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Memo Allows Second Extension for Missed OIC Payments

SEP. 8, 2020

SBSE-05-0920-0065

DATED SEP. 8, 2020
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Citations: SBSE-05-0920-0065

Expiration Date: December 31, 2020
Affected IRM: 5.19.7

September 8, 2020 

MEMORANDUM FOR
GUADALUPE ORTIZ, DIRECTOR, SCOIC

FROM:
RONALD TAKAKJY, Acting Director, Collection Policy

SUBJECT:
Additional Flexibility for Payments Required for Offers in Compromise

The purpose of this interim guidance memorandum is to provide flexibility for taxpayers who are temporarily unable to meet the payment terms on accepted offers due to the economic impact of COVID 19. The procedures will expire December 31, 2020, unless extended.

For offers currently under consideration, the guidance includes a reminder when addressing Form 1040 payment compliance for tax years 2019 and 2020.

You may refer any questions regarding this guidance to Christine Matz, Collection Policy OIC Analyst.

CC:
Director, Collection
Director, Headquarters Collection
Director, Headquarters Collection-Quality and Technical Support Director, Collection Appeals
www.irs.gov


Monitoring OIC

The granting of an additional 120-day extension may be afforded to taxpayers, even if they have previously utilized the one-time 120-day extension. This second extension must be requested by December 31, 2020.

MOIC can either provide an additional 120-day extension to make up the missed payments (bring the proposed terms completely current) or the IRS and the taxpayer can agree to modify the accepted OIC contract by adding the missed payments to the end of the contract terms. This includes payments that were suspended between March 26 and July 15, 2020 as part of the People First Initiative.

Note: Before granting any extension, verify the CSED is protected.

If MOIC agrees to allow the taxpayer to extend the offer terms by adding the missed payments to the end of the contract, MOIC will use the open paragraph in Letter 2908 (Para B) or Letter 274 (Para D) to state the payments due (months missed) will be added to the end of the contract unless the taxpayer elects to make them sooner.

For example, “Per the agreement reached on September 2, 2020 between you [or your representative _____] and [MOIC tax examiner name], the 7 missed monthly payments of $____/month for February, March, April, May, June, July and August 2020 will be added to the end of the payment term identified in Form 656, Section 4, Payment Terms. Note, however, that you do not have to wait to pay, and we encourage you to make the missed monthly payments as soon as possible.”

Taxpayers who cannot meet the terms of their offer may propose a modification of the offer terms per IRM 5.19.7.9 and 5.8.9.5.

Offer Examiners/Offer Specialists Estimated Tax Payments

Estimated tax payments are required by the established due dates but may be based on current income vs. the last filed return. If a taxpayer indicates their 2020 estimated tax payments are sufficient based on anticipated annual income, accept this and continue to process the offer. Advise the taxpayer that they are responsible for paying any tax in full when they file the 2020 return. If the taxpayer owes for tax year 2019, the offer period may be added to the offer but cannot be included unless the liability is assessed. Per IRM 5.8.7.2.2.2(1), the tax period may be included in the offer if it is in the best interest of the government.

Reminder: IMF Compliance for 2019

While policy dictates the taxpayer be in compliance for the tax year the offer is submitted, the IRM allows for flexibility in determining whether to include 2019 in the offer when it is in the best interest of the government. The liability must be assessed to be included in an offer acceptance.

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