5.8.7 Return, Terminate, Withdraw, and Reject Processing

Manual Transmittal

December 20, 2018

Purpose

(1) This transmits revised IRM 5.8.7, Offer in Compromise, Return, Terminate, Withdraw, and Reject Processing.

Material Changes

(1) Below is a table containing changes impacting this revision of IRM 5.8.7.

IRM Section Change
5.8.7.1: Adds and updates Program Scope and Objectives and its related subsections to comply with the Deputy Commissioner for Services and Enforcement and Operations Support memo, dated September 14, 2016, entitled Heightened Awareness, Sensitivity, and Understanding of Internal Controls.
5.8.7.2(1): Addresses change that Tax Increase Prevention and Reconciliation Act (TIPRA) payments submitted with certain types of not processable returns are applied to the taxpayer’s account, and refers to renumbered IRM 5.8.2.4.1.
5.8.7.2.2(3): Updates chart in accordance with Delegation Order 5-1 (Rev. 5), managers are delegated to approve return if taxpayer fails to perfect amended or related offers.
5.8.7.2.2.1(1): Provides additional guidance when an offer includes periods with substitute for returns.
5.8.7.2.2.1(4): Adds guidance if an original return contains a processing defect.
5.8.7.2.2.2: Moved notes from (4), (7) and (9) to separate paragraphs, which caused renumbering in subsequent paragraphs.
  • (1) Includes additional examples to clarify when estimated tax (ES) non-compliance warrants return of the offer, and adds notes that compliance issues should be identified and addressed before conducting an investigation.

  • (7) Clarifies if the request includes required financial information, the Letter 2844 Option D call back letter can be utilized.

  • (11) Adds example when it may be appropriate to return a case after the taxpayer has been advised of the preliminary determination to reject.

5.8.7.2.2.4(2): Provides additional guidance based on the taxpayer’s response to request for information.
  • If you can proceed with a determination, contact the taxpayer to discuss.

  • If it appears the taxpayer has attempted to fully comply with the request, attempt one phone call. If a message cannot be left, issue Letter 2844 Option D.

  • Clarifies Appeals will only address assets in the collection tables.

5.8.7.2.2.5(5): Updates the Brookhaven address to replace dishonored payments.
5.8.7.2.2.6(2): Cross-references 5.8.4 sections with possible basis for a processable return.
5.8.7.2.2.7(2): Incorporates additional instruction regarding closing processable returns and revises bullet order which changed numbering throughout.
  • (b) Adds reference to Equivalent Hearing (EH) when determining if the closed file needs to be sent to Appeals.

  • (c) Refers to IRM 5.8.7.8 for actions if there is a deposit.

  • (d) Adds instruction to update basis of an offer in AOIC if necessary.

  • (e) Adds guidance that outgoing correspondence must contain an actual or graphic signature, with a copy for the file.

  • (f) Adds instruction to clear return letters timely.

  • (o) Adds instruction from 5.8.4.13 to hold Notice of Federal Tax Lien (NFTL) requests 15 days from date of the determination letter unless TP has been verbally notified.

  • (q) Moves Note regarding mirroring from (s) and adds examples to illustrate when mirroring is required.

5.8.7.3(2): Notes that the issuance of a return letter closes the TIPRA statute.
5.8.7.3.1(3)(f): Clarifies the ES payment in the return reconsideration example was made timely.
5.8.7.3.1(4)(c): Adds that providing verification of compliance more than 30 days after the offer was returned is not cause to reopen the offer. Includes an example.
5.8.7.3.3(5): To address changes in reopened offers, removes instructions and refers users to IRM 5.8.7.3.3.3.
5.8.7.3.3.3(1): Incorporates changes in reopening offers. Offers that meet reconsideration criteria must be reloaded on AOIC. Adds note that cases that are reopened will not be deemed accepted if not completed within 24 months.
5.8.7.3.3.3.1: Removes the section regarding reopening offers on AOIC, and removes the distinction for offers closed by IRS error. Instructions regarding reloading returned offers previously in IRM 5.8.7.3.3.3.2 moved here.
  • (1) Removes reference to exhibit and refers users to OIC SharePoint (SP) to obtain the Reconsideration Cover Sheet. Instructs to fax the entire original Form 656.

  • (2) Removes reference and different reloading instructions due to “IRS error”. Adds COIC instructions for signing and dating the reopened Form 656.

5.8.7.3.3.3.2: This paragraph has been moved to IRM 5.8.7.3.3.3.1, with subparagraphs numbered accordingly.
5.8.7.4.1: Changes include combining / renumbering of paragraphs.
  • (2) Adds note that alternative resolutions should not be negotiated if the taxpayer voluntarily withdraws a Collection Due Process (CDP) offer. Appeals has jurisdiction of collection alternatives.

  • (3) Adds note to confirm both spouses are withdrawing from a joint offer, and refers to new paragraph 5.8.7.4.1.1.

  • (4) Adds paragraph to review AOIC and Form 656 for instruction on disposition of deposits.

  • (6) Adds instruction to hold NFTL requests 15 days from date of letter unless the taxpayer has been verbally notified.

5.8.7.4.1.1: Creates separate section to address actions when only one spouse withdraws the offer.
5.8.7.4.2:
  • (3) Adds example of special circumstance that may warrant a second TIPRA opportunity.

  • (4) Instructs to review Form 656 for deposit authorization.

  • (9) Clarifies once a taxpayer has been notified of the intention to reject with appeal rights, to proceed with rejection if a payment is subsequently missed. Provides exception.

5.8.7.4.2.1(4): Notes that if a determination letter is issued, the TIPRA statute no longer applies.
5.8.7.4.3(3): Adds steps for closing offers as withdrawals, including:
  • Adds reference to Equivalent Hearing (EH) when determining if the closed file needs to be sent to Appeals. Adds note to not negotiate alternative resolutions when an offer under the jurisdiction of Appeals is withdrawn.

  • In AOIC, update the basis and clear the withdrawal letter.

  • Reminds that correspondence contain an actual or graphic signature.

  • Refers to IRM 5.8.7.8 for instructions for addressing deposits.

  • Moves Note regarding mirroring from (l) and adds examples to illustrate when mirroring is required.

5.8.7.5.1: Clarifies outgoing correspondence requires an actual or graphic signature with a signed copy retained in the file.
5.8.7.6: Updated 5.8.7.6 Fast Track Mediation for Offer in Compromise and all subsections to address changes in Rev. Proc. 2016-57 and IRM 8.26.3 and provide additional guidance and references, including:
  • Cases requiring territory manager approval do not qualify.

  • The group manager must attend the mediation.

  • The request must be initiated before issuance of the rejection letter.

  • Both parties must agree to mediate.

  • Change OCC code to 42.

5.8.7.7(7): Clarifies once a taxpayer has been notified of the intention to reject with appeal rights, to proceed with rejection if a payment is subsequently missed. Provides exception.
5.8.7.7.1:
  • (1) Adds note that if the Not in the Best Interest of the Government (NIBIG) recommendation relates to a CDP offer, the approval of the second level manager must be documented.

  • (2) Clarifies the calculation of RCP must be fully developed, and the basis for the rejection well documented and addressed in the open paragraph.

  • (3) adds:

  • Cross-reference to additional NIBIG situations in 5.8.4.23.

  • Note that Appeals will only consider the value of the dissipated asset if the offer is rejected under NIBIG, with second-level manager approval.

  • If IRS has determined the related entity is currently not collectible, NIBIG does not apply.

  • Example of NIBIG based on substantial monthly payment ability.

  • Removes $100 amount from prior NIBIG example.

  • Adds note that simply owing for numerous tax years is not cause to reject NIBIG.

  • (4) Clarifies a complete analysis is required for RCP of NIBIG.

5.8.7.7.2(6): Adds note that if the public policy rejection relates to a CDP offer, the approval of the second level manager must be documented.
5.8.7.7.3(1): Moves paragraphs addressing AOIC closing actions such as deposit disposition and notation of RCP to 5.8.7.7.4 Rejection Not Appealed and 5.8.7.7.5 Rejection Appealed. Removes duplicate instructions, reorders bullets to be more sequential. Incorporates IG regarding actions if manual TC 480 reversal or mirroring is needed and provides examples.
  • (a) Notification of rejection may be verbal and adds reference to IRM 5.8.7.4.2 if the taxpayer is not current on TIPRA.

  • (c) Adds reference to Equivalent Hearing (EH) as falling under Appeals jurisdiction.

  • (d) Update the basis if necessary.

  • (h) Rejection letter should reference the most recent Form 656 and proposed offer amount. Includes examples of open paragraphs for NIBIG. The open paragraph must be used.

  • (k) Clear the letter in AOIC.

  • (l) Include in closing remarks the current compliance; NFTL determination; recommended collection alternative; and if history is maintained in ICS.

  • (m) Include in closing summary any information of which Appeals should be aware, such as large NOLs. Example provided.

  • (o) Reference to separate memo required for public policy rejections removed.

  • (r) Documents within the dividers should be in chronological order, with most current on top.

  • (s) Removes reference to “Account Transcript” tab which is renamed “IDRS” in Document 9600-B Rev. 5-2018.

  • (t) Credit bureau is to be tabbed separately.

  • (w) Outgoing correspondence requires an actual or graphic signature.

5.8.7.7.3(2): Adds reference to IRM 5.8.10.16.5 for additional closing actions required for MFT 74/76 modules.
5.8.7.7.4:
  • (2) Refers to IRM 5.8.7.7.5 for timeliness.

  • (3) Incorporates AOIC closing steps previously in 5.8.7.7.3; renumbers sequence; incorporates IG guidance regarding manual TC 480s and mirroring, with examples.

5.8.7.7.5: Incorporates IG SBSE-05-0818-0032, Perfection Issues Impacting Appeals of Offers in Compromise, and:
  • (1) Adds guidance regarding timeliness of an appeal, with examples.

  • (3) Notes that any electronically signed appeal must contain a graphic signature.

  • (4) Notes the TC 480 status change (from B to P or S) does not upload to IDRS.

  • (16) Adds note that if case was reassigned to Collection as a premature referral, the proposed disposition may need to be reentered in AOIC.

5.8.7.7.6: Retitles from Ex Parte Issues when Rejected Offer Appealed.
  • (2) Adds instruction to notify the taxpayer of the transfer, and to ensure case history contains the appeal information, including dates.

  • (3)(c) Adds requirement to generate any updated collection tables.

  • (3)(e) Moved to new (4), with added instruction to ensure case history contains the appeal information, including dates. If no contact, adds instruction to prepare the AOIC transfer letter for the manager’s signature. Examples of open paragraph language moved here. Subsequent paragraphs renumbered.

  • (5)(c) Changes wording to clarify the appeals transfer letter is prepared by the OE/OS and signed by the manager. If RCP is changed, any updated collection tables should be enclosed.

  • (9) Removed paragraph referring to Fast Track Mediation, as this is not applicable after the rejection letter has been issued.

5.8.7.7.7:
  • (1) Updates that Appeals is responsible for closing cases after appeals consideration, and removes AOIC closing instructions. Moves instruction for NFTL to (2). Renumbers subsequent entries.

  • (2) Clarifies any NFTL requests in the file must be reviewed to ensure the information is current before processing.

5.8.7.7.7.1 Adds note that when a previously rejected offer is reopened, the proposed disposition code must be updated on AOIC.
5.8.7.8: Provides new guidance throughout subsection on actions required when an offer has an associated deposit. Includes the instruction and content to be sent to MOIC.
5.8.7.10:
  • (1) Adds note that alternative resolutions should not be negotiated for CDP offers.

  • (3) Refers to OIC SharePoint (SP) for current instructions on reinstating modules to status 60.

5.8.7.10.1: Adds note that Forms 9465 are only appropriate for guaranteed or streamlined agreements.
5.8.7.11: Includes note that credit bureau reports are to be tabbed separately or tagged.
5.8.7.12: Adds instruction regarding archiving paper files that cannot be given an accession number.
Exhibit 5.8.7-1 Removed exhibit; the current cover sheet should be obtained from OIC SP.

(2) Editorial changes were made throughout the document.

(3) Some additions resulted in renumbering of IRM sections.

Effect on Other Documents

This material supersedes IRM 5.8.7, dated 02/07/2017 and incorporates Interim Guidance Memorandums (IGM) SBSE-05-0118-0006, Actions for Offer in Compromise Accounts Requiring Mirroring; or the Input of Manual Closing Codes and SBSE-05-0818-0032, Perfection Issues Impacting Appeals of Offers in Compromise.

Audience

SB/SE Collection and Campus Compliance employees

Effective Date

(12-20-2018)

Scott Reisher
Director, Collection Policy

Program Scope and Objectives

  1. Purpose: Offers that are not recommended for acceptance will be closed by return, rejection, withdrawal, or termination. This section defines the types of dispositions other than acceptance and describes the procedures for completing each type of closure.

  2. Audience: These procedures apply to IRS employees who are responsible for investigating offers.

    • Offer Examiners (OE) in Centralized Offer in Compromise (COIC)

    • Offer Specialists (OS) in the Field OIC

    • Additional IRS employees assigned to the offer program and employees who conduct offer in compromise investigations

  3. Policy Owner: Director Collection Policy

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

  5. Primary Stakeholders: COIC and Field OIC

  6. Program Goals: Policy Statement P-5-100 explains the objective of the OIC as a collection tool. By following the procedures in this IRM, employees will be able to accurately process returns, rejections, withdrawals, and terminations of offers in compromise when appropriate.

Background

  1. Offers in compromise not recommended for acceptance require specific closing actions. This section addresses what must be considered when not accepting an offer, and the closing actions required when closing a case as a return, rejection, withdrawal, or termination.

Authority

  1. Authorities relating to this section include:

    • IRC 7122 - Compromises

    • Treasury Regulation § 301.7122-1 - Compromises

    • Policy Statement P-5-100

    • Revenue Procedure 2003-71

    • Notice 2006-68

    • IRM 1.2.44, Servicewide Policies and Authorities, Delegations of Authority for the Collecting Process, Delegation Order 5-1 (Rev 5)

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. Managers of employees investigating offers are responsible for ensuring these procedures are followed and employee actions are timely and accurate.

  4. Offer examiners, offer specialists, and other employees investigating offers are responsible for following the procedures in this IRM.

Program Management and Review

  1. Operational and program reviews are conducted on a yearly basis by the Director, Specialty Collection OIC and Collection Policy with the use of data and reports from the Automated Offer In Compromise (AOIC) system and ENTITY case management system. In addition, ad hoc reports, which provide information on the inventory levels, hours per case, and age of offers in inventory or at the time of closure, are also provided. See IRM 1.4.52, Offer in Compromise Manager’s Resource Guide - Field Program, and IRM 1.4.54, Offer In Compromise Manager’s – Centralized OIC Program Guide.

  2. Managerial case reviews are also completed as defined in IRM 1.4.52, Offer in Compromise Manager’s Resource Guide - Field Program, and IRM 1.4.54, Offer In Compromise Managers – Centralized OIC Program Guide. These reviews are a method to determine if the offer amount accurately reflects the reasonable collection potential (RCP) as defined in Policy Statement P-5-100.

  3. National quality reviews and consistency reviews are routinely conducted to ensure program consistency and effectiveness in case processing. As a result of these reviews, procedural changes may be required to improve the quality and effectiveness of the program.

Program Controls

  1. ICS is used by field employees as a method for inventory control and history documentation.

  2. 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.

  3. Managers are required to follow program management procedures and controls addressed in IRM 1.4.50, Resource Guide for Managers - Collection Group Manager, Territory Manager and Area Director Operational Aid; IRM 1.4.52, Offer in Compromise Manager’s Resource Guide - Field Program; and IRM 1.4.54, Offer In Compromise Managers – Centralized OIC Program Guide.

  4. Approving officials ensure the closing of the offer via return, rejection or withdrawal is appropriate, and all actions required by the IRM are taken. Managerial requirements for case approval are defined in Delegation Order 5-1 (Rev. 5).

  5. Monitoring OIC (MOIC) is responsible for addressing any funds held as deposits by applying the funds to the liability or issuing a refund.

Terms/Definitions/Acronyms

  1. Terms or acronyms used throughout this IRM:

    Term Definition
    Reject A non-acceptance recommendation that includes appeal rights
    Return A non-acceptance recommendation that does not include appeal rights
    Withdrawal, voluntary A closing of the offer at the request of the taxpayer
    Withdrawal, non-voluntary A closing of the offer because the taxpayer failed to make payments required under the Tax Increase Prevention and Responsibility Act (TIPRA)
    Termination A closing of the offer due to the death of the taxpayer
    Deposit Payment remitted by the taxpayer that is not immediately applied to the liability. Pending the outcome of the investigation, the funds may be applied to the account or returned to the taxpayer.
    CAP A type of appeal under the Collection Appeal Program
    CDP A type of appeal under the Collection Due Process hearing provisions
    COIC Centralized Offer in Compromise
    CSED Collection Statute Expiration Date
    EFTPS Electronic Federal Tax Payment System
    EH Equivalent Hearing (Appeals)
    ES Estimated Tax Payment
    ETA Effective Tax Administration, a basis of consideration wherein the taxpayer does not contest the ability to pay in full, but requests consideration of their special circumstances
    FIV Future Income Value (monthly income times a multiplier)
    FTD Federal Tax Deposit
    IA Installment Agreement
    ICS Integrated Collection System
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    NFTL Notice of Federal Tax Lien
    NOL Net Operating Loss
    OE Offer Examiner
    Offer(s) Offer(s) in Compromise
    OIC Offer in Compromise
    OIC SP Offer in Compromise SharePoint
    OS Offer Specialist
    POA Power of Attorney or legal representative
    PPIA Partial-Pay Installment Agreement
    PUB Publication
    RCP Reasonable Collection Potential
    RO Revenue Officer
    TIPRA Tax Increase Prevention and Reconciliation Act of 2005
    TP Taxpayer
  2. For a list of other common abbreviations, definitions and acronyms used throughout this IRM, see IRM 5.8.1 Exhibit 1, Common Abbreviations Used in the IRM.

  3. Additional acceptable acronyms and abbreviations are found in the ReferenceNet Acronym Database, which may be viewed at http://rnet.web.irs.gov/Resources/Acronymdb.asp.

Related Resources

  1. Additional resources can be found in:

    IRM Title Guidance On
    5.8.4 Investigation Actions required to determine the appropriate method of closure.
    5.8.5 Financial Analysis Appropriate evaluation of the taxpayer’s ability to pay and computation of reasonable collection potential.
    5.8.6 Collateral Agreements Considerations involved when rejecting an offer where a collateral agreement was a factor.
    5.8.10 Special Case Processing Additional considerations required in special cases such as death of the taxpayer, MFT 74 or 76 modules, etc.
    5.8.11 Effective Tax Administration Consideration of hardship or public policy/equity issues.
    5.8.1.5 Protecting Taxpayer Rights Rights afforded by Internal Revenue Code and Taxpayer Bill of Rights (TBOR).
    5.19.7 Monitoring Offer in Compromise Actions taken on accepted offers.
  2. Employees can find helpful information on these websites:

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

    • Interim Guidance memorandums at http://imdtrack.web.irs.gov/search.asp.

Returns

  1. An offer can be returned as either a "not processable return" or a "processable return." It is important to note the distinction because when there is a not processable return, the collection statute is not suspended. The application fee is returned to the taxpayer in all cases involving a not processable return; however, the IRS keeps the application fee when it is a processable return. See IRM 5.8.2.4.1, Determining Processability, for the criteria.

  2. Review the AOIC record to ensure the information is accurate.

Not Processable Returns

  1. An offer is determined to be not processable if any of the "Not Processable" criteria listed in IRM 5.8.2.4.1, Determining Processability, is present. This decision is the sole responsibility of the Centralized OIC (COIC) sites located in the Brookhaven and Memphis Campuses.

Processable Returns

  1. Processable returns include all returns made after the offer has been determined to be processable.

    Note:

    If an offer is processed in error, the IRS will follow the provisions of IRM 5.8.2.4.1 as to the treatment of TIPRA payments.

  2. A processable return will result in suspension of the collection statute for the period of time the offer was considered processable and will result in the Service keeping the application fee and applicable TIPRA payment(s). A taxpayer whose offer is closed as a return does not receive appeal rights; however different levels of approval exist for some return situations. The Service's return of an offer may be reconsidered in limited situations. Refer to IRM 5.8.7.3 below for reconsideration criteria.

  3. During the offer investigation, there are a number of situations that may result in a processable offer being returned to a taxpayer. During discussion with the taxpayer or if correspondence is sent, the taxpayer should be made aware of all issues which are preventing the offer investigation from proceeding, i.e. the taxpayer may have compliance issues and verification of an expense is required.

    The following chart lists the reasons a processable offer may be returned and who can authorize the return. Approval authority is outlined in Delegation Order 5-1 (Rev. 5), and IRM 1.2.44, Delegations of Authority for the Collecting Process.

    Reason for Return OIC Employee Delegated to Sign the Letter
    • Taxpayer filed bankruptcy during a pending investigation.

    • Tax was paid in full by a refund offset, tax has been abated, or no tax can be identified as owing.

    • Taxpayer failed to perfect original offer form necessary to process the offer for consideration.

    • All other return reasons not specified below

    Investigating Process Examiner (PE), Offer Examiner (OE), field Tax Examiner (TE), Offer Specialist (OS)
    • Failure to provide financial information

    • Failure to make required estimated tax payments or federal tax deposits

    • Failure to make required TIPRA payments and/or the application fee when submitting a revised or related Form 656

    • Failure to perfect the original offer, incorrectly claiming exemption from application fee or TIPRA payments

    • Other investigations pending

    • Solely to delay

    Group Manager in Field OIC and Team Manager in COIC
    All other return reasons Investigating PE, OE, field TE, OS
Return for Filing Compliance
  1. A processable offer must be returned when the investigation reveals the taxpayer has not remained in filing compliance. One attempt should be made by telephone to secure the return(s). If the taxpayer or their representative cannot be reached by telephone a letter should be issued. If the taxpayer fails to submit the delinquent returns or provide a reason for not filing and internal research verifies the returns are not posted or pending, return the offer without further contact. Document the case history with attempts to secure the delinquent returns.

    Note:

    If any periods included on the offer were prepared under unagreed substitute for return (SFR) proceedings, offer processing may continue; however, the taxpayer/POA should be notified if an offer is accepted, the taxpayer’s liability on the SFR tax year can never be adjusted, even if the offer defaults. If the taxpayer wishes to contest the liability by filing a corrected tax return, solicit a withdrawal of the offer. Amended returns may take months to process, and the offer should not be held in inventory pending the determination. The taxpayer may file an offer after the tax returns are processed.

  2. If the current year return has not posted and there is no extension, TC 460, check FFINQ to verify if the return has been received or is waiting to be processed. Do not return the offer for non-compliance if indicators on FFINQ show that the return has been received but not processed. If the return has not posted or is not pending and the offer is going to be accepted, schedule follow-ups during the eight week period after the due date of the return or extension and monitor for the posted return or extension. Submission Processing IRM 3.30.123.6.1.6, Domestic Form 1040 Series OTFP (AUSPC, FSPC, KCSPC, OSPC Only) (Program #s 43110, 43130, 44110, and 47130) Processing Specifications, provides specific dates for the current year processing.

  3. If the AOIC remarks indicate an OIC employee made a prior request for delinquent tax return(s) and the taxpayer failed to file the requested return(s) or provide a reason for not filing, and internal research verifies the returns are not posted or pending, the offer may be returned without any additional contact. See IRM 5.8.4.7, Additional Initial Offer Actions, for further instruction. Document the case history.

  4. If you receive a return that cannot be processed due to a defect, such as a missing signature or a missing tax schedule, make one attempt to secure the necessary information. If possible, secure the correction via fax. If the taxpayer does not resolve the defect, the return should be forwarded for routine (not expedited) processing. The Service Center will return the tax return to the taxpayer if they are unable to resolve the defect. The offer should be returned on the basis the taxpayer did not file the return. Use the open paragraph to explain the taxpayer did not provide the necessary information to make the tax return processable.

Return for Inadequate Estimated or Insufficient Withholding Tax Payments
  1. A processable offer must be returned if the taxpayer does not supply requested verification of sufficient estimated tax paid or income tax withheld to cover the estimated tax of the tax year the offer was submitted, or fails to remain compliant with estimated tax payments or have sufficient withholding in any year after the offer is submitted.

    Example:

    While investigating an OIC on July 16, 2018, which was submitted in January 2018, you should verify the taxpayer has made the required estimated tax payments for the first two quarters of the 2018 tax year.

    Example:

    In June 2018, you conduct an initial compliance screening of an OIC that was submitted in November 15, 2017, and identify an apparent deficiency. The 2017 return is on extension and based on the last filed return, the taxpayer has an estimated tax obligation for 2017 and 2018. Upon initial contact, the taxpayer should be asked to submit payment of the delinquent tax payments for 2017 and to bring current the estimated tax payments for 2018. If the taxpayer fails to meet the deadline, the offer should be returned.

    Exception:

    If the tax return for the year the offer submitted has been filed and assessed or is pending assessment, the tax period may be included in the offer if it is in the best interest of the government.

    Example:

    The offer in compromise was submitted on November 15, 2017 and in May 2018 you conduct your initial analysis and RCP calculation. There was no previous contact with the taxpayer to request missed estimated tax payments for 2017. The taxpayer is current on estimated tax payments for 2018 and the offer appears to meet acceptance criteria. If the 2017 tax return has been filed and assessed, you may add the 2017 tax year to the offer and proceed with acceptance. You may also wait for a pending assessment to post, if the delay is in the best interest of the taxpayer and the government.

    Example:

    The offer in compromise was submitted on November 15, 2017, and the offer investigation is being conducted in June 2018. There was no previous contact with the taxpayer to request missed estimated tax payments for 2017. The taxpayer is current on estimated tax payments for 2018 and the offer investigation has been completed and the offer is being recommended for rejection. If the 2017 tax return has been filed and assessed, the OE/OS may add the 2017 tax year to the offer and proceed with rejection. Because the investigation has been substantially concluded, it is generally in the government’s best interest to reject, rather than return, the offer. If the taxpayer submits a similar offer in the future, there may be grounds to return the offer as not materially different from an offer that was considered, but not accepted.

    Note:

    Any compliance issues identified in the initial compliance screening discussed in IRM 5.8.4.6 must be addressed prior to completing a review of the taxpayer’s financial information.

  2. The requirement to have adequate estimated tax paid prior to acceptance of an offer applies to corporate as well as individual taxpayers.

  3. Estimated tax payments are required when a taxpayer does not pay their tax through withholding, or does not pay enough tax through withholding. This can include income from self-employment, business earnings, interest, rent, dividends and other sources.

  4. To determine the estimated taxes required and when it should be paid:

    1. For individuals, if the taxpayer expects to owe at least $1,000, the amount of the payment will be based on 100% of the prior year's tax or 90% of the current year's tax due at the time of the offer, whichever is less. Current year's tax should be based on current income and all legally allowable expenses. The OE/OS may use the on-line calculator on www.irs.gov to calculate the ES payments due.

    2. If the prior year's tax liability showed no estimated tax payments were due, then the taxpayer would not legally be required to make any payments for the current year. If it appears the taxpayer may have a liability this year, remind the taxpayer that filing a return with a balance due would be a default in the offer terms if the offer is accepted.

    3. The amount of the estimated tax payment is generally based on the net taxable income, including the gross income earned, less allowable deductions. This includes depreciation, home office expenses, automobile expenses, and depletion from carrying on a trade or business.

    4. Generally, payments should be made quarterly and are due April 15th, June 15th, and September 15th of the current year in addition to January 15th of the following year.

    5. See Pub 505, Tax Withholding and Estimated Tax, and Pub 334, Tax Guide For Small Business (For Individuals Who Use Schedule C or C-EZ), which provide a more detailed and complete discussion on the matter.

  5. The OE/OS should determine the appropriate amount due during the initial analysis of the case as defined in IRM 5.8.4.6, Initial Compliance Screening, and IRM 5.8.4.7, Additional Initial Offer Actions.

  6. If it is determined that the taxpayer is delinquent in the payment of estimated tax and a previous request for estimated tax payments was not made, calculate the required amount due and give the taxpayer up to 15 calendar days to make the payments. One attempt should be made by telephone to contact the taxpayer to request the necessary tax payment(s). Document the case history with the results of the phone contact attempt.

    Note:

    The OE/OS should provide the taxpayer/representative with the calculated ES payment. Allow the taxpayer/representative the ability to provide information which shows a different amount may be appropriate.

  7. If no telephone contact can be made, a letter must be prepared and mailed to the taxpayer requesting the payment. If you are also requesting required financial information, you may use the Letter 2844 Option D call back letter. This letter should be issued only after the phone attempts referenced in IRM 5.8.4.6(10) are documented. If the taxpayer does not respond, you may return the offer.

  8. If you are requesting only ES, use Letter 2844 with an open paragraph. This letter should be issued only after the phone attempt referenced in IRM 5.8.4.6(10) is documented. Allow 15 calendar days from the date of the letter for the taxpayer to respond (plus 15 calendar days for mailing for a total of 30 calendar days), before taking the next action. Document the case history.

  9. If the taxpayer or their representative provides a legitimate reason for requesting additional time to make the payment(s), a reasonable deadline for responding must be given along with a warning that the offer will be returned if the payment is not received by the established deadline. This may be an additional 15 calendar days from the original established deadline. Barring any special circumstances such as, medical reasons that may extend the request beyond the additional 15 calendar days, the offer may be returned if the taxpayer fails to comply with the request for the payment(s). The case history must be sufficiently documented indicating the attempts made to secure the payment(s).

  10. Prior to returning an offer for this reason, the following actions must be taken:

    1. A determination must be made as to whether the taxpayer has earned sufficient taxable income to require ES payments or income tax withholding for the year(s) in question.

    2. A calculation should be made to determine the amount of tax that should have been paid in ES tax payments to date (or withheld) on the income earned.

    3. Document the case history with attempted contacts as defined in paragraphs (6) and (7) above (including any requested and/or granted extensions of time), the determination as to whether the taxpayer has earned sufficient taxable income to require ES payments, and the amount due.

      Note:

      A "no answer" contact does not meet the criteria as an attempt. If contact by telephone could not be made, a letter must be sent requesting payment and a copy must be retained in the case file.

    4. Additional verification of proof of payment(s). Proof of payment may be verified on IDRS or may include a copy of a cancelled check, a receipt issued by the Taxpayer Assistance Center that accepted the payment, certification of mailing to the appropriate Campus for processing, a receipt from the bank that processed the payment, or EFTPS acknowledgement number.

    Note:

    If the taxpayer or representative provides reasonable verification that the required ES payments for the current year are substantially less than the prior year or the taxpayer may not incur any tax liability for the current year, do not return the offer for failure to make ES payments based on the prior year tax liability. However, advise the taxpayer that filing a return with a balance due would be a default in the offer terms if the offer is accepted.

  11. The history must be documented to support the reason for the return and all attempted requests to bring the taxpayer into compliance. Prior to returning the offer, verify through internal sources (IDRS) if any ES payments have posted to the taxpayer’s account.

  12. In instances where the failure to remain in compliance with estimated tax payments was subsequent to a preliminary determination being shared with the taxpayer or a preliminary determination letter being issued to the taxpayer, proceed with rejection of the offer without contacting the taxpayer to discuss the non-compliance.

    Exception:

    If the taxpayer was previously afforded the opportunity to get current on ES payments during this offer investigation, and misses an additional estimated tax payment, it would be appropriate to return, rather than recommend rejection with appeal rights.

    Example:

    During the offer investigation, the taxpayer was previously afforded the opportunity to get current with the first two quarterly ES payments for 2018, and was advised that any additional missed ES payments would result in return. On September 10, you advised him of the preliminary determination to reject. You allowed the taxpayer to respond to the preliminary RCP, but the information provided did not change the determination. On October 1, while preparing the file for rejection, you discover the ES payment due on September 15 was not made. The offer may be returned.

    Document the case history thoroughly, including the date the preliminary determination letter was mailed and the timing of any subsequent non-compliance. In this case, issue a rejection letter, allowing the taxpayer appeal rights.

    Note:

    The taxpayer should be advised when personally contacted or in correspondence provided during the offer investigation that failure to remain in compliance with estimated tax payments may result in the offer being closed as a return.

  13. A return for failing to make required estimated tax payments or insufficient withheld tax requires approval of a Group Manager in the field or a Unit Manager in COIC. See Delegation Order 5-1 (Rev. 5) for details.

Return for Failure to Make Timely Federal Tax Deposit
  1. A processable offer may be returned when the investigation reveals the taxpayer has not made federal tax deposits during the investigation.

  2. Generally, every employer who pays wages to an employee must withhold income tax and the employee share of FICA (i.e., social security and Medicare) or RRTA taxes from the employee’s gross wages and report the tax liability on an employer's federal tax return (941, 943, 944, 945 or CT-1). Non-payroll income tax withholding must be reported on Form 945, Annual Return of Withheld Federal Income Tax. If the employer accumulates an employment tax liability for withheld taxes and the employer share of FICA or RRTA taxes of $2,500 or more during a quarter (for returns due quarterly) or a year (for returns due annually), this liability must be deposited monthly or semi-weekly depending upon the employer's deposit schedule.

    Note:

    The deposit rules for Form 941, Employer's Quarterly Federal Tax Return, also apply to tax liabilities for Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees; Form 944, Employer’s Annual Federal Tax Return; Form 945, Annual Return of Withheld Federal Income Tax; and Form CT-1, Employer’s Annual Railroad Retirement Tax Return. However, because Forms 943, 944, 945 and CT-1 are annual returns, the rules for determining the deposit schedule apply to a calendar year rather than a calendar quarter.

  3. Deposit requirements are dictated by the dates and amounts of a taxpayer’s payroll.

    1. There are two deposit schedules: monthly and semi-weekly. The deposit schedule a taxpayer must use is based on the total tax liability the taxpayer reported during a look-back period. Generally, for Form 941 filers, the look-back period begins July 1 and ends June 30. If the taxpayer reported $50,000 or less of employment taxes during the look-back period, they would be classified as a monthly depositor. If the taxpayer reported more than $50,000 of employment taxes in the look-back period, they would be classified as a semi-weekly depositor.

      Exception:

      If an employer’s total tax liability for any quarter is less than $2,500, payment may be made with the Form 941 on the due date of the return in lieu of making deposits.

    2. Use IDRS command code ENMOD to determine if the taxpayer has an open employment tax filing requirement. Use BMFOLK to determine if a taxpayer is a monthly or semi-weekly depositor for a particular quarter.

    3. Monthly depositors must deposit accumulated taxes on payments made during a calendar month by the 15th day of the following month.

    4. Semi-weekly depositors must deposit accumulated taxes on payments using the following schedule:

      Payment Days Deposit By
      Wednesday, Thursday, and/or Friday Following Wednesday
      Saturday, Sunday, Monday, and/or Tuesday Following Friday
    5. Generally, the amount required to be deposited is comprised of the federal income tax withheld plus both the employee and employer Social Security and Medicare taxes.

      Note:

      For more information on federal tax deposit requirements, see IRM 20.1.4, Penalty Handbook — Failure to Deposit Penalty.

  4. Determine the type of depositor (monthly or semi-weekly) and verify that deposits are being made. Continue to monitor compliance with FTDs throughout the offer investigation via IDRS.

  5. Effective January 1, 2011, all FTDs must be made by means of the Electronic Federal Tax Payment System (EFTPS). EFTPS is a system designed to use electronic funds transfer (EFT) to pay Federal taxes. The EFT acknowledgement number is provided on the EFTPS when a deposit is made.

  6. Most employers will also have an employment tax filing requirement for Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. If an employer’s FUTA tax liability for any calendar quarter is over $500 (including any FUTA tax carried forward from an earlier quarter), the employer must deposit the tax (i.e., make an FTD) by electronic funds transfer (EFTPS). The employer must include liabilities owed for credit reduction with the 4th quarter FTD. If an employer’s FUTA tax liability for a quarter is $500 or less, the employer does not have to deposit the tax. Instead, it may be carried forward and added to the liability for the next quarter.

  7. Review the taxpayer's account for FTD compliance during the quarter that the offer was submitted and any subsequent quarters. If it is determined at any time during the investigation that the taxpayer is not current with FTD(s), contact the taxpayer by telephone and request the missing deposits. Allow the taxpayer 15 calendar days to make the deposit(s) and/or provide documentation of a reduction in the required deposit. Advise the taxpayer that any future missed deposits will result in immediate return of the offer without appeal rights and with no additional contact. Document the case history with the results of the discussion or attempted contact.

  8. If telephone contact cannot be made, a letter must be prepared and mailed to the taxpayer requesting the missing FTD(s). Allow 15 calendar days from the date of the letter for the taxpayer to respond or make up the missed deposit(s) (plus 15 calendar days for mailing for a total of 30 calendar days), before taking the next action. Document the case history.

  9. The taxpayer will be allowed only one opportunity to make up missed deposits, regardless of when the deposit was missed. Subsequent missed deposits will result in an immediate return of the offer.

  10. The history must be documented to support the reason for the return and all attempted requests to bring the taxpayer into FTD compliance.

  11. A taxpayer whose offer is returned for failure to make FTDs will not include appeal rights. The application fee, as well as any TIPRA payments, will be retained.

  12. A return of an offer for failure to make required FTDs requires approval of the Group Manager.

Return for Failure to Provide Information
  1. An offer may be returned at any time during processing if the taxpayer fails to provide information necessary to determine whether it should be accepted or rejected. Make every reasonable effort to secure the information needed so a recommendation can be made.

  2. Refer to the following table to determine the appropriate action based on taxpayer’s response:

    If Then NOTE:
    Taxpayer did not provide any of the information/documents requested Return offer for failure to provide information.  
    Taxpayer did not provide all the requested information but the information provided is sufficient to support a rejection recommendation. Contact the TP to discuss the case determination . See IRM 5.8.4.9, Actions Based on Reasonable Collection Potential. Because Appeals will address only the assets in your collection tables, include an estimated value for all assets and income stream in RCP. Document the taxpayer failed to provide requested valuation, so estimate was completed using a recognized method of valuation, e.g. "Value of business was based on estimated value of property on depreciation schedule, minus liabilities with priority over the federal tax lien" .
    Taxpayer provided some information requested and the OE/OS is unable to determine RCP. Return offer for failure to provide information. OE/OS must clearly document that a request for the specific information not provided was made and the taxpayer was advised of the consequences for failure to provide all the information requested by the date requested.
    Taxpayer provided some information requested and the OE/OS is unable to determine RCP, yet it appears the taxpayer has attempted to fully comply with the request. Attempt one phone contact to secure the missing information. If a message is left allow the TP/POA 2 business days to respond. If you are unable to leave a message, immediately issue a Letter 2844 option D. If TP/POA fails to respond, return the offer for failure to provide information. Thoroughly document the attempted contact and result.
  3. The return letter must be signed by the Group Manager in the field or a Team Manager in COIC. See Delegation Order 5-1 (Rev. 5), also in IRM 1.2.44.2,, for more detail.

Return for Dishonored Payments
  1. Upon notification of a dishonored application fee and/or TIPRA payment (initial or periodic), determine the current AOIC offer assignment by querying the offer number annotated on the upper left-hand corner of the check.

  2. If the research indicates the taxpayer has not corrected the dishonored payment issue, the offer will be immediately returned to the taxpayer with the appropriate notification for a dishonored check. Document the case history with which check(s) (application fee, TIPRA payment, or both) was returned and the date the check was dishonored.

  3. If the taxpayer or an authorized representative offers to replace the dishonored check and requests reconsideration of their offer, contact by the taxpayer or their representative must be made within 30 calendar days of the date of the initial return letter.

  4. The replacement payment must be in the form of certified funds (money order, cashier’s check, etc.) and submitted via overnight mail or the taxpayer must provide proof via overnight mail or e-fax/fax, a previously submitted replacement check has cleared the bank. See IRM 5.8.7.3, Return Reconsideration, below for reconsideration procedures.

    • Inform the taxpayer or the authorized representative that the offer will not be reconsidered if the payment is not made with certified funds.

    • Provide a reasonable due date for receipt of the payment to the taxpayer or the authorized representative.

    • Advise the taxpayer or their representative to submit the payment by overnight mail. If proof a replacement check has cleared is being submitted, it should also be submitted via overnight mail or sent via e-fax/fax.

    • Document the case history.

  5. Inform the taxpayer or the authorized representative that the certified funds must be mailed to either of the following addresses:

    Brookhaven: Internal Revenue Service Center, 5000 Corporate Court - Stop 680, Holtsville, NY 11742

    Memphis: Internal Revenue Service Center, 5333 Getwell Rd AMC - Stop 880, Memphis, TN 38118

  6. To ensure proper handling, advise the taxpayer to include a letter requesting reconsideration of the offer.

  7. If the payment was dishonored with a TC 671 on the Master File, include information in the AOIC remarks.

  8. Upon receipt of the replacement payment, the case should be worked under reconsideration criteria, if appropriate. The employee should verify if the payment was received within the established deadline as annotated in the case history.

Other Types of Processable Returns
  1. In addition to the returns referenced in this section, other circumstances in which a processable return is appropriate are discussed in IRM 5.8.4, Investigation. These include returns based on solely to delay criteria and circumstances in which other investigations are pending which will not allow for a decision on the taxpayer’s offer until the other investigation is concluded.

  2. IRM 5.8.4, Investigation, provides guidance on the following types of processable returns:

    • IRM 5.8.4.17, Pending Assessments

    • IRM 5.8.4.19.1(2), Open Criminal Investigations

    • IRM 5.8.4.20.2, Procedures for Return of Offers Submitted Solely to Delay Collection

Closing an Offer as a Processable Return
  1. Processable returns do not require preparation of the Form 1271, Rejection or Withdrawal Memorandum.

  2. The following actions should be taken to close a case as a processable return:

    1. Verify that the AOIC record reflects a "Y" in the Processable status field.

    2. Review IDRS to determine if the taxpayer has filed a Collection Due Process (CDP) hearing request (unreversed TC 520 with CDP closing code or -W freeze code) or an Equivalent Hearing (EH) request (unreversed TC 971 AC 278) on any module. If a CDP or EH request is open in Appeals, the offer file should be forwarded to Appeals after the return letter is mailed and the offer is closed on AOIC. Refer to IRM 5.8.4, Investigation, relating to closing an offer when the taxpayer has an open CDP/EH.

    3. Review AOIC to determine if any taxpayer payments are being held as a deposit. If there is a deposit, see IRM 5.8.7.8 for required actions.

    4. If the basis of the offer is ETA, update the Offer Type on the AOIC summary screen from “C” to “A.”

      Note:

      If the Form 656 includes a request to have the offer considered under ETA, AOIC should reflect type of offer “A”.

    5. Generate the "Return Letter" for the signature of the appropriate delegated official, listing the reason(s) the offer is no longer processable.

      Note:

      Outgoing correspondence should be signed with an actual signature, or with a graphic signature if the approval signature is secured via electronic methods, in accordance with the current security and verification standards of the Internal Revenue Service. In all instances, a printed copy of the signed or electronically executed document, form, or letter, must be included in the offer case file.

    6. Clear the return letter in AOIC. The content of any open paragraph is not populated into AOIC until the letter is cleared. Delays in this action will cause erroneous information to appear in the AOIC Remarks.

      Example:

      The final determination letter was mailed on February 20, 2018. The OE/OS does not clear the forms/letters until May 30, 2018. The AOIC remarks will reflect any open paragraph information with a May 30, 2018 date.

    7. If a POA indicator exists, verify a POA letter is provided. If a disclosure issue exists, use the appropriate paragraph to indicate this in the return letter, and do not send a copy to the representative.

    8. Stamp the Form 656 "RETURN." Cross out the IRS received date(s) with a "X."

    9. Document the case history, indicating the reason(s) the offer is no longer processable and with any other pertinent information regarding the case.

    10. Attach a copy of the offer to the taxpayer's letter and submit the letter(s) for approval and required signature.

    11. Keep the original offer, any amended offers, the closing letter(s), the CIS, all supporting documentation, and all internal documentation secured in connection with the investigation in the case file. For space saving purposes, delete any unnecessary documentation, such as duplicate copies.

      Note:

      See IRM 5.8.7.11, Destruction of Credit Reports, for information on the purging and destruction of credit reports.

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

    13. If the file contains a “TC” after the offer number, or if the case history reflects a TC 480 was manually input, it must be manually reversed by the field or COIC person inputting closing actions on AOIC. Review the AOIC Remarks to determine which periods require manual reversal. Ensure all TC 480s are reversed.

      Note:

      At a minimum, the AOIC Transaction Listing (Parts 2 and 3) must be resolved on a weekly basis to ensure all reversing transactions are correctly posted. Additionally, any open IDRS control bases assigned to XX88888884 (first 2 digits represent the area), must be closed, once the systemic posting error has been resolved. There could be a delay from the time the error is on the AOIC transaction listing to when the control base is opened on IDRS.

    14. The case may be closed on AOIC as a return once the letter is signed.

    15. Per IRM 5.8.4.13(3), wait 15 days after the date of the letter before processing any NFTL request to Centralized Lien Operations (CLO). If appeal rights were discussed with the taxpayer, it is not necessary to wait 15 days unless a significant time has passed. Refer to IRM 5.1.9.2, Informing Taxpayers of Their Appeal Rights.

    16. See IRM 5.8.7.10, Alternative Resolutions, for procedures on forwarding the case for the next appropriate collection action.

    17. Mirroring is required at case closure if the offer processing resulted in differing Collection Statute Expiration Dates (CSEDs) for spouses in a joint assessment (MFT 30 or 35). The need for mirroring may be indicated by a red “M” after the offer number on the case file, but should be verified in every case. A request for mirroring the accounts (MFT 30/31 and MFT 35/65) should be processed in accordance with the mirroring procedures discussed in IRM 5.19.7.2.14, Separate OICs on Joint Liabilities, at the conclusion of the offer investigation. When a case is closed on AOIC, it requires a “yes or no” answer regarding the need for mirroring or the need for manual code reversal. The results will appear on the AOIC Summary Screen.

      Example:

      Mr. and Mrs. Taxpayer submit separate offers for their joint and several liabilities on the same day, both with TC 480 on February 3. The offers are both returned on September 9. No mirroring is required.

      Example:

      In the example above, Mr. Taxpayer’s offer was returned for failure to stay in compliance on September 9, while Mrs. Taxpayer’s offer remains under consideration. When Mrs. Taxpayer’s offer is closed, mirroring is required to record the taxpayers’ different CSEDs for the joint periods.

  3. See IRM 5.8.7.7.3.1, Notification of Dishonored Check After Issuance of the Rejection Letter, for procedures to close the offer as a return based on notification of a dishonored check after issuance of a rejection letter.

Return Reconsideration

  1. This section does not apply to offers returned for any of the following reason codes, unless the return was determined to have been in error.

    • P — filed bankruptcy after offer submission

    • Q — non-compliance after offer submission

    • V, W — "solely to delay" submissions

    • S — collection is in jeopardy

    • X — "other investigations are pending that may affect …"

    • Y — original assessment fully abated

  2. Situations may arise when the reconsideration of a returned offer would best serve the interests of both the Service and the taxpayer. Generally, an additional application fee and mandatory payment will not be required. Upon receipt of a return letter, taxpayers may telephone to object to the return of an offer. Below are the criteria for possible reconsideration.

    Note:

    Notice 2006-68 states that an offer will not be deemed accepted under section 7122(f) if the offer is rejected, returned, voluntarily withdrawn or a mandatory withdrawal within the 24-month period. Thus, if a case is reopened for any reason, including IRS error, after one of these events occurred (rejection, return, withdrawal), the IRS will have already acted on the offer within the 24 months, and the offer will not be deemed accepted if it is not worked within the 24 months.

Criteria for Return Reconsideration

  1. Generally, the taxpayer or the representative must contact the Service to raise objections and provide an explanation for failure to provide the requested items. The objection must be raised within 30 calendar days from the date of the return letter (unless the condition that caused the failure to supply the substantiation continued for a prolonged period).

  2. Acceptable criteria for potential situations where return reconsideration may be applicable based on IRS error are listed below. These are not all inclusive.

    1. The offer was closed as a return in error by the field OIC or the COIC site.

      Note:

      If the return was based on a "Solely to Delay" determination from a field offer group, then the ICS history or AOIC remarks must provide information that the Field Group Manager who approved the determination was notified of the offer being reopened.

    2. The information was sent timely, but it was not associated with the case.

    3. The taxpayer was affected by a federally declared disaster as defined in IRC § 7508A.

    4. The taxpayer is in a combat zone as defined in IRC § 7508.

    5. The taxpayer provided proof that the required application fee, application fee shortfall and/or TIPRA payments were made prior to the offer return.

  3. Acceptable criteria for potential situations where return reconsideration may be applicable based on specific taxpayer issues are listed below. These are not all inclusive.

    1. Serious illness or injury prevented the taxpayer from submitting the information timely.

      Note:

      Serious illness or injury may not apply to the taxpayer's representative, if the taxpayer controlling the information receives a copy of the combo or additional information letter and is aware he or she should respond directly. Inquire with the representative and/or use POA bypass procedures if necessary. See IRM 5.1.23, Taxpayer Representation, for bypass procedures.

    2. There was a death in the taxpayer's immediate family that prevented timely mailing of the information.

    3. The failure to perfect by providing a required additional Form 656, required TIPRA payment (i.e., remainder of 20% of the amount of a lump sum cash offer), and application fee when the original Form 656 included both joint and separate liabilities or individual or joint and corporation or partnership liabilities.

    4. The taxpayer requests a low-income certification waiver instead of paying the application fee and required TIPRA payment, and then provides proof that an incorrect conclusion was made.

    5. The taxpayer failed to make ES payments but provides proof that ES payments or withheld taxes are not due.

    6. The taxpayer made ES payments timely, but the verification did not reach the requesting OIC unit within the deadline.

    7. The taxpayer submitted funds within the required timeframes to replace previously dishonored check(s). See also IRM 5.8.7.2.2.5, Return for Dishonored Payments.

  4. The following would not be acceptable criteria for return reconsideration:

    1. Lack of availability of either the taxpayer or representative, absent circumstances identified in IRM 5.8.7.3.1, Criteria for Return Reconsideration, above;

    2. Representatives’ filing season activity, unless the representative made a reasonable request for an extension prior to return of the OIC.

    3. Demonstrating compliance more than 30 days after an offer was returned.

      Example:

      A taxpayer with a CDP OIC filed an extension for his Form 1040 filing due date. ES payments of record are inadequate compared to the last filed return. The taxpayer did not respond to the request for verification of ES compliance, so the offer is returned. Two months later, the taxpayer files a Form 1040 that shows the existing credits are sufficient, and advises Appeals the offer should not have been returned. The IRS will not reopen the offer because the taxpayer did not supply the information timely, or within the 30 day reconsideration period.

Approval Authority for Return Reconsideration

  1. Approval to reconsider a returned, processable offer(s) will be obtained from COIC Department Managers or field OIC Group Managers before requesting the taxpayer or authorized representative to send any missing documentation, payments or fees. This authority may not be re-delegated.

  2. The manager will indicate approval or denial of the request by making a history entry on AOIC.

Reconsideration Procedures

  1. If the employee receiving a telephone request from a taxpayer or authorized representative for reconsideration determines the request does not have merit, based upon the acceptable criteria outlined in IRM 5.8.7.3.1, Criteria for Return Reconsideration above, the employee will advise the taxpayer or their authorized representative of the decision and the taxpayer's right to discuss the issue with the employee's manager. Annotate the closed offer record history on AOIC.

  2. If the employee receiving a telephone request for reconsideration determines that the request does have merit based upon the acceptable criteria outlined in IRM 5.8.7.3.1, Criteria for Return Reconsideration above, after manager concurrence, the employee will:

    • Contact the taxpayer or their representative and request additional information to support the reconsideration request, if applicable.

    • The information must be received within 10 calendar days of the contact. Fax is the preferred method of receipt.

    • Annotate the closed AOIC or ICS offer history. If the ICS history is annotated, the employee must reference the ICS history in AOIC remarks.

  3. If the taxpayer or their representative fails to provide the requested information, annotate the closed AOIC remarks that there will be no reconsideration.

  4. If the taxpayer or their representative provides the requested information, the recommending employee will:

    • Annotate the closed AOIC remarks and request the reconsideration by making a history entry on the closed offer record on AOIC (not ICS), describing the taxpayer's claim or supporting verification and why the reconsideration request is justified.

    • Submit the closed offer case file, along with any verification submitted by the taxpayer to support the reconsideration request, through the appropriate management channels to the approving official.

  5. Retain the original Form(s) 656 in the case file and if the offer is reopened, see IRM 5.8.7.3.3.3.

Denial of the Reconsideration
  1. If the approving official denies the reconsideration request, the employee assigned the case should clearly communicate by telephone to the taxpayer or their representative that the request for reconsideration was denied and that the matter is closed. Document the AOIC remarks with the information.

Approval of the Reconsideration
  1. If the approving official agrees that a returned offer should be reconsidered, the employee assigned the case will telephone the taxpayer or their representative and advise that the offer is being reconsidered. They should also be advised that they must be able to provide the missing or required information, substantiation, Forms 656, and/or applicable fees within 10 calendar days of the telephonic communication of the reconsideration approval.

  2. No action will be taken to reload or work the offer to AOIC until receipt of any required information or substantiation, Forms 656, and/or applicable fees. If the taxpayer fails to submit the promised items within the agreed timeframe, document the AOIC remarks of the closed offer and take no further action.

Additional Form(s) 656 and Application Fee(s) Received as Condition for Reconsideration
  1. Some reconsideration situations may involve an original offer that included either joint and individual tax liabilities, or joint or individual and corporation or partnership liabilities on one Form 656. The offer may have been returned because the taxpayers failed to perfect the offer by submitting additional Forms 656 and the applicable application fee and required TIPRA payments for each. Since the taxpayers met the fee and payment requirement for the original, returned Form 656 they must submit and meet the fee requirement for each additional Form 656 before the original offer can be reloaded under return reconsideration procedures. Therefore, both the "Amended/Revised" and "Related to" offers that were previously provided with the Combo letter, must be loaded to AOIC, but not until the application fee is received for the "Related to" offer along with any additional substantiation that was required.

Reopening a Returned Offer
  1. When a return letter is issued, the offer is closed and a TC 481 is systemically uploaded. If the offer meets reconsideration criteria, a new TC 480 is required. Offers that meet reconsideration criteria must be reloaded on AOIC, versus using the Reopen Closed Offer action on AOIC. Field OIC must provide a request to COIC to take the appropriate actions to reload the offer. Reloading the offer accurately reflects the time the offer is actively under consideration, with a correct CSED suspension. See IRM 5.8.10.7(7) for the effect of offers on the CSED.

    Note:

    Notice 2006-68 states that an offer will not be deemed accepted under section 7122(f) if the offer is rejected, returned, voluntarily withdrawn or a mandatory withdrawal within the 24-month period. Thus, if a case is reopened for any reason, including IRS error, after one of these events occurred (rejection, return, withdrawal), the IRS will have already acted on the offer within the 24 months, and the offer will not be deemed accepted if it is not worked within the 24 months.

Reloading the Returned Offer
  1. Field OIC does not have the authority to reload an offer record on AOIC. If reconsideration has been approved by the field OIC manager and the offer must be reloaded onto AOIC, the field must notify the respective COIC site. Field OIC offices should obtain the Reconsideration Cover Sheet from OIC SharePoint. Be sure to include a full copy of the Form 656, complete all fields on the cover sheet and fax to the applicable COIC location. This will enable the COIC sites to create the new offer record.

    Note:

    Cases that are reloaded should be worked expeditiously with the goal of rendering a decision within 24 months of the original offer pending date. This is particularly true for cases closed in error. The 45-day initial analysis timeframe in IRM 5.8.4.7 does not apply to reloaded offers, if the initial review has already been conducted.

  2. For purposes of an approved return reconsideration, COIC will take the following actions:

    • In the waiver section of the faxed copy of the original Form 656, the PE should place their signature and title (alongside the existing signature and title), to indicate acceptance of the waiver of the statutory period of limitations.

    • Enter on the date line, the AOIC "Pending Dt" used for the new offer record. Usually, this will be the date any missing information, substantiation, Forms 656, and/or applicable fees were received.

    • Create a new AOIC offer record by reloading the same AOIC data as the returned offer, except for "IRS Rcvd Dt," "AO Rcvd Dt" and "Pend Dt" fields which will contain the date any missing information, substantiation, Forms 656, and/or applicable fees were received.

    • Show the offer as related to the original offer, so they are linked. Notate in remarks the offer is reloaded, and any TIPRA payments associated with the original offer apply

    • Return the Form 656 to the originator, so they can associate the documents from the closed offer with the new, reloaded offer folder.

    • Enter an AOIC remarks notation in the closed offer record to indicate the documents were refiled with the reloaded offer.

Reloading Offers with a Previously Submitted Application Fee (COIC ONLY)
  1. If the taxpayer paid the application fee with the original returned offer, for the new AOIC offer record enter:

    • "N" in the "Fee Due" field

    • "ME" in the "Waiver Criteria" field

    • The number of the original, returned offer in the "Master Offer #" field of AOIC Application Fee screen.

Reloading Offers with a Previous Low-Income Certification (COIC ONLY)
  1. If the taxpayer previously checked low-income certification on the returned offer and they qualified for the low income waiver, enter the following for the new AOIC offer record:

    • "N" in the "Fee Due" field.

    • "ME" in the "Waiver Criteria" field of AOIC Application Fee Screen.

    • The number of the original, returned offer in the "Master Offer #" field of AOIC Application Fee Screen.

Withdrawal

  1. There are two kinds of withdrawn offers; they are (1) Voluntary and (2) Mandatory.

  2. Voluntary Withdrawal of Offers – An action that may be taken by the taxpayer at any time during the offer investigation. See IRM 5.8.7.4.1, Voluntary Withdrawal, below for more information.

  3. Mandatory Withdrawn Offers – An action that may be taken by an OE/OS during the offer investigation. See IRM 5.8.7.4.2, Mandatory Withdrawal, below for more information.

Voluntary Withdrawal

  1. Taxpayers may voluntarily withdraw their OIC at any time prior to the IRS’ acceptance of the offer. A withdrawal must never be solicited merely to avoid a complete investigation or deny taxpayers access to Appeals.

  2. When an OIC cannot be recommended for acceptance, allow the taxpayer an opportunity to voluntarily withdraw the offer and, at the same time, inform the taxpayer that withdrawing the offer forfeits all appeal rights.

    Note:

    Do not negotiate alternative resolutions when a CDP offer is withdrawn. Appeals has jurisdiction over virtually all outcomes and is responsible to explain taxpayer rights within CDP, including the right to judicial appeal and retained jurisdiction of the final decision.

  3. A voluntary withdrawal request may be made orally, by fax, or in writing. Receipt of a withdrawal (either in writing or orally) must be clearly documented in the case file indicating how the request was received. See IRM 5.8.7.4.3 for the date a withdrawal is effective.

    Note:

    You must confirm both spouses are withdrawing a joint offer. See IRM 5.8.7.4.1.1 regarding joint offers.

  4. Review AOIC to determine if any taxpayer payments are being held as a deposit. If there is a deposit, see IRM 5.8.7.8 for required actions.

  5. Document the case history or correspondence that the taxpayer was informed that a withdrawal forfeits their appeal rights.

  6. Per IRM 5.8.4.13(3), wait 15 days after the date of the letter before processing any NFTL request to Centralized Lien Operations (CLO). If appeal rights were discussed with the taxpayer, it is not necessary to wait 15 days unless a significant time has passed. Refer to IRM 5.1.9.2, Informing Taxpayers of Their Appeal Rights.

  7. AOIC should be documented with results of contact or any actions taken.

Voluntary Withdrawal of a Joint Offer
  1. When a joint offer is withdrawn, verify both spouses concur with the withdrawal.

  2. If one spouse verbally requests withdrawal, request telephone confirmation from the other spouse. If you are unable to secure verbal approval, send an AOIC Letter 2844 Option D and enclose the Letter 3504-A. If the taxpayers do not respond by the deadline, return the offer for failure to respond (Option AT). If the spouse requests reopening of the offer within 30 days of the return letter, they must submit an amended Form 656 to remove the other spouse and allow consideration of their sole offer.

  3. You may accept a written withdrawal signed by one spouse, as long as the withdrawal refers to the joint offer. If unclear, or if one signature block on the withdrawal Letter 3504-A is unsigned, an effort should be made to perfect the request. Contact the spouse to secure verbal approval or request a written request. See (2) if you are unable to reach the taxpayer.

  4. If either spouse requests refund of a deposit, the joint deposit will be refunded.

  5. If only one spouse submits a withdrawal, a request for mirroring the accounts (MFT 30/31 and MFT 35/65) should be processed in accordance with the mirroring procedures discussed in IRM 5.19.7.2.14, Separate OICs on Joint Liabilities, at the conclusion of the offer investigation.

Mandatory Withdrawal

  1. If during the investigation the taxpayer fails to make the required subsequent periodic payments as required by TIPRA, the offer may be considered withdrawn. Check both AOIC and IDRS for TIPRA payments prior to a mandatory withdrawal determination.

  2. One request for the missed payment(s) must be made by telephone. If the taxpayer or their representative cannot be contacted by telephone, issue a letter requesting the missed payment(s). If the contact is by telephone, allow the taxpayer 15 calendar days to submit the payment(s) before taking the next action. If the contact is written, allow 15 calendar days from the date of the letter for the taxpayer to submit the payment(s) (plus 15 calendar days for mailing for a total of 30 calendar days), before taking the next action. Document the case history.

    Note:

    If documentation is in the offer file that a previous request was made for the missed payment(s) and the payment(s) has not been made, the OE/OS is not required to re-request.

  3. If the taxpayer provides a reasonable explanation for missing the payment(s) (i.e. special circumstances exist), the investigation of the offer should continue.

    Example:

    The taxpayer misses monthly TIPRA payment of $200 in July and previously missed the January TIPRA, which was subsequently paid. Before the OIC is closed as a mandatory withdrawal, the taxpayer informs the OS he had a medical emergency in July, and offers to immediately bring the delinquent payment current. The taxpayer may be provided the opportunity to make up the payment(s).

  4. Review AOIC to determine if any taxpayer payments are being held as a deposit. If there is a deposit, see IRM 5.8.7.8 for required actions.

  5. Issue the withdrawal letter indicating that the taxpayer failed to comply with the request for the required payment(s), therefore the offer is withdrawn.

  6. The letter must include the following information:

    • A statement indicating that the taxpayer failed to respond to the request for the remainder of the required periodic payments.

    • A statement indicating how any deposit made is being disposed of (i.e., refunded or applied to the tax deposit).

  7. Close the offer as withdrawn as defined in IRM 5.8.7.4.3, Closing an Offer as a Withdrawal, below.

  8. Document the case history, thoroughly describing the attempts to secure the funds and the decision to consider the offer withdrawn.

    Note:

    The taxpayer should be advised, whether personally contacted or in correspondence provided during the offer investigation, that failure to remain in compliance with periodic payments may result in the offer being closed as a return or mandatory withdrawal with no appeal rights.

  9. In instances where the failure to remain in compliance with periodic payments was subsequent to a preliminary discussion with or letter being issued to the taxpayer advising that the OIC would be rejected, proceed with rejection of the offer without contacting the taxpayer to discuss the non-compliance. See IRM 5.8.7.7.

    Note:

    Document the case history thoroughly, including the date the preliminary determination letter was mailed or discussion took place and the timing of any subsequent non-compliance. In this case, issue a rejection letter so the taxpayer will receive appeal rights.

    Exception:

    As a policy matter, if this is the second instance of the taxpayer missing a periodic payment, it may be appropriate to close the offer as a mandatory withdrawal.

    Example:

    Upon receipt of the case, you identify the taxpayer has missed two monthly TIPRA payments. Before proceeding with the additional initial analysis, you secure the payments and advise failure to make future payments will result in mandatory withdrawal. After completing the preliminary RCP, you advise the POA the offer amount appears unacceptable, and if the taxpayer does not supply information to justify acceptance of the offer by the stated deadline, you will proceed with a rejection recommendation. The taxpayer fails to make the next TIPRA payment. You may close the offer as a mandatory withdrawal versus a rejection recommendation.

  10. Per IRM 5.8.4.13(3), wait 15 days after the date of the letter before processing any NFTL request to Centralized Lien Operations (CLO). If appeal rights were discussed with the taxpayer, it is not necessary to wait 15 days unless a significant time has passed. Refer to IRM 5.1.9.2, Informing Taxpayers of Their Appeal Rights.

  11. Upon notification of a dishonored required TIPRA periodic payment, the offer should be returned in accordance with IRM 5.8.7.2.2.5, Return for Dishonored Payments.

Reopening a Mandatory Withdrawal (IRS Error)
  1. If an offer closed as a mandatory withdrawal was closed due to IRS error, the offer may be reopened. When an offer is closed as a mandatory withdrawal, a TC 482 is systemically uploaded. If the offer is to be reopened, a new TC 480 date is required. Offers that were closed as a mandatory withdrawal in error must be reloaded on AOIC, versus using the Reopen Closed Offer action on AOIC. While an additional application fee will not be required, the taxpayer must make any required TIPRA periodic payments which became due after the mandatory withdrawal letter was mailed. Upon receipt of a letter advising the taxpayer their offer was a mandatory withdrawal, taxpayers may telephone to object to the closing of the offer. If the taxpayer can provide proof that the required TIPRA payments were made timely, but not posted and submit any additional required TIPRA periodic payments, the offer may be reopened.

  2. Approval to reconsider an offer closed as a mandatory withdrawal will be obtained from the COIC Department Manager or the field Group Manager before requesting the offer be reopened. This authority may not be re-delegated.

  3. The manager who approved the reconsideration will indicate approval or denial of the reopening of the offer by making an entry in AOIC remarks. If the case does not meet the criteria for reopening, the employee assigned the case should clearly communicate by telephone to the taxpayer or their representative that the request for reconsideration was denied and that the matter is closed. Document the AOIC remarks with the information.

  4. Refer to IRM 5.8.7.3.3.3, Reopening a Returned Offer, and IRM 5.8.7.3.3.3.1, Reloading the Returned Offer, for the procedures to provide a request to COIC to reload the offer. The TC 480 date will be the date the offer is agreed to be reopened.

    Note:

    Since a mandatory withdrawal is based on the taxpayer’s failure to submit required TIPRA payments, the only basis for reopening of a mandatory withdrawal is IRS error when the payments were actually received prior to the withdrawal, yet not processed or posted timely.

    Note:

    The 24-month mandatory acceptance period as defined in the TIPRA statute no longer applies once the IRS has issued a determination letter, even if the offer is subsequently reopened.

Amended Offer after Failure to Make Required Periodic Payments
  1. The offer examiner/offer specialists (OE/OS) will follow the provisions of IRM 5.8.7.4.2, Mandatory Withdrawal, and close an offer as a mandatory withdrawal if the taxpayer fails to remain in compliance with periodic payments required based on the terms of the offer under investigation. The submission of an amended offer, unless requested by the OE/OS, will not change the determination to process a mandatory withdrawal, if any required TIPRA payments based on the terms of the original offer are not paid.

    Example:

    The taxpayer submits an amended offer in which the payment terms under periodic payment provisions are for a lesser amount than required under the original offer amount. The taxpayer is unable or unwilling to make up the payments required under the original terms through the date of the amended offer. The original offer in the amount of $12,000 provided for the TP to submit periodic payments on a monthly basis equal to $500 per month for 24 months. After four months the taxpayer has submitted two payments totaling $1,000 and submits an amended periodic payment offer in the amount of $5,000 with the periodic payment terms being $1,000 already paid and $200 per month for 20 months. In this instance, the taxpayer would be required to submit the missing required periodic payments of $1,000 for the offer investigation to continue.

    Example:

    The amended offer is for a lesser amount than the previous offer and has lump sum payment terms (five or fewer payments in five months or less). The taxpayer requests any previous periodic payments be applied toward the 20% required TIPRA payment for a lump sum offer.

    Exception:

    If the OE/OS has determined reasonable collection potential (RCP) and requests the taxpayer submit an amended offer equal to or greater than RCP and the taxpayer submits any required TIPRA payment(s) with the amended offer, the OE/OS may proceed with recommending acceptance of the amended offer, even though previously required periodic payments were missed.

  2. If the taxpayer has made all payments required under TIPRA at the time an amended offer is received, monitor required TIPRA payments based on the amended offer and make a determination on the acceptability of the amended offer based on the revised terms.

Closing an Offer as a Withdrawal

  1. Offers closed as withdrawals do not require preparation of Form 1271, Rejection or Withdrawal Memorandum.

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

    If taxpayer withdraws an offer in compromise by… Then the offer will be considered withdrawn …
    phone on the date the Service mails, or personally delivers, a written letter to the taxpayer acknowledging the withdrawal.
    non-certified mail or fax on the date the Service mails, or personally delivers, a written letter to the taxpayer acknowledging the withdrawal.
    mailing written notification of the withdrawal via U.S. certified mail on the date the Service receives the certified mail.
    personal delivery when notification of the withdrawal is received by the Service.
  3. The following actions should be taken to close an offer as a withdrawal:

    1. Review the AOIC record to ensure the information is accurate.

    2. Review IDRS to determine if the taxpayer has filed a CDP hearing request (unreversed TC 520 with CDP closing code or -W freeze code) or an EH request (unreversed TC 971 AC 278) on any module. If a CDP/EH hearing request is open in Appeals, the offer file should be forwarded to Appeals after the withdrawal letter is mailed and the offer is closed as a withdrawal on AOIC. Refer to IRM 5.8.4, Investigation, relating to closing an offer when the taxpayer has an open CDP.

      Note:

      Do not negotiate alternative resolutions when an offer under the jurisdiction of Appeals is withdrawn.

    3. If the basis of the offer is ETA, ensure the Offer Type on the AOIC summary screen is “A” vs. “C.” Update if necessary.

      Note:

      If the Form 656 includes a request to have the offer considered under ETA, AOIC should reflect type of offer “A”.

    4. Generate the AOIC "Withdrawal Letter" for the signature of the authorized delegated employee.

      • Voluntary withdrawal – Use the chart above to determine the correct date to use as the effective date of the withdrawal.

      • Mandatory withdrawal – The date of the withdrawal is the date of the "Withdrawal Letter."

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

    6. Document the AOIC remarks, indicating the date, method of receipt, and type of withdrawal (e.g., voluntary or mandatory).

    7. Submit the file for approval and signature of the letter(s).

      Note:

      Outgoing correspondence should be signed with an actual signature, or with a graphic signature if the approval signature is secured via electronic methods, in accordance with the current security and verification standards of the Internal Revenue Service. In all instances, a printed copy of the signed or electronically executed document, form, or letter, must be included in the offer case file.

    8. Review AOIC to determine if any taxpayer payments are being held as a deposit. If there is a deposit, see IRM 5.8.7.8 for required actions.

    9. Close the case on AOIC as withdrawn after approval has been received. Keep a copy of the signed letter(s) with the closed offer file.

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

    11. If the file contains a “TC” after the offer number, or the case history reflects a TC 480 was manually input for any periods, those TC 480s must be manually reversed by the field or COIC person inputting closing actions on AOIC. Ensure all TC 480s are reversed. Review the AOIC Remarks to determine which periods require manual reversal.

      Note:

      At a minimum, the AOIC Transaction Listing (Parts 2 and 3) must be resolved on a weekly basis to ensure all reversing transactions are correctly posted. Additionally, any open IDRS control bases assigned to XX88888884 (first 2 digits represent the area), must be closed, once the systemic posting error has been resolved. There could be a delay from the time the error is on the AOIC transaction listing to when the control base is opened on IDRS.

    12. See IRM 5.8.7.10, Alternative Resolutions, for procedures on forwarding the case for the next appropriate collection action.

    13. Mirroring is required at case closure if the offer processing resulted in differing Collection Statute Expiration Dates (CSEDs) for spouses in a joint assessment (MFT 30 or 35). The need for mirroring may be indicated by a red “M” after the offer number on the case file, but should be verified in every case. A request for mirroring the accounts (MFT 30/31 and MFT 35/65) should be processed in accordance with the mirroring procedures discussed in IRM 5.19.7.2.14, Separate OICs on Joint Liabilities, at the conclusion of the offer investigation. When a case is closed on AOIC, it requires a “yes or no” answer regarding the need for mirroring or the need for manual code reversal. The results will appear on the AOIC Summary Screen.

      Example:

      Mr. and Mrs. Taxpayer submit separate offers for their joint and several liabilities on the same day, both with TC 480 on February 3. The offers are both returned on September 9. No mirroring is required.

      Example:

      In the example above, Mr. Taxpayer’s offer was returned for failure to stay in compliance on September 9, while Mrs. Taxpayer’s offer remains under consideration. When Mrs. Taxpayer’s offer is closed, mirroring is required to record the taxpayers’ different collection statute extension for the joint periods.

Termination of Consideration

  1. Consideration of an offer must be terminated upon the death of a single proponent. See IRM 5.8.4.10. The date of termination is the taxpayer's date of death and the date used for the TC 482. If the taxpayer’s date of death is prior to the offer submission, refer to 5.8.7.5.1(2)(f). Offers that are terminated do not receive appeal rights. See IRM 5.8.10.4.1, Death of a Taxpayer, for instructions on actions to take prior to termination when advised that one party to a joint offer has died.

Closing an Offer as a Termination

  1. Offers closed as terminations do not require preparation of Form 1271, Rejection or Withdrawal Memorandum.

  2. The following actions should be taken to close an offer as a termination:

    1. Generate the AOIC "Termination Letter" for the signature of the authorized delegated employee. On the salutation line of the letter, enter the "Estate of" and the taxpayer's name.

    2. Generate a copy of the letter for any authorized representative.

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

    4. Check INOLE to determine if a TC 540 has been input. If no TC 540 is present, then request input of TC 540 to IDRS if the exact date of death is confirmed.

    5. Submit the package for approval and signature of the letter(s).

      Note:

      Outgoing correspondence should be signed with an actual signature, or with a graphic signature if the approval signature is secured via electronic methods, in accordance with the current security and verification standards of the Internal Revenue Service. In all instances, a printed copy of the signed or electronically executed document, form, or letter, must be included in the offer case file.

    6. Close the case on AOIC as a "Termination" after approval and document the date of death in the case history.

      Note:

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

    7. Keep a copy of the signed letter(s) with the closed offer file.

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

    9. If the file contains a “TC” after the offer number, or the case history reflects a TC 480 was manually input for any periods, those TC 480s must be manually reversed by the field or COIC person inputting closing actions on AOIC. Review the AOIC Remarks to determine which periods require manual reversal. Ensure all TC 480s are reversed.

      Note:

      At a minimum, the AOIC Transaction Listing (Parts 2 and 3) must be resolved on a weekly basis to ensure all reversing transactions are correctly posted. Additionally, any open IDRS control bases assigned to XX88888884 (first 2 digits represent the area), must be closed, once the systemic posting error has been resolved. There could be a delay from the time the error is on the AOIC transaction listing to when the control base is opened on IDRS.

Fast Track Mediation for Offer in Compromise

  1. The goal of Fast Track Mediation - Collection (FTMC) is to help taxpayers resolve certain collection disputes without the need to formally appeal a rejection determination. It may allow expedited resolution in situations with an isolated disagreement.

  2. The Appeals mediator does not have settlement authority. Any recommendation made by the Appeals mediator does not bind the parties and is not a decision regarding any issue in dispute.

  3. For additional information regarding FTMC, refer to IRM 8.26.3, Alternative Dispute Resolution (ADR) Program,- Fast Track Mediation for Collection Cases; Rev. Proc. 2016-57; and Pub 3605, Fast Track Mediation - A Process for Prompt Resolution of Tax issues.

    Note:

    This program is not available for any work in the COIC sites.

  4. Unlike a formal appeal, Collection provides active participation in the mediation. The prohibition against ex parte communications between Appeals personnel and other IRS employees does not apply because Appeals is not acting in their traditional Appeals settlement role. Any information developed in mediation will become part of the administrative file if the taxpayer elects to proceed with a formal appeal.

Criteria for Fast Track Mediation - Collection

  1. Mediation may only be considered after the OS has fully developed the case facts and made a reasonable attempt to negotiate an acceptable offer. A request for participation in FTMC should be initiated after an issue has been fully developed, but before Collection has made a final determination regarding the issue.

    Note:

    Mediation is not a substitute for the taxpayer's or the taxpayer's representative's right to a conference with the manager.

  2. Taxpayers or taxpayer representatives who express an interest in mediating must first request a conference with the manager.

  3. The opportunity to mediate should only be granted after the first level manager has reviewed the case and determined that the issues in dispute may be resolved in mediation.

  4. When appropriate, mediation should be addressed before the case is forwarded to the Independent Administrative Reviewer for approval. If the rejection letter has been issued, FTMC may not be utilized.

  5. Below are some examples of when it would be appropriate or inappropriate to offer mediation. The examples are not all inclusive.

    Example:

    Appropriate — valuations of ongoing business' goodwill; artwork with collector or sentimental value; valuation of assets including real property. See IRM 8.26.3.4.1, Cases Included in FTMC, for additional examples.

    Example:

    Inappropriate — taxpayer has ability to full pay based on financial data; taxpayer declines to increase the amount offered and does not disagree with the values; rejection is based on public policy. See IRM 8.26.3.4.2, Cases or Issues Excluded from FTMC - General, and IRM 8.26.3.4.2.1, Cases or Issues Excluded from FTMC - OIC for additional examples.

  6. Cases requiring approval higher than that of a Collection Group Manager are not eligible for FTMC. See IRM 1.2.44.2, Delegation Order 5-1 (Rev. 5).

  7. Both parties have to agree to mediation to participate in FTMC. If the OS and group manager do not feel the mediation would be beneficial, see IRM 5.8.7.6.3.

Processing Granted Requests for Fast Track Mediation

  1. When the request for mediation is granted, the OS will complete the following actions:

    • Complete the Form 13369, Agreement to Mediate. The form must be signed by both the group manager and the taxpayer, or authorized representative. If signed by a representative, a copy of Form 2848 must be attached.

    • Complete a written summary of disputed issues

    • Complete a RCP computation

    • Within three business days of securing the required signatures, follow local established procedures to submit the request to Appeals.

    • Provide a copy of the Form 13369, Agreement to Mediate, to the taxpayer or their representative.

    • The OS who completed the investigation must be in attendance. Because each party must have at least one participant with decision-making authority present, the group manager must also attend the mediation session.

    Note:

    Collection retains exclusive jurisdiction of the offer throughout the mediation process.

  2. Update the OCC code in AOIC to 42.

Processing Denied Requests for Fast Track Mediation

  1. If Fast Track Mediation is denied, document the case file with the reason for the denial, including how it was relayed to the taxpayer and/or their representative.

  2. Managerial approval is required. The manager should indicate concurrence by documenting the ICS history.

  3. Update the OCC code in AOIC to 42.

Rejection

  1. When the facts of the case do not support acceptance and the taxpayer will not agree to an acceptable offer or an alternative resolution of the delinquency and withdraw the offer, the taxpayer should be informed that the offer will be recommended for rejection.

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

  3. Generally, rejections on offers based on DATL are because the liability is believed to be correct as assessed or the taxpayer will not withdraw the offer after the account has been adjusted.

  4. The most common reason for rejecting an offer based on Doubt as to Collectibility (DATC) is because it has been determined that more can be collected than was offered. In all cases, the taxpayer should be informed prior to the issuance of the rejection letter that an acceptance cannot be recommended. This communication should be by telephone.

    When the taxpayer is contacted, the OE/OS should explain the computation of the RCP, offer to provide the taxpayer with a copy of the financial analysis, and give the taxpayer an opportunity to submit any additional financial information. If no conversation can be held with the taxpayer to convey this information, the OE/OS should send the taxpayer/poa an additional information letter paragraph E to request contact. Enclose the AET/IET if prepared. Edit the bottom of L2844 to reference the enclosures. A PD 3500 may be used when the additional information letter paragraph E is not appropriate, yet correspondence is required, i.e. taxpayer is in a combat zone, is residing out of the country or is incarcerated .

    Note:

    Whether the communication is by telephone or letter, the taxpayer should be informed of the necessity to remain in compliance with their estimated tax or periodic payments while the offer is being investigated to avoid their offer being returned or closed as a mandatory withdrawal. Refer to IRM 5.8.7.2.2.2, Return for Inadequate Estimated or Insufficient Withholding Tax Payments, or IRM 5.8.7.4.2, Mandatory Withdrawal, which discuss the appropriate closing actions to take if the taxpayer’s failure to remain in compliance occurs subsequent to a preliminary rejection letter.

    The calculation of RCP should be completed in all instances. This includes offers being rejected under "not in the best interest of the government" (NIBIG) and "Public Policy" .

    Note:

    When providing information on the taxpayer's ability to pay prior to the offer being rejected under NIBIG or Public Policy, the taxpayer should be advised, "although the financial information may show the offer might be acceptable under DATC, the offer is being rejected based on the fact it is either not in the best interest of the government or contrary to public policy (also insert specific issues identified)." The description of the reason(s) for rejection should identify the specific issues which provided for the offer to be rejected under NIBIG or public policy.

  5. When discussing the potential rejection or preparing the potential rejection letter requesting an increased offer amount, the calculation should reflect any payments made during the offer investigation.

    Example:

    The taxpayer submitted a $1,000 periodic payment offer. The balance due is $10,000. The RCP was determined to be $4,400, so when providing the RCP information to the taxpayer, the OE/OS should include the following information: “To date you have made four (this number will reflect actual number of payments made) payments totaling $400. If you wish to submit an amended offer in the amount of calculated RCP, your balance of $4,000 must be paid in 20 months at $200 per month.

    Note:

    Periodic payment terms up to 24 months beginning with the date of the amended offer may be provided when deemed appropriate.

  6. If the taxpayer or their representative presents new information, it must be considered and addressed in the history. If the information does not change the decision to reject, contact the POA/TP by telephone to discuss the new information and inform them that the information submitted did not change the rejection determination. If no telephone contact can be made, issue the appropriate AOIC rejection letter and document the AOIC or ICS history.

  7. When an offer is rejected, there is no obligation on the part of the taxpayer to continue to make periodic payments pursuant to the offer schedule, even if the taxpayer has appealed the rejection. Generally, once the Service has notified the taxpayer of the intention to reject with appeal rights, whether verbally or in a predetermination letter, we should proceed with the rejection recommendation, even if it is discovered the taxpayer missed a payment before the case was submitted.

    Exception:

    If this is the second instance of the taxpayer missing a periodic payment, it may be appropriate to close the offer as a mandatory withdrawal. See IRM 5.8.7.4.2.

    Example:

    Upon receipt of the case, you identify the taxpayer has missed TIPRA payments. Before proceeding with the additional initial analysis, you secure the payments and advise failure to make future payments will result in mandatory withdrawal. After completing the preliminary RCP, you advise the POA the offer amount appears unacceptable, and if the taxpayer does not supply information within 10 days to justify acceptance of the offer, you will proceed with a rejection recommendation. The taxpayer fails to make the next TIPRA payment. You may close the offer as a mandatory withdrawal versus a rejection recommendation.

  8. If the taxpayer is not in compliance prior to a preliminary determination being shared with the taxpayer or a preliminary determination letter being issued to the taxpayer, the offer should be a processable return, not rejected. See IRM 5.8.7.2.2, Processable Returns, for complete instructions.

Not in the Best Interest of the Government Rejection

  1. An offer rejection may also be based on a determination that acceptance of the specific offer at hand is not in the "best interest of the government" (NIBIG) as discussed in Revenue Procedure 2003-71, SECTION 6.03 which states: "The decision whether and when to accept an offer to compromise a liability is within the discretion of the Service. In keeping with IRM 1.2.14.1.17, Policy Statement P-5-100, an offer will only be accepted if it is determined to be in the best interest of both the taxpayer and the Service. In addition to the criteria discussed in Section 4.02, the Service may take into account public policy and tax administration concerns in determining whether an offer to compromise is acceptable" .

    Rejections under this provision should not be routine and should be fully supported by the facts outlined in the rejection narrative. Offers rejected under this section require the review and approval of the second level manager; that is, Territory Manager for the field or Operations Manager for COIC.

    Note:

    If making this recommendation for a CDP offer under the jurisdiction of Appeals, the approval of the second level manager must be shown in the file. They may sign the proposed determination letter, notate approval in the case history or remarks, or provide a printable e-mail.

  2. Even if a determination is made that a rejection under this basis is appropriate, a calculation of the taxpayer's ability to pay needs to be fully developed. The preliminary asset/equity and income/expense tables as discussed in IRM 5.8.4.7, Additional Initial Offer Actions, should be completed and provided to the taxpayer. The extent of additional verification, if required, should be based on the facts of the case. The preliminary tables and the basis for the rejection should be discussed with the taxpayer/representative to allow for submission of additional information for consideration. The discussion regarding the basis for the rejection must be well documented and addressed in the open paragraph. See IRM 5.8.7.7.3 for preparation of the rejection letter.

  3. Below are situations that may warrant rejection as not being in the "best interest of the government" (not all inclusive). Additional situations may found in IRM 5.8.4, Investigation, and specifically IRM 5.8.4.23, Other Cases.

    • The taxpayer's offer meets processability criteria; however, the taxpayer has an egregious history of past noncompliance and appears not to be in current reporting compliance. The taxpayer failed to report all income on recent tax years and did not pay the tax liability when he had the means to do so.

      Example:

      An offer in compromise is submitted by a taxpayer who has a history of filing frivolous returns. The OIC includes tax assessments which were completed by the IRS under substitute for return procedures. The financial statements submitted with the offer include very little income on which minimal estimated tax payments have been made. Information from internal sources reveals the taxpayer has additional income not being reported on the financial statement. It is not in the government's interest to investigate an OIC until the taxpayer demonstrates compliance with filing and payment of the appropriate tax. Referral to Exam should also be considered based on available information.

      Note:

      A taxpayer simply owing for numerous tax years is not sufficient reason to reject NIBIG.

    • The taxpayer's offer meets processability criteria however; it is determined inclusion of a dissipated asset is appropriate and the taxpayer is unwilling or unable to include the value of the dissipated asset in the offer amount. For a discussion on when inclusion of the value of a dissipated asset is appropriate, refer to IRM 5.8.5.18, Dissipation of Assets.

      Note:

      Appeals will only sustain rejection of an offer based on inclusion of a dissipated asset in RCP if the offer is rejected under NIBIG, with second-level manager approval.

    • The taxpayer is the primary responsible party for a related entity, i.e. corporation, partnership, etc., that is not in compliance with its filing and/or paying requirements, has not entered into an agreement to resolve the compliance or balances due, or does not have an offer pending.

    • The owner, general partner, or a significant shareholder of the taxpayer is not in compliance with their filing and/or paying requirements, has not entered into an agreement to resolve the compliance or balance due, or does not have an offer pending.

      Note:

      If the IRS has determined the related taxpayer liability is currently not collectible, NIBIG rejection generally would not apply.

    • An in-business taxpayer compromising employment taxes, where financial analysis indicates the business does not have the ability to fund the offer, remain current with future tax obligations, and meet the business's normal operating expenses.

    • The offer is from an ongoing business that appears to be insolvent, will remain insolvent, even if the offer is accepted, and it appears that the government's position would be better protected through a formal insolvency proceeding. Refer to IRM 5.8.10.2.2.1, Consideration of a Potential Bankruptcy Filing on the Calculation of RCP in an OIC Investigation.

    • The taxpayer is not able to fully pay via an installment agreement, but due to a high monthly payment ability, the amount collectible through the CSED is substantially more than the amount that appears acceptable under the calculation of reasonable collection potential as defined in IRM 5.8.5, which includes a value of future income over a 12 or 24 month period. Due to the disparity between the amount offered and the amount collectible via a partial pay installment agreement (PPIA), acceptance of an offer would not be in the government’s best interest. In these instances, the taxpayer should be provided the opportunity to enter into a PPIA. Refer to IRM 5.8.4.3 (4). Ensure the case determination is consistent with the program objectives to effect collection of what can reasonably be collected. See IRM 5.8.1.2.4.

      Note:

      It is anticipated this recommendation would apply only to taxpayers with substantial monthly payment ability and lengthy remaining CSED.

      Example:

      A taxpayer with monthly payment ability of $5,000 submits an offer after filing several years of delinquent returns with $750,000 liability. Although the $5,000 installment payment will not pay the liability in full, the collection potential over the remaining 9-year CSED is significant. Since the offer in compromise future income valuation amount of $60,000 ($5,000 x 12) is almost $500,000 below the amount potentially collectible via a PPIA, it appears that acceptance of an offer for $60,000 is not in the government’s interest. Absent any special considerations, a rejection based on NIBIG may be appropriate.

  4. In each of the situations listed, a complete analysis of the taxpayer's financial situation must be completed prior to a final determination that a rejection under NIBIG is the appropriate course of action. RCP must be fully developed. If Appeals does not sustain the basis of NIBIG, they will consider acceptance of the offer under DATC for the amount determined by Collection as RCP.

    Exception:

    In circumstances where the potential for a fraud referral exists, the financial evaluation conducted and verified should be based on the facts and circumstances of the case. Refer to IRM 5.8.4.18, Potential Fraud Referrals.

    The taxpayer should also be provided the opportunity to withdraw the offer prior to submission of the offer rejection recommendation, advised of the reason(s) the offer is being recommended for rejection under NIBIG criteria, and alternatives available to the taxpayer.

    If the offer is not withdrawn, the offer examiner/offer specialist should proceed with rejection in accordance with IRM 5.8.7.7.3, Recommending Rejection of an Offer. The rejection letter will provide the taxpayer appeal rights in accordance with Treasury Regulation 301.7122-1 (f) (5).

Public Policy Rejection

  1. Policy Statement P-5-89, IRM 1.2.14.1.15, establishes that offers may be rejected on the basis of public policy if acceptance might in any way be detrimental to the interests of fair tax administration, even though it is shown conclusively that the amount offered is greater than could be collected by any other means, provided no ETA issues exist.

    Note:

    This section should not be confused with IRM 5.8.11.2.2, Public Policy or Equity Grounds, under ETA offers.

    Note:

    As a matter of policy, offers may not be accepted from any federal agency. If an offer is submitted by a federal agency, it should be rejected under public policy.

  2. Offer acceptance reports are open to public inspection in accordance with Internal Revenue Code § 6103(k)(1), so the general public may be aware of any offer acceptance. A decision to reject an offer for public policy reason(s) should be based on the fact that public reaction to the acceptance of the offer could be so negative as to diminish future voluntary compliance by the general public. Decisions to reject offers for this reason should be rare.

    Note:

    Once a determination is made that a rejection under this basis is appropriate, a calculation of the taxpayer's ability to pay must still be developed. The preliminary asset/equity and income/expense tables should be completed as discussed in IRM 5.8.4.7, Additional Initial Offer Actions.
    The extent of additional verification requested from the taxpayer should be based on the facts of the case. The preliminary tables and the basis for the rejection should be discussed with the taxpayer/representative to allow for submission of additional information for consideration.

    After discussion with the taxpayer/representative, if the decision to reject the offer is appropriate, the offer examiner/offer specialist should proceed with rejection in accordance with IRM 5.8.7.7.3, Recommending Rejection of an Offer. The rejection letter will provide the taxpayer appeal rights in accordance with Treasury Regulation 301.7122-1(f)(5).

  3. Below are some examples of situations that may warrant rejection based on a public policy decision.

    • The taxpayer has in the past, and continues to openly encourage others to refuse to comply with the tax laws.

    • Indicators exist showing that the financial benefits of a criminal activity are concealed or the criminal activity is continuing.

      Exception:

      Do not summarily reject, under public policy provisions, an offer submitted by a taxpayer involved in the business of cultivating and selling marijuana. Refer to IRM 5.8.5.25.2, Calculation of Future Income - Cultivation and Sale of Marijuana in Accordance with State Laws. If the taxpayer is unwilling to submit an acceptable offer based on the calculation involving allowable expenses for income tax purposes, rejection under public policy is appropriate. Rejecting under public policy further supports the determination, in the event the taxpayer argues the allowable expenses.

    • The taxpayer engaged in a pattern of conduct suggesting intentional dissipation of assets which was intended to circumvent the offer investigative process.

      Example:

      The taxpayer, a payroll service provider, has received from its clients payments of employment taxes in the amount of $10 million. The taxpayer remits to the Service an amount equal to the trust fund portion of the employment taxes and designates the payment for application to the trust fund portion of the tax. The taxpayer pays no more of the employment tax. Meanwhile, the taxpayer dissipates the remainder of the collected tax payments and all of its remaining assets, reducing its reasonable collection potential to $0. The taxpayer then submits an OIC for $10,000. Because the OIC exceeds reasonable collection potential, the taxpayer would qualify for the OIC on the grounds of doubt as to collectability. Nevertheless, the OIC should be rejected on public policy grounds.

    • Fraud or identity theft is present and documented relative to the illegal use of an Individual Tax Identification Number (ITIN). This illegal activity may involve stolen, borrowed or purchased SSNs and there is continued fraudulent activity.

  4. An offer will not be rejected on public policy grounds solely because:

    • It would generate considerable public interest, some of it critical.

    • A taxpayer was criminally prosecuted for a tax or non-tax violation.

  5. The rejection narrative should discuss the specific public policy issues.

  6. Rejections of this type require the approval of the SB/SE Collection, Territory Managers (2nd level) in the field or SB/SE Compliance Services Operations Managers for COIC. Refer to IRM 1.2.44.2, Delegation Order 5-1 (Rev 5), for approval authority.

    Note:

    If making this recommendation for a CDP offer under the jurisdiction of appeals, the approval of the second level manager must be shown in the file. They may sign the proposed determination letter, notate approval in the case history or remarks, or provide a printable e-mail.

Recommending Rejection of an Offer

  1. The following actions should be taken to recommend rejection of an offer:

    1. Review AOIC and IDRS to verify taxpayer is current on all required TIPRA payments, required FTD and ES payments, and the filing of all required returns.

      Note:

      If the taxpayer has compliance issues which occurred prior to being notified of the rejection (either verbally or via a preliminary determination letter), and has not cured the issue, the offer should be returned and not rejected. See IRM 5.8.7.2.2.2, Return for Inadequate Estimated or Insufficient Withholding Tax Payments. If the taxpayer is not in compliance with TIPRA, refer to IRM 5.8.7.4.2, Mandatory Withdrawal.

    2. Analyze accounts on AOIC and IDRS systems to resolve issues involving misapplied or un-refunded payments/deposits.

    3. Review IDRS to determine if the taxpayer has filed a CDP hearing request (unreversed TC 520 with CDP closing code or -W freeze code) or an EH request (unreversed TC 971 AC 278) on any module. If a CDP/EH hearing request is open in Appeals, then Collection does not have the authority to issue a rejection letter. Refer to IRM 5.8.4, Investigation, relating to closing an offer when the taxpayer has on open CDP.

    4. Review AOIC entity information and verify the taxpayer information is consistent with the Form 656 and/or any amended offers. Update AOIC with correct information, if necessary. This may include adding or removing a taxpayer’s name based on the original or submission of an amended Form 656.

      Note:

      If the Form 656 includes a request to have the offer considered under ETA, AOIC should reflect type of offer “A”.

    5. Update the MFT screen with assessment dates, if necessary, and balance due. The MFT screen should be consistent with the Form 656 and/or any amended offer submissions.

    6. If the AOIC remarks reflect a TC 480 was manually input, annotate a prominent red “TC” after the OIC number on the file. Document the closing AOIC Remarks with the periods that require manual reversal, and flag the case to alert the person inputting closing actions on AOIC that manual reversal (TC 481) is required if the offer is not accepted.

      Note:

      If the file is transferred to Appeals, ensure the need for manual input is clearly noted.

    7. Update AOIC screen with current AGI.

    8. Generate the AOIC "Rejection Letter" using the appropriate optional paragraph(s) for the signature of the authorized delegated official. The letter should reference the date of the most recent Form 656 (i.e. any amended offer), and the current amount being proposed by the taxpayer (i.e. any addendum), so it is clear what contract terms are being rejected. Attach the IET and AET to the letter when the offer is based on DATC.

      Note:

      If the offer is being rejected under public policy or not in the best interest of the government, the open paragraph must be used to provide information on the basis for the rejection under these criteria. The description of the issue(s) involved should provide the taxpayer with enough information to be able to address the issue(s) if they wish to appeal the offer rejection. If the reason for the rejection was discussed with the taxpayer, you may reference this in the open paragraph.

      Example:

      We are recommending rejection of this offer due to the egregious history of compliance. This offer was submitted immediately after filing seven years of delinquent income tax returns. During these years you reported income well in excess of necessary living expenses, yet made no estimated tax payments. Your financial statement now shows little income, yet there appears to be no change in lifestyle. It is in the government’s best interest to file a Notice of Federal Tax Lien and refer the case to a revenue officer for further investigation of collectibility.

      Example:

      The basis for rejection includes dissipation of assets to non-priority creditors.

    9. Generate the POA letter, if applicable.

    10. Generate Form 1271, Rejection or Withdrawal Memorandum, for signature by the appropriate delegated officials. The Reviewer on Form 1271 must be the Independent Administrative Reviewer (IAR).

    11. Clear the Form 1271 and rejection letter in AOIC. The content of any open paragraph is not populated into AOIC Remarks until the letter is cleared. Delays in this action will cause erroneous information to appear in the AOIC Remarks.

      Example:

      The final determination letter was mailed on February 20, 2018. The OE/OS does not clear the forms/letters until May 30, 2018. The AOIC remarks will reflect any open paragraph information with a May 30, 2018 date.

    12. Document the ICS history or AOIC remarks regarding the decision. Include the following:

      • Amount of the RCP

      • Attempts to negotiate an alternative resolution

      • Key issues in the disagreement

      • Discussion of any special circumstances noted

      • Current compliance status

      • NFTL determination

      • The recommended alternative collection resolution after the appeal period. See IRM 5.8.7.10.

      Note:

      If documentation is in ICS, copy the closing summary into AOIC Remarks, with a statement that the full history is in ICS.

    13. Include in the history any pertinent information of which Appeals should be aware such as any pending assessments, if a collateral agreement was discussed with the taxpayer, or if a collateral agreement is warranted if an acceptance is negotiated.

      Note:

      Because Policy Statement 8-2 (rev. 1), IRM 1.2.17.3, prohibits Appeals from raising a new issue, support for a collateral agreement must be established in the rejection narrative.

      Example:

      The taxpayer has a $400,000 net operating loss he is carrying forward. The taxpayer was not asked to waive this loss via a collateral agreement because Collection is not recommending acceptance of this offer. Document the file that the net operating loss is a significant tax advantage, and provide an estimate of the value. See IRM 5.8.6.5.1(2). Per IRM 5.8.6.2(3), a collateral agreement to waive the loss is appropriate if an OIC were to be accepted.

    14. Print the AOIC remarks or ICS history and include it in the offer file.

    15. If the basis for the rejection is under Public Policy, a comprehensive history summary is required to support the determination.

    16. Prepare a supplemental memorandum to report any rare facts of a confidential nature that should not be disclosed through a Freedom of Information Act (FOIA) request and include it in the file clearly identifying it as "Confidential Information– Not to be Disclosed" .

    17. Print the AOIC Remarks and/or ICS History for the offer file.

    18. Place Tabs (Document 9600-B) in the case file for ease in review or if the decision is appealed. The use of labeled dividers is required.

      Note:

      Generally, documents within the tabs will be placed with the most current on top. For example, if because of the Counsel feedback, the OS changed direction and rejected the offer, the top document would be the rejection letter followed by the Form 1271, counsel opinion, and crossed out acceptance letter and Form 7249.

    19. IMFOLI and SUMRY should be the top pages under the "IDRS" tab, followed by any necessary supporting prints.

      Note:

      Before archiving, you may delete any unnecessary documentation, such as irrelevant IDRS prints and duplicates.

    20. Credit bureau should be tabbed separately to allow for easy removal before case closure.

    21. Submit the package for managerial approval and signing of Form 1271.

    22. After approval by the delegated official, route the file to the IAR.

      Note:

      If the taxpayer is claiming ETA or “special circumstances” and submits a letter or attachment to Form 656, etc., which explains and/or expands on this issue, that document must be included in the case file and/or electronic transmission for field cases, when forwarding to the IAR.

       

    23. After approval of the IAR, route the offer for signature, dating, and mailing of the letter(s).

      Note:

      Outgoing correspondence should be signed with an actual signature, or with a graphic signature if the approval signature is secured via electronic methods, in accordance with the current security and verification standards of the Internal Revenue Service. In all instances, a printed copy of the signed or electronically executed document, form, or letter, must be included in the offer case file.

       

    24. Assign the case on AOIC to the designated "30-day hold (xx99)" assignment number and route the case file to the hold file for monitoring of the appeal period.

  2. If the offer includes MFT 74 or MFT 76 modules, see IRM 5.8.10.16.5, Procedures Relating to MFT 74 and MFT 76 Modules - Case Closures, for additional closing actions.

Notification of Dishonored Check After Issuance of the Rejection Letter
  1. If notification of the dishonored check occurred after issuance of a rejection letter, the employee should:

    • Date the return letter 31 days from the date of the rejection letter.

    • Include the open paragraph "RET-M" with the following language: "As a result, your request for appeal has been dismissed" .

      Note:

      This should only be used in those cases where a request for an appeal was received within the 30-day appeal period.

       

    • Close the case on AOIC as a return using the mail date of the return letter and AOIC final disposition code 10.

Rejection Not Appealed

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

    Note:

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

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

    Note:

    See IRM 5.8.7.7.5, Rejection Appealed, for information regarding timeliness.

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

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

    2. Update AOIC to reflect the computed RCP.

    3. Review AOIC to verify this information is correct: entity name, address, type of offer, OCC code. Correct, if necessary.

    4. Review AOIC to determine if any taxpayer payments are being held as a deposit. If there is a deposit, see IRM 5.8.7.8 for required actions.

    5. A notice of federal tax lien (NFTL) cannot include shared responsibility payment (SRP) statutory liens on the NFTL. If a NFTL request is being forwarded for filing, it cannot include any SRP liabilities. See IRC § 5000A, IRM 5.12.2.3.1.1, Affordable Care Act’s (ACA) Shared Responsibility Payment (SRP) Exception, and IRM 5.12.2.6.1, ACA Shared Responsibility Considerations When filing NFTL.

      Note:

      SRP liabilities are not subject to penalties or to lien and levy enforcement actions

      .

      Note:

      Per IRM 5.8.4.13(3) , wait 15 days after the date of the letter before processing any NFTL request to Centralized Lien Operations (CLO). The rejection letter contains language regarding the Collection Appeal Program. If appeal rights were discussed with the taxpayer, it is not necessary to wait 15 days unless a significant time has passed. Refer to IRM 5.1.9.2 , Informing Taxpayers of Their Appeal Rights.

    6. Prepare the Form 3177, Notice of Action for Entry on Master File, to request input of a TC 483 to reverse the TC 480 for any NMF tax period that is listed on the MFT screen and not on Form 656.

    7. If the file contains “TC” after the offer number, or the case history reflects a TC 480 was manually input for any periods, those TC 480s must be manually reversed by the field or COIC person inputting closing actions on AOIC. Review the AOIC Remarks to determine which periods require manual reversal. Ensure all TC 480s are reversed.

      Note:

      At a minimum, the AOIC Transaction Listing (Parts 2 and 3) must be resolved on a weekly basis to ensure all reversing transactions are correctly posted. Additionally, any open IDRS control bases assigned to XX88888884 (1st 2 digits represent the area), must be closed, once the systemic posting error has been resolved. There could be a delay from the time the error is on the AOIC transaction listing to when the control base is opened on IDRS.

    8. Mirroring is required at case closure if the offer processing resulted in differing Collection Statute Expiration Dates (CSEDs) for spouses in a joint assessment (MFT 30 or 35). The need for mirroring may be indicated by a red “M” after the offer number on the case file, but should be verified in every case. A request for mirroring the accounts (MFT 30/31 and MFT 35/65) should be processed in accordance with the mirroring procedures discussed in IRM 5.19.7.2.14, Separate OICs on Joint Liabilities, at the conclusion of the offer investigation. When a case is closed on AOIC, it requires a “yes or no” answer regarding the need for mirroring or the need for manual code reversal. The results will appear on the AOIC Summary Screen.

      Example:

      Mr. and Mrs. Taxpayer submit separate offers for their joint liabilities on the same day, both with TC 480 on February 3. The offers are both returned on September 9. No mirroring is required.

      Example:

      In the example above, Mr. Taxpayer’s offer was returned for failure to stay in compliance on September 9, while Mrs. Taxpayer’s offer remains under consideration. When Mrs. Taxpayer’s offer is closed, mirroring is required to record the taxpayers’ different CSEDs for the joint periods.

    9. If warranted, take action to return the accounts to the Field Compliance function for immediate resumption of collection activities. See IRM 5.8.7.10, Alternative Resolutions, for procedures on forwarding the case for the next appropriate collection action.

    10. Route the offer file to the closed files.

Rejection Appealed

  1. Appeals may be submitted via mail; via fax; or via hand-delivery. When a request for appeal is received, it must be reviewed upon receipt to determine if it was submitted timely and contains the required statements and signatures. Document that an appeal was received, the fax or postmark date; and provide a brief description of the contents. The Service looks to different rules to determine if a document is considered timely, as described in IRM 25.6.1.6.15, When a Document is Treated as Filed Under the IRC. If a request is received after the 30 calendar days referenced in the rejection letter, consider if it is timely based on the rules below.

    1. Saturday, Sunday or Legal Holiday (SSLH) Rule: If the 30th day falls on a Saturday, Sunday, or legal holiday, the appeal will be considered timely if it is received the next business day. Under SSLH, the type of delivery service is irrelevant. For example, the 30th day for appeal falls on Saturday, August 25, 2018. The request for the appeal is received Monday, August 27, 2018. This is considered a timely appeal because it was received on the first regular business day following the 30th calendar day.

    2. Timely Mailing Rule: The postmark and type of delivery service dictate timeliness under this rule. If a request for an appeal is received that is postmarked by United States Postal Service (USPS) or a designated private delivery service (PDS), no later than 30 calendar days following the date of the rejection letter, the appeal will be considered timely. Refer to Notice 2016-30 or subsequent notice for a list of designated PDS, and see IRM 3.10.72.6.2.3, What is a Designated Private Delivery Service (PDS)?, or IRM 3.10.72.6.2.4, Determining Postmark Date.

      Note:

      Typically, ground or non-express services are not included in the list of designated private delivery services.

       

    3. Coordination of Timely Mailing Rule and the SSLH Rule: If the 30th day falls on a weekend or holiday, and taxpayer uses USPS or a designated PDS, the appeal will be considered timely if it is postmarked the next business day.

    Example:

    The 30th day falls on Saturday, August 24. The taxpayer mails the appeals package using an approved PDS, and it is postmarked the following Monday. The appeal is considered timely because it was mailed and postmarked the next business day via an approved PDS.

    Example:

    The 30th day falls on Saturday. August 24. The taxpayer mailed the appeal that day, but used a non-approved (ground) PDS. The package arrived on Tuesday, August 27. The appeal does not meet the SSLH rule because it did not arrive the next business day. The postmark under the Timely Mailing Rule is considered only if the appeal is mailed via USPS/designated PDS.

  2. If the appeal was not received timely, notify the taxpayer that the appeal was not timely and will not be forwarded to Appeals for consideration. Notification may be verbal or in writing but should be documented. Written notification may be completed using AOIC transfer letter, paragraph C.

    Note:

    Although untimely, if the additional information provided allows for acceptance and is provided before the offer is closed, proceed with an acceptance processing.

  3. If the request for appeal is unsigned, the request will not be considered a valid appeal. As soon as the defect is identified, make a reasonable attempt to secure a perfected appeal. See 5.8.7.7.5(7).

    Note:

    If the appeal is signed electronically, it must provide identification of the person. For this reason, use of a script font would not be a valid electronic signature. A graphic or digital image of a handwritten signature can be used to identify and authenticate the individual signing the document.

    Reminder:

    Only authorized representatives can sign an appeal for the taxpayer.

  4. If a joint offer is rejected and only one spouse signs the request for appeal, an effort should be made to perfect the request. Contact the taxpayers and have the other spouse sign the request for appeal. If there is no response to the request for perfection, then the appeal will only be considered for the spouse who signed the request for appeal. Appeals will secure an amended Form 656 if the offer is ultimately accepted. Change the AOIC entity to the name of the spouse who requested the appeal, and change the indicator on the MFT screen from “B” to “P” or “S” as applicable.

    Note:

    The TC 480 status change does not upload to IDRS. Mirroring action is required to input the corrected TC 480 for each spouse. At the conclusion of the offer investigation, a request for mirroring the accounts (MFT 30/31 and MFT 35/65) must be processed in accordance with the mirroring procedures discussed in IRM 5.19.7.2.14, Separate OICs on Joint Liabilities. . Document AOIC Remarks: “At case closure, MIRRORING is required because only TPH (or W) appealed. TC 481 for non-appealing spouse is (Date of rejection letter) + 30 days.” Add a prominent red “M” after the OIC # on the case folder and clearly document the closing history that a mirroring request is needed when the case is closed by Appeals. When a case is closed on AOIC, it requires a “yes or no” answer regarding the need for mirroring or the need for manual code reversal. The results will appear on the AOIC Summary Screen.

  5. Any request for Appeals consideration must include a written, signed protest in accordance with guidance provided in the rejection letter issued to the taxpayer. The rejection letter and the Form 13711, Request for Appeal of Offer in Compromise, contain the required language. Additional information may be found in Pub 5 , Your Appeal Rights and How to Prepare a Protest If You Don’t Agree. Taxpayer-signed appeals must contain the perjury statement, while representatives may select the appropriate declaration:

    • "I declare that I have submitted the protest and accompanying documents and to the best of my knowledge, the facts stated in the protest and accompanying documents are true, correct, and complete."

    • "I declare that I have submitted the protest and accompanying documents, but have no personal knowledge concerning the facts stated in the protest and the accompanying documents."

    Note:

    Only authorized representatives can sign an appeal for the taxpayer.

  6. If the request for appeal does not contain the required statements, the request will not be considered a valid appeal and the taxpayer or POA should be notified as soon as the defect is identified. The taxpayer should be provided the opportunity to perfect the appeal.

  7. While there is no statutory provision for the perfection of an appeal, it is the Service’s practice to make a reasonable telephonic attempt to secure a processable appeal. If you receive a timely request for appeal which has not been signed with the required statements, make a reasonable attempt to contact the taxpayer or POA by phone as soon as the defect is identified. A reasonable time (no more than 15 calendar days) shall be allowed to perfect the request by including the applicable signature(s) and/or statement(s). If you make contact, advise that failure to perfect the appeal will result in the offer being closed and the taxpayer not being provided consideration by the Office of Appeals.

    Example:

    An appeal is postmarked on the 30th day. Due to mail time and scheduled annual leave, the OS does not discover the appeal is unsigned until the 46th day. The OS calls the POA that day and advises the appeal cannot be processed without signature. The POA may be allowed up to fifteen days to perfect the appeal, but may expedite processing by providing the signed appeal via E-fax.

  8. If the request is signed on the taxpayer’s behalf by an unauthorized representative, contact the taxpayer directly to explain the person who signed the appeal is not authorized to do so. The taxpayer may sign the appeal with the required statement, or if applicable, provide a valid Form 2848 to allow for processing of the original appeal. Allow no more than 15 calendar days to perfect the request. If you make contact, advise that failure to perfect the appeal will result in the offer being closed and the taxpayer not being provided consideration by the Office of Appeals.

  9. If the taxpayer fails to perfect the request for appeal within the time-frame provided, the offer should be closed as "rejection no appeal." Prior to closing on AOIC generate a transfer letter using Option C, to notify the taxpayer the appeal was not timely and cannot be considered by Appeals.

    Note:

    Do not close the offer on AOIC before the 30-day appeal period has expired.

  10. The taxpayer should provide specific information with the appeal letter, including a list of items of disagreement and evidence to support any of those items. If the letter provides new information not previously considered, the case should be reassigned to an OE/OS for reconsideration.

    Note:

    Caution must be exercised when reviewing a case where new information is received and the offer is reconsidered following issuance of a rejection letter. If the taxpayer's letter requested an appeal, the offer must still be forwarded to Appeals if this reconsideration of the offer results in no change to the initial decision to reject. A new rejection letter should not be sent.

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

  12. If the taxpayer agrees to increase the offer to the amount you proposed, ensure they understand an amended proposal does not extend the appeal period. If they wish to secure appeal rights in case the offer is not approved during the review process, they may submit a signed Form 13711 with the addendum / amended offer.

  13. If a deposit is associated with the case, clearly notate the file so Appeals knows additional action may be required. Print the AOIC summary screen and highlight the deposit. Note if the taxpayer provided instruction regarding the deposit on Form 656. If a request was previously sent to MOIC to apply the deposit to the liability, ensure that information is documented in the AOIC Remarks and highlighted in the file for Appeals information.

  14. If the offer includes MFT 74 or MFT 76 modules, see IRM 5.8.10.16.5.1, Procedures Relating to MFT 74 and MFT 76 Modules - Closing Rejection with Appeal. Because manual inputs are required when closing offers with these assessments, the closing history must advise Appeals that required closing actions are in IRM 5.8.10.16.5.

  15. The review of the taxpayer’s submitted information, preparation of any additional documents, and forwarding the taxpayer’s request to Appeals should be completed in a timely manner.

    Note:

    Refer to IRM 5.8.7.7.6, Addressing a Timely Appeal Without Ex Parte Communication, regarding issues relating to sharing documents with the taxpayer in accordance with ex-parte communication issues.

    IRM 5.8.4.10, Follow-Up Actions, provides guidance on timely actions. Managers should assign cases in accordance with IRM 1.4.52, Offer in Compromise Manager’s Resource Guide - Field Program, and IRM 1.4.54, Offer in Compromise Managers - Centralized Offer in Compromise Program Guide, to allow for the most efficient case processing.

  16. If Appeals returns an offer with an imperfect appeal as a premature referral, the OE/OS should request perfection of the appeal from the taxpayer/POA within 15 days of receipt of the case from Appeals. If the taxpayer/POA does not comply with the request for perfection within 15 days of the request by the OE/OS, the offer should be closed as "rejection no appeal" . Generate a transfer letter using Option C, prior to closing the offer.

    Note:

    If the appeal is perfected and the case is sent to Appeals, update the recommended disposition in AOIC to “Rejected with Appeal.” The AOIC disposition may be reset when the case is reassigned to Collection.

Appeals Referral Investigation (ARI)
  1. During consideration of the taxpayer’s appeal of a rejected offer, consideration of new information may be provided to Collection via an ARI. Collection should provide a written response to Appeals, in accordance with any ex-parte rules in a timely manner. If after consideration of the new information, Collection determines the original offer is acceptable, the response should include a recommendation to accept the offer amount under consideration. If the OE/OS determines an acceptable offer amount the taxpayer agrees to, an amended offer for the acceptable amount should be secured from the taxpayer and provided to Appeals with the response to the ARI and a recommendation to accept the amended offer. If the taxpayer fails to provide the amended offer, forward the recommendation to Appeals, including an explanation why the amended offer was not included.

  2. The ARI should be assigned to the OE/OS on AOIC in a timely manner.

    Note:

    If the ARI is related to a CDP, transfer from AOIC Area 21 back to the Area office is necessary prior to assignment to the OE/OS.

  3. Although Collection may recommend acceptance of the original offer amount or a revised amount, after reviewing the information, the processing of the offer acceptance will be completed by Appeals.

Addressing a Timely Appeal Without Ex Parte Communication

  1. Upon receipt of the taxpayer's appeal, the OE/OS will review the information provided to determine if any new information is identified or additional documentation has been submitted. If after review, the OE/OS determines rejection of the offer is still appropriate, additional discussion with the taxpayer may be necessary. New information is information that was not previously discussed with or raised by the taxpayer, or not previously investigated and documented by the OE/OS.

    Example:

    A taxpayer's appeal states that their actual housing expense, which is higher than the local standard, should be allowed. The OE/OS had previously documented the basis for not allowing the actual expense and determined the local standard was appropriate for the taxpayer. This is not new information.

    Example:

    A taxpayer submits an appeal that includes additional documentation of the taxpayer's current income. Since this documentation was not previously considered, this is new information that requires additional investigation or consideration by the OE/OS.

  2. If the taxpayer appeal does not include new information requiring additional investigation or consideration by the OE/OS, the OE/OS will:

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

    2. Ensure the case history contains the following information: Date the rejection letter was issued; date the appeal was postmarked and date it was received; that no new information was received; that the taxpayer was notified of transfer to Appeals; and the case is being forwarded to the group manager for review prior to transmission to Appeals.

    3. Submit the OIC case file for managerial review.

    4. The manager must ensure that no prohibited ex parte communications are included in the offer case file or the case history before approving the transmittal of the case to Appeals.

      Note:

      The OE/OS should not make any commentary in the AOIC remarks or ICS histories regarding the merits of the appeal and should not prepare any memorandum discussing the issues or the basis for the original determination in response to the appeal.

  3. If the taxpayer appeal includes new information requiring additional investigation by the OE/OS, the OE/OS will:

    1. Document receipt of the appeal in the AOIC remarks or ICS case history. Annotate history with a statement that the taxpayer's appeal was received on (date), and include only the facts concerning the new information requiring additional investigation.

    2. Conduct additional investigation of the new information as appropriate, and document the AOIC remarks or ICS history with the investigation actions and results of the investigation.

    3. If the information provided changes the RCP, generate updated collection tables.

    4. If the additional investigation results in a decision to change the recommendation to an acceptance, follow the procedures in IRM 5.8.8.7, Closing Actions on Accepted Offers.

  4. If the additional investigation does not result in a decision to change the recommendation to an acceptance, the OE/OS will take the following actions:

    1. Attempt to make telephone contact with the taxpayer to explain the results of the additional investigation.

    2. Document the AOIC remarks or ICS history, notating if contact was made with the taxpayer and the details of the discussion. Ensure the case history contains the following information: Date the rejection letter was issued; date the appeal was postmarked and date it was received; that the taxpayer was notified of transfer to Appeals; and the case is being forwarded to the group manager for review prior to transmission to Appeals.

    3. If the OE/OS is unable to make contact with the taxpayer within a reasonable time period, forward the offer case file to the group manager. Include updated collection tables. Prepare the AOIC transfer letter for the manager’s signature, using the open paragraph to provide the taxpayer with a brief summary of the results of the additional investigation.

    Examples of language for open paragraph:

    • "After review of the expense documentation provided, a determination was made that the rejection of your offer is still appropriate because (insert explanation). Your offer will be forwarded to the Office of Appeals per your request."

    • "After review of the additional information provided relative to the value of your real property, a determination was made that the rejection of your offer is still appropriate because (insert explanation). Your offer will be forwarded to the Office of Appeals per your request."

  5. The group manager will take the following actions:

    1. Review the OIC case file, AOIC remarks or ICS history to determine if the new information has been sufficiently addressed and documented.

    2. If the new information requires additional investigation, the group manager will return the offer file to the OE/OS.

    3. If the new information has been sufficiently addressed and documented, the group manager will sign the AOIC transfer letter to the taxpayer.

      Note:

      If the information provided changed the RCP, enclose the updated collection tables in the transfer letter.

    4. Document issuance of the letter to the taxpayer in the ICS history, and place a copy of the letter in the offer case file.

    5. The manager must ensure that no prohibited ex parte communications are included in the offer case file or the case history before approving the transmittal of the case to Appeals. If the case history contains commentary that is determined to violate the ex parte communication rules, the manager will take appropriate action, which could include sharing the information with the taxpayer, or following ICS history removal procedures detailed in IRM 5.1.10.8, Case Histories.

      Note:

      The administrative OIC case file transmitted to Appeals is not an ex parte communication since it sets forth the boundaries of the dispute between the taxpayer and the Internal Revenue Service and forms the basis for Appeals to assume jurisdiction. The OIC case file should include all information that supports the original determination.

      Example:

      An OE/OS received an appeal from a taxpayer appealing the offer rejection and documents AOIC remarks or ICS history as appropriate. The OE/OS determined the appeal contains new information. The OE/OS reviews the new information provided, contacts the taxpayer by telephone to discuss their investigation of the new information, and advises the taxpayer the determination to reject the OIC will not change. The discussion with the taxpayer is documented in the AOIC remarks or ICS history. Since the additional investigation was discussed with the taxpayer, there is no prohibited ex parte communication. The OE/OS forwarded the offer case file to the group manager, who reviewed it to determine if the new information had been sufficiently addressed and documented that no prohibited ex parte communications were included in the offer case file or the case history before approving the transmittal of the case to Appeals.

      Example:

      An OE/OS received an appeal from a taxpayer appealing the rejection of their OIC. The OE/OS documented the ICS case history that the appeal contained new information. The OE/OS conducted additional investigation of the new information and concluded that the determination to reject the OIC remained appropriate. The OE/OS attempted to contact the taxpayer by telephone to advise the taxpayer of the results of the investigation, but was unable to reach the taxpayer. The OE/OS documented the AOIC remarks or ICS history and generated a transfer letter with open paragraph containing a summary of the results. The OE/OS submitted the offer case file to the group manager. After reviewing the case file to determine the new information issue had been sufficiently addressed and documented, the manager issued the AOIC transfer letter. The final determination was documented in AOIC remarks or ICS history, and a copy of the letter was included in the offer case file. No ex parte communication rules were violated in transmitting the administrative file to Appeals because the additional investigation results were shared with the taxpayer in the AOIC transfer letter.

      Example:

      An OE/OS received an appeal of the offer rejection from a taxpayer. The OE/OS documented the AOIC remarks or ICS case history that the appeal contained new information. The OE/OS conducted additional investigation of the new information and concluded that the determination to reject the OIC remained appropriate. The OE/OS documented the results of the additional investigation, but did not contact the taxpayer by telephone to advise the taxpayer of the results of the investigation, and his or her manager did not send a letter to the taxpayer containing the results of the additional investigation. The OE/OS violated the ex parte communication rules because he communicated with Appeals through the AOIC remarks or ICS case history, which contained documentation regarding the results of the additional investigation of the new information that was not shared with the taxpayer.

      Note:

      The communication to the taxpayer should include a brief summary of the additional investigation and must be at least as detailed about the reason for the rejection as the communication to Appeals. Appeals may not receive details about the basis for the determination that are not provided to the taxpayer.

  6. After review of taxpayer's appeal:

    1. Transfer the case to 90XX on AOIC.

    2. Mail the case to the appropriate Appeals Area office based on the taxpayer's zip code.

  7. If an offer previously forwarded to Appeals is returned as a premature referral, the originating function may not communicate ex parte with Appeals while reconsidering the case, other than with respect to ministerial, administrative, or procedural matters, without offering the taxpayer or representative an opportunity to participate in the discussion because Appeals may ultimately review the case. If necessary, the taxpayer should be contacted to discuss the results of any additional investigation or be provided with information by the group manager relative to the results of any additional investigation that was not discussed with the taxpayer via correspondence, prior to the offer being returned to Appeals.

  8. There may be rare instances, after the taxpayer's request for Appeals consideration of a rejected offer in compromise has been forwarded to the Office of Appeals, that Collection will secure significant new information that needs to be provided to Appeals to allow Appeals to fully evaluate the offer in compromise. In these rare instances, supplemental information can be provided to Appeals as long as Collection concurrently provides the same information to the taxpayer/representative. Appeals will give the taxpayer/representative the chance to respond to the supplemental information.

    When supplemental information is provided by Collection to Appeals based on the discovery of new information, a letter, signed by the manager, will be issued to the taxpayer/representative that identifies the new information and explains that the information is being provided to Appeals. Include with the letter sent to the taxpayer/representative a copy of the written communication to Appeals and any documents being sent to Appeals. Document issuance of the letter in the AOIC remarks or ICS history and include a copy of the letter with the supplemental information sent to Appeals.

    Example:

    After forwarding the taxpayer's request for Appeals consideration, the OE/OS is provided information from a revenue officer indicating that the taxpayer failed to disclose a significant asset on his/her financial statement and research conducted by the OE/OS did not reveal the existence of the asset. The OE/OS seeks group manager concurrence that this is significant new information that needs to be shared with Appeals. The group manager concurs and issues a letter to the taxpayer/representative with the information to be shared with Appeals (including copies of any documents/memos/letters being sent to Appeals), documents issuance of the letter in AOIC remarks or ICS history, and sends the supplemental information to the Appeals team manager along with a copy of the letter sent to the taxpayer/representative.

    Reminder:

    The ability to provide significant new information after the case file is forwarded to Appeals does not relieve the OE/OS of completing a thorough evaluation of the taxpayer's offer and ensuring a complete rebuttal is prepared prior to sending the case file to Appeals.

    Note:

    This procedure should only be followed when assets are discovered by the OE/OS that were not disclosed by the taxpayer during the OIC or the information that would impact the offer determination was concealed by the taxpayer during the offer investigation. This procedure should not be used to provide to Appeals information from the further development of assets that were disclosed by the taxpayer during the OIC consideration unless the additional information was concealed by the taxpayer during the offer investigation, the information was provided by the taxpayer after the offer was forwarded to Appeals, or the information being provided is in response to an ARI issued by Appeals.

Closing of Offer After Appeal's Consideration

  1. Appeals Account & Processing Support (APS) is responsible for closing cases on AOIC. Accepted offers are forwarded to MOIC. Files for sustained and withdrawn offers will be returned to the originating office for archiving. Additional actions may be appropriate.

  2. If a NFTL request is in the file, it must be reviewed to ensure the information is current (entity information, periods, and unpaid balance of assessment). Also, it cannot include any SRP liabilities. See IRC § 5000A, IRM 5.12.2.3.1.1, Affordable Care Act’s (ACA) Shared Responsibility Payment (SRP) Exception, and IRM 5.12.2.6.1, ACA Shared Responsibility Considerations When filing NFTL.

    Note:

    SRP amounts owed are not subject to penalties or to lien and levy enforcement actions.

    Note:

    Prior to requesting the NFTL, verify the taxpayer has been advised of CAP rights in accordance with IRM 5.8.4.8, Taxpayer Contact, and IRM 5.8.4.13, Notice of Federal Tax Lien Filing.

  3. Review the file for alternative resolution instructions. See IRM 5.8.7.10, Alternative Resolutions, for procedures on forwarding the case for the next appropriate collection action.

  4. Route the offer file to the closed files.

Re-Opening a Previously Rejected Offer
  1. When a non-Collection Due Process offer rejection is sustained, Appeals no longer retains jurisdiction of the case. A previously rejected offer can only be reopened based on the following circumstances:

    1. A rejection was sustained by Appeals because the taxpayer failed to timely provide requested information, and it is later learned that the information was provided timely, but was mis-routed by Collection or Appeals.

    2. Where the taxpayer failed to respond to Appeals and it is later learned that the taxpayer was unable to respond due to an emergency (medical, natural disaster, etc.).

      Note:

      If a previously rejected offer is re-opened, the proposed disposition code must be updated on AOIC at the time of reopening.

  2. In these circumstances, the taxpayer’s request to have the case reopened must have been postmarked no more than 30 days after the date of the determination letter issued by Appeals.

    Exception:

    A previously rejected offer sustained in Appeals may be re-opened later than 30 days after closure only upon agreement by the Director, Collection Appeals; Director, Examination Appeals; or Director, Appeals Specialized Examination Programs and Referrals and the Director, Specialty Collection Offers in Compromise (SCOIC).

  3. Once it is determined the offer should be reopened, a memorandum signed by the Appeals Director should be forwarded to the OIC manager based on location of the original offer for reopening. If approval of the Director, SCOIC is required, concurrence must be secured prior to reopening the offer.

Authorization to Apply Deposit

  1. When closing an offer with a deposit as other than an acceptance, Service employees must determine how the deposit is to be disbursed.

    Note:

    Deposits are automatically applied if the offer is accepted.

  2. The taxpayer may have provided authorization and instructions regarding deposit disposition in Section 5 of Form 656. If the instructions are not clear, ask the taxpayer if they wish to have the funds applied to the delinquent tax liability whenever soliciting a withdrawal or advising that acceptance cannot be recommended.

  3. If a taxpayer agrees to the application of the deposit to a tax liability, written authorization is required. The written authorization or Form 3040 , Authorization to Apply Offer in Compromise Deposit to Liability, must be retained in the offer file. Upon receipt of the written authorization, or at the point the offer is submitted for closure, submit an e-mail request to MOIC. The e-mail request should be sent to the MOIC unit that works your taxpayer’s state. MOIC contact information can be located at http://mysbse.web.irs.gov/collection/toolsprocesses/CaseRes/oic/deposits/default.aspx or http://serp.enterprise.irs.gov/databases/who-where.dr/coic_backend.htm. Use the subject line “Request to Apply Deposit” and include the following information in the e-mail:

    1. OIC number

    2. Identification of the payments to be moved

    3. Instruction regarding payment application, including tax periods and DPC codes

      Note:

      Unless the taxpayer has requested the deposit be applied as a required TIPRA payment, the DPC code is 99.

    4. The type of written authorization: Form 656 checkbox; Form 3040; or Other.

  4. Document this same information in AOIC Remarks. The employee closing the offer will input AN (apply no special instructions), or AS (apply with special instructions) in the pop up screen to alert MOIC.

  5. If a taxpayer does not authorize application of the deposit to a tax liability, in writing, it will be returned to the taxpayer. If the AOIC Remarks contain no information regarding written authorization, the employee closing the AOIC record will input RN (refund no special instructions) or RS (refund with special instructions), depending whether any special instructions are being provided.

  6. Occasionally requests for a discharge or subordination are received while an offer is pending. See IRM 5.8.10, Special Case Processing, for instructions on processing the Form 3040 received in conjunction with issuance of the lien certificates.

Potential Subsequent Actions

  1. If the following issues are present, refer to the IRM references listed below for appropriate actions:

    1. Solely to Delay Collection – IRM 5.8.4.20, Offers Submitted Solely to Delay Collection.

    2. In-business Trust Fund – IRM 5.8.4.21, Responsibility of Offer Examiners, Offer Specialist, and Field Revenue Officers [Continuing Action on In Business Trust Fund (IBTF) cases].

    3. Levy/Seizure related action – IRM 5.8.4.21, Responsibility of Offer Examiners, Offer Specialist, and Field Revenue Officers (Levy or seizure related actions).

    4. Protection of the government’s interest required (Notice of Federal Tax Lien (NFTL), nominee NFTL/levy, suit recommendation, etc.) – IRM 5.8.4.21, Responsibility of Offer Examiners, Offer Specialist, and Field Revenue Officers.

      Exception:

      If a taxpayer has been identified as being located in a Combat Zone area, no NFTL should be filed unless extenuating circumstances exist.

    5. Development of Potential Fraud – IRM 5.8.4.18, Potential Fraud Referrals. The fraud technical advisor should be consulted and agreement is reached that a more thorough field investigation is required. See IRM 5.8.10.10, Indicators of Taxpayer Fraud, for more information.

Alternative Resolutions

  1. When an offer in compromise investigation is being closed as a voluntary withdrawal or rejection, the OE/OS should have discussed alternative resolutions with the taxpayer. Additionally, if an agreement is not reached with the taxpayer on an alternative resolution to the balance due accounts or no discussion was held with the taxpayer regarding an alternative resolution, the OE/OS should take the appropriate actions to assign the balance due account to the appropriate function.

    Note:

    Do not negotiate alternative resolution for a CDP offer received from Appeals. Appeals has jurisdiction over virtually all outcomes and is responsible to explain taxpayer rights within CDP, including the right to judicial appeal and retained jurisdiction of the final decision.

  2. Document the AOIC remarks or the ICS history as appropriate with the proposed actions to be taken on the taxpayer's account, if there remains a liability.

  3. No action will be required on the following cases:

    • Cases in Status 12. These cases can go to closed files.

    • Cases in Status 60, 43, 26, and 72 will not be updated. After a history entry discussing reasonable collection potential is input to AMS, the OIC case file should be forwarded to the closed files.

    Note:

    Refer to OIC SharePoint (SP) for current instructions on reinstating modules to status 60, or see IRM Exhibit 5.8.4-5, COIC Procedures for Status 60/Status 71 Changes, and IRM Exhibit 5.8.4-6, Field Procedures for OIC in Lieu of Installment Agreement.

  4. If the offer file was received from Appeals and the rejection was sustained, review the AOIC remarks to determine if a recommendation was made to assign the case to a field RO. If the offer should be assigned to a field RO, follow the procedures in IRM 5.8.7.10.4, Alternative Resolution Procedures - Assignment to Field.

Alternative Resolution Procedures - Installment Agreement

  1. If an agreement is reached to have the taxpayer resolve the liability via an installment agreement, the processing of the Form 433-D, Installment Agreement, to full pay the tax due or Form 9465, Installment Agreement Request, should be completed and processed, as appropriate.

    Note:

    Forms 9465 are only permissible for guaranteed or streamlined installment agreements. If the agreement requires managerial approval and/or a Form 433-A to support the payment, secure a Form 433-D. Refer to the IA table at http://mysbse.web.irs.gov/collection/toolsprocesses/CaseRes/IA/iatable/default.aspx.

  2. Refer to IRM 5.15, Financial Analysis, when determining the appropriate payment amount.

  3. The OS should refer to IRM 5.14.2, Partial Payment Installment Agreements and the Collection Statute Expiration Date (CSED), for PPIA procedures

  4. Streamlined installment agreement (SIA) processing may be used in offer cases if the taxpayer proposes an amount equal to or greater than the amount required under SIA provisions. Refer to IRM 5.14.5, Streamlined, Guaranteed and In-Business Trust Fund Express Installment, to determine if the taxpayer qualifies for certain types of agreements.

  5. If the OIC group is able to input actions to IDRS, the actions should be suspended in the group until the offer closing transactions post (manual reversals should only be input if the TC 480 was manually input). If the actions are to be processed by another Service function, the request should not be mailed until the TC 48X transactions have posted and all compliance and freeze code conditions have been addressed.

    Note:

    Documentation of installment agreement discussion and actions taken to process any agreement should be included in either ICS history or AOIC remarks.

Alternative Resolution Procedures - Currently Not Collectible

  1. The Form 53, Report of Currently Not Collectible Taxes, should be completed to report the account uncollectible when requesting current payment would create an undue hardship, the taxpayer is deceased and there is no probate, or the taxpayer is now unable to be located.

  2. If a TC 530 is within one year of offer submission, return the account to Status 53. If the TC 530 is over one year old, and the taxpayer has the ability to full pay through an installment agreement or has substantial equity in assets, which were not considered when the account was reported CNC, reverse the TC 530 with the input of a TC 531 using REQ77/FRM77. Accelerate the modules to Status 22 00 using Command Code STAUP after a history entry discussing reasonable collection potential is input to AMS. The above actions cannot be processed on IDRS until the TC 48X posts.

  3. If the OIC group is able to input actions to IDRS, the actions should be suspended in the group until the offer closing transactions post (manual reversals should only be input if the TC 480 was manually input), If the actions are to be processed by another Service function, the request should not be mailed until the TC 48X transactions have posted and all compliance and freeze code conditions have been addressed.

    Note:

    Documentation of CNC discussion and actions taken to process a CNC should be included in either ICS history or AOIC remarks.

Alternative Resolution Procedures - Assignment to ACS

  1. Subsequent to AOIC closing action by COIC and the field offer groups, with the exception of cases noted in IRM 5.8.7.10(3), cases in which an installment agreement will be processed, cases in which a CNC is processed, or cases assigned to the field, all other closures meeting the below criteria will be accelerated to ACS and any critical financial information will be documented in the AMS history.

  2. If the prior status was 24 or 26 and a Form 657 is not in the offer file or the Form 657 states the RO does not wish to have the case returned to their inventory, the case should be accelerated to Status 22, unless the case is Status 12, 60, 43, or 72. This may be accomplished by inputting a STAUP 22 00 with an assignment code of 0605.

  3. All other Status cases will be accelerated to Status 22 on IDRS by inputting Command Code STAUP 22 00.

  4. If the OIC group is able to input actions to IDRS, the actions should be suspended in the group until the offer closing transactions post (manual reversals should only be input if the TC 480 was manually input). If the actions are to be processed by another Service function, the request should not be mailed until the TC 48X transactions have posted and all compliance and freeze code conditions have been addressed. Since the financial information is not input to the financial screens, include a history statement in AMS. Examples of good history statements are: (1) OIC returned because the taxpayer failed to provide bank statements, (2) OIC rejected, the reasonable collection potential totaled $_____, and the taxpayer failed to increase their offer and Appeal Rights were not exercised, (3) OIC rejected because the taxpayer reasonable collection potential totaled $_____, which exceeds their liability. The taxpayer appealed and Appeals concurred with the rejection recommendation.

Alternative Resolution Procedures - Assignment to Field

  1. If immediate field assignment is being recommended, the history should be documented even if the offer is going to Appeals, so expeditious assignment can be made if Appeals sustains the rejection.

    Types of cases where accelerated assignment to a Collection field revenue officer may be necessary include:

    • A specific asset(s) with equity of $50,000 or greater was identified during the offer investigation and/or,

    • A taxpayer's ability to full pay is apparent and the taxpayer refused to fully pay the liability or enter into an installment agreement to resolve the outstanding balance

  2. The closing narrative in the AOIC remarks should be documented by the OE relative to whether immediate field action should take place. When reviewing the closing narrative, if the COIC manager agrees that immediate field action is warranted, the manager should state their concurrence in the AOIC remarks. If the offer is not appealed, COIC will process the closing actions on AOIC and forward the offer file to the site RO.

  3. The closing narrative by the OS in the ICS history should include a statement relative to whether immediate field action should take place. When reviewing the closing narrative, if the field offer manager agrees that immediate field action is warranted, the manager should state their concurrence in the AOIC remarks. If the offer is not appealed, the field offer group will process the closing actions on AOIC, as appropriate.

  4. Either the field offer manager or site RO will contact the Field RO Manager to discuss the potential other investigation (OI) issuance.

    If after discussion with the field Manager a decision is reached not to issue an OI to the field, the OIC Field Manager or site RO will notate the ICS history or AOIC remarks and forward the case file for any remaining closing actions. NOTE: If possible, bal due modules may be created on ICS by the site RO or field offer group and transferred to the receiving field RO group.

    If the field RO Manager states they agree with the assignment of the case, an OI will be issued to the field RO group or bal due modules will be created and transferred to the field RO group. The following information should be included in the ICS history:

    • Basis for the immediate assignment determination and

    • Equity determination on specific asset/levy source(s) located.

    The OI or bal due modules will be created on ICS by the COIC site RO or the field offer group. The ICS parameter tables and SERP zip code assignment list are available to determine the appropriate field group. The ICS modules should be updated or the history should include a statement that the case should be treated as sub-code 604 (Large $ Asset Case); copies of the Form 433-A(OIC) and 433-B(OIC) along with any relevant research documents will be provided to the Field RO Manager. Additional documents from the offer case file may be secured by the RO, if necessary, once the case is assigned.

    Either the site RO or field offer group contact (as determined by the site or group procedures) name and phone number should be listed for the field RO to secure pertinent documents from the offer file, if necessary.

  5. If a Form 657, Revenue Officer Report, is present in the case file and the RO requested on Form 657, contact with the RO should be made to advise of the offer rejection and that the RO may initiate action to accelerate the case to Status 26, if they wish to have the case returned to their inventory expeditiously.

  6. The above actions cannot be processed on IDRS until the TC 48X posts. If the OIC group is able to input actions to IDRS, the actions should be suspended in the group until the offer closing transactions post (manual reversals should only be input if the TC 480 was manually input). If the actions are to be processed by another Service function, the request should not be mailed until the TC 48X transactions have posted and all compliance and freeze code conditions have been addressed.

  7. Once received by the Field RO Manager, the case will be transferred to the RO pending reversal of the TC 480 (usually one full cycle).

    Note:

    No enforcement action(s) should be taken by the RO until the TC 480 has been reversed or the RO has verified the offer closing letter has been issued

    .

    The OI serves as an open assignment until the case is systemically assigned to Status 24 (QUEUE), at which time the RO Manager will assign the case to the RO using ENTITY GM Case Assignment. This process usually takes about 30 days. The RO Manager may use expedited STAUP/TSIGN procedures to assign the case to the RO on IDRS, if necessary.

Destruction of Credit Reports

  1. Procedures for destruction of credit reports for OICs should be as follows:

    1. For rejected cases, all credit reports should be destroyed upon closure of the case after the 45-day period for appeal has passed. If the taxpayer files for appeal, the credit report should remain with the file and forwarded to Appeals. Appeals will then be responsible for pulling and destroying the report. This is in accordance with IRM 5.1.18.19.2.9, Disposal of Credit Information.

    2. For returned, withdrawn, and terminated offers all credit reports should be pulled and destroyed after the managerial review and approval.

    3. For accepted offers, see IRM 5.8.8, Acceptance Processing.

    Note:

    The May 2018 revision of Document 9600-BTab Dividers for Offer in Compromise Case Files has a separate tab for credit bureau. Credit bureau reports should be tabbed separately or tagged, and at case closure, placed near the top of the case file for easy removal.

Closed File Retention

  1. Closed cases (other than acceptances) are to be retained in closed files in the Area or COIC offices. Document 12990 Records and Information Management Record Control Schedules, directs that the Area and COIC offices may retire the closed files to the Federal Records Center (FRC) when it is determined they are no longer needed for current business. See IRM 5.8.7.12.1, Shipment of Closed Cases to Federal Records Center (FRC), below for instructions on shipping closed cases to the FRC.

  2. As space dictates in the offices, the files should be prepared to be retired to the FRC. Instructions for shipping files should be secured from the appropriate AWSS area Records Manager. A record of the cases shipped, including taxpayers name, TIN, and year closed, with a cross reference to the FRC box number and locations should be maintained in the Area or COIC office so the closed case file can be retrieved, if necessary, for litigation or other necessary action. This information should also be input into AOIC under FRC Tracking located on the AO-AOIC Main Menu page under maintenance.

  3. In rare instances a CDP file may be returned to OE/OS group by Appeals after the offer has been closed.

    1. If the OIC was accepted by Appeals, the OE/OS group will check to see if the offer is still in MOIC.
      1. If the offer is still in MOIC, the file should be forwarded to MOIC (a courtesy e-mail should be sent to MOIC to advise the CDP information is being forwarded) to associate with the accepted offer.
      2. If the offer is no longer in MOIC and has been sent to FRC, keep the file and send it to FRC according to regular archiving schedule.

      Note:

      Since the offer number is already being used on AOIC, the CDP file should be placed as the last case in one of the boxes and AOIC remarks noted with the statement "CDP case file information shipped to FRC as the last case in box # xxx shipped to FRC MM/DD/YYYY" .

    2. If the OIC was not accepted by Appeals, the OE/OS group who worked the offer will associate the documents with closed offer file which is being retained in the site/territory/group which closed the offer and sent to FRC according to the regular archiving schedule. When the file is shipped to FRC, the AOIC remarks should be noted that the CDP information is with the OIC file.

      Note:

      If the offer file has already been shipped to FRC follow the same procedures as noted on acceptance cases in IRM 5.8.8, Acceptance Processing.

  4. Prior to shipping these cases they should be purged so that only the following documents are shipped:

    If... Then ship ...
    Returned, Terminated or Withdrawn Return, Termination or Withdrawal letter to the taxpayer (and POA letter if applicable)
    • All Forms 656 received

    • Form 2848, if applicable

    • CIS

    • Case history sheets

    • Other significant correspondence/ documents

    Rejected Rejection letter to taxpayer (and POA letter if applicable)
    • All Forms 656 received

    • Form 2848, if applicable

    • Form 1271

    • Narrative report

    • CIS with supporting verification/documentation

    • Case history sheets

    • Other significant correspondence/documents

Shipment of Closed Cases to Federal Records Center (FRC)

  1. Document 12990, Records and Information Management Record Control Schedules, R , allows local offices to retain closed files until “there is no longer a business need” to retain them at the local level.

  2. Follow procedures in IRM 1.15.4, Retiring and Requesting Records, when mailing closed cases to the FRC.

Loading FRC Information on AOIC

  1. COIC and field Area offices are required to load the FRC information on the AOIC FRC Tracking screen, for each case, prior to mailing the closed file(s) to the FRC. This screen includes the offer number, accession number, box number, FRC date and location. Refer to the AOIC Course User’s Guide for instructions on loading information on the AOIC FRC Tracking screen.

    Note:

    In some instances, paper files related to previously closed offers cannot be associated with the original file and must be archived separately. Examples include closed CDP cases referred by Appeals and Other Investigations (OIs) for offer on offer investigations. When the case is boxed, AOIC Remarks should be documented “Shipped to FRC as the last case in box #xxx, shipped on MM/DD/YYYY.”

  2. Cases shipped to FRC prior to the inclusion on AOIC, will not be grandfathered into AOIC; therefore, paper documents must be retained.

Requesting a Closed Case from FRC

  1. The AOIC FRC Tracking screen provides information to locate a closed offer file previously shipped to the FRC by entering either the TIN, accession number and/or the FRC date. Refer to the AOIC Course User’s Guide for instructions on how to locate a closed offer using the AOIC FRC Tracking Option.

    Note:

    If information is not available on the AOIC FRC Tracking screen or the AOIC remarks, refer to the Area designee responsible for maintaining the SF 135, Records Transmittal and Receipt, to locate the information.

  2. If retrieval of a case is needed from FRC, a Form 2275, Records Request, Charge and Recharge, or optional Form OF 11, Reference Request – Federal Records Center, sheet must be completed. Follow procedures in IRM 1.15.4, Retiring and Requesting Records, when requesting closed cases from FRC.