4.18.5 Review, Closing and Reporting Requirements

Manual Transmittal

February 28, 2017


(1) This transmits revised IRM 4.18.5, Exam Offer-in-Compromise, Review, Closing and Reporting Requirements.


This IRM provides instructions and guidance to examiners for administrative review, closing, and reporting procedures for Offer-in-Compromise request.

Material Changes

(1) Minor editorial changes have been made throughout this IRM. Website addresses, legal references, and IRM references were reviewed and updated as necessary.

IRM Reference Description of Changes IRM - Added "NOTE" regarding infrequent acceptance of OIC-DATLs. Rearranged for better flow of information. IRM - Added TIPRA statute information. IRM - Changed wording to clarify Technical Services is responsible for the IAR and closing of the case. IRM - Added requirement for Area PSP Coordinator and SB/SE Exam HQ OIC-DATL analyst involvement. IRM - Updated OIC file content requirements. IRM - This was the original (2). Moved to (5) and updated for changes to monitoring procedures. IRM - Corrected code section reference from 7122(d) to 7122(e). IRM - Paragraph revised for clarity.

Effect on Other Documents

This material supersedes IRM 4.18.5, Review, Closing and Reporting Requirements, dated December 28, 2010.


SB/SE Examination

Effective Date


John Caggiano
Acting Director, Exam - Field and Campus Policy
Small Business/Self Employed


  1. This section provides administrative review, closing and reporting procedures for Offer-in-Compromise (OIC) requests.

  2. Examination is responsible for the investigation and processing of offers in compromise based on doubt as to liability (OIC-DATL).

  3. Technical Services is responsible for case closing procedures and the administrative review. This occurs after the investigation and processing of offers in compromise are completed in Examination. The offer can be rejected, withdrawn, returned, terminated, or accepted.


    Closing an OIC-DATL case as an acceptance will be a rare and infrequent occurrence and requires approval of the Exam Headquarters Policy Analyst. If an examiner believes that the proper disposition of an OIC-DATL case is an acceptance, the examiner should reach out to their Area PSP OIC-DATL coordinator for further instructions and guidance prior to pursuing this course of action.

Case Closing Procedures

  1. After consideration of an OIC case is completed in the field, the file is forwarded to the Exam OIC reviewer in Technical Services for further action using Form 3210, Document Transmittal. There must be a minimum of six months (180 days) remaining on the Tax Increase Prevention and Reconciliation Act (TIPRA) statute when the case is received in Technical Services. See IRM, Statutory Period of Limitation.

  2. All OIC-DATL cases are required to be closed through Technical Services. An independent administrative review by Technical Services is required for offers with a rejection recommendation. See IRM

  3. Form 7249, Offer Acceptance Report, or Form 1271, Rejection or Withdrawal Memorandum, is forwarded, with the case file, for the appropriate approval and signatures. Prior to closing a case as an offer acceptance, the examiner should reach out to their Area PSP coordinator for guidance. Offer acceptances require concurrence from the SB/SE Exam Headquarters OIC-DATL analyst. For additional guidance regarding Technical Services’ procedures, see IRM, Offer in Compromise Cases.

  4. The OIC file should contain the following:

    1. Form 656, Offer in Compromise, or Form 656-L, Offer in Compromise (Doubt as to Liability),

    2. Any written withdrawal request from the taxpayer(s), if applicable,

    3. Form 7249, Offer Acceptance Report, or Form 1271, Rejection or Withdrawal Memorandum,

    4. Form 3040, Authorization to Apply Offer in Compromise Deposit to Liability, if applicable,

    5. Form 2848, Power of Attorney and Declaration of Representative,

    6. Tax return (original, copy or electronic print),

    7. Supporting workpapers/documentation,

    8. Form 4549-A, Income Tax Examination Changes (Unagreed and Excepted Agreed), and Form 5344, Examination Closing Record, if abatement is proposed. For no change OIC-DATL cases, include Form 4549-A, with No Change language, and Form 5344.

  5. After review, the Exam OIC reviewer in Technical Services will send a copy of the AOIC Exam/Specialty Checklist to the PSP OIC Coordinator. The PSP OIC Coordinator will then enter the closing data onto the Automated Offers in Compromise (AOIC) system.

Independent Administrative Review Procedures (IAR)

  1. IRC 7122(e), Administrative Review, requires the Service to provide for independent administrative review of all proposed rejections of offers in compromise prior to the rejection being communicated to the taxpayer.

  2. For Examination, this review occurs within the Technical Services function where one reviewer shall be designated as the Independent Administrative Reviewer (IAR). The IAR cannot be anyone who works on the case or is a part of the initial rejection or acceptance decision.

  3. The grade level of the IAR should be the same or greater than the individual making the initial rejection or acceptance decision.

  4. The IAR must be independent, defined as "free from the influence, guidance, or control of others." The review will be performed by an individual who is not influenced by the person who made the original rejection decision.

  5. The IAR will review all proposed rejections of offers in compromise prior to any indication or notification of such action being given to the taxpayer. The purpose of the review is to evaluate the case and determine if rejection was the correct decision.

  6. Review criteria to be considered will include, but not be limited to, the following:

    1. Whether IRM requirements were followed (procedural and mathematical accuracy);

    2. Whether the applicable tax law was correctly considered and applied;

    3. Whether the facts/circumstances were thoroughly developed and the correct law applied.

  7. If the rejection is sustained, the IAR will:

    1. Sign Form 1271, Rejection or Withdrawal Memorandum, as reviewer signifying concurrence with the recommendation;

    2. Provide a brief comment in the remarks section (findings/conclusions from review);

    3. Return the case file to the delegated official for signing, dating and mailing the rejection letter to the taxpayer.

  8. If the IAR determines that the rejection is not appropriate, the case file will be returned to the examiner, using Form 3990, Reviewers Report, with an explanation on the activity record stating why the rejection was inappropriate. The IAR will allow 21 calendar days for a response. If an agreement cannot be reached between the examiner and the IAR, or the 21 calendar days time frame has passed, the issue will be elevated to management levels (Group Managers or above) by either the field examiner or IAR, as appropriate.