Memo Provides Temporary OIC Process Due to Backlogged Returns

Expiration Date: September 30, 2021
Affected IRM: IRM 5.8.2; IRM 5.8.7; IRM 5.19.7

Date: June 1, 2021

MEMORANDUM FOR:
DIRECTOR, SPECIALTY COLLECTION OFFER IN COMPROMISE

FROM:
Kareem Williams
ACTING DIRECTOR, COLLECTION POLICY

SUBJECT:
Temporary Deviation on Offers in Compromise (OICs) Involving Delayed Processing of Individual Master File (IMF) & Business Master File (BMF) Tax Returns

Purpose: This memorandum issues temporary guidance for employees of Specialty Collection Offer in Compromise (SCOIC) when an IMF or BMF tax return has not been processed due to a revised processing schedule as a result of the COVID-19 pandemic.

Procedural Change — IRM 5.8.2 — Process Examiners (PE)

If a Tax Year (TY) 2019 or 2020 IMF return (or a TY 2020 BMF return, as applicable) is not located, process the incoming offer until notified that IRS has processed all returns. At this time, do not return as not-processable if there is an unfiled TY 2019 or TY 2020 IMF return or unfiled TY 2020 BMF return. An OE or OS will need to address these returns during the investigation of the offer and update the AOIC Remarks.

The current guidance under IRM 5.8.2.4.1(4), Unfiled Tax Returns (Both IMF/BMF), states that offers submitted where IDRS does not indicate a required return has been received will be deemed not processable. Under this temporary deviation, until all backlogged IMF and BMF returns (as applicable) are processed, do not return as not processable for unfiled returns. Forward to the appropriate OE/OS inventory. Update comments on AOIC to state the following: No return(s) on file for (insert MFT and tax period for the missing returns). Offer forwarded to (insert inventory number, for example, 6000).

Procedural Change — IRM 5.8.7 — Offer Examiners (OE) and Offer Specialists (OS)

If the taxpayer provides evidence of filing, do not return the offer until IRS has processed all backlogged IMF and BMF returns, as applicable. If the offer is acceptable and the returns will have a balance due, hold the offer open until the return has processed. If the TIPRA mandatory acceptance date is within 90 days and the balance due return has not posted, advise the taxpayer that you can continue to recommend acceptance, but without the liability and they will have to fully pay the new balance due when they receive notice. The taxpayer can also choose to withdraw the offer and wait for the assessment.

The current guidance under IRM 5.8.7.2.2.1(2) states that 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 for the posted return. Under this temporary deviation, until all backlogged IMF and BMF returns (as applicable) are processed, do not return for filing compliance issues.

Procedural Change — IRM 5.19.7 — MOIC Tax Examiners (TE)

If the taxpayer provides evidence of timely filing, do not default the accepted offer until IRS has processed all backlogged IMF and BMF returns, as applicable.

The current guidance under IRM 5.19.7.14.4.1(2) states to allow ten (10) weeks for an IMF return and twenty (20) weeks for a BMF return to post to the master file. Under this temporary deviation, until all backlogged IMF and BMF returns (as applicable) are processed, do not default an accepted OIC for failure to adhere to compliance terms.

Contact: You may direct any questions to Diana Estey, National Offer in Compromise Program Manager, or a member of your staff may contact Policy Analyst, Bill Grodzicki

Cc:
Director, Field Collection
Office of Chief Counsel
Director, Appeals, Case and Operations Support

Distribution:
IRS.gov (http://www.IRS.gov)