8.22.3  Back-End Processing for Collection Due Process and Equivalent Hearing Cases

Manual Transmittal

September 24, 2012

Purpose

(1) This transmits revised IRM 8.22.3, Back-End Processing for Collection Due Process and Equivalent Hearing Cases.

Material Changes

(1) Revised IRM to reflect new organizational titles resulting from the Appeals 2012 Alignment Project.

(2) Revised IRM to incorporate Interim Guidance AP-08-0412-12 to eliminate the requirement to create and maintain closed office files.

Effect on Other Documents

This IRM supersedes IRM 8.22.3 dated December 27, 2011. Incorporated Interim Guidance Memorandum AP-08-0412-12, Elimination of Appeals Closed Office Files, which was issued May 1, 2012, into this IRM.

Audience

Account and Processing Support employees, Appeals Officers, Settlement Officers and Appeals Account Resolution Specialists.

Effective Date

(10-01-2012)

Susan L. Latham
Director, Policy, Quality and Case Support

8.22.3.1  (10-01-2012)
Overview of Back-End Processing

  1. To properly close a CDP case, Account and Processing Support is responsible for taking the following key actions:

    • Issuing Notice(s) of Determination by certified mail.

    • Monitoring the case during the suspense period and if the taxpayer files a Tax Court petition, until the Tax Court decision becomes final and the file is returned from Counsel.

    • Accurately inputting TC 521 CC 76 and/or CC 77, to end the suspension of the collection statute. See IRM 8.22.3.4.1

    • The input of any collection alternatives or adjustments to IDRS, e.g. IA, CNC, Form 3870.

    • Closing a CDP OIC off of the Automated Offer in Compromise system (AOIC).

    • The input of TC 481 for CDP OIC cases that are not loaded on the AOIC system.

    • Transmitting an accepted CDP OIC file to Memphis or Brookhaven MOIC.

    • Forwarding cases to the Cincinnati Campus Appeals office, or any other APS office as directed by management, where an Innocent Spouse (IS) issue was raised.

    • The input of closing information to ACDS, including PEAS. See IRM 8.22.3.2.1

    • Closing the case off CDP Tracking System (CDPTS).

    • Closing the control base on IDRS for CDP or EH cases originating from ACS. See IRM 8.22.3.5

  2. When there is a related innocent spouse case, a CDP offer case, or an equivalent hearing case associated with the CDP case, the related cases may be closed off ACDS at the time the Notice of Determination is issued. However, the case files should be kept together with the CDP case during the monitoring period.

  3. APS instructions relating to the issuance of a Bankruptcy Resolution Notice of Determination are contained in IRM 8.7.6.2.7.

  4. CDP cases are suspended in the APS office that issues the Notice of Determination. CDP cases may be suspended in both field and campus offices. The date of the Notice of Determination Letter and the postmark must be the same. If the taxpayer does not petition Tax Court for a review of the Appeals determination within 30 days after the CDP Notice of Determination is issued, the field offices will send the CDP case to one of the Appeals campus CDP units for back-end processing.

    Note:

    Additional time beyond the 30 day period provided by the Notice of Determination is necessary for the following Notice of Determination combination letters:

    • Letter 4390 for Innocent Spouse cases (suspended for 90 days)

    • Letter 4389 for Abatement of Interest cases (suspended for 180 days)

    • Letter 4439 for EH Innocent Spouse cases (suspended for 90 days)

    • Letter 4440 for EH Abatement of Interest cases (suspended for 180 days)

  5. Brookhaven, Fresno, Memphis and Philadelphia sites process CDP and EH case closures.

  6. This section provides guidance for APS employees on closing responsibilities for CDP and EH cases and for processing collection alternatives and adjustments.

8.22.3.2  (10-01-2012)
Case Closing Actions

  1. APS campus sites complete back-end closing actions on CDP and EH cases that originate both in field Collection and the Automated Collection System (ACS).

8.22.3.2.1  (10-01-2012)
Processing Employees Automated System (PEAs)

  1. Assign the CDP WUNO on PEAS when received in the centralized APS campus office.

  2. The PEAs type will be "CLS." The subtype selected will reflect the action required on the case:

    • "ACDS Only"

    • Special Processing – if adjustments or account action is required

  3. APS employees will:

    1. Close cases from ACDS

    2. Update the CDPTS

    3. Determine and input the TC 521 date on CDPTS

    4. Input adjustments to accounts

    5. Input collection alternatives

    6. Close the AOIC database if applicable

  4. The case will not be closed out of the TE’s inventory on PEAs until all actions have been completed.

  5. If the record has multiple years, each year may be closed as action has been completed; the entire case must not be closed if actions, including cycling adjustments, have not been completed.

  6. Suspense PEAs, if necessary, during the process.

8.22.3.3  (10-01-2012)
ACDS Entries: CDP, EH, RJ and CDPTD

  1. ACDS entries for closing CDP, EH, RJ and CDPTD cases.

8.22.3.3.1  (10-01-2012)
ACDS Closing Codes

  1. CDP cases are closed with the following closing codes:

    Closing Code Action
    04 Agreed with waiver (Form 12257)
    05 Defaulted determination letter
    08 Obsolete for CDP.
    10 (Docketed) Agreement Secured - Used for a case settled with a secured agreement, whether it was secured by Appeals or Counsel.
    11 Dismissed -Lack of Jurisdiction
    12 Dismissed - Lack of Prosecution
    13 Disregarded Hearing Request
    16 Withdrawn (Form 12256 or other written withdrawal)
    17 Tried Case - Used for any cases tried by Counsel which resulted in a court rendered decision. See IRM 8.22.3.9
    20 Premature referrals or rescinded CDP cases
    42 Remanded cases (interim)
    43 Petitioned cases (interim)

  2. EH cases are closed with the following closing codes:

    Closing Code Action
    13 Disregarded Hearing request
    14 Fully sustained
    15 Partially or not sustained
    16 Withdrawal
    20 Premature Referral

  3. RJ cases are closed with the following closing codes:

    Closing Code Action
    14 Collection is following Appeals' CDP determination.
    15 Collection is not following Appeals' determination.
    16 Appeals' CDP determination is revised in cases involving change in circumstances.

  4. Separate Timeliness Determination (CDPTD) cases are closed with the following closing codes:

    Closing Code Action
    14 Appeals agrees with Collection's timeliness determination
    15 Appeals disagrees with Collection's timeliness determination
    16 Appeals partially agrees with Collection's determination

8.22.3.3.2  (10-01-2012)
ACDS Dates and Action Codes

  1. ACDS dates and action codes.

8.22.3.3.2.1  (10-01-2012)
CDP Default: CLOSING CD = 05

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC521 date

    • LTODATE = Default Date

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.2  (10-01-2012)
CDP Waiver Form 12257: CLOSING CD = 04

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC 521 date

    • LTODATE = Date ATM or Hearing Officer signed F12257

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.3  (10-01-2012)
CDP or EH Closed With Form 12256 Withdrawal: CLOSING CD = 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC521 date

    • LTODATE = Date Appeals received F12256

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.4  (10-01-2012)
CDP or EH Closed as a Disregarded Hearing Request: CLOSING CD=13

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC522 date

    • LTODATE = Leave blank

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.5  (10-01-2012)
CDP or EH Closed as a Premature Referral: CLOSING CD = 20

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC522 date

    • LTODATE = Leave blank

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

  2. See IRM 8.22.3.4.3 concerning the use of TC 522 for CDP cases closed using Closing Code 20

8.22.3.3.2.6  (10-01-2012)
EH Closure: CLOSINGCD = 14 (sustained) or cc 15 (not sustained)

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.7  (10-01-2012)
Retained Jurisdiction: CLOSINGCD = 14, 15, or 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.8  (10-01-2012)
CDPTD: CLOSINGCD = 14, 15, or 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLOSED: Enter date closed in APS

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.4  (10-01-2012)
Closing CDP Cases on CDPTS

  1. Update CDPTS to Stage 7, Appeals Decision Reached, when issuing the Decision/Determination/Closing letter, with the Reason Code 1. The input for Reason Code 1 on CDPTS is shown as the Reason Code on the face of Form 5402:

    • CS=Collection Sustained

    • CA=Collection Alternative

    • PR=Premature Referral

    • WD=Withdrawal

  2. Always update CDPTS at Stage 7 with Reason Code 2 identified as the Resolution Reason Code on the face of Form 5402.

  3. The Reason Code 2, input at Stage 7, identifies the major issue discussed or addressed in the hearing. Additional Codes are in development for deployment to CDPTS. The codes currently are as follows:

    Resolution Reason Codes
    IA - Installment Agreement Accepted ID - Installment Agreement Denied
    FP - Full Pay NC - Currently Not Collectible
    AB - Abatement/Adjustment (non-tax) granted AD - Abatement/Adjustment (tax) granted
    AC - Abatement/Adjustment (non-tax) denied AT - Abatement/Adjustment (tax) denied
    UL - Unable to raise liability RC - Reasonable cause not established
    LD - Lien discharged LS - Lien subordinated
    LR - Lien release LN - Lien withdrawn
    CF - Collection facilitated PF - Premature filing
    OC - Offer in Compromise accepted OD - Offer in Compromise denied
    IS - Innocent Spouse relief granted (full or partial) TD - Taxpayer Delay
    IR - Innocent Spouse relief denied (full or partial) CE - CSED expired
    CO - Lack of compliance with filing and/or paying AI - Advocate Involvement
    FV - Frivolous argument presented NR - No Response
    IV - Invalid request OT - Other
    DS-Duplicate Submission (pending) RN-CDP notice rescinded (pending)
    PF-Premature filing (pending)  

  4. If the taxpayer petitions Tax Court, interim updates to CDPTS are as follows:

    • to Stage 8 with Tax Court Petition Date

    • to Stage 9 with the Tax Court Decision Date

  5. Update CDPTS to Stage 13 when the case is closed in Appeals. If a Notice of Determination was issued, this will be after completion of the suspense period and, if applicable, any court reviews. It is critical that the TC 521 be accurately input at Stage 13 on all CDP modules for both field and ACS closures on timely CDP cases. See IRM 8.22.3.4.1"Determine the TC 521 Date" and IRM 8.22.3.4.2"How to Input the TC 521 Date" . See the discussion below concerning the TC 521 prompt at Stage 13.

  6. You will input the following five pieces of information when updating the CDP case at Stage 13:

    1. Stage Date - use "today's" date

    2. Appeals Closing Code - use the CC from Form 5402 , unless the case went to trial. If the case went to trial, use the CC that fits the disposition of the case in Tax Court.

    3. Returned To Office Code - Use:

      • A = ACS

      • C = Collection Field

      • P = Appeals

        Note:

        For either an ACS or a Collection Field case, if a Collection Alternative was reached, e.g. IA, CNC or accepted OIC, selecting "P" will automatically update the CDPTS from Stage 13 to Stage 24.

        Exception:

        A manually monitored installment agreement (identified on the face of Form 5402 ) or a CNC with a mandatory follow-up (the Form 53 will be in the file, marked as such) will use the "Returned to Office Code" of "A" or "C" , depending on the source of the case.

    4. Returned to Location Code - Use the Location Code shown at Stage 1.

    5. Decision Final Date - For a CDP hearing, use the same date as the TC 521 date, following IRM 8.22.3.4.1. For an equivalent hearing, use the date of issuance of the Decision letter. The date you input here will upload a TC 971 AC 276, 277, 279 or 280 to IDRS for the periods involved, indicating that the case is resolved.

  7. When closing a CDP case, CDPTS may or may not prompt you to reverse the TC 520 cc76/77 at Stage 13. You must input TC 521 cc 76/77 or TC 522 for all CDP periods that are in Status 72 on SUMRY at Stage 13 whether or not the prompt appears. See IRM 8.22.3.4.2 for instructions on manually inputting TC 521. See IRM 8.22.3.4.3 for instructions on inputting TC 522.

  8. If a Decision Letter or Closing Letter (with withdrawal or Form 12257 Waiver) is issued, Stage 7 and Stage 13 should have the same date.

  9. See IRM 8.22.1.1.3 and IRM 2.3.79 for additional information concerning the CDP tracking system (CDPTS).

8.22.3.4.1  (10-01-2012)
Determine the TC 521 Date

  1. The TC 521 date is the date the determination becomes final. APS must ensure that IDRS reflects the proper TC 521 date and that it properly posts to IDRS.

  2. If the taxpayer does not file for a judicial review, compute the TC 521 as follows:

    If Then
    Letter 3193 Notice of Determination is issued and CDP case is closed CC 05, TC 521 = 30 days after the letter is issued
    Form 12257 Waiver of Right to Judicial Review is secured and CDP case is closed using CC 04, TC 521 = date ATM or Hearing Officer signed Form 12257
    Form 12256 or a withdrawal is received and CDP case is closed CC 16, TC 521 = the date Appeals received the withdrawal as shown on Letter 4383, Withdrawal Acknowledgment.
    CDP/IS Combo Letters L4390 or L4439 is issued as closing letter because the CDP taxpayer raised a spousal issue, TC 521 = Notice of Determination Letter date + 90 days if the taxpayer does not petition Tax Court
    CDP/ ABINT Combo Letter L4389 or L4440 is issued as closing letter because the CDP taxpayer raised an abatement of interest issue, TC 521 = Notice of Determination Letter date + 180 days if the taxpayer does not petition Tax Court
    The CDP case is closed as a premature referral (CC20), do not input TC 521. Input TC 522. See IRM 8.22.3.4.3 (2)
    The CDP case is closed as a disregarded hearing request (CC 13), do not input TC 521. Input TC 522. See IRM 8.22.3.4.3 (1)

  3. If the taxpayer requested judicial review, the TC 521 date will be computed as follows:

    If Then
    The Tax Court decision reads "Pursuant to the agreement of the parties" without an IRC 6330(e) waiver paragraph and the taxpayer does not petition a higher court, (CC 10) TC 521 = Date decision entered + 90 days
    The Tax Court decision reads "Pursuant to the agreement of the parties" with an IRC 6330(e) waiver paragraph, (CC 10) TC 521 = Date decision entered. IRM 8.22.3.9
    The Tax Court decision reads "Pursuant to the determination of the court" and is only signed by the judge, (CC 17) TC 521 = Date decision entered + 90 days
    A Tax Court decision for dismissal and the taxpayer does not petition a higher court, TC 521 = Date decision entered + 90 days

    Note:

    If a taxpayer appeals a Tax Court decision to a U.S. Court of Appeals and/or U.S. Supreme Court, the above time periods will be extended. A chart referencing the various situations that may arise can be found in Chief Counsel Directives Manual CCDM 36.2.5.3. Use this chart to assist in the determination of the TC 521 date. Counsel will generally hold cases until the decision of the Tax Court is final. The TC 521 date should be determined after Counsel returns the case. If there is a question in determining the TC 521 date, consult with APS management or contact the Counsel attorney directly for assistance in determining the correct date.

    Note:

    When calculating the TC 521 date, APS should only use the "Target Date" calculator on ACDS and not the date listed in the SNEXPDATE field.

  4. The Collection Statute Expiration Date (CSED) will systemically be computed by IDRS with the input of the TC 521.

  5. A manual computation is ONLY required when the account is joint and only the Primary (P) or Secondary (S) taxpayer requested the hearing.

  6. The new CSED can be manually computed using the following tools:

    1. ACDS Utilities "Number of Days" calculator. This tool calculates the number of days between the TC 520 and TC 521 dates.

    2. ACDS Utilities "Target Date" calculator. This tool calculates the new CSED date when the number of days the CSED is suspended (see (a) above) is added to the current CSED.

  7. If the CSED was suspended for only "P" or "S" , a new CSED can be input via REQ77 with a manually computed CSED.

8.22.3.4.2  (10-01-2012)
How To Input TC 521 or TC 522 Date

  1. How to input a TC 521 using CDPTS:

    1. The user adds a new stage 13 on the CDPTS web screen.

    2. If the hearing type on CDPTS is DPLN, DPLV or DPBO, the web screen prompts the user "Do you want to request input of the TC 521? Yes or No."

    3. If the user responds "No" , no further action is taken.

    4. If the user responds "Yes" , the web screen prompts the user for the TC 521 transaction date.

    5. CDPTE will automatically generate the closing code by hearing type, cc 76 for DPLN and DPBO and cc 77 for DPLV.

    6. It will add a new TC 521 record, and return a message to indicate if the action succeeds or fails.

    7. If there is more than one module related to the same request, the web screen will prompt each module associated to the same request and repeats steps c and d.

    8. If the user is not prompted by the CDPTS regarding the reversal of the TC 520, APS must research IDRS manually and determine the correct closing code and initiate input of the TC 521 for all appropriate CDP tax periods.

  2. The FRM 77 web screen is available via the CDPTS to allow the user to make the necessary updates/reversals to the TC 520/521 cc 76/77.

    Note:

    The CDP Tracking System FRM 77 screen cannot be used to input a TC 521 when the CSED will not update systemically. You must input TC 550 from the "cc" REQ77 on IDRS. A TC 550 is not always required since it extends the CSED systemically for both spouses even when only one is needed. See IRM 5.1.9.

  3. Delete the existing stage 13:

    1. If the user deletes the existing stage 13 on the web screen, the hearing type is DPLV, DPLN or DPBO and CDPTE previously generated a TC 521, the system will alert the user: "A TC 521 cc 76/77 was previously generated and may need to be reversed."

  4. If Stage 1 is deleted after Stage 13, the system will alert the user, "You may need to request reversal of the TC 520/521 cc 76/77."

8.22.3.4.3  (10-01-2012)
Inputting TC 522 for Disregarded and Non-Processable Hearing Requests

  1. APS will input a TC 522, not a TC 521, to the periods on any CDP case where the Settlement Officer closes the case as a disregarded hearing request using closing code 13. A disregarded hearing request is one submitted by a taxpayer where all the taxpayer's issues are considered frivolous or raised with a desire to impede collection. TC 522 does not require a closing code. It reverses the input of all prior TC 520's to that period. The net result of TC 522 input is that there is no suspension of the collection statute.

  2. APS will input a TC 522, not a TC 521, to the periods on any CDP case where the Settlement Officer closes the case as a premature referral, using closing code 20.

  3. TC 522 can be input through CDPTS at Stage 13 or by using the FRM 77 web screen also available on CDPTS.

8.22.3.5  (10-01-2012)
Closing ACS-originated Control Bases on CDPTS at Stage 13

  1. ACS generally establishes and assigns an IDRS control base to the Brookhaven, Fresno, Memphis or Philadelphia Account and Processing Support unit when they forward a CDP or EH case to the respective site, following IRM 5.19.8.4.9.

    ACS will reassign to APS using the following codes:

    Brookhaven APS: 6619500001

    Fresno APS: 6626900001

    Memphis APS: 6621100001

    Philadelphia APS 6619900001

  2. APS will close the control base at the conclusion of CDP back-end processing on all ACS originated cases. The control base can be closed using either IDRS command code ACTON or at CDPTS Stage 13.

  3. Close using IDRS command code ACTON:

    Example: ACTON

    C0#,,C

    see IRM Exhibit 2.3.12-2 for ACTON format

  4. The control base can also be closed via CDPTS at Stage 13:

    1. If there is an open control base, you will receive a pop-up box asking: "Do you want to close a control base?"

      Answer: "Yes"

    2. You will receive a pop-up box to: "Enter the control base number"

      Select the control base number that is in the box

    3. You will receive another pop-up box to: "Enter group or employee # for this control base"

      Brookhaven Campus will enter 6619500001

      Fresno Campus will enter: 6626900001

      Memphis Campus will enter: 6621100001

      Philadelphia Campus will enter: 6619900001

8.22.3.6  (10-01-2012)
RRAP APS Closing Procedures

  1. Appeals Team Managers will transmit RRAP cases to APS on an RRAP cover sheet.

  2. Upon receipt of the RRAP case from the ATM, APS will take the following actions:

    • Issue the appropriate letter within ten (10) calendar days of the ACAP date.

    • If a Notice of Determination is issued, suspend the case for a total of sixty (60) days.

    • If the taxpayer does not petition the Tax Court, overnight the case to the Fresno APS unit within two (2) business days of the expiration of the sixty (60) day suspense period.

    • If the taxpayer petitions the Tax Court, wait until the Tax Court case is closed and Counsel has returned the case to Appeals. Once the case is returned, overnight the case to the Fresno APS unit.

    • If a Form 12257 was secured, overnight the case to Fresno APS

    • When transmitting the case to the Fresno APS unit, ensure the RRAP cover sheet is attached to the outside of the case file to properly identify the case as needing RRAP handling by the unit

    • The address for the Fresno APS unit is:

      IRS Appeals Office

      Attn: Charlene Stacy

      5045 East Butler Avenue

      Stop 55202

      Fresno, CA 93727

  3. Fresno APS will close the case after the decision is final. Fresno APS will fax copies of the Appeals closing documents to the originating Revenue Officer. At a minimum, this should include:

    • The fax cover sheet prepared by the RO

    • Form 5402

    • Letter 3193 with enclosure or

    • Form 12257 with cover letter or

    • Form 12256 with cover letter

    • Appeals Case Memorandum (ACM)

    • Other documents obtained by Appeals during the CDP hearing process

      Note:

      If the "other documents" exceed fifteen (15) pages, they may be mailed to the RO. However, the first six (6) items should always be faxed to the RO.

8.22.3.7  (10-01-2012)
Closing Actions for the Case File

  1. Whenever there is judicial review of a CDP or an EH with a related case that has judicial review, the case files should be kept together until the suspense period expires or the matter is resolved in the courts.

  2. Close PEAS:

    1. Use PEAs Closing Code 03

    2. "Complete Date" for a CDP or an EH case will be the date APS closes the case off PEAs.

  3. For cases originated by ACS, on IDRS:

    • Input a TC 290 with hold code 3 and blocking series 18

8.22.3.7.1  (10-01-2012)
ACS Notification of CDP and EH Closures

  1. ACS case files will not be returned to ACS. ACS case files will be sent to the "files" section. Related OIC cases will also be sent to "files" if the offer was not accepted. CDP OIC files are not sent back to COIC. If the CDP OIC was accepted, only the OIC file is sent to MOIC and the CDP file is sent to "files" .

  2. APS will provide ACS with a copy of Form 5402 after the completion of all back-end processing for each ACS-originated case closure, regardless of Appeals closing determination, sustained or alternative reached.

  3. APS will:

    1. Batch the Form 5402s.

    2. Prepare a Form 3210 transmittal.

    3. Overnight express mail them to the respective ACS CDP coordinators in Cincinnati, Fresno, Kansas City and Philadelphia at the close of business each Friday.

  4. For CDP cases where the taxpayer has raised frivolous or hybrid issues, the Settlement Officer will indicate such on the Form 5402 and the following documents must be sent to ACS in addition to the Form 5402:

    • Copy of the taxpayer's frivolous CDP hearing request.

    • Copy of Letter 4380 and a copy of Letter 3846 if issued.

    • Copy of the Notice of Determination.

    • Copy of the case history.

    • Copy of any written communications received from the taxpayer as a result of the withdrawal solicitation in either Letter 4380 or Letter 3846.

    See IRM 8.22.2.2.10.3.4(2) for additional information.

8.22.3.7.2  (10-01-2012)
Revenue Officer Notification of CDP and EH Closures

  1. Revenue Officer Collection case files will be returned to the originating Revenue Officer (RO) after the case is closed in Appeals. Related OIC case files will be sent to MOIC if the offer is accepted or be sent with the CDP case file to the Revenue Officer if the OIC is rejected.

  2. Prepare transmittal Form 3210 with the address of the originating RO (found on the Form 5402) and mail the original administrative file to the RO.

    Note:

    If the case is selected for AQMS review, the administrative file should be sent to the requesting reviewer prior to being returned to the Revenue Officer.

8.22.3.8  (10-01-2012)
Cases Chosen for AQMS Review

  1. Appeals Quality Measurement System (AQMS) data is one of the tools used by Appeals in measuring the success in accomplishing the objectives of the Appeals Strategic Plan. AQMS will randomly select closed CDP and EH cases for review.

  2. When APS is notified that AQMS has selected one or more cases for review, APS will send the complete administrative file (including any related cases).

  3. On ACDS, APS will update the LACTION field to read "AQMS" , the LTODATE with the date the files were sent to the reviewer and in the NOTE field, the reviewer's name and POD.

    • LACTION = "AQMS"

    • LTODATE = The date the files were sent to the reviewer

    • NOTE = Reviewer's name and POD

  4. APS will complete all closing actions prior to sending the files to the AQMS reviewer.

8.22.3.9  (10-01-2012)
Tax Court Decision

  1. Counsel will hold cases until the decision becomes final, which is 90 days after the decision is entered in Tax Court, plus 10 days to allow for mailing. If the taxpayer appeals the decision of the Tax Court, this time period will be extended. See CCDM 36.2.5.3.

  2. When the Tax Court decision is final, Counsel will return the case to Appeals on Transmittal Memorandum Form 1734.

  3. Review Form 1734 and input the appropriate ACDS closing code. See IRM 8.22.3.3.1 If it is not clear from the Form 1734 what closing code to use, refer to the Court's decision document(s).

    Note:

    A "Docketed Case" requiring closing code 10 is one that was docketed but was settled with an agreement. Docketed cases are generally settled with a decision document beginning with the words "Pursuant to the agreement of the parties in this case" ..., or similar wording and are signed by the judge, the taxpayer and Counsel.

    Note:

    Closing code 08 is now obsolete for CDP cases. See IRM 8.22.3.3.1.

    Note:

    A "Tried Case " requiring closing code 17 is one that was docketed and not settled, was tried and received a court rendered decision. Cases requiring closing code 17 are those with a decision document from the court beginning with the words "Pursuant to the determination of the Court" ... or similar wording, are signed only by the judge and do not first refer to an agreement.

  4. Update the CDP tracking system to stage 13 using the date the case is being closed in Appeals. See IRM 8.22.1.1.3

  5. Input TC 521 with a closing code 76 or 77, as appropriate. The date of TC 521 will be the date the Tax Court decision became final. See IRM 8.22.3.4.1 for information concerning the date of TC 521. See IRM 8.22.3.4.2 for instructions on updating TC 521 via CDPTS. See CCDM 36.2.5.3 for additional instructions on determining when a Tax Court decision is final. Consult with APS management or contact the Counsel attorney if assistance is needed in determining the correct TC 521 date.

  6. If a decision document contains a waiver of the restrictions on collection in accordance with IRC 6330(e), which would be placed below the judge's signature, the collection statute starts on the date the decision is entered.

  7. A Tax Court may grant litigation fees and costs to a petitioner (taxpayer) in a CDP case. The field attorney who handled the case, not APS, is responsible for handling litigation fees and costs.

  8. An Order of Dismissal is a Tax Court decision. Dismissal reasons include:

    1. Petition not timely filed (dismissed for lack of jurisdiction).

    2. Filing fee not paid (dismissed for lack of jurisdiction).

    3. An unexcused absence. Taxpayer did not appear for the trial (dismissed for lack of prosecution).

    4. Petition not filed in the correct court (dismissed for lack of jurisdiction).

8.22.3.9.1  (10-01-2012)
Appealed Tax Court Decision

  1. A Tax Court decision can be appealed by either the petitioner or the U.S. Government.

    Note:

    "S" cases cannot be appealed.

  2. Counsel holds case files for at least 90 days after the Tax Court decision is entered. See CCDM 36.2.6.2.5 for more information on procedures for notifying Appeals when a Tax Court decision is final. .

  3. Counsel will notify Appeals when the decision becomes final (after the case is finished in the U.S. Court of Appeals and/or Supreme Court). At this point, the TC 521 date must be determined. If there is a question in determining the TC 521 date, consult with APS management or contact the Counsel attorney directly for assistance in determining the correct date. See the NOTE section in IRM 8.22.3.4.1 for additional information on determining the TC 521 date.

8.22.3.9.2  (10-01-2012)
Assessment of Civil Penalties under IRC 6673

  1. The Tax Court may impose a penalty against a taxpayer not exceeding $25,000 under IRC 6673(a)(1) if:

    • a taxpayer institutes or maintains a proceeding primarily for delay

    • takes a position that is frivolous or groundless, or

    • unreasonably fails to pursue available administrative remedies.

    Note:

    A penalty award under section IRC 6673(a)(1) is not asserted against the taxpayer in any notice issued by the IRS. The government can request the penalty in its pleadings or the penalty can be imposed by the Court on its own.

  2. If a court other than the Tax Court, including appellate courts, determines that the taxpayer is proposing a frivolous or groundless suit, the court may award sanctions, penalties, or costs under its rules. IRC 6673(b)(2) and (3) allow the "award" to be assessed and collected like a tax.

  3. APS will assess civil penalties under IRC 6673(a)(1) and 6673(b)(2) and (3).

  4. Clearly document on Form 5402 and the Appeals CDP Case Closure Sheet that an IRC 6673 penalty was assessed.

  5. The penalties will be assessed on a Civil Penalty Module:

    • MFT 13 (Business Master File) or

    • MFT 55 (Individual Master File)

  6. Assessing the penalty:

    1. Research IDRS command codes BMFOL, IMFOL, INOLE, EINAD or SSNAD to ensure the penalty is being assessed on the correct filer’s account.

    2. Use IDRS command code ADJ 54.

    3. Input TC 240.

    4. Input the appropriate penalty reference code: 643 for Tax Court (6673(a)); 644 for other than Tax Court (6673(b)) (Reference - Section 11.11 in Document 6209).

    5. Input the dollar amount of the penalty.

    6. Input blocking series - Hold Codes.

  7. Use blocking series 52X if this is the first penalty assessment MFT 13 or 55 for a taxpayer and tax periods; all subsequent assessments will carry blocking series 53X.

  8. Input a second TC 290 for ZERO with Blocking Series 96X upon posting of the 643 penalty. This will prevent another function outside of Appeals from erroneously abating the penalty.

  9. For computation of the IRC 6673 civil penalties refer to Form 8278.

  10. To set up an account for assessing and collecting the IRC 6673 penalty, see:

    • IRM 20.1.7.1.9 - Creating Entities or Namelines for Non-Return Civil Penalty Cases

    • IRM 20.1.7.1.9.1 - BMF Entities

    • IRM 20.1.7.1.9.2 - IMF Entities

    • IRM Exhibit 20.1.1-3 - Penalty reason code chart; Document 6209 for additional information regarding these codes and indicators

8.22.3.9.2.1  (10-01-2012)
Statute of Limitations for Assessing Costs Under Section 6673(b)(2)

  1. There is no return of tax to trigger the running of the statute of limitations prescribed by IRC 6501. The costs to be assessed under the authority of IRC 6673(b)(2) are not reported on any document filed by a taxpayer. Additionally, the costs are neither related to nor based on a tax return filed by taxpayer.

  2. APS should assess the IRC 6673(b)(2) penalty promptly upon receipt of the judgment (i.e. order of the court).

8.22.3.10  (10-01-2012)
Premature Referral

  1. A CDP Hearing request may be classified as a Premature Referral (PR) and returned to Collection if the hearing officer determines that a CDP notice was issued in error.

  2. Appeals hearing officers will no longer rescind CDP notices they determine were issued in error but only send the case back as a premature referral.

  3. APS will take the following actions on premature referrals:

    1. Reverse the TC 520 with TC 522. Use TC 520 date as TC 522 date.

    2. Close on ACDS with Premature Referral Closing Code 20.

    3. At Stage 7 of the CDPTS, input "PF" as Reason Code 2. Reason code "IV" , shown on the face of Form 5402, is not available on CDPTS at this time. Additional reason codes, including "IV" , are scheduled to be programmed to CDPTS during future updates.

    4. At Stage 13 of the CDPTS, input closing code 20.

    5. Close IDRS control base.

8.22.3.11  (10-01-2012)
Collection Alternatives and Reporting an Account Currently Not Collectible

  1. Collection Alternatives or back-end processing that may be requested on CDP or EH cases include:

    • Installment Agreements (IA)

    • Currently Not Collectible (CNC)

    • Abatement of Tax

    • Abatement of Penalty

    • Abatement of Interest (ABINT )

    • Innocent Spouse (IS)

    • Offer in Compromise (OIC)

    • Credit transfers

8.22.3.11.1  (10-01-2012)
Installment Agreements

  1. Installment Agreements are arrangements where the Service allows taxpayers to pay liabilities over time.

8.22.3.11.1.1  (10-01-2012)
General Information

  1. There are various types of installment agreements:

    1. Streamlined Installment Agreements IRM 5.14.5.2 and IRM 5.19.1.5.5(9)

    2. Guaranteed Installment Agreements IRM 5.14.5.3 and IRM 5.19.1.5.5(8)

    3. In-Business Trust Fund Express Installment Agreements IRM 5.14.5.4 and IRM 5.19.1.5.5.1

    4. BMF Installment Agreements IRM 5.14.7 and IRM 5.19.1.5.5.1 and 5.19.1.5.5.2

    5. Partial Payment Installment Agreements IRM 5.14.2 and IRM 5.19.1.5.6

    6. Direct Debit Installment Agreements IRM 5.14.10 and IRM 5.19.1.5.5.13

    7. Payroll Deduction Agreements IRM 5.14.10 and IRM 5.19.1.5.5.14

    8. Installment Agreements Overview IRM 5.14.1

    9. Manually-Monitored Installment Agreements IRM 5.14.9 and IRM 5.19.1.5.5.18

      Note:

      Taxpayers can also be allowed administrative extensions of 60 to 120 days to full pay a liability. See IRM 5.14.1.6(4) and IRM 5.19.1.5.4

  2. Taxpayers make their payments in one of the following methods

    1. Direct Debit from their bank account.

    2. Payroll Deduction from their employer, or

    3. Payment via check or money order.

  3. Payroll Deduction Installment Agreements (PDIAs) are agreements where employers deduct payments from taxpayers' wages and transmits them to the Service.

  4. Direct Debit Installment Agreements (DDIAs) allow the Service to debit a taxpayer’s checking account for the agreed upon installment amount.

  5. DDIAs are processed in the CSCO sites. Fax the installment agreement along with the routing and account number (usually a voided check) to a DDIA Coordinator for input. The DDIA coordinators are on SERP, Who/Where Campus DDIA Liaisons. Refer to IRM 5.19.1.5.5.13, Direct Debit Installment Agreements, for additional discussion.

    Note:

    There is a legal requirement for any DDIA to have the taxpayer’s signature. The IRS can accept an original signature, electronic signature or faxed signature.

  6. APS will input to IDRS, IDRS-monitored IMF and BMF agreements. For a description, format, "History Item" entries and response for the Command Codes relating to Installment Agreements, see:

    1. IRM 2.4.30

    2. IRM Exhibit 2.4.30 (1 through 9)

    3. SERP Job Aids

  7. All installment agreements require a paper document, either Form 433-D or Form 2159.

  8. Only PDIA's or DDIA's require a taxpayer signature.

  9. Installment Agreements not compatible with IDRS-monitoring are Manually Monitored Installment Agreements (MMIAs). Hearing officers will identify an MMIA on the CDP Form 5402 by selecting MMIA from the Installment Agreement drop down menu.

    Note:

    Installment Agreement requests for only one spouse on a joint liability must be mirrored and are considered to be an MMIA. APS will not be responsible for mirroring accounts in these situations.

  10. Centralized Case Processing will only accept MMIAs for processing from Revenue Officers or ACS. As a result, APS will not input an MMIA to status 60. APS will send a copy of the Form 5402 and administrative file to Revenue Officers to forward to CCP. For ACS cases, APS will return a copy of the Form 5402andForm 433-D to ACS for processing.

  11. There are four types of status codes for Installment Agreements:

    1. Status 60 – Active agreement

    2. Status 61 – Suspended agreement

    3. Status 63 – Deferred agreement: Used to cross reference TINS where collection activity has been deferred until modules under related accounts have been satisfied. These IAs are common on business taxpayers where the officer has a related trust fund recover penalty assessment.

    4. Status 64 – Defaulted agreement

  12. Where Appeals denies the taxpayer an IA, reverse TC 971 AC 043 with TC 972 AC 043. The 971/972 input dates need not be the same. See IRM 8.22.3.11.1.1 below for occasions where the TC 971 and TC 972 dates should be the same.

  13. Input TC 972 AC 043 with the same date as the TC 971 AC 043 when:

    1. The 30-day suspense period for filing for a judicial review concludes.

    2. The Tax Court case decision is entered, if a petition is filed.

    3. A Form 12257 waiver is secured.

    4. A withdrawal is received.

  14. More information pertaining to IDRS inputs for all types of Installment Agreements can be found in IRM 5.19.1.5.5.

8.22.3.11.1.2  (10-01-2012)
IA Processing Information

  1. Use the following procedures when closing a CDP case with an installment agreement:

    1. Close the case on ACDS.

    2. Suspend the case on PEAs with Suspense Reason Code S09 – Monitoring On-Line Adjustment.

    3. Add a PEAs follow-up date equal to the expected posting date.

    4. Once the TC 521 posts, input Command Code IAGRE with the terms of the Form 433-D (Posting issues may arise if the I/A is input prior to the TC 521). The TC 971 AC 063 will post systemically as a result of input of CC IAGRE.

    5. On the date the IA is input, remove the PEAs case from suspense and close the case on PEAs.

    Note:

    Entities with a -A freeze code indicator on the module will now update to Status 60 without the reversal of the -A freeze code.

8.22.3.11.2  (10-01-2012)
Currently Not Collectible

  1. The hearing officer will enter a CNC closing code on Form 5402. The hearing officer will also indicate in the "Remarks" section of Form 5402, any non-CDP periods which should also be placed into CNC status.

  2. Use IDRS Command Code REQ77 to place an account into CNC status.

    Note:

    For a complete discussion of CC REQ77, refer to IRM 2.4.19 and the Job Aid for IDRS command codes.

  3. The hearing officer must prepare a paper Form 53 if they request a mandatory follow-up. Send the paper Form 53 to ACS or the originating Revenue Officer to forward to Compliance Case Processing for input.

  4. When CNC requests are made for one taxpayer on a joint liability, the account must be mirrored. APS will not mirror these accounts and will process these requests through ROs and ACS as stated in IRM 8.22.3.11.1.1

8.22.3.11.3  (10-01-2012)
Adjustments

  1. An account adjustment on a CDP or EH may involve tax, penalty and/or interest.

  2. IRM 21.5 , Account Resolution, contains the guidelines for processing adjustments and will tell you if an action may be taken. Follow these guidelines when working with adjustments.

  3. You may also need to reference other IRMs, such as:

    • IRM 3.8 (Deposit Activity)

    • IRM 5.19 (Liability Collection)

    • IRM 20.1 (Penalty Handbook)

    • IRM 20.2 (Interest)

    • IRM 20.2.3 (Command Code PINEX)

    • IRM 21.1.2 (Reference Materials Overview)

    • IRM 21.1.3 (Operational Guidelines Overview)

    • IRM 21.5.3 (General Claim Procedures)

    • IRM 21.5.4 (General Math Error Procedures)

    • IRM 21.5.6 (Freeze Codes)

    • IRM 21.6 (Individual Tax Returns)

    • IRM 21.6.2.4.2 Multiple Individuals Using the Same TIN (Identity Theft)

    • IRM 21.7 (Business Tax Returns and Non Master File Accounts)

    • IRM 25.6 (Statute of Limitations)

8.22.3.11.3.1  (10-01-2012)
Tax

  1. Tax issues heard within CDP will generally have a separate WUNO if the Settlement Officer determines that the assistance of an Appeals Officer is required to determine the correct tax liability.

  2. APS will input adjustments to tax and make any abatements or adjustments to the account as directed by the hearing officer.

  3. The following documents may be used to request adjustments:

    1. Form 3870 - Request for Adjustment

    2. Form 2424 – Credit Transfer

    3. Form 4159 – Payment Tracer

    4. Form 4549 – Income Tax Examination changes

  4. Assign the CDP and Income Tax WUNO to the TE on PEAs for closing with PEAs TYPE "CLS" and the appropriate Sub TYPE for the case.

  5. Follow established procedures for closing the Income Tax WUNO.

8.22.3.11.3.1.1  (10-01-2012)
Automated Substitute for Return (ASFR) Program

  1. The ASFR program is a non-filer or return delinquency program Compliance uses to assess tax against taxpayers who have not filed or refuse to file individual income tax returns.

  2. If Appeals secures a valid return from the taxpayer, the return will be sent by the hearing officer to the ASFR Recon Team for processing. The ASFR Recon Team will make all of the necessary adjustments to the account.

  3. If it is decided locally that the liability issue will be worked by an Appeals Officer, APS will make any abatements or adjustments to the account as directed by the hearing officer.

  4. If the taxpayer is allowed to raise the liability under CDP, APS will abate the SFR/ASFR assessment and reverse withholding as requested by the hearing officer.

    Note:

    If a taxpayer files a valid return after the SFR assessment, the SFR assessment is not abated but will be raised or lowered by the difference between the amount of tax assessed on the SFR by the amount accepted on the taxpayer's return.

  5. Close the case on ACDS.

  6. When all actions are completed, close the case on PEAs.

8.22.3.11.3.2  (10-01-2012)
Penalty

  1. Hearing officers prepare Form 3870 with the abatement information.

  2. The hearing officer will request blocking series 96X (penalty abatement refusal) for the TC 290 (-0-) transaction if they deny a penalty abatement.

    Note:

    This will prevent a later abatement of a penalty sustained by Appeals

  3. If an appeals employee subsequently decides to abate a penalty previously sustained by Appeals, input a TC 290 with a blocking series 97X (reversal of penalty abatement refusal).

    Note:

    Only Appeals personnel can use the above two blocking series.

  4. APS will never process Trust Fund Recovery Penalty adjustments. APS should send Form 3870 (completed by the hearing officer) and a copy of Form 5402 and ACM to the Control Point Monitor (CPM) that originally sent the case to Appeals or to the CPM in the state where the taxpayer resided at the time of assessment. The CPM address should be indicated by the hearing officer on Form 3870 . If the address is not listed, see the "Control Point Monitoring Technicians" listing in SERP under the "Who/Where" tab for the addresses or in Pub 4235.

8.22.3.11.3.3  (10-01-2012)
Abatement of Interest Under IRC 6404(e)

  1. Appeals Officers may resolve an abatement of interest by:

    1. sustaining in full

    2. abating in full

    3. partially abating

  2. Interest abatement cases are controlled on a separate WUNO using type code ABINT and feature code DP.

  3. Request for abatements will be made on Form 3870, Request for Adjustment, or Form 8485, Assessment Adjustment Case Record.

    Note:

    The amount of interest to be abated may have been previously computed on some of the cases Appeals will handle. In those cases in which it has not, the hearing officer will determine the "from" and "to" dates for the interest abatement and the amount of tax on which to compute the interest. IRM 8.7.7.14.3(4) In some settled cases, hearing officers may obtain a Form 906 Closing Agreement.

  4. Refer to the following for guidance on interest abatement:

    • Delegation Order 228 (Rev. 3)

    • IRM 20.2 , Interest Handbook

    • IRM 20.2.7, Abatements and Suspension of Interest: IRC 6404 and IRC 7508, for information relating to Interest Abatement Requests and Claims, Interest Abatement Coordinators, Interest Calculation, etc.

    • IRM 8.7.7.14, Claim and Over Assessment Cases, provides a complete discussion on Abatement of Interest under IRC 6404(e)

    • IRM Exhibit 8.7.7-1 for examples of interest computations

  5. Close the case as follows:

    Step Action Additional Instructions
    1. Control the CDP and ABINT case Use separate work unit numbers
    2. Cross-reference the WUNOs of the CDP and ABINT in Notes on the CSC  
    3. Assign the CDP WUNO to the TE on PEAs for closing Use PEAs TYPE "CLS"
    4. Assign the appropriate subTYPE for the case Use PEAs SubTYPE ACDS "Only"
    5. Assign the ABINT WUNO to the TE on PEAs, using PEAs TYPE "SND" PEAs SubTYPE "Issue"  
    6. Issue the determination letter See IRM 8.20.6 for instructions on issuing the ABINT determination letter.
    7. Close the CDP WUNO on ACDS  
    8. Suspend the CDP case on PEAs Use Suspense Reason Code S99-Other
    9. Add a PEAs follow up date equal to the ABINT default date The default date is the SNDATE plus 240
  6. Suspend the CDP file with the ABINT file until the ABINT case defaults or is closed from Court.

  7. Close the ABINT work unit.

8.22.3.11.4  (10-01-2012)
Innocent Spouse

  1. The CDP APS Campus sites will:

    1. Send the Innocent Spouse case to the Cincinnati Campus Appeals APS unit for final actions on the IS claim.

    2. Suspend the CDP case on PEAs with Suspense Reason Code S07 – Waiting on Account Transfer.

    3. Remove the case from PEAs suspense and close the case on PEAs when notified by the Cincinnati Campus Appeals APS unit that the IS WUNO actions have been completed.

    4. Close case on CDPTS and ACDS.

  2. The Cincinnati Campus Appeals APS unit will:

    1. Control the IS case on PEAs

    2. Update the Innocent Spouse Tracking System (ISTS).

    3. Update IDRS.

    4. Input IS adjustments, as needed.

    5. Close the IS case on ACDS.

    6. Suspend the IS case on PEAs with Suspense Reason Code S07 – Waiting on Account Transfer.

    7. Add a PEAs follow-up date equal to the expected posting date.

    8. Close the IS case on PEAs after adjustments post.

    9. File the IS administrative file according to standard procedures.

    10. Inform APS - CDP at the conclusion of their closing actions on the IS claim, so the final CDP actions on CDPTS, ACDS, and PEAS may be completed.

  3. All back-end closing actions for CDP cases with related IS issues may also be closed by one campus back-end APS unit in a centralized location, as determined by APS management.

8.22.3.11.5  (10-01-2012)
Levy Release

  1. Levy releases are an interim action.

  2. Hearing officers should request levy releases by contacting Collection before the case is closed to APS.

  3. If APS is requested to release the levy, return the case to the hearing officer through the APS manager.

8.22.3.11.6  (10-01-2012)
Lien Resolutions

  1. There are various types of lien resolutions. Most resolutions require interim actions on the part of the hearing officer.

8.22.3.11.6.1  (10-01-2012)
Lien Release

  1. Lien releases are an interim action.

  2. Hearing officers must request a lien release from the Advisory Group before the case is closed to APS.

  3. If the hearing officer has not requested the lien release prior to closing the case, refer the case to the APS Manager.

8.22.3.11.6.2  (10-01-2012)
Discharge/Subordination

  1. Lien subordinations and discharges are interim actions that the hearing officer must complete before closing the CDP/EH case.

  2. The hearing officer will send an ARI to the Technical Advisory unit for the state where the property is located.

  3. See IRM 8.22.2.4.6 section titled "Lien Discharges and Subordinations" for additional information.

8.22.3.11.6.3  (10-01-2012)
Withdrawal

  1. Lien withdrawals are interim actions that must be completed by the hearing officer before the case is closed to APS.

  2. If the hearing officer has not requested the lien withdrawal prior to closing the case, refer the case to the APS Manager.

8.22.3.12  (10-01-2012)
CDP and EH Offer in Compromise (OIC) Processing: Overview

  1. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles their tax liability for less than full payment. Taxpayers may submit an OIC as an alternative to collection in a CDP or EH hearing. See IRM 8.23 for more information on OICs.

  2. The Centralized Offer In Compromise unit will, with few exceptions, investigate all CDP or EH OICs meeting COIC criteria. After completing the investigation, with the exception of OICs they accept, COIC will return all offers to Appeals. In cases where COIC accepts the offer, COIC will complete all back-end processing and return copies of the OIC documents to the hearing officer. Appeals will adopt COICs acceptance decision. Appeals will make the final determination where COIC rejects, returns, or the offer requires mandatory withdrawal.

  3. Appeals will retain to investigate and make a determination on CDP OICs that do not meet COIC criteria and, in limited circumstances, OICs meeting COIC criteria.

  4. CDP OICs where COIC does not complete the back-end processing as discussed in (2) above, are retained with the CDP file and processed by the APS CDP Campus sites.

    Note:

    Do not forward the OIC separately to Campus APS OIC units in Brookhaven, Fresno or Memphis.

  5. Characteristics of a CDP case with a related OIC:

    1. The OIC and CDP are controlled under separate WUNOs

    2. Each WUNO has Feature Code DP

    3. Where COIC investigates the OIC, both the CDP and OIC WUNO will also have Feature Code CO

    4. The WUNO’s of the CDP and OIC are cross-referenced in "Notes" on the case summary card

      Note:

      Any adjustments made to a TFRP assessment as a result of a filing of an OIC in a CDP case, should be forwarded to the appropriate Advisory unit to make the adjustments. See IRM 8.22.3.11.3.2

  6. APS is now responsible for closing CDP offers that have been loaded onto the AOIC database by Collection.

8.22.3.12.1  (10-01-2012)
CDP OIC Processing: Accepted OICs

  1. Back-end processing on OIC cases will differ depending on whether COIC or Appeals accepts the OIC. CDP and EH back-end processing will not change.

  2. IRM 8.22.3.7 for CDP or EH file closing actions.

8.22.3.12.1.1  (10-01-2012)
Accepted OICs - COIC Investigated

  1. COIC will take the following actions on CDP or EH OICs they accept:

    1. Issue the OIC acceptance letter.

    2. Forward original documents (Form 7249 , et al) to the Monitoring OIC (MOIC) unit.

    3. Forward the required documents to the Public Inspection File.

    4. Return to Appeals, copies of the acceptance letter, Form 7249, and amended Form 656, if applicable.

    5. STAUP CDP periods to status 71 (prevents periods from reverting to collection status when TC 520 cc 76/77 is reversed).

    6. Close the case on AOIC as accepted.

  2. The Appeals CDP or EH OIC file where COIC accepted the OIC should contain the following copies of OIC documents:

    Note:

    The following copies will stay with the CDP or EH case file. APS is not required to send any documents on COIC-accepted OICs to MOIC.

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 7249, Offer Acceptance Report

    • Acceptance Letter, Letter 673(P), signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables

  3. The Appeals CDP or EH file where COIC accepted the OIC should contain the following original CDP/EH documents:

    1. Closing letter, i.e., Waiver Form 12257 , Decision Letter, or Notice of Determination

    2. Customized CDP Form 5402

    3. Separate ACM, if applicable

    4. Case Activity Record

    5. Original correspondence between the Service and the taxpayer

    6. Form 12153 (or other written request)

    7. Form 12153A / Form 12153B

  4. APS will take the following closing actions on CDP or EH cases where COIC investigates and accepts the OIC:

    1. Issue the CDP Notice of Determination, EH Decision Letter or Form 12257 Waiver following established procedures.

    2. Close the OIC WUNO on ACDS.

      Note:

      Since COIC issues the acceptance letter, APS will issue only the applicable CDP or EH closing letter. COIC is solely responsible for AOIC closing actions on offers they accept.

  5. ACDS inputs for accepted OIC WUNO:

    Note:

    Immediately close the CDP OIC WUNO when the CDP is closed with a Form 12257 Waiver. Suspend the OIC WUNO with the CDP WUNO where the CDP is closed with a Notice of Determination.

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt: = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period.

      Enter 0 (zero) for any other tax periods.

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. Paycode = 7

    5. NOTES – COIC accepted OIC. Direct ship by COIC to MOIC

      Note:

      APS will not have IDRS-input requirements on COIC accepted OICs

8.22.3.12.1.2  (10-01-2012)
Accepted OICs - Appeals Investigated

  1. The files of CDP and EH OICs accepted by Appeals should contain the following original documents:

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402

    • Appeals Case Memo

    • Acceptance Letter 673(P) signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables

    • Sanitized TDS transcript.

  2. APS (local or campus) will retain the OIC with the CDP when a CDP Notice of Determination is issued. The OIC and CDP file must be held pending expiration of the default period or until a final decision has been entered by the Court. APS (local or campus) will send a photocopy of the Form 656, Form 7249 and acceptance letter to the appropriate MOIC unit so that monitoring of the accepted offer can begin. The local APS office will send both files to the APS CDP Campus site after the suspense period and the offer file should then be sent to MOIC.

  3. Local APS sites will promptly send to the APS CDP Campus sites for back-end processing EH cases and CDP cases where a Form 12257 Waiver is secured.

  4. APS (local and campus) will ensure the case is ready and complete for closing by verifying inclusion of:

    1. Form 5402 for both CDP and OIC; STAUP 71 information

    2. Acceptance Letter 673

    3. Form 7249, including Counsel signature, when applicable

    4. ACM

    5. Sanitized MFTRAX or TDS transcript

    6. ATM's approval

  5. APS will date and issue the OIC acceptance letter to the taxpayer as an attachment to the CDP Notice of Determination or EH Decision letter or Form 12257.

    Note:

    The CDP Letters and the OIC Acceptance Letter must have the same date.

  6. The APS CDP Campus site will process three (3) separate files:

    1. OIC acceptance file

    2. CDP case file

    3. OIC Public Inspection File

  7. OIC acceptance file. Forward the following documents on Form 3210 to the Campus Monitoring OIC (MOIC) unit at the campus, Brookhaven or Memphis, that will monitor future compliance. See "Offer-in-Compromise (OIC) Compliance Campus Locations for Back-end" at the SERP"Who/Where" tab. These are original documents unless indicated otherwise:

    • Form 656 and any amendments to the original Form 656

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402 (copy)

    • Appeals Case Memo (copy)

    • Acceptance Letter 673(P), signed by the ATM; it may also be signed by the Area Director, Director, Field Operations or the Director, Campus Operations (copy)

    • CDP determination or decision letter and attachment or Form 12257 waiver (copy)

    • Sanitized MFTRAX or TDS transcript

    • Co-Obligor agreement, if applicable

    • Form 656-A hardship waiver of the application fee, if claimed

    • Financial statements

    • AET and IET schedules

    • ACDS history (copy)

    Note:

    APS will update and close AOIC on all Appeals accepted CDP related offers that have been loaded on AOIC and have not been accepted by Collection.

  8. CDP or EH administrative file. OIC documents for the CDP or EH administrative case file are as follows. These are copies of the original documents:

    1. Form 656, Offer in Compromise and amendments

    2. Form 5402 for OIC WUNO

    3. Form 7249, Offer Acceptance

    4. MFTRAX or TDS transcript

    5. Signed and dated Acceptance letter L673

    6. Collateral agreements, if applicable

  9. Public Inspection File. See "Advisory Units Contact List" at Who/Where tab on SERP on where to send these documents:

    1. Copy of Form 7249 (the street address should be redacted and the state should be left unredacted)

    2. Sanitized transcripts

  10. ACDS inputs for accepted OIC WUNO:

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period.

      Enter 0 (zero) for any other tax periods.

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. Paycode = 7

    5. NOTES – Accepted OIC file to MOIC (Memphis or Brookhaven)

  11. Process any OIC payments to the campus OIC unit noted on the acceptance letter.

  12. Input STAUP 71 on all CDP periods to prevent levy action.

    Caution:

    The TC 521 input on the CDP periods will return the periods to their pre-CDP status until MOIC inputs TC 780. The taxpayer may receive a notice to pay or be subject to erroneous levy action if STAUPs are not in place. Also, verify STAUP 71 and TC 480 inputs on all non-CDP periods.

  13. APS is now responsible for closing actions on AOIC for any CDP offer not accepted by Collection that has been loaded onto AOIC. See IRM 8.23.6.2.3.1(3) for procedures on how to close CDP OICs accepted by Appeals.

    Note:

    On AOIC, the "Update Final Disposition" field will prompt for the mailing date of the rejection with appeal rights letter. Enter the date that collection generated but did not issue the rejection letter. This date can be obtained by accessing the remarks or history information on AOIC.

8.22.3.12.2  (10-01-2012)
Rejected CDP OIC Processing

  1. The back-end processing instructions are the same for CDP or EH OICs investigated by COIC and returned with a rejection recommendation and CDP or EH OICs investigated and rejected by Appeals because Appeals makes the final determination on all OICs.

  2. A rejected CDP or EH OIC will have a separate file, but the file is not returned to COIC. The rejection file remains with the CDP or EH file.

  3. The rejected OIC will not have a rejection letter separate from the determination or decision letter. The hearing officer discusses the rejection in the attachment to the decision or determination letter.

    Note:

    If the expiration of the TIPRA statute is imminent, the hearing officer may choose to issue a Letter 238 rejecting the offer directly to the taxpayer so that the TIPRA statute is protected. Upon resolution of the CDP, the hearing officer will still close the cases as discussed in (2) above and the date of the TC 481 should be the date the Letter 238 was issued. If the taxpayer has filed for bankruptcy protection, the hearing officer will close the CDP OIC WUNO, retain pertinent documents in the CDP file and forward the CDP OIC WUNO to APS for all closing actions.

  4. All OIC documents remain with the CDP or EH file.

  5. APS is now responsible for closing actions on AOIC for CDP offers rejected by Appeals that have been loaded onto AOIC. See IRM 8.23.6.2.5.1(2) for procedures on how to close CDP OICs rejected by Appeals.

    Note:

    On AOIC, the "Update Final Disposition" field will prompt for the mailing date of the rejection with appeal rights letter. Enter the date that collection generated but did not issue the rejection letter. This date can be obtained by accessing the remarks or history information on AOIC.

8.22.3.12.2.1  (10-01-2012)
ACDS and IDRS Inputs for Rejected OICs

  1. Close the CDP or EH OIC on ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for rejected OIC WUNO:

    • CLOSINGCD = 14 (OIC Rejected)

    • WUaccpOFRAmt = 0 (zero)

    • Paycode = 7

  3. IDRS inputs for a rejected OIC are completed after the suspense period expires and if the taxpayer petitions Tax Court, after the Tax Court decision becomes final.

    1. Input TC 481 on each tax period included in the rejected OIC. If the case was opened on AOIC, the AOIC database will input the TC 481 systemically upon closure

    2. The date of the Notice of Determination or Decision Letter = date of TC 481 and closing date of OIC WUNO. See also IRM 8.22.3.12.2 above.

8.22.3.12.3  (10-01-2012)
Withdrawn OIC

  1. A withdrawn CDP or EH OIC will have a separate file, but the file is not returned to COIC. The withdrawn OIC file will remain with the CDP file.

  2. The withdrawn OIC will not have a withdrawal letter separate from the Notice of Determination or Decision letter. The hearing officer discusses the withdrawal in the attachment to the decision or determination letter.

    Note:

    If the expiration of the TIPRA statute is imminent on an Appeals investigated CDP/EH offer, the hearing officer may choose to issue a Letter 241 Withdrawal letter to the taxpayer to protect the statute. Upon resolution of the CDP, the hearing officer will still close the cases as discussed in (2) above and the date of the TC 482 should be the date the Letter 241 was issued unless the withdrawal was sent via certified mail or hand delivered, in which case the TC 482 is the IRS received date.

  3. As with accepted and rejected CDP offers, withdrawn offers must be closed on AOIC by APS if Collection loaded the offer onto the AOIC database. See IRM 8.23.6.2.4.1(2) for procedures on closing withdrawn offers on AOIC.

8.22.3.12.3.1  (10-01-2012)
ACDS and IDRS Inputs for Withdrawn OIC Cases

  1. The CDP or EH OIC should be closed both on IDRS and ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for withdrawn OIC WUNO:

    • CLOSINGCD = 16 (OIC Withdrawn)

    • WUaccpOFRAmt = 0 (zero)

    • Paycode = 7

  3. IDRS inputs for withdrawn OIC:

    1. Input TC 482 on each tax period included in the withdrawn OIC.

    2. Where the OIC withdrawal was sent via certified mail or hand delivered, the date of the TC 482 is the IRS received date.

    3. Where the request for withdrawal was received via fax, phone or regular mail, the TC 482 date is the same as the date of the Notice of Determination or Decision Letter and the closing date of the OIC WUNO.

8.22.3.12.4  (10-01-2012)
Sanitized MFTRAX or TDS Transcript

  1. A sanitized MFTRAX or TDS transcript will be secured by the hearing officer and will have the following items "blacked out" (redacted) so that they are unreadable and not available in the public inspection file.

    1. SSN of the taxpayer

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

    3. Number of exemptions

    4. Filing status

    5. Adjusted gross income

    6. Taxable income

    7. Principal Industry Activity Code

    8. Transaction codes with neither debit or credit money amounts. The entire line including the date should be redacted

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

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

      Note:

      See IRM 8.23.4.2 and IRM 5.8.8.3(5) for additional information on sanitizing transcripts for accepted offers.

Exhibit 8.22.3-1 
Sources of Information and IDRS References

CDPSources of InformationEHSources of Information

The following sources of information explain the IDRS requirements for back-end processing of collection alternatives:

Source Description
IRM 2.3 IDRS Terminal Responses – Use and contents of the IDRS – also provides instructions on command codes
IRM 2.4 IDRS Terminal Input – Instructions to Input of Entity and Tax Account Transaction Codes
IRM 2.8 Audit Information Management System (AIMS)
Document 6209 IRS Processing Codes & Information – a reference guide on IDRS
SERP-IRM IRC 21.1.2 Reference Materials Overview, for additional information on SERP; SERP Job Aids

Exhibit 8.22.3-2 
How TC 521 Determination Date Was Made

CDP TC 521 Determination Date
TC 521 Determination Checksheet
Check applicable box in the left hand column and include this completed checksheet in the administrative file for every CDP case.
  Expiration of NOD/TP did not petition Tax Court cc05 TC 521 date is 30 days after NOD date
  Form 12257 waiver secured cc04 TC 521 is date ATM or hearing officer signed waiver
  Form 12256 withdrawal secured cc16 TC 521 is date Appeals received the withdrawal as indicated on L4383
  Expiration of NOD with spousal defense issues TP did not petition Tax Court cc05 TC 521 date is 90 days after NOD date
  Expiration of NOD with abatement of interest issues. TP did not petition Tax Court cc05 TC 521 date is 180 days after NOD date
  Tax Court decision "Pursuant to the agreement of the parties" withoutan IRC 6330(e) waiver paragraph. TP did not appeal to a higher court cc10 TC 521 date is 90 days after decision entered
  Tax Court decision "Pursuant to the agreement of the parties" with an IRC 6330(e) waiver paragraph cc10 TC 521 is date decision entered
  Tax Court decision with wording "Pursuant to the determination of the Court" signed only by the judge cc17 TC 521 date is 90 days after decision entered
  Dismissed in Tax Court for lack of jurisdiction (cc11), lack of prosecution (cc12) or as moot (cc11). TP did not appeal to a higher court. cc11 or cc12 TC 521 is date 90 days after decision entered
  Disregarded Hearing Request (only frivolous issues raised) cc13 TC 522 is used not TC 521
  Premature Referrals cc20 TC 522 is used not TC 521
  Tax Court decision appealed to a higher court   Chief Counsel's CCDM 36.2.5.3. used
TC 521 Determination Checksheet
Check the applicable box for the method used to determine the exact TC 521 date
  Computed by using "Target Date" calculator from the ACDS utilities menu
  Computed manually
  TC 521 date provided by Counsel on Form 1734
  TC 521 date provided by Counsel after APS requested date from attorney
  The Tax Court website was researched and TC 521 date was computed using the "Target Date" calculator from the ACDS utilities menu. Caution: (APS should view the actual document on the Tax Court website to verify the date entered and not rely on the docket sheet date)
  The Tax Court website was researched and TC 521 date was calculated manually Caution: (APS should view the actual document on the Tax Court website to verify the date entered and not rely on the docket sheet date)
  Other (Write a brief description)

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