5.8.2 Centralized Offer in Compromise Initial Processing and Processability

Manual Transmittal

May 25, 2018

Purpose

(1) This transmits revised IRM 5.8.2, Offer in Compromise, Centralized Offer in Compromise Initial Processing and Processability.

Material Changes

(1) Due to recent AOIC programming, this IRM updates the designated payment code from DPC 99 to DPC 34 in the following IRM sections:

  • IRM 5.8.2.4.1 (2) 1st bullet

  • IRM 5.8.2.5(2)e

  • IRM 5.8.2.9(1) If/Then box 3, step 4

(2) Editorial changes throughout sections as needed.

Effect on Other Documents

IRM 5.8.2, published February 9, 2018 is superseded.

Audience

SB/SE Collection and Campus Compliance employees

Effective Date

(05-25-2018)

Kristen E. Bailey
Director, Collection Policy

ProgramScopeandObjectives

  1. Purpose-Thischapterprovidesinstructionsforinitialcaseprocessingofofferincompromisereceipts.

  2. Audience -These procedures apply to offer in compromise employees who are responsible for initial case processing of offer in compromise receipts. It also provides information to other collection employees when considering an offer in compromise as a collection alternative.

  3. Policy Owner - Director, Collection Policy, SB/SE

  4. Program Owner - SBSE Collection Policy, Offer in Compromise (OIC) Program

  5. Primary Stakeholders - The primary stakeholders are OIC process examiners.

  6. Program Goal - Policy Statement P-5-100 explains the objectives of the OIC as a collection tool. By following the processes and procedures in this IRM, employees will be able to accurately and timely complete initial processing of OIC receipts.

Background

  1. This section is a procedural guide that provides the procedures for new offer in compromise receipts loaded on the AOIC system.

Authority

  1. Authorities relating to this section include:

    • IRC 7122 - Compromises

    • Treasury Regulation § 301.7122-1 - Compromises

    • IRC 6702(b) - Civil penalty for specified frivolous submissions

    • Policy Statement P-5-100

    • Policy Statement 1-236

    • Rev. Procedure 2003-71

    • IRM 1.2.44.2, Servicewide Policies and Authorities, Delegations of Authority for the Collecting Process - Delegation Order 5-1

    • Internal Revenue Service Restructuring and Reform Act of 1998, Section 1203

Responsibilities

  1. The Director, Collection Policy, is responsible for all policies and procedures within the Offer in Compromise program.

  2. The National Program Manager, Offer in Compromise, is responsible for development and delivery of policies and procedures within the program.

  3. IRM authors are responsible for writing policies and procedures and clearing documents through all affected offices.

  4. Offer in compromise employees responsible for initial case processing of OIC receipts are responsible for following the procedures in this IRM.

Program Management and Review

  1. Operational and program reviews are conducted on a yearly basis with the use of data and reports from the Automated Offer in Compromise (AOIC) system and Integrated Collection System (ICS). See IRM 1.4.52, Resource Guide for Managers, Offer in Compromise Manager’ Resource Guide - Field Program and IRM 1.4.54, Offer in Compromise Managers - Centralized Offer in Compromise Program Guide.

  2. AOIC Inventory Management Listing, Inventory Listing and Undetermined Offers Listing reports are utilized to monitor OIC cases.

  3. Managerial case reviews are completed as defined in IRM 1.4.54, Offer in Compromise Manager’s - Centralized Offer in Compromise Program Guide.

  4. National quality reviews and consistency reviews are routinely conducted.

Program Controls

  1. AOIC is used to track offers submitted by taxpayers and record case actions and history. Ability to take action on AOIC is limited to specific offer employees. Additional permissions are provided based on an employee’s duties and responsibilities.

  2. AOIC is used by COIC employees for inventory control and history documentation.

  3. Offers are distributed and worked on a first-in, first out basis using IRS received date criteria.

  4. Managerial requirements for case approval are defined in Del. Order 5-1.

Terms/Definitions/Acronyms

  1. The following table is a list of common abbreviations, acronyms and definitions used throughout this IRM.

    Acronym Definition
    AOIC – Automated Offer in Compromise Computer application where offers in compromise are recorded and monitored from receipt to closure. History of the offer investigations conducted by COIC employees and of actions taken by Monitoring OIC (MOIC) units are also maintained on this system.
    CDP – Collection Due Process Allows taxpayers a right to a hearing before Appeals regarding proposed collection enforcement actions or filed Notice of Federal Tax Lien.
    COIC – Centralized Offer in Compromise Units located in Brookhaven and Memphis campus that complete initial processing and work less complicated offers to completion. Do not confuse this with MOIC – COIC units do not monitor or default accepted offers.
    CSED – Collection Statute Expiration Date The date the statutory period for collecting the tax expires.
    DATC – Doubt as to Collectibility Basis for acceptance of an offer where there is doubt that the tax can be paid in full.
    DATL – Doubt as to Liability Basis for acceptance of an offer where there is doubt that the liability is correct.
    ETA – Effective Tax Administration Basis for acceptance of an offer where this is no doubt that the liability is correct or can be paid in full. However, requiring the taxpayer to fully pay the tax would either create an economic hardship or be a public policy/equity issue.
    IAT - Integrated Automation Technologies IAT tools interact with IDRS to automate daily tasks.
    ICS - Integrated Collection System Computer application used by Compliance employees to monitor inventory. Histories of OIC investigations conducted by area office employees are maintained on this system.
    MOIC – Monitoring OIC Unit Unit in Compliance Services located in a campus that completes end processing and monitoring of accepted offers.
    OE – Offer Examiner A tax examiner appointed as an offer investigator and located in COIC.
    OS – Offer Specialist A revenue officer appointed as an offer investigator, generally located in an area office.
    PE – Process Examiner A tax examiner who completes initial processability determinations on offers and is located in COIC.
    SRP - Shared Responsibility Payment Beginning in 2014, IRC § 5000A required all individuals to have qualifying health care coverage (called minimum essential coverage or MEC) in each month of the year, qualify for an exemption, or make an individual shared responsibility payment (SRP) when they file their tax return for the year.
    TFRP – Trust Fund Recovery Penalty Assessments made on individual taxpayers for the withheld or trust fund portion of delinquent employment taxes.
    TIPRA – Tax Increase Prevention and Reconciliation Act of 2005 Legislation enacted in May, 2006, which made major changes to the OIC program.
  2. Additional acceptable acronyms and abbreviations are found in the ReferenceNet Acronym Database, which may be viewed at http://rnet.web.irs.gov?OldRnet/Other/acronymdb.asp.

Related Resources

  1. Additional resources can be found in:

    • IRM 5.8, Offer in Compromise, for procedures collection employees follow when considering a taxpayer’s proposal to compromise their tax liability.

    • Document 12360, Embedded Quality Job Aid (Offer in Compromise), for case reviews.

    • Document 12990, Records and Information Management Records Control Schedules, for record retention.

  2. Employees can find helpful information on these websites:

    • SERP - http://serp.enterprise.irs.gov/

    • IMD site for IGM - http://imdtrack.web.irs.gov/search.asp

Integrated Automation Technologies (IAT)

  1. Integrated Automation Technologies (IAT) tools must be used whenever possible. Some IAT tools are mandatory while others are suggested for use.

  2. A current list of mandated and suggested use tools can be found in Exhibit 5.8.2-1, IAT Tools That Work For You in COIC. Each tool on the list is linked to the IAT website at http://iat.web.irs.gov/. The website contains descriptions and job aids for each tool and should be checked periodically for new tools that may assist in case processing.

  3. When a mandated IAT tool is not used because it was not available, or determined not to be appropriate due to a specific situation, document AOIC Remarks with the corresponding reason. In these situations, complete case processing through IDRS following established procedures.

Initial Processing of Offers in Centralized Offers in Compromise Sites

  1. When an offer is received in the Centralized Offer in Compromise (COIC) site, date stamp the Form 656, Offer in Compromise, in the IRS Received Date Stamp block.

    Note:

    If an offer was received in an IRS location other than the site that is loading the offer onto the Automated Offer in Compromise (AOIC) system, document AOIC Remarks with the initial IRS Date Stamp location.

  2. The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was signed into law on May 17, 2006.

  3. The law stipulates that, in addition to the application fee, an Offer in Compromise (OIC) received on or after July 16, 2006, must include one of the following based on the offer terms:

    1. Lump Sum Cash – The submission of any lump sum OIC shall be accompanied by 20% of the amount of the offer or the low income certification box checked on Form 656. As a matter of Policy, the term "lump sum" means any offer of payments made in 5 or fewer installments within five months of offer acceptance, unless an exception as noted in IRM 5.8.1 under Payments exists. Enter a "C" (Cash) on the Automated Offer in Compromise (AOIC) Terms screen if the payments will be made in 5 or fewer months or a deferred "D" (Deferred) if the payments will be completed in more than 5 months.

    2. Periodic Payment – The submission of any periodic payment OIC shall be accompanied by the amount of the first proposed installment or the low income certification box checked on Form 656. As a matter of policy, the term "periodic payment" means any offer of payments in 6 to 24 months. Enter a "D" (Deferred) on the AOIC Terms screen.

    Note:

    Taxpayers can now forward offer payments via the Electronic Federal Tax Payment System (EFTPS).

  4. The required initial payment and subsequent payments will be applied to the taxpayer’s account, whether the offer is deemed processable or not processable. These funds are non-refundable, except for some situations, and should be immediately posted to the taxpayer’s account (either as designated by the taxpayer or to the Government’s best interest if not designated). This does not include deposits or application fees. Deposits are refundable. Application fees may not be designated but may be refundable, in certain situations.

  5. Because a taxpayer may not specify how the application fee for processing an offer in compromise will be applied, the Service will apply the application fee in the best interests of the government.

  6. If COIC gets a new offer that was originally received in another IRS office, and none of the required payments are attached, research IDRS for recent payments corresponding to the required offer amounts. If found, consider as meeting offer payment submission requirements, load the payments on the AOIC Payment screen and, if necessary, update DPC codes.

  7. Sort in the following categories:

    • Offers submitted with remittance

    • Offers submitted without remittance

    • Out of jurisdiction transfers

  8. Verify the jurisdiction of the offer.

    If the office of jurisdiction is… Then…
    Collection
    • Add the offer to AOIC.

    • Process payments in accordance with current guidelines.

    Doubt as to Liability (DATL)
    • Process any payments received with the offer using DPC 99.

    • Forward to the Brookhaven Centralized DATL Site.

    DATL (Trust Fund Recovery Penalty (TFRP)/ Personal Liability Excise Tax (PLET))
    • Add the offer to AOIC.

    • Process payments in accordance with current guidelines.

    Appeals - Non Collection Due Process (CDP)
    • List payments on the AOIC Appeals Fee screen.

    • Do not load the offer onto AOIC.

    • Forward the case to Appeals using the Form 3210, Document Transmittal.

    Appeals - CDP offers meeting COIC and Field criteria
    • Load offer onto AOIC.

    • Select Offer Category Code (OCC) 10

  9. COIC interoffice transfers based upon State mapping are no longer necessary.

  10. Research Integrated Data Retrieval System (IDRS) for entity verification, bankruptcy, cross reference Taxpayer Identification Numbers (TINs) and freeze codes.

  11. Print the first page of Individual Master File Online Tax definer 'T' (IMFOLT) and Business Master File Online Tax definer ‘T’ (BMFOLT), as applicable, and include in every case file.

  12. Complete the following actions on AOIC:

    • Query AOIC to ensure the receipt is a new offer

      Note:

      If there is an existing offer for the same taxpayer TIN, additional research will be required.

    • Add only new offers to AOIC

    • Load entity information with the social security number (SSN) and name control only

    • Initiate Data Download

    • If Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, is included with the offer, review the form to ensure it includes required essential elements for validity as listed in IRM 21.3.7.5.1, Essential Elements for Form 2848 and Form 8821.

    • If valid power of attorney (POA) information is found on Centralized Authorization File Inquiry (CFINK) or provided with the offer, load the information on the AOIC POA screen. If multiple POAs are provided, load up to two on the AOIC POA screen. Update AOIC Remarks with the representative information for any valid Powers of Attorney not loaded on the AOIC POA screen.

      Note:

      If multiple POAs are listed on the drop down menu research IDRS for matching information and load up to two POAs with authority for all offer tax periods. Load the individual POA name. Do not load the company name. Form 2848, Power of Attorney and Declaration of Representative, takes precedence over Form 8821, Tax Information Authorization, when both are valid.

    • Update the pre-qualifier tool field to 'Y' when the taxpayer indicates the pre-qualifier tool was used prior to submitting the offer.

    • Complete the "Update Processability" function of AOIC.

      Note:

      Multiple offers submitted with one remittance intended as the application fee(s) and/or payment(s) for all will be processed. Load the offers to the AOIC system.

  13. If research indicates the taxpayer has an accepted offer in monitoring and the Service Center status code is other than 'C*' do not load the offer. Return the offer and any money received with the submission to the taxpayer. If the prior accepted offer is in status C* load the offer and process following established guidelines.

  14. Follow procedures in IRM 5.8.2.4.1, Determining Processability, below to make a processability determination and IRM 5.8.2.8.1, Processable Offers - Payment Processing and IRM 5.8.2.9, Sorts and Payment Processing, for processing application fees, payments, and deposits.

Processability

  1. COIC Process Examiners (PEs) are responsible for determining processability on offers received and worked by the Service; including TFRP/PLET DATL offers . All other DATL offers are processed in Brookhaven COIC. (see IRM 5.8.2.3 (8) above).

  2. If the offer is received with payment, processability must be made within 24 hours of IRS received date. Case building must then be completed within 16 calendar days of AO received date.

  3. If no payment is submitted, and the Low Income Certification box on Form 656, Offer in Compromise, is checked, processability and case building must be completed within 16 calendar days of AO received date. Update the processability code to ‘U’, Undetermined, on offers for which processability will not be completed within 24 hours.

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

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

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

Determining Processability

  1. The COIC sites are responsible for determining offer processability. If an offer is determined to be not processable, then the application fee will be returned to the taxpayer in all cases. However, the TIPRA payment will be applied to the taxpayer’s account and not returned to the taxpayer, except in the circumstances stated below:

    • Taxpayer in Bankruptcy – An offer will not be considered while a taxpayer is in bankruptcy. See IRM 5.8.2.4.2, Additional Research on Bankruptcy Cases, below for procedures on conducting additional research on bankruptcy OICs prior to returning the offer as not processable and returning the TIPRA payment to the taxpayer.

    • Taxpayer did not submit the application fee with the offer – The application fee must be submitted with each Form 656, Offer in Compromise, or the low income certification box checked in the applicable section of Form 656.

    • Taxpayer did not submit the required initial payment with the offer. – (1) Lump Sum Cash offers must include 20% of the offered amount or the low income certification box checked in the applicable section of Form 656; (2) Periodic Payment offers must include initial proposed installment payment or the low income certification box checked in the applicable section of Form 656.

      Exception:

      If the taxpayer submits the application fee and a portion (but not all) of the required TIPRA payment (either cash or periodic payment) the offer may be considered a processable offer. Follow IRM 5.8.3 to perfect the offer.

    • Department of Justice - The IRS may not process any offer to compromise a liability previously referred to the Department of Justice (DOJ) for prosecution or defense. If all liabilities have been referred to DOJ then the offer is not processable. If the IRS retains jurisdiction on any tax liabilities then the offer is processable and should be referred to the appropriate field offer group.

    • Unassessed Liabilities -Offers submitted solely to compromise a tax period or tax year for which (1) there are no liabilities assessed to the taxpayer’s account, and (2) IDRS does not indicate a return has been received, will be deemed not processable. If IDRS indicates a return has been received, process based on IRM 5.8.2.10, Offer Submitted Solely for Unassessed Liability(ies)

    • No Liabilities - Offers submitted for which (1) there are no liabilities due on the taxpayer’s account, and (2) IDRS does not indicate an Exam or AUR assessment is being worked, will be deemed not processable. For example: The taxpayer’s refund paid the liability sought to be compromised and no other unpaid liabilities exist on the taxpayer’s account.

    • Offer submitted solely for tax period(s) with expired CSED(s) - An offer will not be considered when the CSED(s) has expired for all liabilities sought to be compromised; as evidenced by a TC 608 on the taxpayer's account.

    • Total amount of payment listed as a deposit and the taxpayer did not check the low income certification box - Beginning October 25, 2013, for offers where the taxpayer marked the total amount of the payment as a deposit, the entire amount will be considered a deposit and returned to the taxpayer, making the offer not processable for failure to submit the required TIPRA payment. This procedure does not apply if the taxpayer marked the box for Low Income Certification in Section 1 of Form 656.

  2. If an offer is determined to be not processable, the application fee will be returned and the TIPRA payment will be applied to the taxpayer’s assessed liability and not returned to the taxpayer in the below circumstances:

    • Unfiled Tax Returns - Offers submitted where IDRS does not indicate a required return has been received will be deemed not processable. Apply any TIPRA payment received to the taxpayer’s liability with DPC 34 unless designated as a deposit.

      Note:

      Generally, this will not exceed a 6-year look-back period without managerial approval. Internal research must validate a legal requirement to file the missing return. A Substitute for Return (SFR) assessment on Master File will be considered compliant for the corresponding tax period.

      Note:

      Consider the tax period as compliant if a valid extension is on file.

      Note:

      An unsigned tax return received with the offer for the required tax period will be considered as filed for offer purposes. Follow perfection instructions in IRM 5.8.3.6, Perfecting Offers.

    • Offer to compromise liability included in an open offer in compromise - Offers will not be considered if there is an open offer that includes the same liability for compromise. Apply any TIPRA payment received to the taxpayer’s open offer in compromise unless designated as a deposit.

  3. Update AOIC remarks to clearly state the reason for the not processable return. Example:Offer returned as not processable due to required, yet unfiled tax returns for the 2014 and 2015 tax period(s) Example: Offer returned as not processable. Liability taxpayer sought to compromise has been full paid through 2016 tax refund.

  4. An OIC is considered pending when a delegated IRS official signs and dates the Form 656. This date is the official offer pending date. If the offer is determined to be processable, the PE must immediately sign and date the waiver on the Form 656.

    Note:

    The pending date entered on AOIC must match the date the delegated official signed the Form 656. This date must also match the Transaction Code (TC) 480 date when it posts to IDRS.

  5. No application fee, TIPRA payment or financial statement is required for offers based solely on DATL.

  6. The low income certification applies only to individual taxpayers. Taxpayers are considered as an individual if they are seeking compromise of a liability for which they are personally responsible, including any liability incurred as a sole proprietor or any Form 941 liability incurred. If the business is other than a sole proprietor or disregarded single member LLC taxed as a sole proprietor, and employment taxes are owed on or after January 1, 2009, they cannot qualify for the waiver.

Additional Research on Bankruptcy Cases

  1. If the taxpayer failed to indicate the date of dismissal or discharge on the Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B (OIC), Collection Information Statement for Businesses, it may be necessary to conduct additional research to determine whether a taxpayer is still in bankruptcy or has been discharged or dismissed. Bankruptcy should be verified using IDRS, Automated Insolvency System (AIS), and Public Access to Court Electronic Records (PACER) before returning as not processable. The following table directs the next action to take when an open TC 520 or -V freeze (bankruptcy) is discovered.

    Circumstance… And… Then…
    Upon receipt of an initial offer with a application fee and TIPRA payment IDRS research shows a -V freeze code or an open TC 520 with a bankruptcy closing code present on any liability Follow current procedures to refund or return the application fee and TIPRA payment, as appropriate.
    Upon receipt of a subsequent periodic payment, and there was previously no open -V freeze or TC 520 with a bankruptcy closing code present on any liability at the time the offer was deemed processable IDRS research now shows a -V freeze or an open TC 520 with a bankruptcy closing code present on any liability (posted date is prior to waiver date) Follow current procedures for not processable return to refund or return the application fee and TIPRA payment, as appropriate.

    Note:

    Field OS must contact the appropriate COIC site.

  2. A -V freeze on the taxpayer’s account or the following TC 520 closing codes can be used to identify when a taxpayer has filed bankruptcy: 60-67, 81, 83-89. See Document 6209, IRS Processing Codes and Information, for additional information.

    Note:

    Because closing codes 81 and 84 are litigation codes not exclusive to bankruptcy, it will be necessary to research PACER to determine if the taxpayer filed bankruptcy.

  3. Document AOIC Remarks with any findings.

Not Processable

  1. When returning the offer as not processable do not sign the offer.

    1. If correspondence is received with no Form 656, Offer in Compromise, respond to the taxpayer using correspondex Letter 278C or comparable letter. If the correspondence is received with money, do not send Letter 278C; return both the correspondence, and all money received with the correspondence, to the taxpayer along with a letter advising the taxpayer why the correspondence and money are being returned.

    2. Checks must be stamped non-negotiable within 24 hours of receipt.

  2. Take the following actions:

    1. Complete the AOIC Payment screen as applicable.

    2. Stamp Form 656, Offer in Compromise, with "RETURN" and write the date that the offer was determined to be not processable.

    3. Cross out all IRS received dates with an “X.”

    4. Document the AOIC Remarks with the payment information, specifying the reason(s) for the not processable determination.

    5. If the offer is not processable due to required unfiled tax returns and the taxpayer submitted one check for the application fee and TIPRA payment, the check must be deposited to apply the TIPRA payment to the taxpayer’s account using DPC 34 and a manual refund completed to refund the application fee and deposit, if applicable.

      Note:

      If less than the application fee is received return the money to the taxpayer.

    6. If the payment(s) was processed through EFTPS or the Remittance Strategy for Paper Check Conversion (RS-PCC), prepare the Form 5792, Request for IDRS Generated Refund (IGR), for a manual refund.

      Note:

      The Form 5792, Request for IDRS Generated Refund (IGR), on not processable offers will be processed according to normal manual refund procedures outlined in IRM 21.4.4, Manual Refunds.

  3. Prepare the Return Letter.

    1. In addition to identifying the reason(s) for the determination, also address any issues concerning combined joint and separate liabilities, if appropriate; for example, individual and corporate or partnership liabilities on one Form 656, Offer in Compromise. In those cases, include option "AF" in the return letter.

    2. Ensure signature on the return letter as defined in Delegation Order 5-1.

    3. Close AOIC with a final disposition code of 10.

    4. Send Form 656, Offer in Compromise, the return letter, Pub 1, Your Rights as a Taxpayer, and Pub 594, The IRS Collection Process, to the taxpayer with all original documents submitted with the offer. If a POA is present, send the representative a copy of the letter. If disclosure issues exist, use the appropriate paragraph to indicate this in the return letter, and do not send a copy to the representative.

    5. Clear the AOIC letters and forms after they are generated. The AOIC remarks are populated with form/letter information on the date it is cleared, not the date it is generated.

      Note:

      Failure to clear the forms and letters timely will make it appear they were issued days or weeks after the fact.

  4. If the Form 656, Offer in Compromise, was forwarded by a Revenue Officer (RO) with a Form 657, Revenue Officer Report, and it is determined to be not processable, the COIC site should forward Form 657 and a copy of the not processable letter to the RO or approving official of Form 657. If Form 656 was forwarded by an RO without Form 657, forward a copy of the return letter to the RO assigned the collection case for information.

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

    Note:

    There is no requirement to retain any information or copies of documents on not processable cases. Exception: Case files must be retained on accepted DOJ offers that were erroneously deemed processable. IRM 5.8.2.7(2), Erroneous Processability Determination, second note regarding DOJ cases.

Not Processable Offers Received with Payments

  1. The following procedures apply if the application fee and payment(s) were made with certified funds (money order, bank check, cashiers check, government check), and the processability determination and return package can be completed on an expedited basis, and the offer package with the certified funds payment instrument can be returned to the taxpayer within 24 hours of receipt.

    • Hand-carry the certified funds payment instrument and return offer package to the Campus Support Mail Team within 24 hours of receipt. The Campus Support Mail Team is responsible for preparation and mailing of the certified package.

    • The Form 3210, Document Transmittal, must be completed by annotating "$xxx amount Certified" to indicate the application fee and/or deposit payment(s) were returned via certified funds to the taxpayer.

      Note:

      TIPRA payments will be refunded when meeting the criteria in IRM 5.8.2.4.1 (1) above.

  2. The following procedures will only apply if processability cannot be completed within 24 hours of receipt of the application fee and deposit, if any, was made with certified funds (money order, bank check, cashiers check, government check).

    • Certified funds will be deposited upon receipt and processed through the normal work stream for both the clerical and PE procedures.

    • Request a manual refund of the application fee and/or deposit payment(s) by preparing the Form 3753, Manual Refund Posting Voucher.

      Note:

      Form 3753 manual refunds on not processable offers will be processed according to normal manual refund procedures outlined in IRM 21.4.4, Manual Refunds.

      Note:

      TIPRA payments will be refunded when meeting the criteria in IRM 5.8.2.4.1 (1) above.

    • Prepare the offer package to be returned to the taxpayer.

  3. The following procedures will only apply if processability cannot be completed within 24 hours of receipt of the application fee and the payment(s) was made with a personal check.

    1. Complete a separate Form 3210, Document Transmittal, for those offers to be returned based on the receipt of only the application fee.

    2. Enter no more than 5 offers on the Form 3210, Document Transmittal.

    3. Load onto AOIC.

    4. Hand-carry the Form 3210, Document Transmittal, to the Campus Support Mail Team to get personal checks stamped as non-negotiable.

      Note:

      COIC will use a non-negotiable stamp on personal checks when the taxpayer's offer is deemed not processable. The Form 3210 will be issued for control purposes only and should be maintained as a record of the payment(s) received. The Form 3210 must also indicate the check(s) was stamped as non-negotiable and the date it was stamped.

    5. Personal checks stamped non-negotiable will be returned to the designated COIC function employee housed in the Campus Support mail area and maintained in a locked file until the completion of the return package.

    6. Personal checks stamped non-negotiable and the offer package should be returned to the taxpayer through normal mail-out procedures.

    7. The AOIC history must be documented indicating the check was stamped non-negotiable and include the date it was stamped.

      Note:

      Once the checks have been stamped non-negotiable and handled according to the procedures above, the offer package should be assigned to a PE for completion of the return letter and offer package.

  4. Management must establish controls to ensure returned offer packages are associated with the non-negotiable payment instruments and processed in accordance with established procedures.

  5. If the taxpayer also submitted a deposit and the offer is not processable, the deposit must be refunded to the taxpayer. Prepare the Form 3753, Manual Refund Posting Voucher, to refund the deposit from the 4710 Account, and forward it to Monitoring Offer in Compromise (MOIC) for processing. Annotate the AOIC Remarks screen.

Erroneous Processability Determinations

  1. The Service retains the application fee for processable offers. Except as provided in section 300.3(b)(2), as a general rule the application fee will not be refunded to the taxpayer when an offer is returned as non processable after acceptance for processing.

  2. If it is determined that the taxpayer was in bankruptcy at the time the offer was received, to avoid violation of the automatic stay in bankruptcy, the application fee and TIPRA payment(s) must be refunded to the taxpayer.

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

  4. When the erroneous processability determination is corrected, prepare the return letter and correct the AOIC Payment screen record and follow IRM 5.8.2.6, Not Processable Offers Received with Payments, above, for refund procedures, if applicable.

    Note:

    See DOJ Controlled Cases in IRM 5.8.9, Actions on Post-Accepted Offers, for steps regarding erroneous processability of an accepted offer that is later determined to have been under the settlement jurisdiction of the Department of Justice (DOJ). Once the offer has been returned to the taxpayer as not processable, the case file must be retained in the Federal Records Center, FRC.

  5. If the offer is not processable because a tax year has been referred to DOJ, and the user fee and TIPRA payment were applied to the taxpayer’s assessed liability, contact area counsel so it can supplement its suit letter to DOJ.

Processable Offers

  1. Complete the AOIC Payment screen and generate Form 3244, Payment Posting Voucher, or Form 2515, Record of Offer in Compromise, as appropriate.

    Note:

    The application fee and all payments received with the processable offers will be applied to the taxpayer’s account unless designated as a deposit.

  2. Complete the proposed Terms screen on AOIC as stated on Form 656.

  3. Verify Master File Tax (MFT) screens are populated through Data Download or manually input all required information. If the taxpayer did not include a tax period with an outstanding liability on the original Form 656 and the entity is the same, add the periods to the AOIC MFT screen. If the taxpayer has a separate entity that was not included on the original Form 656, the PE will no longer be responsible for loading those periods on the AOIC MFT screen until such time the OE/OS secures the amended and related Form 656.

    1. When manually adding tax periods to the AOIC MFT screen include: MFT 35 and/or mirrored MFT 65, Shared Responsibility Payment liabilities assessed under IRC 5000A, Individual Shared Responsibility Payment as well as MFT 74, the penalty for late filing of Form 5500, Annual Return/Report of Employee Benefit Plan, and MFT 76, excise tax based on noncompliance with various statutes relating to employee benefit plans. See 5.8.10 regarding Assessments Related to Employee Benefit Plans - MFT 74 and 76. The uploaded MFT 74 and MFT 76 transactions will appear as errors on the AOIC Transaction Listing and must be corrected through manual posting of TC 480 and updating the module to status 71

    2. When loading MFT 31 liabilities on a joint offer; load all liability amounts under the primary ssn modules and load the secondary ssn modules with zero liability amounts. This will avoid inflating the total liability amount.

  4. When the need for mirroring is identified, place a prominent red “M” directly after the OIC number on the case file. This could be caused by one spouse submitting an offer separately; one spouse appealing an offer rejection; or submission of separate offers by the spouses with different waiver dates for joint period(s).

  5. On all Individual Master File (IMF) cases enter "P" if the offer is for the primary taxpayer of the controlling TIN on the entity, enter "S" if the offer is for the secondary taxpayer, or "B" if both spouses are filing a joint offer. If only one party of a joint liability is submitting the offer, remove the "Y" from the MFT screen. This will take the case out of Status 71.

    Note:

    See IRM 5.8.2.13, Changing Status Codes, below for guidance on when it is appropriate to change the status code.

    Note:

    See IRM 5.8.3 regarding Input & Verification of TC 480, for the appropriate corrective actions when a related offer is received.

  6. Research IDRS and notate AOIC remarks regarding any freeze codes such as: -Y (offer in compromise), -W (litigation), -Z (Criminal Investigation), -A (duplicate return), -V (bankruptcy), -L (Administrative Information Management Strategy, (AIMS)), F- (frivolous return), -E (tax shelter/rollback) as well as TC 520 (Litigation) and TC 971/065 (Innocent Spouse) as these may require special action. Freeze codes indicating Criminal Investigation Division (CID), bankruptcy, Exam issues (i.e. AIMS), duplicate return filed, innocent spouse claims, or other litigations should be worked in accordance with guidelines in this IRM.

  7. Check for cross-reference SSN, Employee Identification Number (EIN), and Individual Taxpayer Identification Numbers (ITINs) known or found for the taxpayer for input to MFT Data Download.

  8. Verify the taxpayer has submitted the appropriate Form 656, Offer in Compromise, Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses.

  9. Verify the taxpayer has submitted the application fee, required TIPRA payment, or checked the box on Form 656 for the low income certification for each offer submitted.

    Note:

    Do not request a shortfall of less than a dollar when the taxpayer has rounded their initial payment to a whole dollar amount.

    Note:

    When loading a related offer received by the OE/OS or Appeals, verify case remarks to see if they have addressed these payments and if they will be requesting a credit transfer to split the TIPRA payment from the original offer.

  10. Document the AOIC Remarks.

Processable Offers - Payment Processing

  1. If the taxpayer submits both the application fee and the required initial TIPRA payment (20 % or first installment) in one check, the application fee will be entered first and the remainder will be applied as the required TIPRA payment.

  2. Insufficient remittance of the initial TIPRA payment will be considered a perfection issue. See IRM 5.8.3, Centralized Offer in Compromise Transfers, Perfection, and Case Building, for more information regarding the perfection of incomplete offers.

  3. The required initial TIPRA payment (20% or first installment) will be applied to the taxpayer’s liability in all instances. With the exception of specific offer submissions noted in IRM 5.8.2.4.1 (1) above, these monies are not refundable to the taxpayer.

  4. Taxpayers may designate how the required TIPRA payments are to be applied and payments will be applied in accordance with the taxpayer’s designation. The designation applies only to the payment being processed.

    Note:

    If the taxpayer wishes to have future payments applied to particular liabilities, each payment will need to be designated. Payments without designation will be applied to the taxpayer's tax liability in the best interest of the Government.

  5. If no written payment designation was submitted with the offer, apply the payment(s) to the taxpayer's tax liability in the best interest of the Government.

  6. For offers submitted from entities other than corporations, apply the TIPRA payment(s) to the tax liability(ies) with the earliest unexpired CSED(s).

    Note:

    There may be instances when the earliest unexpired CSED is not the earliest tax period.

  7. For offers submitted from corporations or other entities subject to the trust fund recovery penalty, involving trust fund taxes, apply payment(s) in the following descending order:

    1. To all Forms 1120, 940, and any other non-trust fund liabilities (in earliest unexpired CSED order), if any; and

    2. To the following unpaid portions of all Form 941 periods (in earliest unexpired CSED order):

    • Non-trust fund portion of tax (employer's share of FICA)

    • Assessed lien fees and collection costs

    • Assessed penalty

    • Assessed interest

    • Accrued penalty to the date of payment

    • Accrued interest to date of payment

    • Trust fund portion of the Form 941 (withholding and employee's share of FICA)

  8. It is possible the taxpayer may submit the application fee, the required initial TIPRA payment, and a deposit with the Form 656, Offer in Compromise.

    • The application fee, required initial TIPRA payment, and deposit will be entered on separate lines on the Form 3210, Document Transmittal, Document Transmittal, and processed through RS-PCC.

  9. All checks must be deposited within 24 hours of receipt.

  10. If the amount submitted with the Form 656, Offer in Compromise, exceeds the amount required, the entire amount will be treated as a non-refundable payment of tax, unless the taxpayer indicates the excess amount is to be treated as a deposit in the applicable section on Form 656. See the If/Then chart in IRM 5.8.2.9, Sorts and Payment Processing.

  11. If the taxpayer sends one check, the amount submitted exceeds the required amounts, and the taxpayer indicated how the payment should be applied (for example, as a deposit or an estimated tax payment), process the amount according to the taxpayer’s designation. The application fee portion of the payment may not be designated, and will be applied in the best interest of the Government. Any payments other than the application fee, required TIPRA payment, or deposit must be processed on Form 3244, Payment Posting Voucher, with the appropriate transaction code and Designated Payment Code (DPC). For example, an estimated payment will be a TC 430 (for IMF) or TC 660 (for BMF), instead of TC 670. This determination will be made by the PE when making a processability determination and applying payments on the Form 3244, Payment Posting Voucher, using the IRS received date as the payment date.

  12. Subsequent payments must also be deposited within the 24 hour requirement as defined above.

    Note:

    Subsequent installment payments of a periodic payment offer are non-refundable and should be applied to the earliest tax liability with the earliest CSED or as designated by the taxpayer. If the offer is submitted by an entity subject to the trust fund recovery penalty refer to (7) of this section for application of payments.

    Note:

    Any additional subsequent payment designated as a deposit, yet not required to continue the offer in compromise process, should be applied to the 4710 account and addressed as appropriate at case closing.

  13. If the payment is submitted on Form 656-PPV, Offer In Compromise Partial Payment Voucher:

    • Process the payment as described above through RS-PCC or Paper Check Conversion (PCC) when applicable.

    • Document the payment on AOIC Payment screen.

Sorts and Payment Processing

  1. The “If and Then” table below provides the criteria for processing payments:

    If you receive a… Then…
    (1) Form 656, Offer in Compromise, the application fee, and required initial TIPRA payment
    1. Load the offer on AOIC.

    2. List payments on the AOIC Payment screen.

    3. Prepare Form 3244, Payment Posting Voucher

    4. Process payments through RS-PCC or PCC as applicable.

    (2) Form 656, Offer in Compromise, with the application fee and no required initial TIPRA payment (20% or first installment payment) Offers received with a check for the application fee only are deemed not processable upon receipt and will be sorted by the clerical function during the fine sort.
    1. Load the offer in AOIC.

    2. Update the AOIC Remarks documenting that the offer is not processable.

    3. Complete the Form 3210, Document Transmittal, for a not processable return.

    4. If the taxpayer submitted a personal check, COIC will stamp the check non-negotiable, generate the return letter, and send to the taxpayer.

    5. If the taxpayer submitted certified funds (money order, certified check, etc.), COIC will generate the return letter, and the funds will be returned by certified mail via Campus Support.

    (3) Form 656, Offer in Compromise, from an individual taxpayer with the application fee and/or required initial TIPRA payment, and the low income certification box checked.
    1. Load the offer on AOIC.

    2. Validate the low income waiver.

    3. If the taxpayer does not qualify for the low income waiver apply the application fee and TIPRA payment to the taxpayer’s account. Complete the AOIC Payment screen.

      Note:

      If the taxpayer has submitted more than the required amount, apply any amount not designated as a deposit to the taxpayer’s account.

    4. If the taxpayer does qualify for the low income waiver review Form 656 to determine if the taxpayer has designated the payment(s) as a deposit. If designated as a deposit see below "If " box: Form 656, Offer in Compromise, from an individual taxpayer with the total remittance designated as a deposit and the low income certification box checked for further instructions. If the payment(s) is not designated as a deposit, complete the AOIC Payment screen indicating "valid waiver" and prepare the Form 3244, Payment Posting Voucher, to post the payment(s) to the taxpayer’s account using DPC 34.

    5. Process the payment(s) through RS-PCC or PCC as applicable.

    6. Notate the payment information in AOIC Remarks if the AOIC Payment screen is not available.

    (4) Form 656, Offer in Compromise, from an individual taxpayer with only a low income waiver (in lieu of the application fee and required initial payment)
    1. Load offer on AOIC.

    2. Validate the waiver.

    3. If the taxpayer qualifies for the waiver complete the AOIC Payment screen indicating valid waiver.

    4. If the taxpayer does not qualify for the waiver follow IRM 5.8.2.5, Not Processable procedures.

    .
    (5) Form 656, Offer in Compromise, from an individual taxpayer with the total remitted designated as a deposit and the low income certification box checked
    1. Load offer on AOIC.

    2. Validate the waiver.

    3. If the taxpayer qualifies for the waiver complete the AOIC Payment screen indicating "valid waiver" . Prepare the Form 2515, Record of Offer in Compromise, designated the payment(s) as a deposit and process through PCC.

    4. If the taxpayer does not qualify for the waiver follow IRM 5.8.2.5 Not Processable procedures.

    (6) Non CDP Form 656, Offer in Compromise - Appeals Jurisdiction
    • Load payments to the Appeals Fee screen.

    • Prepare the Form 2515, Record of Offer in Compromise.

    (7) CDP Form 656, Offer in Compromise, COIC and Field criteria
    • Load the offer on AOIC.

    • Load payments to AOIC Payment screen.

    • Complete the Form 3210, Document Transmittal, by entering the following: (1) Offer Number (2) SSN/EIN (3) Name Control (4) Check Amount (5) Check Number (6) Check Type (7) The application fee (8) Amount of the required initial TIPRA payment and deposit, if any.

    • Prepare the Form 3244, Payment Posting Voucher.

    • Update Case Category Code to 10

    (8) DATL offer (Form 656-L, Offer in Compromise (Doubt as to Liability)) DATL offers, Form 656-L, are exempted from application fees and all TIPRA payments. Any fee or payment will be treated as a voluntary payment and applied to the taxpayer’s account.
    • Prepare Form 3244, Payment Posting Voucher

    • Process payments through RS-PCC or PCC as applicable.

Offer Submitted Solely for Unassessed Liability(ies)

  1. An unassessed liability is a liability where no assessment has been made.

  2. If an offer is received that is solely for an unassessed liability(ies), COIC will determine processability using the following procedures.

    If… Then…
    (1) Research of IDRS indicates the return has been received, but has not posted and there is no prior assessment in the tax module.
    1. Continue with offer processing.

    2. Post the payments to the taxpayer’s account as applicable.

      Note:

      If there is a prior assessment in the tax module request input of a secondary TC 570 with "$.00 " to hold the payment in the taxpayer’s account until the liability has been assessed.

    (2) Research of IDRS shows no indication a return has been received and no return was submitted with the offer. Return the offer per IRM 5.8.2.4.1 (1), Determining Processability, above.
    (3) Research indicates the unassessed liability is being worked in Exam or AUR
    1. Continue with offer processing.

    2. Request input of a secondary TC 570 with "$.00" to hold the payment in the taxpayer’s account until the liability has been assessed.

    3. Refer offers that will be worked in COIC to the Exam/AUR Coordinator. The Exam/AUR Coordinator should follow procedures outlined in IRM 5.8.4, Investigation.

Payments Processed Using Remittance Strategy – Paper Check Conversion (RS-PCC)

  1. Most payments received for the OIC application fee and TIPRA payments will be processed by Campus Support utilizing Remittance Strategy Paper Check Conversion (RS-PCC).

  2. All payments regardless of whether scanned through PCC or RS-PCC must be delivered to Campus Support for processing within 24 hours of receipt. The 24 hour deposit standard must be met.

  3. COIC is responsible for completing the Form 3244, Payment Posting Voucher, with the following information:

    • SSN/EIN

    • MFT

    • Tax Period

    • Transaction received date

    • Taxpayer name, address, and zip code

    • Transaction code

    • Transaction amount

    • Remarks

    • Prepared by (name and unit symbol)

    • DPC code

    DPC Definition
    33 Offer in Compromise application fee
    34 Offer in Compromise 20% lump sum / initial periodic payment
    35 Offer in Compromise subsequent payments made during the offer investigation
    02 Trust Fund Liability Payments (i.e. 941, 943, 945 liabilities, NOT MFT 55). Payment is to be applied first to the trust fund portion of the tax.

    Caution:

    Only use DPC 02 when posting offer payments designated to the trust fund portion when the offer was submitted by a corporate taxpayer or LLC.

    09 Offer in Compromise (Accepted Offer Payments)
    99 Miscellaneous Payment

    Note:

    Any payment received after the offer has been closed should be applied to the taxpayer's liability using DPC 99.

  4. Write "RS-PCC" on the Form 3210, Document Transmittal.

  5. List Trust Fund liability designated payments (DPC 02 ) at the beginning of the Form 3210, Document Transmittal, and highlight for special handling.

  6. Write the offer number on the Form 3210, Document Transmittal, for each payment processed through RS-PCC.

  7. Payments should be listed on the AOIC Payment screen. If the taxpayer checked the box and qualified for the low income certification notate the payment in the AOIC remarks if the AOIC payment screen is not available.

Payment Processing through Paper Check Conversion (PCC)

  1. The following payments cannot be processed through RS-PCC and must be processed through Paper Check Conversion (PCC):

    1. Any check that cannot be read by the RS-PCC scanner.

    2. Any funds that are considered a deposit and must be deposited in the 4710 account.

  2. PCC payment processing:

    1. Complete the Payment screen on AOIC.

    2. Generate Form 2515, Record of Offer in Compromise, from AOIC.

    3. Prepare Form 3210, Document Transmittal, annotating "PCC" in the upper right hand corner.

    4. Complete Form 2515 and make one copy. Attach the payment(s) to the original.

    5. Form 2515, Annotations - COIC will use the following abbreviations to annotate the Form 2515, beside the appropriate entry in the Amount column. The blank space at the bottom of the form may be used for any additional remarks.

      Definition Abbreviation
      Application Fee AppFee
      Payment Pymt
      Deposit Dep
      Estimated Payment ES
      Refund to Taxpayer

      Note:

      To be used when COIC prepared the Form 3753, Manual Refund Posting Voucher, to refund the application fee and forwarded to Cincinnati for processing

      RefTP
      Designated Payment

      Note:

      Indicate MFT and Period

      DesgP
    6. Forward the Form 3210, Form 2515, and remittance(s) to PCC for processing.

    7. Forward the copy of Form 2515 to MOIC. Attach the transmittal Form 3210.

    8. Attach Form 3210, and include (1) offer number; (2) taxpayer identification number; (3) taxpayer name; and (4) amount of the payment.

    9. Transmit the payment by traceable methods to the appropriate MOIC unit for processing.

    10. Annotate the Remarks section of Form 2515 with the payment application (e.g., 20% lump sum, first periodic installment, application fee, and any deposit, if applicable).

      Note:

      Because a taxpayer cannot designate how the application fee for processing an offer in compromise will be applied, the Service will apply the application fee in the best interests of the government.

      Note:

      If the taxpayer designated application of the TIPRA payment(s) on Form 656, Offer in Compromise, enter the appropriate information in the Remarks section of the Form 2515. If the taxpayer also submitted a deposit separate from the required TIPRA payment, split the payment as requested. Enter the information according to the offer terms and annotate the difference as the deposit. The deposit will remain in the 4710 Account until a determination is made; that is, the offer is accepted, rejected, or returned.

    11. Retain a copy of the Form 2515 in the case file.

      Note:

      The entries on the Form 2515 must equal the check(s) amount(s) recorded on the Form 3210. The Form 3210 and associated documents should be returned to COIC clerical for processing.

    12. Document the AOIC Remarks with the payment type, application of the funds, and if the payment was applied per taxpayer's designation.

      Example:

      One check received in the amount of $650 applied as follows: $186 application fee applied to tax period 30/2010, $214 applied to tax period 30/201612 per taxpayer designation, and $250 applied to deposit account.

  3. Deposits are not treated as payments of tax upon receipt. They are held in a special deposit fund commonly referred to as the 4710 Account. The deposit is not reflected on IDRS nor applied to any specific tax period until the offer is accepted. For those offers previously loaded on AOIC, the amount will be annotated on the Deposits screen of the taxpayers AOIC record by the MOIC employee processing the remittance.

  4. All payments regardless of whether scanned through PCC or RS-PCC must be delivered to Campus Support for processing within 24 hours of receipt. The 24 hour deposit standard must be met.

Processing Forms 3210 after Processability Determinations

  1. Form 2515, Record of Offer in Compromise, and Form 3753, Manual Refund Posting Voucher, will be forwarded to COIC after processability determinations have been made.

  2. Form 3210, Document Transmittal, will be returned to COIC for processing of all attached Form 3244, Payment Posting Voucher. All completed Form 3210 will be filed and retained in COIC for three years.

  3. If the offer was determined to be not processable and payments were processed through PCC, forward the related Form 2515 and Form 3753 to MOIC for processing with a copy of the Form 3210. The Form 3210 serves as the transfer transmittal.

    Note:

    All forms should be forwarded to MOIC on an expedited basis.

  4. Not processable offers (with the exception of offers returned because only the application fee was submitted with a personal check, not processable offers submitted solely for unassessed liabilities and offers submitted solely for a liability(ies) with an expired CSED(s)) will be returned to the clerical function with the associated Form 3210, Form 2515 and Form 3753. The PE will prepare the return letter and envelope for mail out. The following actions must be taken:

    • Date and sign the return letter

    • Include with the letter any other associated documents

    • Seal the envelope for mail out

    • Close with final disposition 10 on AOIC

    • Include the Form 656, Offer in Compromise

    • Return to the clerical function to be mailed

    Note:

    If the offer is being returned because the taxpayer submitted only the application fee, or is a not processable offer submitted solely for an unassessed liability(ies) or an offer submitted solely for a liability(ies) with expired CSED(s) do not seal the envelope. The clerical function must associate the check(s) with the offer package before it is returned.

  5. If the offer was determined to be processable and the payments processed through PCC, forward the related Form 2515 to MOIC for processing with a copy of the Form 3210. The Form 3210 serves as the transfer transmittal.

  6. The COIC sites will retain processable offers for further OIC processing and assignment.

Determining Processability for Appeals Collection Due Process Offers

  1. If Collection files a lien or serves a notice of intent to levy, and the taxpayer files a Collection Due Process (CDP) request in response, the taxpayer's offer in compromise falls under the jurisdiction of Appeals while the CDP is open.

  2. If the CDP is open change the case category code to 10.

  3. The same processability criteria will be applied to these cases.

  4. Payment processing should be through RS-PCC or PCC as appropriate.

  5. Appeals will provide COIC with the processable determination letter containing all necessary information, including the Appeals contact information on Appeals Transmittal Form 3210, Document Transmittal. Appeals will provide two copies of the Appeals Transmittal Form 3210. One copy is for COIC clerical filing and the other copy will remain with Form 656, Offer in Compromise, and related documents. It is the responsibility of COIC to sign, date, and mail the applicable letter based on the processability determination.

    If… Then...
    (1) The offer is not processable and a remittance was attached
    1. Prepare the not processable letter and the Form 656, Offer in Compromise, to mail to the taxpayer in accordance to current IRM procedures.

    2. Follow IRM 5.8.2.6 , Not Processable Offers Received with Payments

    3. Send an e-mail to the SO/AO with the information as to why the offer was deemed not processable. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210, Document Transmittal.

    4. Fax a copy of the not processable letter to the Appeals employee.

    Note:

    The Appeals Transmittal Form 3210 should remain with the case until a processability determination has been made. A copy should be retained by the Clerical staff in Appeals.

    (2) The offer is not processable and no remittance was attached
    1. Prepare the not processable letter and the Form 656 to mail to the taxpayer in accordance with current procedures.

    2. Send an e-mail to the SO/AO with the information as to why the offer was deemed not processable. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210.

    3. Fax a copy of the not processable letter to the Appeals employee.

    (3) If the offer is processable and a remittance is attached
    1. Access the AOIC Payment screen and input the fee and payment data and process the payment through RS-PCC or PCC, as appropriate.

    2. Mail the processability letter to the taxpayer.

    3. Send a copy of the letter and the Form to the Appeals employee designated on the Appeals Transmittal Form 3210. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210.

      Note:

      The Appeals Transmittal Form 3210 should remain with the case until the processability determination has been made. A copy should be retained by the Clerical staff in Appeals.

    (4) If the offer is processable and the taxpayer submitted and qualified for the low income certification
    1. Mail the processability letter to the taxpayer.

    2. Send a copy of the letter and the Form 656 to the designated Appeals employee on Appeals Transmittal Form 3210. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210.

  6. See the below chart if the CDP condition is identified after processability has been completed.

    If… Then...
    (1) It is determined that the case is under Appeals jurisdiction and the CDP condition is identified while the offer is being processed through COIC
    • The COIC site CDP coordinator will advise the AO/SO of the processability determination.

    • The AO/SO will generate and transmit via encrypted e-mail to the COIC site CDP coordinator the appropriate appeals processable letter.

    • The COIC site will follow the current procedures to process the letter and application fee.

    (2) It is determined the case is under Appeals jurisdiction but the CDP condition is identified after the offer has been deemed processable and moved to a workable inventory The controlling area will:
    • Input CCC 10.

  7. It will be the responsibility of Appeals to resolve each TC 480 (e.g. input of TC 481, 482, 483) after Appeals makes a determination on the proposed rejection.

Changing Status Codes

  1. If the offer is determined to be processable, it may be necessary to change the status code to 71.

  2. If tax periods are in status 53, 61, 63, 72 or if the Form 657, Offer In Compromise/Revenue Officer Report, indicates that Tax Delinquent Accounts (TDAs) are to remain in the field, remove the "Y" on each tax period on the MFT screen. Do not change the status of those accounts unless the module is a Status 53 with Closing Code 03 (unable to locate) or Closing Code 12 (unable to contact).

  3. Offers in status 60 (installment agreement) – for offers with a status of 60 the indicator should be changed to Status 71. If the offer cannot be accepted, the installment agreement should be reinstated. In those cases, the reinstatement fee for the IA will be waived. See Exhibit 5.8.2-2, COIC Procedures for Status 60 / 71 Changes, below for instructions.

Processing Related Offers Received from Field OIC and Appeals

  1. Related offers and any corresponding payments received for loading onto the AOIC system should be processed following current procedures as soon as possible.

    Note:

    If an imminent issue arises and a request is made to allow the offer specialist or appeals officer to address a payment issue (shortfall, split) continue processing the offer and grant the request.

  2. If the related offer was received from an OIC field offer specialist take the following actions:

    • Load the related offer onto AOIC

    • Complete processability

    • Update the original offer as applicable

    • Transfer the offer to the appropriate AO

    • E-mail the OS, GM and Drop Point GM to advise the Form 656 has been processed and is ready for transfer acceptance in the Area. Include the new and related offer numbers in the e-mail.

      Note:

      If E-fax is available, use this method to notify the OS.

    • Mail the Form 656 (and any attachments) directly to the OS using Form 3210.

  3. If the related offer was received from Appeals take the following actions:

    • Load the related offer onto AOIC

    • Complete processability

    • Update the original offer as applicable.

      Note:

      If the original offer is assigned to AO 21 Appeals will correct the original offer.

    • If the original offer was worked in COIC assign the offer to the Offer Examiner that worked the original offer.

    • If the original offer was worked in a field office: 1) Transfer the offer on AOIC to the AO where the original offer is controlled. 2) Send an e-mail with the offer number to the Appeals Officer and field drop point manager. 3) Return the 656 (and any attachments) directly to the Appeals Officer. DO NOT send any documents to the field.

IAT Tools That Work For You in COIC

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COIC Procedures for Status 60 / Status 71 Changes

The below procedures have been established to assist the COIC sites taking a taxpayer account from Status (STAT) 60 to STAT 71 and placing the account back into STAT 60 if the offer is rejected, returned, or withdrawn.

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