SBSE Memo Provides Guidance on Simultaneous Compromise Offers

Expiration Date: March 1, 2020
Impacted: IRM 5.8.2; IRM 5.8.10

Date: March 1, 2019

MEMORANDUM FOR
DIRECTOR, SPECIALTY COLLECTION OFFER IN COMPROMISE

FROM:
DIRECTOR, COLLECTION POLICY

SUBJECT:
Interim Guidance Memorandum — Application of Payment when
Doubt as to Liability (DATL) and Doubt as to Collectibility (DATC)
Offers are Received Simultaneously

This memorandum provides interim guidance for Collection employees regarding posting payments received when a taxpayer submits offers under DATL and DATC criteria and the processability determination has not taken place on either offer. This guidance will be incorporated into the next revision of IRM 5.8.2, Centralized Offer in Compromise Initial Processing and Processability and IRM 5.8.10, Offer in Compromise — Special Case Processing.

Background: IRM 5.8.10.14,Taxpayer Files both Doubt as to Liability and Doubt as to Collectibility Offers, discusses what actions should be taken when a taxpayer requests consideration under both DATL and DATC. IRM 5.8.10.14 (2) also discusses processing payments submitted with a DATC offer that is deemed not processable based on the submission of a Form 656-L, Doubt as to Liability offer. Since Form 656, Offer in Compromise and Form 656-L have been revised, it is necessary to update IRM 5.8.10.14 (2), so it is consistent with the payment application guidance provided on the Form 656, Form 656-L, IRM 5.8.1.13, IRM 5.8.2.4.1, and IRM 5.19.24.

Procedure:

IRM 5.8.2.4, Processability, insert new paragraph (2) —

(2) When DATL and DATC offers are received and neither offer has been deemed processable, processability of the DATL offer will be determined first as the DATL offer will take precedence. Follow IRM 5.8.10.14, Taxpayer Files both Doubt as to Liability and Doubt as to Collectibility Offers.

If funds were submitted with the Form 656 or Form 656-L, the DATL unit or COIC Process Examiner will make a processability determination of the DATL offer within 24 hours. If the DATL offer is processable, the DATC offer will be deemed not processable and any payments received should be posted to the taxpayer's account in accordance with guidance provided on the Form 656-L. If the DATL offer is not processable, return the DATL offer and determine processability of the DATC offer following current IRM procedures.

NOTE: Form 656-L documents received in the Memphis site which need to be processed by the DATL unit in accordance with IRM 5.8.2.4 (1) should not be loaded on AOIC by Memphis and always need to be forwarded to DATL unit in Brookhaven. If a Form 656 is also awaiting a processability determination which cannot take place until the Form 656-L is reviewed for processability, a Memphis employee should scan the Form 656-L and send the scanned documents to the Brookhaven DATL e-fax number, available on SERP.

Subsequent paragraphs in this section will be renumbered when the IRM is updated.

IRM 5.8.10.14, Taxpayer Files both Doubt as to Liability and Doubt as to Collectibility Offers

(1) If a taxpayer files Form 656-L, Doubt as to Liability (DATL), and Form 656, Doubt as to Collectibility (DATC), consideration of both offers will not occur concurrently. In instances in which both offers are received and neither offer has been deemed processable, processability of the DATL offer will be determined first.

(2) When a DATL and DATC offer are submitted and neither offer has been deemed processable, refer to IRM 5.8.2.4(2) discussion on determining processability and application of payments.

(3) If a DATL or DATC offer is submitted while another offer under a different basis is being investigated, the new offer will be returned as not processable. Any payments should be posted to the taxpayer's account in accordance with the guidance provided on the Form 656 and/or Form 656-L.

Note: A taxpayer may submit an additional Form 656 requesting consideration under effective tax administration (ETA) while a Form 656 DATC offer is under consideration. If the IRS determines there is no grounds for compromise under DATC criteria, then the IRS may determine there are grounds for compromise under ETA criteria. The additional Form 656 should be considered an amended offer and any ETA issues presented should be considered. If an amended Form 656 is received by other than the employee who is investigating the offer, it must be provided immediately to the assigned offer examiner in COIC or faxed to the offer specialist. Additionally, the remarks screen should be updated to reflect an amended offer was received.

(4) If a taxpayer wishes consideration of a DATL offer while an offer under DATC is being considered, the taxpayer must submit a withdrawal of the DATC offer prior to processing the DATL offer. The withdrawal of the DATC offer must be submitted within 10 workdays of the DATL offer submission or the DATL offer will be considered not processable.

This interim guidance provides offer employees with guidance relative to the correct processing of offers and posting of payments in the scenarios discussed and does not impact other IRM sections relative to non-processable offers.

You may direct any questions regarding these procedures to Diana Estey, National Offer in Compromise Program Manager, or a member of your staff may contact Senior OIC Analyst, Thomas B. Moore.

cc:
Director, Field Collection
Office of Chief Counsel
Chief, Appeals

www.irs.gov