ensure it conforms to the Service's policies and procedures. If Counsel does not sign or check the "disagree" box for legal sufficiency on the Form 7249, then the IRS has the legal right to accept the offer. However, rejecting Counsel advice is not a preferred course of action.” See IRM 5.8.8.12.1, Counsel Review and Concurrence (Legal issue).

  5. Refer to IRM 5.8.8, Acceptance Processing and Del. Order No. 5-1 (Rev. 3) at IRM 1.2.44.2.1 , Acceptance Authority for procedures and levels of approval when recommending acceptance of a DATL offer in compromise. However, review and approval authority will remain within the Compliance Services department over the centralized DATL processing units.

  6. Prepare a copy of the Form 7249, Offer Acceptance Report, and a sanitized MFTRA-X based on the list below and forward for inclusion in the public inspection file.

    • Name and SSN of a co-obligor spouse if the spouse is not the party to the compromise.

    • Address.

    • Number of exemptions.

    • Filing status.

    • Adjusted gross income.

    • Taxable income.

    • Principal industry code.

    • Transaction codes with no dollar amounts. The entire line including the date should be redacted.

    • Transaction Codes and explanations dealing with fraud, negligence, or criminal investigations, but not the date and amount of the transaction.

    • Power of Attorney/Tax Information Authorization (POA/TIA) on the file.

    • The amount of interest, additional amount, addition to the tax, or assessable penalty, imposed by law on the person against whom the tax is assessed.

    Note:

    For additional information see IRM 5.8.8.6, Required Actions Prior to Closing an OIC as an Acceptance.

  7. Forward the accepted offer file to the appropriate Monitoring Offer in Compromise (MOIC) function based on the taxpayer's state of residence. MOIC will process offer payments and input appropriate OIC transaction codes.

5.19.7.2.17  (01-08-2014)
Disposition of DATL Good Faith Deposits

  1. On occasion, taxpayers submit deposits when they submit DATL offers. COIC deposits these funds into a 4710 RACS account, and attaches a Form 13479, a Form 2515, and a copy of the form of payment to the offer case before forwarding to the DATL Unit. The deposit is held in this account until the DATL offer determination is made.

  2. If a deposit has been made with an offer, Service employees should ask taxpayers if they wish to have deposit funds applied to the unpaid tax debt when a withdrawal is solicited or when advising taxpayers that an acceptance cannot be recommended.

  3. If the taxpayer agrees to the application of the deposit, a written authorization or Form 3040, Authorization to Apply Offer in Compromise Deposit to Liability, should be completed, signed and submitted to the MOIC unit when the case is closed.

  4. If the taxpayer does not authorize application of the deposit, it will be refunded.

5.19.7.2.18  (01-08-2014)
Manual Refunds

  1. If the tax examiner determines a manual refund is necessary due to an overpayment, prepare a manual refund, use 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 authorized individual to sign the manual refund request form. After the form has been signed, it should be forwarded 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.

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

5.19.7.2.19  (01-08-2014)
Indicators of Taxpayer Fraud

  1. The following are potential fraud warning signs most identifiable during an interview:

    1. Failing to keep proper books and records in a business or profession.

    2. No records, poorly kept records, or attempts to falsify or alter records.

    3. Destroying books and records without plausible explanation or refusal to make certain records available.

    4. Extent of taxpayer's control of sales and receipts and the apparent unwillingness to delegate this function to employees.

    5. Engaging in illegal activities.

    6. Personal living standard and asset acquisition is inconsistent with reported income.

    7. Indications that valuable assets belonging to the taxpayer are being acquired and held in the name of others.

    8. Self-serving statements with no documented proof.

    9. Repeated procrastination on the part of the taxpayer in making and keeping appointments.

    10. Hasty agreement to adjust and undue concern about immediate closing of the case may indicate a more thorough examination may be necessary.

  2. The following are potential fraud warning signs most identifiable during verification of the financial statement:

    1. Uncooperative attitude displayed by:

      • Not providing requested information

      • Refusal to make certain records available

      • Not furnishing adequate explanations for discrepancies or questionable items

    2. Trying to conceal a pertinent fact or record.

    3. Failing to deposit all receipts to the business account.

    4. Use of nominees or false names.

    5. Unusual depletion of assets shortly before filing an offer.

    6. Inflated salaries, payment of bonuses or cash withdrawals by officers, directors, shareholders, or other insiders.

    7. Transfers of property to insiders, shareholders, or relatives shortly before filing the offer.

    8. Payoff of loans to directors, officers, shareholders, relatives, or other insiders shortly before filing of the offer.

    9. Complicated corporate structures and relationships.

    10. Undervaluing of assets.

    11. Overstatement of liabilities.

  3. The fraud indicators below can fall into any of the categories in paragraphs (1) and (2) above:

    1. Making false, misleading, and inconsistent statements.

    2. Using currency instead of bank accounts or making large expenditures in currency.

    3. Concealment of bank accounts and other property.

  4. If indications of fraud are identified, follow the procedures outlined in IRM 5.8.4.18 - Potential Fraud Referrals.

  5. Refer to IRM 5.8.4.19 - Open Criminal Investigations relative to the appropriate actions if the taxpayer is involved in an open criminal investigation.

5.19.7.2.20  (06-17-2015)
Third party Authorizations

  1. Taxpayers have the right to retain an authorized representative of their choice by submitting a properly executed Form 2848, Power of Attorney and Declaration of Representative, or to seek assistance from a Low Income Tax Clinic if they cannot afford representation. If POA information is located on CFINK, load the information on the AOIC POA Screen and follow procedures as defined below. Input the representative's information on AOIC and retain a copy of the form in the paper case file. Forward the original for recording on the Centralized Authorization File (CAF).

  2. Send all original correspondence to the taxpayer and provide a copy to the representative unless the taxpayer has indicated they do not want their representative to receive correspondence. The boxes in section 2 of Form 2848 indicate whether copies of notices and communications should be sent to the representative(s).

  3. Individuals who are not entitled to practice before the IRS with respect to a collection matter (such as unenrolled return prepares) may accompany taxpayers to meetings with a completed Form 8821, Taxpayer Information Authorization, or other proper authorization, and receive and provide information that relates to the offer investigation. They are not authorized to represent the taxpayers or sign documents relating to offers in compromise.

  4. If the Form 2848 does not include the matter(s) and year(s) that are included on the offer, send a redacted letter to the representative. The letter to the taxpayer may inform him/her that he/she can file a Form 8821 or new Form 2848 that includes all matter(s) and year(s) covered in the offer..

  5. If during the investigation it is discovered that the POA no longer represents the taxpayer, secure a letter from the taxpayer revoking the POA and document the case history. Remove the POA information from AOIC.

  6. Attorneys, Certified Public Accountants (CPA), enrolled agents, or enrolled actuaries are generally the only practitioners authorized to represent taxpayers before the IRS on collection matters.

    Note:

    An unenrolled return preparer is an individual, other than an attorney, CPA, enrolled agent, or enrolled actuary, who prepares and signs a taxpayer’s return as a preparer, or who prepared a return but is not required to sign the return. An unenrolled return preparer cannot represent a taxpayer before the IRS on any collection matter. An unenrolled return preparer, however, may represent a taxpayer before the IRS in certain other limited situations. Students working in LITCs and STCP who have submitted a Form 2848 and authorization letter from the Office of Professional Responsibility are also authorized to represent taxpayers before the IRS on collection matters. For additional information see IRM 5.1.10.6.2, Right to Representation.

  7. During the course of the investigation, a taxpayer may submit a Form 2848 designating a third-party as their representative or power of attorney, or the taxpayer may submit a Form 8821 designating an appointee or may complete the third party designee section on the Form 656-L, Doubt as to Liability Offer in Compromise. When properly completed and filed by the taxpayer, each of these documents should be recognized during an investigation, and interaction with the third party should be governed by the parameters allowed within each of these authorization forms.

    • Form 2848- authorizes an eligible individual (e.g. attorney, CPA, enrolled agent, or enrolled actuary) to represent as well as receive confidential information.

    • Form 8821 authorizes an appointee to inspect and/or receive the taxpayer’s confidential tax information.

    • The taxpayer may use Form 656-L to authorize a third party designee to discuss the offer with the IRS.

  8. If Form 8821 is missing critical information that can only be provided by the taxpayer (e.g., tax years, type of tax, missing taxpayer signature, date) it will be returned to the taxpayer.

  9. Information that may be disclosed to the designee is limited to the type of tax, tax form number, tax years or periods, or specific tax matter that is listed on the Form 8821, item 3.

  10. If Form 8821, item 5a is checked, the designee is also entitled to receive copies of tax information, notices, and other written communication on an ongoing basis for the type of tax, tax form number, tax years, or specific tax matter listed under item 3.

  11. The designee is not authorized to act as the taxpayer’s representative. For example, the designee may not advocate the taxpayer’s position when responding to IRS correspondence.

  12. Where a recognized representative has unreasonably delayed or hindered an examination, collection, or investigation by failing to furnish, after repeated request, non-privileged information necessary to the examination, collection or investigation, the Internal Revenue Service employee conducting the examination, collection, or investigation may be given permission to bypass the representative and contact the taxpayer directly for such information. 26 C.F.R. § 601.506(b) (Statement of Procedural Rules). Prior to contacting the taxpayer directly, the IRS employee must first complete bypass procedures. See IRM 5.1.23.5, By-Passing a Taxpayer's Representative for procedures to bypass a POA.

5.19.7.2.21  (01-08-2014)
Closed File Retention

  1. Closed offer cases (other than acceptances) will be retained within the centralized DATL processing units for a period of 2 years. Write or stamp "Closed" with the closed date on the case file. This file can be sent to the Federal Record Center(FRC). Document AMS and AOIC history and case history sheet with the FRC location, box number, ascension number, and date. Refer to IRM 1.15.28, Records Control Schedule for Collection, for authorized disposition schedule. In addition this information should be input into AOIC under FRC tracking.

  2. For additional information, record retention requirements and input requirements, See IRM 5.8.7.12, Closed File Retention

5.19.7.2.22  (01-08-2014)
DATL Reports

  1. In order to summarize activity occurring each week, the centralized DATL units will prepare reports for DATL offers to include:

    1. opening inventory;

    2. offer receipts;

    3. offers returned because they could be processed;

    4. offers returned after processing;

    5. offers withdrawn;

    6. offers accepted;

    7. offers rejected, not appealed;

    8. appealed offer rejections;

    9. offers transferred to the Area Office Examination function;

    10. offers transferred to the Appeals function (other than those included under "h" above;

    11. ending inventory;

    12. dollar amounts of adjustments, abatements, etc.

  2. The report will cover the weekly period ending on Thursday.

5.19.7.2.22.1  (01-08-2014)
AOIC Inventory Management Reports

  1. There are multiple AOIC inventory Management reports available on AOIC that should be used to track and monitor inventory. See IRM 1.4.54.5, Reports using AOIC and Jasmine Portals, for additional information.

5.19.7.2.23  (01-08-2014)
AOIC Transaction Listing

  1. At a minimum, the AOIC Transaction Listing (Parts 2 and 3) must be resolved on a weekly basis to ensure all reversing transactions are correctly posted. Additionally, any open IDRS control bases assigned to XXXXXXXXXX (first 2 digits represent the area), must be closed, once the systemic posting error has been resolved. There could be a delay from the time the error is on the AOIC transaction listing to when the control base is opened on IDRS.

5.19.7.3  (06-17-2015)
Monitoring Offers in Compromise (MOIC)

  1. An accepted Offer in Compromise (OIC) is a legally binding agreement between a taxpayer and the IRS that resolves the taxpayer's tax liability. IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. The Service has a requirement to monitor all accepted offers for payment of the offered amount and for the mandatory 5-year compliance period.

    Note:

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

  2. This subsection provides:

    • Procedures for processing OIC deposits

    • Procedures for accepting OICs into the campus inventory

    • Procedures for monitoring accepted OICs

    • Procedures for processing OIC payments and refund recoupments

    • Procedures for applying or refunding the OIC application fee

    • Procedures for transferring accounts to NMF (non master file)

    • Procedures for creating mirror assessments (MFT 31 accounts)

    • Procedures for processing compliance listings and / or EUREKA™ reports

    • Procedures for processing defaulted offers

    • Procedures for processing OIC collateral agreements

    • A guide for Customer Service Representatives assisting taxpayers with an OIC inquiry

  3. The following reference documents must be available to compliance campus tax examiners for procedural guidance:

    • IRM 4.18, Examination Offer in Compromise

    • IRM 5.8, Offer in Compromise

    • IRM 5.19.7, Compliance Services Collection Operations (CSCO) Programs.

    • IRM 8.13, Closing Agreements

    • IRM 8.23, Offer in Compromise

    • IRM 1.2.44, Delegation of Authorities for the Collecting Process

    • IRM 21.1, Accounts Management and Compliance Services Operations

    • Document 12803 AOIC-SC User Guide for MOIC Campus Tax Technicians

    • The Internal Revenue Code (IRC)

    • Document 6209, IRS Processing Codes and Information

  4. Generally offers in compromise are accepted to meet the following objectives:

    • To resolve accounts when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects the collection potential

    • To resolve accounts with a legitimate dispute as to the amount of tax assessed

    • To collect an amount which can reasonably be collected at the earliest time possible and at the least cost to the Government

    • To collect funds which would not be collectible through any other means

    • To give taxpayers "a fresh start" toward future compliance with the tax laws

  5. If contacted by a taxpayer wishing to submit an offer, advise that before the offer can be processed all applicable lines on the Form 656or Form 656-L should be complete, and only the most recent revision of the Form should be submitted. Missing information may result in significant delays. The following information must be included:

    • Taxpayer's full name and address

    • Taxpayer's identification number

    • All outstanding balance due liabilities by tax period

    • Basis for compromise

    • Amount offered

    • Payment terms

    • Signatures of all persons submitting the offer

  6. Except with respect to DATL offers, a Form 433-A Collection Information Statement for Wage Earners and Self-Employed Individualsor Form 433-B Collection Information Statement for Businesses, is also required with requested attachments, required application fee or Section 4 of the Form 656 Low Income Certification, if applicable, and required initial offer payments, if applicable.

  7. If the taxpayer indicates during contact that an offer will be submitted:

    • Send Letter 278C, the correspondex letter that includes the Form 656-B OIC booklet as an enclosure. Provide the appropriate COIC address. Refer to the SERP website on the intranet, click on the Who/Where tab and scroll down to Offer in Compromise(OIC) Centralized Service Center Locations..

      Note:

      If the taxpayer has internet access, he/she can get forms and publications by accessing our web site at www.irs.gov or by calling 1-800-829-FORM (3676).

5.19.7.3.1  (06-17-2015)
OIC Payment Terms

  1. Taxpayers are expected to pay the entire amount offered in the shortest time possible based on the terms of their accepted agreement.

  2. The amount and due dates of payments must be specified.

    Note:

    The taxpayer and the IRS can agree to modify the OIC-contract by changing the monthly payment date. The taxpayer however can not miss a monthly payment.

  3. For non-DATL offers there are two (2) types of payment terms that the Service and the taxpayer may agree to:

    • Lump sum cash - payable in five or fewer installments within 5 or fewer months of the date of the notice of acceptance; Form 656 must be accompanied by a payment of 20% of the amount offered.

      Note:

      An exception may be allowed to the five month payment requirement when more flexible payment terms are warranted. Also, in these cases, while they may be submitted and considered as cash offers, the RCP should be calculated as a periodic offer (24 months). See IRM 5.8.4.

    • Periodic payment - installment payments payable in 6 - 24 months.Form 656 must be accompanied by the first proposed installment, and additional installments must be paid in accordance with the taxpayer's proposed offer terms while the Service evaluates the offer.

    Note:

    DATL offers are payable within 90 days of the notification of acceptance, unless an alternative payment term is approved at the time the offer is accepted. See Form 656 - L section 3.

5.19.7.3.1.1  (01-29-2014)
OIC Application Fee

  1. The IRS established this fee to recover part of the cost of processing, reviewing and providing a specialized service to a limited segment of taxpayers.

  2. When required, the application fee for submitting an OIC is $186. The application fee will be applied to the taxpayer's liability as a payment once the processability determination has been made.

    Note:

    The OIC application fee changed on 1/1/14. It went from $150 to $186.

  3. All taxpayers who submit a Form 656-B, Offer in Compromise Booklet, must pay the $186 application fee, except in two instances:

    • The taxpayers total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines. Form 656-B section 4, Low Income Certification , must be completed by the taxpayer. The form may be used to help taxpayers determine whether they qualify for the poverty guidelines exception.

    • The OIC is submitted based solely on Doubt as to Liability (DATL), including DATL of Trust Fund Recovery Penalty.

    The fee is either refunded or applied against the amount of the offer if the offer is accepted to promote effective tax administration, or accepted based on certain economic hardship criteria (special circumstances).

  4. Submission of the fee with the Form 656 is also a processability criteria.

  5. If multiple offers submitted with one remittance intended as the application fees and required TIPRA payments are deemed processable the payments will be applied to tax liabilities and any shortage will be requested. .

5.19.7.3.2  (01-08-2014)
OIC Determinations

  1. COIC process examiners are responsible for determining processabilty and perfecting offers before they are assigned for investigation.

  2. An offer may be returned for various reasons, including failure to provide information and solely to delay. See 5.8.7, Return, Terminate, Withdraw, and Reject Processing, for additional reasons for returns.

  3. OIC determinations are made by the Collection Area Office, Examination, Appeals, or COIC. The Department of Justice may settle court cases that are ultimately sent to MOIC for monitoring.

  4. One of the following determinations will be made following the OIC investigation:

    1. Rejection: A determination is made that more can be collected than is being offered or acceptance will not be in the best interest of the government. All reject determinations must be reviewed and agreed to by an independent reviewer. The taxpayer will be given appeal rights with the rejection letter.

    2. Withdrawn: The taxpayer requests or agrees to withdraw the offer. The taxpayer is asked to provide the withdrawal in writing in the form of a letter. A Form 3040 should be obtained to state the disposition of any deposit that may have been submitted with the offer.

    3. Accepted: The offer is accepted and forwarded to MOIC for monitoring through the completion of the mandatory 5-year compliance period.

      Note:

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

  5. COIC loads the offer, the application fee, and TIPRA payment onto the AOIC database. If the offer is determined to be processable, AOIC systemically uploads the following to IDRS:

    1. TC 480 With the appropriate jurisdiction code (1=Collection Field Function or COIC, 2=Examination, 3=Appeals). Jurisdiction codes 2 and 3 are manual inputs.

    2. CSED indicator P=Primary taxpayer, S=Secondary taxpayer, B=Both taxpayers.

    3. Status 71 Creates a "-Y" freeze, suppresses balance due notices and suspends collection and levy action.

5.19.7.3.3  (01-08-2014)
Powers of Attorney (POA)

  1. Taxpayers who wish to be represented submit a properly executed Form 2848, Power of Attorney and Declaration of Representative.

  2. When an offer is received with a Form 2848, COIC checks it across CC CFINK and if the POA is not there the original is forwarded to the Centralized Authorization File (CAF) for input on to the CAF system. If the POA sends in a copy of an already recorded Form 2848 then it is not forwarded unless additional tax periods are being added or there is some change to what the current CAF reflects.

  3. The representative's information is loaded onto AOIC and a copy is placed in the paper case file.

  4. When responding to a third party (anyone other than the taxpayer), who indicates he/she has a third party authorization on file, complete the appropriate search using CC CFINK before providing any tax account information.

  5. If the POA information is on the CAF file but not on AOIC due to an oversight, add the POA information and continue your contact as long as guidelines found in IRM 21.1.3, Operational Guidelines Overview are followed.

5.19.7.3.4  (06-17-2015)
Automated Offer in Compromise (AOIC)

  1. The AOIC program tracks and controls offers in compromise. Area Offices, Compliance Campus, DATL and Appeals Area Office share a common database that contains relevant offer information. AOIC allows the user to process, view, and track the status of each offer. The program also generates forms, letters, and managerial reports.

  2. AOIC consists of four parts:

    1. The Area Office segment is designed to assist COIC staff, Field OIC specialists, and other Area Office personnel manage offers up to the point the offer is returned, rejected, withdrawn, or accepted.

    2. The compliance campus segment is designed to assist compliance campus personnel control inventories; post and journalize payments, deposits, refund recoupments; prepare and generate forms, letters reports; and monitor collateral agreements and taxpayer compliance for offers that are accepted.

    3. The Appeals segment is designed to assist the Appeals staff up to the point the offer is rejected, withdrawn or accepted.

    4. The DATL segment is also designed to assist the DATL staff up to the point the offer is rejected, withdrawn, return or accepted.

  3. Generally all offers investigated by Collection are on the AOIC program. Department of Justice (DOJ) Settlement cases are not loaded on AOIC.

  4. Cases not on AOIC must be manually monitored. See IRM 5.19.7.3.9.7. Accepted OICs Requiring Manual Monitoring

5.19.7.3.5  (01-08-2014)
Taxpayer Advocate Service (TAS)

  1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers whose problems with the IRS are causing financial difficulties, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

  2. The Service Level Agreement negotiated between TAS and Small Business Self Employed (SBSE) describes when the request for expedited processing would be appropriate and provides instructions for processing the case between the TAS and SBSE functions.

  3. When appropriate, TAS employees may issue Form 12412, Operations Assistance Request (OAR). Upon receipt of an OAR, CSCO management should:

    1. Control the request and ensure a response is provided to the TAS office within the requested time frames.

    2. Research AOIC or pull the case file (manually monitored) to review the case history.

    3. Discuss actions taken with the assigned tax examiner.

    4. Contact the TAS office and discuss the OAR issue with the TAS employee.

    5. Contact the TAS office and negotiate additional time if it is determined that the time frame cannot be met.

    6. Respond to the OAR indicating how the issue is being addressed or resolved within the requested or extended time frame.

    Note:

    See IRM 5.8.1.3.7 Taxpayer Advocate Service, for a detail of responsibilities and time frames for SB/SE.

  4. As part of the Identity Theft Program, the AM IPSU Team will begin assisting taxpayers whose situations meet TAS criteria 5–7 and involve identity theft. Applicable cases will now be considered IPSU criteria.

    Note:

    If the taxpayer specifically requests TAS assistance or is facing economic burden (TAS criteria 1-4), refer the case to TAS. IRM 13.1.7.2, TAS Case Criteria

  5. Generally, the AM IPSU Team will assist taxpayers whose situations meet TAS criteria 5-7 and involve identity theft.

    Note:

    There will, however, be situations where it is in the best interest of the taxpayer to have TAS work the case, for example when the taxpayer declines referral to IPSU or the taxpayer is facing an economic burden. See IRM 13.1.16.7.9.1, Criteria 5-7 Identity Theft Cases Not Eligible for Referral to IPSU, for a complete list of conditions where referral to TAS would be appropriate.

5.19.7.3.6  (06-17-2015)
Extension and Suspension of the Statutory Period for Collection

  1. The Collection Statute Expiration Date (CSED) is the length of time established by law that the Service can collect any unpaid liabilities.

  2. The CSED is normally ten years from the date of assessment.

    If the Then
    tax was assessed after November 05, 1990 the CSED is ten years.
    taxes were assessed before or on November 05, 1990, and the CSED had not expired as of that date the CSED was extended to ten years.
    CSED expired prior to November 05, 1990 the CSED was six years.

    Example:

    TC 150 11/04/1990 + 6 years = CSED 11/04/1996
    TC 150 11/05/1990 + 10 years = CSED 11/05/2000
  3. Each assessment on a module has a separate CSED. Assessments include but are not limited to:

    • TC 150, Entity Created by Posting of a Return

    • TC 290, Additional Tax Assessment

    • TC 300, Additional Tax or Deficiency Assessment by Examination or Collection Division

  4. Generally, the CSED is suspended when the taxpayer files for or submits a request for a specific case action. See IRM 5.1.19.3 Case Actions that can Suspend and/or Extend a CSED.

  5. When a taxpayer files an offer TC 480 is systemically uploaded via AOIC on each tax module included on the offer. If the offer is not on the AOIC system, then TC 480 is manually input. TC 480 suspends the CSED until a TC 481, TC 482, or TC 780 posts. The CSED is extended by the amount of time between the posting of TC 480 and the reversing or accepted transaction code.

    • TC 481 = Rejected

    • TC 482 = Withdrawn

    • TC 780 = Accepted

    Reminder:

    Input of TC 480 and a subsequent TC 483 on the tax module does not suspend the CSED, as this was an erroneous input of TC 480. The CSED reverts back to the original CSED.

  6. Several legislative changes have provided or revoked the Service's ability to suspend the statutory period of collection for Offers in Compromise.

    Law Change
    The IRS Restructuring and Reform Act of 1998 (RRA '98) Section 3461 of RRA '98 eliminated the Service's ability to extend the CSED after December 31. 1999. All extensions secured prior to December 31, 1999, and extended beyond December 31, 2002, expired on December 31, 2002 or the original CSED date whichever is later. (Offers that were accepted for processing prior to December 31, 1999, but remained pending after that date were treated the same.) Thereafter, the CSED is only suspended while the offer is pending, during the 30-day period following the rejection of the offer, or during the time an appeal of the offer rejection is under consideration.
    Community Renewal Tax Relief Act dated December 21, 2000 The CSED was not suspended for pending offers for the period of December 21, 2000 to March 09, 2002 because the CRTRA inadvertently removed the suspension provision from the IRC.
    The Job Creation and Worker Assistance Act of 2002 Enactment of the Job Creation and Worker Assistance Act of 2002 on March 9, 2002, reinstated the suspension. Effective March 09,2002, input of the TC 480 suspends the CSED period during the time an offer is pending, during the thirty days following rejection of an offer, and for any period when a timely filed appeal from the rejection is being considered by Appeals. That is for the period of time between the TC 480 and the TC 481, TC 482, or TC 780 only (do not add a year to this suspension). This law change is not retroactive.

    Note:

    Enactment of the Job Creation and Worker Assistance Act of 2002 on March 9, 2002, reinstated the suspension

  7. Computing the CSED using the Julian date:

    If Then
    The date of the transactions will extend through the calendar year, take the Julian date for the last day of the year. This will give the amount of days the CSED was suspended for that period. Convert the date of the TC 480, 481, 482, 521, or 780 to the Julian date for that date. Add the two dates together and that is the amount of days the CSED was suspended. Once the days of suspension is obtained it will then be added to the TC 150, TC 290, or TC 300 date for the correct CSED.
  8. When a payment is received on an accepted OIC, determine which module has the earliest CSED. Use the table below as a guide to determine the CSED suspension periods:

    If Then Limited to:
    The offer was pending on or after March 9, 2002 The statute is suspended for the period the offer is open (including any time the offer was open prior to December 21, 2000) The number of days the statute was suspended. Upon acceptance, the statute begins running again.
    The offer was submitted on or after January 1, 2000 and closed on or after December 21, 2000 The statute is suspended until December 21, 2000 The days the offer was pending prior to December 21, 2000.
    The offer was submitted and pending prior to January 1, 2000 and closed on or after 12/21/2000 The statute is suspended while the offer was pending up to December 21, 2000 and extended for an additional year The time the offer was pending. Upon acceptance, the statute begins running again.
    The offer was submitted and pending prior to January 1, 2000 and closed between 01/01/2000 and 12/21/2000 The statute is suspended for the period the offer was pending to the date of acceptance and extended an additional year The original CSED or December 31, 2002, whichever is later.
    The offer was submitted, pending and accepted prior to January 1, 2000 The statute is suspended for the period the offer is pending, during the time the terms are monitored and extended for an additional year The original CSED or December 31, 2002, whichever is later.

    Note:

    Several events can suspend or extend the statute. Guidance is provided in IRM 5.19.10.4.4. In addition, the is a downloadable CSED calculator, CCalc, which can assist in complex calculations of the CSED.

  9. COIC and Area Offices are responsible for calculating the CSED and ensuring all statute issues are addressed.

  10. Appeals will compute the CSED for any assessment made for 1992 and prior. Periods with 6 months or less will be given priority by Appeals.

5.19.7.3.7  (01-08-2014)
Amended Offer in Compromise (OIC)

  1. While an offer is under consideration, taxpayers may make changes to the original offer. Changes to the amount, terms, tax class, or tax periods, are considered amendments. The taxpayer can submit a new Form 656 or make changes to the original Form 656. The form should be marked "Amended" in red on the top margin of page one.

    Reminder:

    If a Form 656 is inadvertently sent to the compliance campus marked "Amended" , forward the form to the MSC/BSC COIC Unit or Area Office where appropriate changes and updates to the AOIC record can be made.

5.19.7.3.8  (01-08-2014)
Overlooked Periods

  1. Occasionally additional periods or years are discovered subsequent to the acceptance of an offer. Missing liabilities assessed before the acceptance are considered only a defect of the offer. When such liabilities are discovered, the offer agreement should be modified to include the additional period(s).

    Note:

    Such modification of the offer agreement would not require a determination of "mutual mistake of material fact" . If the modification results in the unpaid amount of tax equaling or exceeding $50,000 and an opinion from Counsel had not previously been obtained, the file must be sent to Counsel for the required opinion.

  2. When overlooked period(s) are discovered by MOIC (after acceptance), update AOIC to add a history narrative referencing the overlooked periods.

    Note:

    DATL offers are accepted only on disputed modules. Not all liabilities are included.

  3. Return the case file to the originator for a determination via Form 3210 per IRM 5.8.9.5 (4), and follow-up for receipt of the acknowledgement copy.

  4. If the file has been sent to Federal Record Center (FRC), update AOIC history and request the file be returned to MOIC. Send the file to the originator for a determination and any necessary pen and ink changes to the appropriate forms as well as for the required signatures.

  5. If the overlooked period(s) are discovered by the field or COIC, they will add the periods to AOIC and make pen and ink changes to the Form 7249 and Form 656 to include the additional period(s). The appropriate official must initial the recommended change on the Form 7249.

5.19.7.3.9  (06-17-2015)
Processing Accepted OICs

  1. MOIC units monitor accepted offers from COIC, Collection Field function, Appeals and Examination and settlements referred to the IRS by the Department of Justice..

  2. The majority of paper case files for accepted offers controlled on AOIC will be held for a short period at the campus before being sent to the Federal Record Center (FRC). The frequency of the shipment will be per FRC guidelines. MOIC will use the AOIC system to ensure receipt and control of these files to the FRC as well as to ensure timely release of the Federal tax lien on any of these cases that are paid in full prior to receipt at the campus for monitoring.

    Note:

    Subsequent requests for any accepted offer file from the FRC is the responsibility of the function needing the file.

  3. There are specific case files that will be held by the campus during the monitoring period. These case files are considered manually monitored. They include but are not limited to:

    • Examination and Appeals DATL offers

    • Appeals CDP offers that are not loaded on AOIC

    • Accepted corporate offers with related TFRP issues

    • Accepted corporate offers with related excise tax assessments or waivers

    • Accepted offers with collateral agreements

    • Department of Justice (DOJ) offers

      Note:

      Defining a DOJ case: **Any module in status 72 and/or with an un-reversed TC 520 cc: 70, 75, 80, 82 **Any module with a TC 550 and definer code 04 (judgment) Actions on cases where DOJ is litigating or has secured a judgement, without DOJ concurrence/approval may have a negative and serious impact on the ongoing litigation or secured judgment. The IRS generally does not have the authority under IRC 7122 to compromise periods DOJ is litigating or for which DOJ has secured a judgment. Please refer to: IRM 21.5.6.4.46 -W freeze, or IRM 21.5.6.4.44 (3) -V freeze

    • Any other offer requiring manual monitoring

  4. When COIC or the Area Office accepts an offer and closes their assignment (release and validate) on AOIC, the offer record transfers to the campus (service center) side of AOIC. The record appears on AOIC in NW status.

    1. The "Release and Validate" Screen is selected from the Maintenance Menu on the Area Office side of AOIC.

    2. The "Destination Listing Report" displays which compliance campus the case is assigned.

    3. COIC accepted offers will be forwarded to the same Campus MOIC site for acceptance into inventory

    4. AOIC will systemically load the correct campus monitoring address on the Acceptance Letter.

  5. Taxpayers required to submit more than one offer may have the accepted offers directed to different campuses for monitoring:

    If And Then
    There are two accepted offers filed by the same taxpayer one is accepted before the other the first site assigned to monitor will monitor both offers.
    A taxpayer has more than one accepted offer; the offers are accepted, released and validated at the same time one is assigned to Brookhaven and the other to Memphis the site that monitors offers for the taxpayer's state of residence will monitor both or all.
  6. There are two SBSE sites (Brookhaven and Memphis) that monitor accepted offers.

  7. MOIC accepts transfer of the accepted offer by updating the service center status on AOIC to "OU" . The open unassigned record is now part of the MOIC inventory.

  8. Manually monitored or cases listed under exceptions must include the following documents:

    • Acceptance Letter

    • Form 7249, Offer Acceptance Report

    • The "original" Form 656, Offer in Compromise

    • Any Amendments or addendum(s) to the original Form 656

    • Co-obligor Agreement, if applicable

    • Collateral Agreement, if applicable

    • Related TFRP forms i.e. Form 2750, etc, if applicable.

      Note:

      Copies of the above documents are acceptable.

  9. For those offers listed under the exceptions that are not loaded onto AOIC, check the file for the above documents before accepting into MOIC inventory. If any of the documentation listed above is missing or the case file is missing, contact the originating office and request the missing information (or file) be faxed or mailed to the campus. Allow the originating office 15 days to provide the missing information.

    Note:

    Once the campus accepts the transfer on AOIC, the case can not be reassigned to COIC or the Area Office.

  10. Update AOIC status code NW with the appropriate sub code

    1. MC = Missing Case.

    2. IC = Incomplete Case.

  11. Campuses should generate a report using the NW and sub status code to follow up with the originating office.

  12. If the missing information is not received after the 15 day period or the case file can not be located, accept transfer and follow procedures for processing accepted offers without the case file below.

  13. Research IDRS to verify that all balance due modules assessed at the time the offer was accepted are included on the Form 656 orAddendum . When overlooked period(s) are discovered by MOIC, update AOIC and add a history narrative referencing the overlooked periods and follow the procedures in IRM 5.19.7.3.8, Overlooked Periods.

  14. While researching IDRS

    Check for And Then
    Check for TC 922, an indication of URP processing If present follow procedures in IRM 5.19.7.3.10.11 Automated Underreporter (AUR) Assessments.
    Check for an unreversed TC 530 If present input TC 531 to reverse the currently uncollectable transaction code.
  15. TC 480 and Staup 71 is uploaded onto each tax module for offers controlled on AOIC. The Staup updates the module to Status 71, OIC. Occasionally the TC 480 or the Staup will go unpostable. If the unpostable is not corrected by the Area Office or COIC, TC 480 and Status 71 will not show on the tax module.

    Exception:

    OICs accepted by Appeals through a timely-requested CDP hearing will be in Status 72.

    Note:

    It is the responsibility of the MOIC Tax Examiner to verify that the MFT screen has been input correctly and that all IDRS systemic actions created due to the input of the MFT screen are correct. An example is the a correct Statute Exp Codes (CSED indicator) B, (Both), P (Primary), S (Secondary)., and Status 71 if appropriate.

  16. Ensure that TC 480 has posted to each tax period shown on the Form 656:

    If Then
    TC 480 is not present, Input TC 480 using CC REQ77. Use the date the Form 656 was signed by the IRS official for the transaction date or the pending date on AOIC, not the date the taxpayer signed.
    All TC 480s present do not have the same date the Form 656 was signed, 1. Input TC 483 using CC REQ77.
    2. Input TC 470 using CC REQ77 to prevent balance due notices from issuing.
    3. Input TC 480 using CC REQ77 with the correct date, include a posting delay code of 1. Note: If the posted date does not agree with signature date on the amended Form 656, follow the above procedures.
    NMF period (MFT 20) on MFT screen 1. Verify TC 480 has been input with the correct date.
    2. If not present, input TC 480 via Form 3177.
    3. If present, verify the waiver date is correct.

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