8.22.7  Alternatives to Collection Action

Manual Transmittal

September 23, 2014

Purpose

(1) This transmits an editorial update to IRM 8.22.7, Collection Due Process, Alternatives to Collection Action.

Material Changes

(1) 8.22.7 is updated to incorporate Appeals Interim Guidance:

  • AP-08-0214-0001, Interim Guidance on Appeals Discontinued Use of CDPTS, and

  • AP-08-0714-0005, Implementation of the Appeals Judicial Approach and Culture (AJAC) Project Collection - Phase 2

  • AP-08-0814-0008, Appeals Judicial Approach and Culture (AJAC) Feature Codes and Premature Referral Reasons with new instructions at 8.22.7.4(6) for inputting feature code "RI" and suspending the case while an ARI is under way.

(2) Removed subsections regarding Corporate and LLC Trust Fund Offers as these were obsoleted by AJAC Phase II. Collection investigates all OICs and any TFRP issue is resolved before a Corporate or LLC Trust Fund offer is returned to Appeals. Removed the following subsections:

  • 8.22.7.4.2, ARI to Field Collection for Corporate and LLC Trust Fund Offers

  • 8.22.7.10.10, Corporate and LLC Trust Fund Offers

  • 8.22.7.10.10.1, Trust Fund Computation

  • 8.22.7.10.10.2, TFRP Investigation

(3) New (5) added to IRM 8.22.7.1.1, Collection Information Statement (CIS), repeating IRM 8.23.3(8) for continuity and clarity on the treatment of the CIS.

(4) Revised to update citations and references.

(5) Revised to improve the content for plain language, active voice and organization.

Effect on Other Documents

IRM 8.22.7 dated November 5, 2013 is superseded.

Audience

Hearing officers, appeals account resolution specialists and appeals team managers

Effective Date

(09-23-2014)

John V. Cardone,
Director, Policy, Quality and Case Support.

8.22.7.1  (11-05-2013)
Overview

  1. This section provides guidance to hearing officers considering alternatives to collection action in CDP, EH and retained jurisdiction cases.

  2. All open tax periods must be included when resolving a case through:

    • Installment Agreement (IA)

    • Offer in Compromise (OIC)

    • Currently not Collectible (CNC)

  3. If a CDP liability is full paid, Appeals does not have jurisdiction to consider a collection alternative or CNC for non-CDP period(s) alone.

8.22.7.1.1  (09-23-2014)
Collection Information Statement (CIS)

  1. A current CIS is generally required if a taxpayer requests an alternative to collection action and does not qualify for a:

    • Guaranteed, Streamlined, In-Business Trust Fund Express IAs, or

    • Currently not Collectible (CNC) hardship status in limited situations. See IRM 5.16.1.2.9.

    A CIS is current if it is dated 12 months or less from the date received in Appeals.

  2. Treat a current CIS that comes with a CDP as verified since Collection had an opportunity to review it.

  3. A taxpayer's financial information may be reported on:

    • Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals.

    • Form 433-B, Collection Information Statement for Businesses

    • Form 433-F, Collection Information Statement

    • Form 433-A (OIC) and Form 433-B (OIC)

  4. Form 433-F is routinely used by ACS and campuses. If Collection requested a Form 433-F and the taxpayer provided it, Appeals will rely on it.

    Exception:

    If the taxpayer proposes an OIC as a collection alternative, the taxpayer must complete the CIS included in Form 656-B, the offer in compromise booklet.

  5. Do not contact a taxpayer to secure an updated CIS if it is less than 12 months old, or if the information became outdated due to IRS delay. If Appeals needs updated financial information from the taxpayer, an updated CIS is not necessary. “Pen-and-ink” changes to the existing CIS are sufficient.

  6. Ensure current Allowable Living Expenses are used prior to making a determination or decision that requires a CIS.

8.22.7.1.2  (11-05-2013)
Form 12257 Summary Notice of Determination

  1. Form 12257 serves as a summary Notice of Determination that waives the taxpayer's right to go to court and the suspension of levy action.

  2. When you reach an agreed resolution in a timely CDP, ask the taxpayer to sign Form 12257, Summary Notice of Determination..., after advising that:

    1. The taxpayer is not obligated to sign and the agreed resolution will be input with or without the Form

    2. The right to petition Tax Court is waived

    3. The right to a 30 day suspension of levy action is waived

    4. Without it, Appeals delays the input of the agreed resolution by 60 or more days to see if the taxpayer petitions Tax Court

8.22.7.2  (09-23-2014)
Requesting a Credit Report

  1. Appeals does not request credit reports in CDP cases.

8.22.7.3  (09-23-2014)
Third-Party Contacts

  1. Appeals does not contact third parties to verify a CIS. If verification is necessary, see IRM 8.22.7.4, Appeals Referral Investigation (ARI), below.

8.22.7.4  (09-23-2014)
Appeals Referral Investigation (ARI)

  1. An ARI may be necessary if:

    • The appropriateness of a collection alternative or CNC hardship can't be determined without additional information that Appeals can't secure from internal sources or the taxpayer

    • The taxpayer provides a new CIS to Appeals that requires verification and proposes an IA or CNC

  2. If you determine an investigation is needed or verification is required, use an ARI to forward the information to Collection.

  3. If the taxpayer proposes a collection alternative but does not qualify for the alternative based on other facts (e.g. non-compliance), an ARI is not necessary.

  4. Field Collection is responsible for ARIs on field sourced CDPs. See IRM 8.22.7.4.1, ARI to Collection to Verify CIS, below.

  5. ACS is responsible for ARIs on ACS sourced CDPs. See IRM 8.22.7.4.3, ARI to ACS to Verify CIS, below.

  6. When issuing an ARI:

    1. Suspend the case in ACDS by inputting SU/PI and E/OTH.

    2. Add Feature Code (RI) Referral Investigation to ACDS. The RI feature code remains on the case after it is taken out of suspense.

    3. Input SU/TO to take the case out of suspense once the ARI is complete.

  7. If, in response to an ARI you receive:

    • An incomplete response: Proceed with the information you have.

    • No response: Follow up with Collection once. If there is no response to the follow up, proceed with the information you have.

8.22.7.4.1  (09-23-2014)
ARI to Field Collection to Verify CIS

  1. Prepare Form 2209, Courtesy Investigation, or Form 10467, Appeals Division Feedback Report and Transmittal Memorandum, and state in the remarks section:

    Example:

    "We are conducting a CDP/EH hearing and the taxpayer has raised [collection alternative] which require [specify what is Collection should do]. Please see the attached forms and verify necessary items."

  2. Prepare a letter to the taxpayer notifying them that a referral is being made to Collection for verification:

    Example:

    "You requested Appeals consider [specify issue]. Appeals has asked Collection to review the information provided while we retain jurisdiction of your case. It may be necessary for Collection to contact you and/or third parties for information to complete the review. You'll have an opportunity to respond once the results of the review are shared with you."

  3. Route the ARI to the revenue officer group covering the taxpayer's zip code. This is found in ICS by clicking on Administrative Action, Parameter Table and then Assignment table. Send the revenue officer group the ARI and a copy of:

    1. The CIS

    2. The taxpayer referral letter to assure Collection that the taxpayer is aware contact may be necessary

  4. The deadline for completing an ARI is:

    • 45 days after issuance if the action address is within the United States, Puerto Rico or the Virgin Islands

    • Six months after issuance if the action address is any other US possession or territory or located within a foreign country

  5. If you have not heard back on an ARI, follow up within 30 days after the deadline for completion with Collection via secure email. Limit your inquiry to the status of the ARI to avoid prohibited ex parte communication. Print Collection's response and associate it with your case file.

  6. Share the results of the ARI with the taxpayer and ask for his or her review. Give the taxpayer at least 15 business days to review the results before scheduling a follow-up conference or using the information in your determination.

    Example:

    “Enclosed are the results of Collection's review of [specify issue]. If you disagree with the results, tell me what you disagree with and why you disagree by MM/DD/YY. I'll consider Collection’s review and your response before making a decision in your Collection Due Process hearing.”

8.22.7.4.2  (09-23-2014)
ARI to Field Collection or COIC to Review New Information in an OIC

  1. If Collection returns a CDP OIC to Appeals with a recommendation to reject and the taxpayer subsequently submits new information to Appeals, see IRM 8.23.3.3.1.2, Review of Supplemental Information – Collection Issue Offers, to determine if an ARI is necessary.

  2. If an ARI is necessary, issue it to the Collection office that recommended rejection of the OIC. Instructions for preparing the ARI are found in IRM 8.23.3.3.2.6 , Requesting Assistance from Field or Campus Collection.

  3. Prepare a letter to the taxpayer advising that a referral is being made to the OIC unit for verification.

    Example:

    “You requested Appeals consider [specify issue]. Appeals asked Collection to review the information provided while we retain jurisdiction of your case. It may be necessary for Collection to contact you and/or third parties for information to complete the review. You'll have an opportunity to respond once the results of the review are shared with you.”

8.22.7.4.3  (09-23-2014)
ARI to ACS to Verify CIS

  1. If the table in ACS' IRM 5.19.1.1.6 (8), Financial Analysis, Verification and Substantiation, shows ACS would verify a CIS based on the taxpayer's balance due and type of case resolution, you may request an ACS ARI. If the table indicates no verification is needed, Appeals will not request verification through an ACS ARI.

    Note:

    ACS CIS verification is limited to checking internal sources.

  2. Prepare Form 2209, Courtesy Investigation, or Form 10467, Appeals Division Feedback Report and Transmittal Memorandum, and state the reason(s) for your ACS ARI request in the remarks section:

    Example:

    “Appeals is conducting a CDP/EH hearing and the taxpayer raised [collection alternative] which requires [specify what is ACS should do]. Please see the attached and verify necessary items.”

  3. Prepare a letter to the taxpayer advising that a referral is being made to ACS for verification:

    Example:

    “You requested Appeals consider [specify issue]. Appeals asked Collection to review the information provided while we retain jurisdiction of your case. It may be necessary for Collection to contact you for information to complete the review. You'll have an opportunity to respond once the results of the review are shared with you.”

  4. Prepare a fax cover sheet and fax Form 2209 or Form 10467 and the CIS to the ACS Campus EEfax number of the originating ACS site:

    • Cincinnati: 866-722-5542

    • Fresno: 855-230-8299

    • Kansas City: 816-282-6375

    • Philadelphia: 855-647-8434

  5. If you have not heard back on an ARI, follow up within 30 days after the deadline for completion with the ACS CDP Coordinator via secure email. The Coordinator can be located on the SERP Who/Where webpage which is accessible here. Limit your inquiry to the status of the ARI to avoid a prohibited ex parte communication. Print ACS response and associate it with your case file.

  6. ACS returns the ARI to the hearing officer by secure email.

  7. Share the results of the ARI with the taxpayer and ask for his or her review. Give the taxpayer at least 15 business days to review the results before scheduling a follow-up conference or using the information in your determination.

    Example:

    “Enclosed are the results of Collection's review of [specify issue]. If you disagree with the results, tell me what you disagree with and why you disagree by MM/DD/YY. I'll consider Collection’s review and your response before making a decision in your Collection Due Process hearing.”

8.22.7.5  (09-23-2014)
Installment Agreements (IA)

  1. Appeals may secure IAs as a collection alternative in CDP. CDP IAs are not limited by the multifunctional restrictions that apply to other IAs secured by Appeals.

    Caution:

    An IA may not be granted if any of the taxpayer's liabilities have been referred to the Department of Justice (DOJ) until DOJ agrees the IA is appropriate. See IRM 8.22.6.9, Tax Cases Controlled by the Department of Justice .

  2. IAs must be a document signed by taxpayer and IRS, or a written confirmation of an agreement mailed or delivered to the taxpayer. Form 433-DInstallment Agreement or Form 2159Payroll Deduction Agreement, are generally used to establish an IA. The taxpayer's signature on the form is not required unless it is a payroll deduction or direct debit IA.

  3. An ARI to Collection to address TFRP is not necessary when the IA includes trust fund taxes owed by a corporation or an LLC (when the single member owner is not the liable taxpayer). When considering an In-Business Trust Fund (IBTF) IA, Appeals is not involved in any aspect of:

    • Soliciting or securing Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, or Form 2751Proposed Assessment of Trust Fund Recovery Penalty

    • Determining who is responsible for the TFRP

    • Determining non-assertion based upon collectibility

    Collection is solely responsible for TFRP determinations and assessment statutes. Securing Forms 2750 or 2751 or making responsibility and collectibility determinations compromises Appeals' independence.

  4. Within 24 hours of a processable request for an IA, request input of TC 971 AC 043 (pending IA) by secure mail to Account and Processing Support (APS) for all CDP/EH and non-CDP periods. The transaction code:

    • Prevents levy action on non-CDP periods

    • Suspends the running of the collection statute (CSED) during consideration of the agreement

  5. When determining the acceptability of an IA, consider all relevant facts including the taxpayer’s compliance history, ability to pay and equity in assets.

  6. If it appears a taxpayer will have a balance due at the end of the current year, the accrued liability may be included in an IA per IRM 5.14.1.4.1(18), Compliance and Installment Agreements. From the date of the IA, the taxpayer must be in compliance with filing, paying estimated tax payments and federal tax deposits.

  7. Add the statement “an NFTL may be filed by Collection” to Form 433-D, Additional Conditions/Terms box unless you determine an NFTL will not be filed as a condition of an IA.

  8. If you determine an NFTL will not be filed as a condition of an IA, check the box on Form 433-D that says “May be filed if this agreement defaults.”

    Note:

    Advise Collection on Form 5402 when you determine no NFTL will be filed as Form 433-D is not always returned to Collection.

  9. List all non-CDP periods in the “remarks” section of Form 5402 so APS can input ALL tax periods to IA status.

  10. Do not request input of TC 971 AC 063 (approved IA) as it is systemically generated on input to status 60.

  11. If you reject a pending IA, instruct APS in the "Remarks" section of Form 5402 to input TC 972 AC 043 to reverse the TC 971 AC 043. APS does not input the TC 972 AC 043 until the conclusion of the 30 day suspense period for filing for a judicial review. If a judicial review is filed, the TC 972 AC 043 is not input until the review is final.

8.22.7.5.1  (11-05-2013)
Direct Debit Installment Agreements (DDIA)

  1. A DDIA automatically transfers funds from the taxpayer's bank account to the IRS. If the taxpayer has a bank account, encourage the use of the DDIA.

  2. The following is required to establish a DDIA:

    1. Form 433-D

    2. A CIS, unless the agreement meets streamlined or guaranteed IA criteria

    3. a voided check or the taxpayer's legibly written routing and account number

    4. The taxpayer's signature, which is a legal requirement

    Caution:

    Avoid delays in DDIA processing by verifying the legibility of a hand written routing and account number.

  3. A faxed signature on Form 433-D can be accepted after speaking with the taxpayer. The faxed copy must be documented with the date of the contact.

    Example:

    "04/07/2011 TP REQ FAX"

  4. Monthly reminder notices are not issued on DDIAs.

  5. The taxpayer may request a notice of federal tax lien withdrawal from Collection once certain conditions of the DDIA are met. See IRM 8.22.7.9.1, Notice of Lien Withdrawals for additional information.

  6. See IRM 5.14.10.4 Direct Debit Installment Agreements, for additional information on DDIAs.

  7. At closing, select "DDIA" from the Form 5402 Installment Agreement drop down box. This alerts APS to return the "DDIA" to the originator for processing.

8.22.7.5.2  (10-01-2012)
Manually-Monitored Installment Agreements (MMIA)

  1. Some IAs are not compatible with IDRS monitoring. The following agreements must be manually monitored in Centralized Case Processing (CCP) to ensure compliance with the terms of agreements:

    • NMF assessments

    • Agreements with variable or percentage amounts

    • Agreements with irregular payment intervals

    • Agreements secured from two or more parties at different addresses on the same liability (e.g. divorced taxpayers, partnerships, etc.)

    • L Freeze modules during pending Joint and Several Liability Relief Under IRC 6015 claims

    • IBTF IAs (except Express Agreements)

    • Restitution Based Assessments and related civil assessments

    • Any other agreement not compatible with IDRS monitoring

  2. At closing, select "MMIA" from the Form 5402 Installment Agreement drop down box. This alerts APS to return the "MMIA" to the originator for processing.

8.22.7.6  (11-05-2013)
Full Pay Within 60 Day Agreement

  1. If a taxpayer proposes an agreement to full pay an ACS-sourced account within 60 days, an agreement is authorized per IRM 5.19.1.5.4, Full Pay Within 60 or 120 Day Agreement. A request may be granted based on:

    • Personal funds available to full pay the balance due

    • Third party assets available to full pay the balance due

    • Refund return or amended return that full pays the balance due

  2. Request in the remarks section of Form 5402 that APS input STAUP to any non-CDP tax periods if the agreement is that the liability will be satisfied within 60 days as well. Advise APS as to the next status and the number of cycles of delay until the next status. See IRM 2.4.28.2CC STAUP Notice Requests, for the sequence of master file status codes.

8.22.7.7  (09-23-2014)
Currently Not Collectible (CNC)

  1. A taxpayer may challenge the appropriateness of collection activity by claiming they are in a hardship situation or by requesting CNC status.

  2. CNC is not a collection alternative. It is a determination that a case should not be in collection at this time.

  3. If the taxpayer's CIS confirms hardship per IRM 5.16.1.2.9 Hardship:

    • It is not appropriate to sustain the proposed levy action. IRC 6343(a)(1), Release of Levy and Notice of Release, requires release of a levy if the IRS determines the levy is causing economic hardship to the taxpayer due to the taxpayer's financial condition.

    • CNC may be granted even if the taxpayer hasn't filed all required returns.

  4. Form 53,Report of Currently Not Collectible Taxes, is generally not needed to report a CDP account CNC. APS inputs CNC using Form 5402 and the closing code selected in the drop down menu. List all non-CDP periods in the "remarks" section of Form 5402 so APS can input ALL tax periods to CNC.

    Note:

    Prepare Form 53 if the closing code is CC 13, In-business corporation. APS sends the paper Form 53 to Collection for input.

  5. When resolving trust fund liabilities as CNC, no ARI is necessary. Note on Form 5402 that Compliance is responsible for any TFRP determination and close the case.

  6. When resolving a case as CNC, advise the taxpayer verbally or in writing that a lien may be filed by Collection.

  7. Avoid making a CDP determination that a CDP liability is uncollectible on the basis of TC 530 CC 39 in the module. A TC 530 CC 39 only indicates the module has been assigned in Collection to a hold file.

8.22.7.8  (11-05-2013)
Adjustments-Form 3870

  1. Adjustments on accounts may involve:

    • Credit transfers

    • Tracing payments

    • Penalty abatements

    • TFRP adjustment

    • Tax abatement (FUTA, 6020(b), CAWR, SFR/ASFR, AUR Reconsiderations, Audit Reconsiderations)

    • Tax assessed under wrong entity or tax period

    • 941-X increase or decrease

    • Statute consideration

  2. See the table below for a description of the forms used for making adjustments and transferring credits:

    Form Used for...
    2424, Account Adjustment Voucher transferring credits
    8765, IDRS Control File Credit Application transferring credits from excess collection.
    3870, Request for Adjustment for all other adjustments.

    Note:

    To request the Statute Unit clear a payment located in the Excess Collection File for credit or refund to the taxpayer's account, see IRM 25.6.1.10.2.5.1.1, Appeals Determinations.

  3. When adjusting Form 941, 940, and 1040 tax assessments, you must include item or credit adjustment codes. See Document 6209, Section 8. Below are some of the commonly used codes for adjusting Forms 941, 940, and 1040:

    Form 941
    Item Reference Number Explanation
    003 Adjusted total of income tax withheld
    004 Taxable social security wages
    005 Taxable social security tips
    007 Adjusted total of social security/medicare taxes
    Form 940
    WCA – Wage increase/decrease
    TCA – Tax increase/decrease
    Form 1040
    806-W-2 Withholding tax and/or excess FICA contribution Credit
    807-W-2 Withholding tax and/or excess FICA contribution Debit
    886-Taxable income (valid 7712 and subsequent)
    888-Adjusted gross income adjustment
    889-Self-Employment Tax Adjustment

8.22.7.8.1  (11-05-2013)
Interim Adjustments

  1. A tax adjustment may be required before a case can be closed. Adjustments requested prior to closing a case are called interim adjustments. Interim adjustment requests should be made judiciously.

  2. To request an interim adjustment:

    Step Action
    1 Generate an on-line Form 3870 from the IRS Intranet publishing catalogue.
    2 Complete the form and mail it to your ATM for a digital signature.
    3 Generate the ACDS Update Request form in APGolf and open in MS WORD
    4 Change the caption from ACDS Update Request to CDP Interim Adjustment Request form.
    5 After establishing which APS campus services your office, send an mail to the respective site
    • *AP-PQCS-APS-Campus-FSC ACDS Update Request, or

    • *AP-PQCS-APS-Campus-MSC ACDS Update Request, or

    • *AP-PQCS-APS-Campus-BSC ACDS Update Request

    with the retitled update form and Form 3870
    6 In the subject line of your secure mail, type: CDP Interim Adjustment
  3. APS alerts the originator via mail when the interim adjustment is complete.

8.22.7.9  (03-29-2012)
Notice of Federal Tax Lien (NFTL)

  1. This subsection describes actions with respect to an NFTL including NFTL withdrawals, and lien releases, discharges and subordinations.

8.22.7.9.1  (11-05-2013)
NFTL Withdrawals

  1. IRC 6323(j),Withdrawal of Notice in Certain Circumstances, gives the Service the authority to withdraw an NFTL under certain circumstances. Taxpayers requesting NFTL withdrawal must meet one of the following conditions:

    • IRC 6323(j)(1)(A): The filing was premature or not in accordance with the Service's administrative procedures

    • IRC 6323(j)(1)(B):The taxpayer entered into an agreement under IRC 6159, Agreements for Payment of Tax Liability in Installments, to satisfy the tax liability for which the lien was imposed by means of installment payments unless such agreement provides otherwise

    • IRC 6323(j)(1)(C): Withdrawal facilitates the collection of the tax liability

    • IRC 6323(j)(1)(D): With the consent of the taxpayer or the National Taxpayer Advocate, withdrawal would be in the best interest of the taxpayer and the United States

  2. See IRM 5.12.9, Withdrawal of Notice of Federal Tax Lien , for examples of when a withdrawal is or is not appropriate.

  3. Form 12277, Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien is used by a taxpayer to indicate the basis for a withdrawal request under IRC 6323(j). This form is not needed in a CDP hearing if the taxpayer's request for withdrawal falls under one of the IRC 6323(j) criteria.

  4. Use the table below after considering a taxpayer's request for an NFTL withdrawal:

    Did you determine withdrawal is appropriate under IRC 6323(j)? Then... Does Appeals retain jurisdiction on the NFTL withdrawal?
    Yes
    • Issue a determination or decision that the NFTL will be withdrawn

    • See table IRM 8.22.7.9.1.3, Notice of Lien Withdrawal Procedures

    Yes
    No Issue a determination or decision explaining the NFTL is not withdrawn and explain the basis of your decision. No

8.22.7.9.1.1  (11-05-2013)
DDIA NFTL Withdrawals

  1. A taxpayer may request withdrawal of an NFTL under IRC 6323(j)(1)(B) when in an established DDIA. See IRM 5.12.9.3.2.1Special Provisions for Direct Debit Installment Agreements, for conditions which must be met prior to a determination to withdraw under this provision. Appeals ATMs have the delegated authority to approve or deny such requests. For Appeals NFTL withdrawal procedures, see IRM 8.22.7.9.1.3 below.

  2. If a taxpayer enters into an IA other than a DDIA, the taxpayer may still qualify for an NFTL withdrawal under IRC 6323(j)(1)(B) if the IA did not provide for the NFTL.

8.22.7.9.1.2  (11-05-2013)
Withdrawal of NFTL after Release

  1. A taxpayer may request withdrawal of an NFTL under paragraphs (A) and (D) of IRC 6323(j)(1) after the notice has been released. See IRM 5.12.9.9.1, Processing Withdrawals After Release, for conditions which must be met prior to a determination to withdraw under this provision. Appeals ATMs have the delegated authority to approve or deny such requests. For Appeals NFTL withdrawal procedures, see IRM 8.22.7.9.1.3 below.

8.22.7.9.1.3  (11-05-2013)
NFLT Withdrawal Procedures

  1. Use the table below to request an NFTL withdrawal:

    Step Who Action
    1 hearing officer Prepare Form 13794-W, Request for Withdrawal or Partial Withdrawal of Notice of Federal Tax Lien, explaining which of the 4 IRC provisions is the basis for the withdrawal. Use the .pdf Form 13794-W in the Publishing catalog pending deployment in APGOLF.
    2 hearing officer Insert your name in the "requested by" field on the form and forward the Form 13794-W .pdf file by encrypted mail to the ATM.
    3 ATM The ATM signs Form 13794-W and transmits it by encrypted mail or fax to the Collection Advisory manager for the office that covers the taxpayer's residence. See Pub 4235, Collection Advisory Group Addresses, for the appropriate Advisory area office contact information.
    4 Advisory Advisory processes the withdrawal request in accordance with IRM 5.12.6.5 Processing Lien Related Certificates:
    • Confirms the accuracy of Form 13794-W, and

    • Forwards it to Centralized Lien Processing Operation (CLO) within 5 days of receipt

  2. A copy of the withdrawal is available through ALS. If requested by the hearing office, a copy of the withdrawal form is returned by CLO.

  3. When an NFTL is withdrawn in response to a CDP determination, the taxpayer may not request another CDP lien hearing if the NFTL is later filed.

    Exception:

    If Collection timely rescinded the original CDP notice, the taxpayer would be entitled to another CDP lien hearing request.

8.22.7.9.2  (11-05-2013)
Partial Release and Manual Release

  1. Circumstances may dictate a partial release of an NFTL is necessary. A partial release is necessary when:

    • An OIC is accepted from only one party on a joint liability

    • Innocent spouse relief is granted

    • The taxpayer requests a release for a specific tax period that has been satisfied on an NFTL with multiple tax periods

  2. Use the following procedures for requesting a partial release after receiving concurrence from your ATM:

    1. Prepare Form 13794

    2. Forward the request to Centralized Lien Processing Operation (See SERP)

    3. Request acknowledgment of the request for a partial release

    4. Once acknowledgment is received, you may close your CDP without waiting for the partial release to be recorded

  3. Use the procedures above for requesting a manual release for satisfied or unenforceable accounts as per IRM 5.12.3.3.2, Satisfied or Unenforceable Taxpayer Accounts.

8.22.7.9.3  (11-05-2013)
Discharges and Subordinations

  1. If a taxpayer requests a subordination or discharge of a tax lien, see the table below:

    Alternative Definition
    Discharge- IRC 6325(b) Permits the Service to discharge property from a tax lien. Taxpayers typically seek a discharge in connection with the sale of real property when there is insufficient equity to full pay the NFTL. See:
    • Pub 783, Instructions on How to Apply for Certificate of Discharge from Federal Tax Lien

    • IRM 5.12.3.12Discharge of Property for additional information

    Subordination- IRC 6325(d) Permits the Service to subordinate a tax lien to another lien or interest. Taxpayers typically seek subordination in connection with refinancing a loan where there is insufficient equity to full pay the NFTL. See:
    • Pub 784, Instructions on How to Apply for a Certificate of Subordination of Federal Tax Lien

    • IRM 5.12.3.13Subordination of Lien for additional information

  2. If the taxpayer completes Form 14135, Application for Certificate of Discharge of Federal Tax Lien or Form 14134,Application for Certificate of Subordination of Federal Tax Lien, submit the application on an ARI to the Advisory Unit for the state where the property is located. See Pub 4235 for Advisory Unit addresses.

  3. Advisory considers the request, processes any payments and issues the certificate. Advisory shares the results of the request with the taxpayer.

  4. If Advisory rejects the discharge/subordination request and the taxpayer disputes it, review the decision and make a final determination prior to closing the CDP.

  5. The results of the discharge/subordination request are communicated to the taxpayer in the determination/decision letter attachment or Form 12257 waiver.

8.22.7.10  (09-23-2014)
Offers in Compromise (OIC)

  1. This subsection discusses the unique procedures in CDP OICs. General guidance for working OICs in Appeals is in Appeals IRM 8.23, Offer in Compromise.

  2. An OIC may be a viable collection alternative in a CDP hearing. Key components of an OIC discussion include:

    • Different types of offers and payment options

    • How reasonable collection potential (RCP) is determined

    • Compliance and acceptance requirements

    • The application fee is refundable if the offer is not processable. The application fee is not refundable once an offer is determined processable

    • TIPRA payments are not refundable and are applied to the liability along with the application fee

    • The taxpayer's right to designate application of TIPRA payments, but that the designation must be in writing at the time the payment is made, and that the right to designate offer payments ends once the offer is accepted

    • The application fee and TIPRA payment requirements don't apply if the offer is doubt as to liability or the taxpayer meets the low-income qualifications

  3. Advise the taxpayer that a search of the phrase"offer in compromise" at www.irs.gov provides additional resources.

  4. The taxpayer is responsible for initiating the offer and determining the amount of the offer as per IRM 1.2.14.1.17 , Policy Statement 5-100. Do not prenegotiate the offer amount as this leads to the government negotiating against itself and the taxpayer offering as little as possible.

  5. Advise the taxpayer of any conditions that might prevent an offer from being considered including:

    • Failure to remain in filing compliance

    • Insufficient estimated tax paid or income tax withheld to cover the estimate of the current year's tax

    • Federal tax deposits not timely made during the course of the investigation

    • Failure to provide requested information needed to determine the acceptability of the offer

    • Dishonored check for application fee or TIPRA payment

    • Failure to make periodic payments

  6. If the taxpayer wants an offer considered, provide Form 656-B, Offer in Compromise, and a deadline for the offer to be returned.

  7. You may assist the taxpayer in preparing the offer forms if necessary. For example, the taxpayer may need assistance if they are illiterate or do not speak English.

8.22.7.10.1  (09-23-2014)
Responsibilities in CDP OICs

  1. (1) The subsections below discuss responsibilities in CDP OICs.

8.22.7.10.1.1  (09-23-2014)
Functional Responsibilities

  1. COIC makes the offer processability determination. When a taxpayer disagrees with COIC’s not-processable determination, Appeals makes a final OIC processability determination and includes it in the NOD. See IRM 8.22.7.10.4.1, OIC is Not Processable, below.

  2. Collection investigates the offer and either:

    1. Accepts it, or

    2. Provides Appeals a recommendation of rejection, or

    3. Determines if the criteria for returning a processable offer or a mandatory withdrawal is met, or

    4. Secures a voluntary withdrawal

  3. For offers recommended for rejection, Appeals considers disputed items and makes a final determination following IRM 8.23.3.3, Appeals OIC Evaluation Procedures.

  4. For offers returned by Collection, Appeals makes a final determination by noting in the NOD that the basis for the return was correct.

  5. If all CDP periods are satisfied while an OIC is pending with Collection, there is no issue with respect to the NFTL or the proposed levy for Appeals to consider. Notify Collection that:

    • Appeals releases jurisdiction, and

    • Collection will make the final determination on the OIC

  6. If a taxpayer withdraws a CDP request, the OIC is returned to Collection for the determination.

8.22.7.10.1.2  (09-23-2014)
Associating Separated CDP and OIC cases

  1. If a pending OIC is not addressed in your Notice of Determination, the CDP may be remanded by the Tax Court. You must associate any pending OIC with your CDP/ EH case and incorporate the OIC decision into the CDP determination to avoid this. Examples of OICs that must be associated and addressed in a CDP include:

    • A taxpayer requests a CDP hearing while an OIC is pending with Collection

    • A taxpayer timely requests an appeal of a rejected OIC, and the OIC hearing is pending in Appeals when the taxpayer requested a CDP hearing

    • A taxpayer submits an OIC directly to Collection while a CDP hearing is pending i.e. before the date the CDP closing letter is mailed

  2. An ecase notification in the CAR ecase found new AOIC information for this case indicates COIC received an offer which must be carded in and considered by Appeals as a collection alternative in CDP unless, prior to the date of the TC 480:

    • The determination/decision letter was mailed in a CDP case, or

    • The ATM signed Form 12257 in an agreed CDP case

  3. When you see the CAR entry, "ecase found new AOIC information for this case," and don't have an OIC, check IDRS for a TC 480 and confirm receipt with the COIC CDP coordinator. Do not make a final determination without confirming whether an OIC is pending. If an OIC is pending, the CDP determination/decision must comment on it as a collection alternative.

  4. If you discover an OIC is pending in Collection, notate it in the CAR and:

    1. Alert the COIC CDP Coordinator, identified in SERP, by secure mail that a CDP/ EH is pending in Appeals

    2. Obtain a copy of Form 656 and request APS card in a OIC WUNO per instructions below.

    3. Suspend action on the CDP unless other issues need to be addressed besides the OIC

    4. Issue the Substantive Contact Letter within 30 days of receiving COIC’s recommendation, if the letter has not already been sent

  5. If you discover an OIC appeal pending before another Appeals employee, request the OIC WUNO to be transferred to you to associate with your CDP. A DP feature code is applied to both WUNOs.

  6. If Collection is considering an OIC and discovers a CDP pending in Appeals, Collection sends Appeals a secure mail to notify of the OIC and faxes a copy of Form 656.

  7. Upon receipt of Form 656:

    1. Update the CAR to note Collection’s investigation of the OIC

    2. Add "DP" and "CO" feature code to the CDP/EH WUNO

    3. Request APS create an OIC WUNO with "DP" and "CO" feature codes; REQAPPL = the date the taxpayer requested an Appeal. APS will determine the RECDATE and ASGNDATE in generating the OIC WUNO.

    4. Request APS input on OIC WUNO new STAT code "TIPRA" with the OIC received date + 2 years

    5. Suspend both WUNOs by selecting carats history Action Code SU, sub action=PI, and suspense action=E/OIC

    6. Suspend further actions on the CDP/EH case unless other issues besides the OIC need to be addressed

8.22.7.10.1.3  (09-23-2014)
TIPRA Statute Responsibilities

  1. When an OIC is submitted in CDP, Appeals has 24 months to make a determination. If the offer is not rejected, returned or withdrawn within 24 months of submission, it is deemed accepted.

  2. An OIC is "submitted" as of the day IRS receives the offer. The postmark is irrelevant in determining when an offer was submitted.

  3. An amended Form 656 is not a new offer and it does not impact the 24 month TIPRA statute that started on the date the original offer was received.

  4. TIPRA statute cases are subject to the same back-end processing requirements listed in IRM 8.21.3.1.7, Closings, and IRM 8.21.4.2, Appeals Team Manager, which means:

    • Written ATM concurrence is required to keep the OIC open beyond 120 days remaining on the TIPRA statute

    • You are responsible for ensuring the OIC is shipped to APS for closing with at least 90 days remaining on the TIPRA statute

    • If less than 90 days remain when the case is being closed, notify the PTM by encrypted mail when the case is being closed to APS

    • Responsibility for the TIPRA statute is shared jointly by the PTM and the ATM

8.22.7.10.2  (09-23-2014)
Requesting an OIC WUNO

  1. Upon receipt of Form 656, request an OIC WUNO by providing APS with:

    1. The related CDP Case Summary Card noted "Please create OIC WUNO." Include feature code DP and enter into the NOTES field the following: XREF- WUNO of the related CDP/EH case.

    2. A copy of page one of Form 656 listing all periods on the OIC

    3. TIPRA statute date = oldest date stamp on form 656 of OIC plus two years

  2. Feature Codes:

    1. All CDP OICS: Input Feature Code “DP” and “CO” to the OIC WUNO. Input a “DP” to the CDP WUNO

    2. DATL-OICs: Input Feature Code “LI” to the OIC WUNO

  3. Entries in SOURCE, DO, and PBC for the OIC are the same as the entries in the related CDP.

  4. A CDP/EH case can result in more than one OIC. For example, related entities such as a joint return and a sole proprietorship are each carded in as a separate OIC work unit. Related case files are associated and worked together unless there is a DATL OIC where the liability is precluded from CDP.

8.22.7.10.3  (09-23-2014)
Receipt of Form 656

  1. Upon receipt of a new OIC submitted in CDP, date stamp the upper right corner of Form 656 with the date the offer was received.

    Example:

    The IRS mail room receives and date stamps an envelope containing Form 656 on 11/14/13. You get the Form 656 in your office mail on 11/18/13. The IRS receipt date of the form 656 is 11/14/13.

  2. DO NOT SIGN FORM 656 as COIC is responsible for signing it as part of the processability determination. Forward the offer to COIC for processing, even if it was received without a user fee or TIPRA payment.

  3. If the address on Form 656 doesn't match IDRS, confirm the current address with the taxpayer. Update ACDS to the current address as well.

  4. Appeals may take jurisdiction over non-CDP periods for the purpose of resolving a case through an OIC. Examples of tax periods included in a CDP OIC but not the subject of the CDP/EH may include:

    • Tax debts owed by the CDP/EH taxpayer but not listed on the CDP notice

    • Joint tax debts of a co-residing spouse who did not request a CDP/EH hearing, or

    • sole proprietorship or an LLC where the single member owner is solely responsible

8.22.7.10.4  (09-23-2014)
Processing Offers

  1. (1) When receiving an OIC in CDP, prepare Form 13933, Collection Due Process/Equivalent Hearing Offer in Compromise Cover Sheet and Form 3210, Application Fee in the OIC section of APGolf. Send them with the items below to the appropriate COIC site for a processability determination and Collection investigation:

    • Form 656

    • The OIC application fee and TIPRA payment, if applicable

    • Any written designation of the TIPRA payment from the taxpayer

    • Form 433-A/B

    • A signed Letter 3820, Appeals Received Your Offer in Compromise and We Can Consider It

    • A self-addressed return envelope

      Note:

      The requirement to sign Letter 3820 before sending it to COIC is a new requirement. COIC mails Letter 3820 for processable OICs notifying the taxpayer that their offer has been forwarded to Collection for investigation.

  2. The requirement to send COIC Letter 3821 has been removed. COIC uses its own letter if the offer is not processable.

8.22.7.10.4.1  (09-23-2014)
OIC is Not Processable

  1. If COIC determines an offer is not processable, COIC:

    1. Mails the taxpayer Form 656 and a Return letter, explaining why the OIC isn't processable

    2. Faxes Appeals a copy of the Return Letter.

    3. Refunds the application fee, if applicable

  2. COIC's Return Letter advises the taxpayer to contact Collection if she or he disagrees with the decision to return the OIC. If the taxpayer raises the return in CDP, ask the taxpayer how the processability criterion at IRM 5.8.2.3 was incorrectly applied. Independently evaluate the claim and if you agree the return was in error, resubmit Form 656 to COIC for processability with the new information.

  3. If the return was not in error, close the OIC WUNO when closing the CDP case:

    1. Prepare Form 5402 using cc 20 premature referral and the appropriate resolution reason

    2. Document the not-processable determination in the attachment to the determination/decision Letter

      Example:

      "The offer in compromise submitted during your Collection Due Process hearing was returned on 01/31/2013 because it was not processable."

8.22.7.10.4.2  (09-23-2014)
OIC is Processable

  1. If COIC determines the offer is processable, COIC:

    1. Signs Form 656

    2. Mails Letter 3820 to the taxpayer and POA, if applicable, and

    3. Inputs TC 480 for OIC periods

    4. Inputs STAUP to EH and non-CDP periods to move those periods to status 71 (if not in status 53)

    5. Mails a copy of Form 13933 ,Letter 3820 and Form 656 to the originating Appeals employee within 14 days

8.22.7.10.4.3  (09-23-2014)
OIC Investigation

  1. Collection investigates the offer and either:

    1. Accepts it, or

    2. Provides Appeals a recommendation of rejection, or

    3. Determines if the criteria for returning a processable offer or a mandatory withdrawal is met, or

    4. Secures a voluntary withdrawal

  2. COIC may transfer an OIC to Field Collection for investigation based on complex issues.

  3. Collection must return an OIC to Appeals with no less than 9 months on the 24 month TIPRA statute for Appeals to make a final determination. If there is less than 9 months remaining, Collection must contact the Appeals employee assigned the case and provide a report on the anticipated completion of the investigation.

    Note:

    If Collection does not return an OIC with 9 months remaining on the TIPRA statute, elevate this to your ATM to elevate to Collection.

8.22.7.10.4.4  (09-23-2014)
Collection Recommends Acceptance

  1. If Collection accepts the OIC, Collection will:

    1. Issue the acceptance letter, which is a final determination under IRC 7122(f), Deemed acceptance of offer not rejected within certain period

    2. Forward original documents to MOIC and the required documents to the Public Inspection File

    3. Return to Appeals copies of the acceptance letter, Form 7249, and Form 656

    4. STAUP CDP periods to status 71 to prevent them from reverting to collection status when TC 520 cc 76/77 is reversed

  2. Once you are notified of the accepted offer, ask the taxpayer to sign Form 12257 to resolve the CDP. If the taxpayer declines to sign, adopt the decision to accept the offer in the attachment to the Determination/Decision and close the CDP/EH if the taxpayer has no other relevant issues.

  3. To close the OIC WUNO:

    1. Generate the OIC 5402 and select closing code 15

    2. Select “CDP OIC acceptable” as the Resolution Reason

    3. In “Remarks” section, type “Collection accepted OIC and issued the acceptance letter.”

8.22.7.10.4.5  (09-23-2014)
Collection Recommends Rejection, Return or Mandatory Withdrawal

  1. Collection shares the results of the OIC investigation with the taxpayer. If Collection recommends rejection, Appeals will make a final determination under IRC 7122(f) within 24 months of the date the offer was received.

  2. If Collection erroneously issued a final rejection letter, Collection will not rescind it. Instead, the hearing officer will inform the taxpayer that the OIC is under Appeals’ jurisdiction and Appeals will make the final determination regarding the OIC in the CDP determination/decision letter. Locate the COIC CDP coordinator http://appeals.web.irs.gov/tech_services/collection/cdp.htm and request that the offer be reopened on AOIC under reconsideration procedures in IRM 5.8.7.3 .

    Note:

    In this circumstance, the TIPRA statute continues to run until Appeals makes the final determination.

  3. The CDP and OIC files are generally closed and retained together in case the OIC is raised as an issue in a CDP Tax Court petition.

8.22.7.10.5  (09-23-2014)
Mandatory Withdrawal for Missed Periodic Payment

  1. If a taxpayer fails to make a payment other than the first installment, Collection asks the taxpayer to make up the missed payment. If the taxpayer fails to do so, Collection notifies Appeals the OIC was closed as a mandatory withdrawal.

  2. Confirm that the taxpayer was given an opportunity to make up the missed payment and failed to do so. Once confirmed, close the OIC WUNO as a mandatory withdrawal with the following actions:

    Step Action
    1 Remove the DP feature code from both the OIC and CDP WUNOs in ACDS.
    2 Prepare Form 5402 using cc 16 withdrawal
    3 Note the OIC in your CDP NOD with the following language: “You submitted an offer which required periodic payments according to a schedule you proposed. You failed to pay after being reminded of the payment requirement. Under the law, your offer was withdrawn.”
  3. If the OIC must be closed before the CDP WUNO, retain the OIC file with the CDP file and send APS the following to close the OIC WUNO:

    • Form 5402 for the OIC WUNO

    • OIC CAR

8.22.7.10.6  (09-23-2014)
Return Procedures for Dishonored Payments

  1. If Collection discovers a dishonored application fee and/or TIPRA payment after the offer is deemed processable, Collection returns the offer to the taxpayer with a letter giving 30 days to make the payment good and request reconsideration. If the taxpayer fails to provide replacement payment, Collection notifies Appeals of the dishonored payment.

  2. Confirm that the taxpayer was given an opportunity to provide a replacement payment and failed to do so. Once confirmed, close the OIC WUNO as a return with the following actions:

    Step Action
    1 Remove the DP feature code from both the OIC and CDP WUNOs in ACDS.
    2 Prepare Form 5402 using cc 20 premature referral and the appropriate resolution reason code.
    3 Note the OIC in your CDP NOD with the following language: “You submitted an offer but did not provide the required 20% down payment and/or the first initial payment of a proposed Periodic Payment Offer. Your offer was returned.”
  3. If the OIC WUNO must be closed before the CDP WUNO, retain the OIC file with the CDP file and send APS the following:

    • Form 5402 for the OIC WUNO

    • OIC CAR

8.22.7.10.7  (09-23-2014)
Return Procedures for Bankruptcy

  1. If a taxpayer files bankruptcy while an OIC is open, the OIC is returned. Close the OIC WUNO immediately upon notification with the following actions:

    Step Action
    1 Remove the DP feature code from both the OIC and CDP WUNOs in ACDS.
    2 Prepare Form 5402 using cc 20 premature referral and the appropriate resolution reason code.
    3 If the OIC is to be returned by Appeals and not Collection, generate Letter 3821, Appeals Received Your Offer in Compromise And We Can't Consider Your Offer, in APGolf and check the bankruptcy box explaining why the OIC is being returned.
    4 Note the OIC in your CDP NOD with the following language: “You filed bankruptcy while your offer was under consideration. We can't consider an offer while you are in bankruptcy. Your offer was returned.”
  2. Retain the OIC file with the bankruptcy-suspended CDP file and send APS the following to close the OIC WUNO:

    • Form 5402 for the OIC WUNO

    • OIC CAR

    • Return Letter 3821 and Form 656, if the OIC is being returned by Appeals instead of Collection

8.22.7.10.8  (09-23-2014)
Termination of OIC due to Death of Taxpayer

  1. An OIC is terminated upon the death of a taxpayer. If the OIC was jointly submitted and one spouse dies, see IRM 5.8.10.4, Death of Taxpayer, to determine whether to continue.

  2. If an OIC is terminated due to the death of the taxpayer, close the OIC WUNO with the following actions:

    Step Action
    1 Remove the DP feature code from both the OIC and CDP WUNOs in ACDS.
    2 Prepare Form 5402 using cc 20 premature referral and the appropriate resolution reason code.
    3 If the OIC is to be terminated by Appeals and not Collection, generate the Termination Letter using the template found on the Appeals OIC Web Page
    4 Note the OIC in your CDP NOD with the following language: “The offer was terminated due to the death of the taxpayer while the offer was under consideration.”
  3. When a taxpayer dies, the OIC WUNO is closed at once while the CDP case may remain open. Retain the OIC file with the CDP file and send APS the following to close the OIC WUNO:

    • Form 5402 for the OIC WUNO

    • OIC CAR

    • Termination Letter, if the OIC is being returned by Appeals instead of Collection

8.22.7.10.9  (09-23-2014)
Withdrawals

  1. The subsections below discuss withdrawals in combination CDP OIC cases.

8.22.7.10.9.1  (09-23-2014)
Withdrawal of the CDP

  1. A taxpayer may ask to withdraw a CDP hearing while an offer is being considered by Collection. Explain that the consequences of withdrawal include:

    • No Appeals verification that all applicable laws and procedures were followed

    • Collection issues a decision on the OIC

    • No right to petition Tax Court for an abuse of discretion review

  2. If the taxpayer withdraws a CDP/EH hearing while an OIC is:

    • Pending in Collection: inform Collection immediately by encrypted email. Collection will issue the OIC decision letter and does not return any paperwork to Appeals.

    • Pending in Appeals: return the OIC to Collection on Form 3210 for a final determination. Form 3210 must say that Appeals released jurisdiction. Ensure Form 3210 is acknowledged and follow up with Collection to resolve any issues concerning receipt of the OIC before closing the OIC WUNO to insure the TIPRA statute is protected.

  3. Close the OIC WUNO using closing code 20 and the premature referral reason “CDP withdrawn while related OIC pending in Collection”.

8.22.7.10.9.2  (09-23-2014)
Withdrawal of the OIC

  1. A taxpayer may request to withdraw an OIC any time after the OIC is submitted. The request may be made verbally, by fax or letter.

  2. Document receipt of a withdrawal in your case history and indicate how the request was made.

  3. If a withdrawal is not hand-delivered or received by certified mail, it is considered withdrawn when it is acknowledged in writing by the IRS. For a CDP OIC, Form 12257 or the closing letter must acknowledge the taxpayer's withdrawal of the offer to close the TIPRA statute.

8.22.7.10.10  (09-23-2014)
Doubt as to Liability (DATL) Offers

  1. A DATL submitted in a CDP hearing is a challenge to the underlying liability. Examine the liability at issue to determine if the taxpayer had a prior opportunity per IRM 8.22.8, Liability Issues and Relief from Liability.

  2. When a DATL is not precluded:

    1. Upon receipt, forward the DATL offer to COIC for a processability determination and open an OIC WUNO following IRM 8.22.7.10.4, Processing Offers.

    2. Follow IRM 8.22.8.5.1, Referring a Liability Issue , for reassigning the DATL OIC to an AO (other than for TFRP assessments which an SO may work).

    3. Suspend the CDP case using CARATs codes SU-PI, pending a decision by the AO. Take the CDP case out of suspense using CARATS codes SU-TO upon receipt of the AO's decision. Adopt the AO's decision and consider any other relevant issues.

    4. Your determination/decision letter attachment must clearly state the offer was accepted, rejected, withdrawn or returned to close the TIPRA statute

  3. When a DATL is precluded:

    1. Upon receipt, forward the DATL to COIC for a processability determination.

    2. Note on Form 3210 that "Appeals is precluded from considering the liability"

    3. Document the determination/decision letter attachment acknowledging the taxpayer submitted a DATL OIC. Note that the OIC was forwarded to Compliance for consideration because the OIC could not be considered as a CDP issue. Note how you determined the taxpayer was precluded from raising a challenge to the liability in CDP.

  4. When a DATL is precluded AND the liability was determined in Appeals:

    1. Upon receipt, forward the DATL to COIC for a processability determination, following IRM 8.22.7.10.4, but omitting Letter 3820.

    2. Note on Form 3210 to "Return the offer after processability is determined. Inform the taxpayer if the offer is processable. Letters 3820 is not included as Appeals has jurisdiction to consider the offer outside of CDP."

    3. Follow the procedures at IRM 8.22.8.5.1, Referring a Liability Issue for reassigning the DATL OIC to an AO, (other than for TFRP).

    4. Proceed with the CDP hearing since the DATL OIC is being considered outside of CDP

  5. The taxpayer must offer something in a DATL; generally, the amount offered should be the amount of the expected liability, penalties and interest .

  6. The taxpayer is not required to pay an OIC application fee or make a TIPRA payment in a DATL.

  7. In the case of trust fund recovery penalty (TFRP) or personal liability excise tax (PLET) liabilities, negotiate a settlement in a manner similar to considering hazards of litigation.

8.22.7.10.11  (09-23-2014)
Terminated OICs

  1. When the Service determines an OIC is in default, it sends the taxpayer a default letter to cure the noncompliance items. If the taxpayer does not cure the default, the OIC is terminated. A taxpayer does not have a right to appeal the termination of an OIC.

  2. Appeals retains jurisdiction of the offers it accepts. When an offer Appeals accepted is in potential default, MOIC unit sends a Form 2209 to Appeals to consider issuing a default letter per IRM 8.23.6.1.2, Previously Accepted OIC (Potential Default) Cases Returned to Appeals. See IRM 8.23.6.1.2.

  3. Appeals will not reinstate an OIC where there was a default and the OIC was properly terminated. In CDP, you may consider a new OIC proposed by the taxpayer as a collection alternative.

  4. The taxpayer may contend that the termination was improper because the default was insignificant or not a "material breach." The only relevant question is whether there was a default of an express condition. Whether the taxpayer “materially breached” the OIC or “substantially complied” with the OIC is irrelevant.

  5. If you determine that the termination was improper because there was no default, the purported termination by the Service was improper. You may determine that the OIC is still in effect.

8.22.7.10.12  (09-23-2014)
Agreed Resolution and Open TDI

  1. Resolve open Taxpayer Delinquent Investigation (TDI) filing requirements when resolving a case through:

    • IA

    • OIC acceptance

    • CNC, except cases closed with a hardship closing code described in IRM 8.22.7.7, Currently Not Collectible.

  2. Policy Statement P-5-133, Little or No Tax Due, allows closing of a TDI because the non-filing is not willful and:

    • There would be no tax due on the delinquent return

    • There would be minimal tax due on the return as defined in IRM 5.19.2-2, Policy Statement P-5-133 Little or No Tax Due

    • The cost to the Service to secure a return would exceed anticipated revenue

  3. Document 6209, Section 11.8(3) lists TDI closing codes. See IRM 5.1.11.7, Del Ret Closures, for more information on closing TDIs. Note how the TDI module was resolved in the "Remarks" section of Form 5402


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