5.8.3. Centralized Offer in Compromise Transfers, Perfection, and Case Building

(1) Purpose: This IRM section provides instruction for determining jurisdictional responsibility, perfecting and case building, and transferring offers in compromise.

(2) Audience: The primary users of this IRM are offer in compromise employees who are responsible for initial case processing of offer in compromise receipts. It also provides information to other collection employees when considering an offer in compromise a collection alternative.

(3) Policy Owner: Director, Collection Policy, SB/SE.

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

(5) Primary Stakeholders: The primary stakeholders are OIC process examiners.

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

(1) If an offer is received with payment(s), processability and payment processing must be determined within 24 hours of IRS received date and case building completed within 20 days of Area Office( AO) received date.

(2) If no payment(s) is submitted, processability and case building must be completed within 20 days of the AO received date.

(1) Except for CDP offers meeting COIC criteria, for all cases cited in the table below, generate and send the transfer letter to the taxpayer and/or POA, if applicable. Ensure all TC 480 or STAUPs have been input, as appropriate. If manual STAUP is needed follow IRM 2.4.28, IDRS Terminal Input, Command Codes STAUP, STATI and STATB.

(2) The following table provides guidance on jurisdictional responsibility:

(1) Once the COIC sites have loaded the offer to AOIC and completed initial processing and perfection, pending offers in certain categories will be immediately transferred to the appropriate FOIC group. See OIC Share Point for a list of the categories at: Offer in Compromise SharePoint Site, https://irsgov.sharepoint.com/sites/SbCsi_Oic/SitePages/Home.aspx

(2) Some categories may require additional research to determine the correct routing. To determine where to assign the offer, use the reference guide found on OIC SharePoint as well as the Form 433-A (OIC) section 2, Form 433-B and IDRS.

(3) If the taxpayer checks the box in section 2 on the Form 433-A (OIC) indicating, they have ownership interest in a business a Form 433-B is required and should be requested in the Combo letter.

(4) Prior to transfer, COIC will generate the AOIC transfer letter or Combo A letter and send to the taxpayer. When preparing the transfer letter, use 120 days as the time frame for taxpayer contact.

(5) All field transfer criteria (4101) must go to the manager to review and transfer.

(1) Taxpayers are required to include separate checks for the application fee and TIPRA payment unless they check the Low-Income Certification box and qualify for the waiver on Form 656 for each offer submitted. No payment is required for DATL OIC submissions.

(2) There should only be as many Forms 656 as there are entities. An entity is the individual or business that is assessed the liability(ies). In conjunction with an acceptance letter, the Form 656 constitutes a binding agreement between the government and the taxpayer.

(3) When determining the number of offers required for taxpayers with identical assessments (e.g., MFT 55, MFT 31), if the original assessments are established against the individual taxpayer, separate offers are required. Annotate AOIC remarks informing the OE/OS an additional offer is needed. The chart in paragraph 5 below provides examples.

(4) There may be instances when a taxpayer sends in three offers when only two are required. In those cases, you should:

• Add the applicable MFTs from the third offer to each of the remaining two offers.

• Load the third offer onto AOIC and return as not processable because all the liabilities are included in an open offer in compromise(s). See IRM 5.8.2.4.1(2), Determining Processability.

• Return the additional application fee by writing “Return” across the check and apply any additional TIPRA payment to the earliest CSED.

• Inform the taxpayer, preferably by telephone, of the actions taken.

(5) The table below is intended to assist in identifying and loading a processable offer and provides guidance on advising the taxpayer when more than one Form 656, application fee, and/or TIPRA payment may be required.

(6) Individuals or self-employed taxpayers filing a DATC or ETA offer should complete and attach Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals.

(7) All other forms of business entities (partnerships, corporations, limited liability companies, etc.) should submit Form 433-B (OIC), Collection Information Statement for Businesses.

(8) Taxpayers who submit an offer to compromise individually owed tax and also have a substantial interest in an ongoing business may be required to submit a Form 433-B for that business.

(1) Prior to beginning an OIC investigation, certain critical errors must be corrected to perfect the offer. The Combo letter on the AOIC system is designed to communicate with the taxpayer and/or their representative to request the necessary corrective action. Secure Messaging is a web-based system that allows SCOIC employees a convenient way to communicate, send, and receive documentation from taxpayers/representatives. The use of Secure Messaging is voluntary but is recommended as another way to communicate with the taxpayer and/or their representative. Document Upload Tool (DUT) allows taxpayers/representatives to upload documents without an online account.   Both Secure Messaging and DUT should be offered to the taxpayer/representative as an option any time information is requested. If there is no response to the request letter, the OIC may be returned with no further contact. A return for failure to perfect an offer does not require a Form 1271, Rejection Memorandum. The taxpayer has no appeal rights when the offer is closed as a return. The following errors are considered critical and must be corrected before beginning the investigation:

(2) Perfect the name line to ensure the taxpayer’s name can been seen through the envelope’s window.

• AOIC is limited to 35 characters and the PE must ensure the entire name fits on Name line 1. Consider using the ampersand (&) and approved abbreviations such as Corp; remove middle initials if necessary. Don’t include unnecessary punctuation such as commas, periods, or dashes.

• When entering a deceased taxpayer, enter their full name with “DECD” after the last name. If a joint offer, enter “DECD” after the deceased taxpayers first name if the joint offer has the same last name. See IRM 3.24.37.6.15(4) for more information on how to enter a decedent name line.

• The last name should appear on Name line 1, not Name line 2. If you cannot sufficiently identify both spouses in the 35 characters provided, consult *SBSE Coll Policy OIC.

• If there is a valid Form 56, Notice Concerning Fiduciary Relationship, court papers naming the person as a representative for the estate of the deceased or a will that has been validated through the court, enter that information on the 2nd name line. See IRM 5.19.1.5.3.2, Deceased Taxpayers - Entity Changes for examples on to write the name line.

Note: Never include the name of an LLC member in either AOIC name line.

(3) If you receive two offers, one for joint liabilities and one for separate liabilities and both offers were submitted with either the applicable payments or low-income certification, load both offers and perfect as follows:

• Send the taxpayers two Forms 656 with the Combo letter.

• The primary taxpayer's Form 656 should be annotated as" Amended to" inserting the original offer number. Complete the Form 656 to include all joint and any individual liabilities.

• The secondary taxpayer's Form 656 should be annotated "Amended to" inserting the original offer number. Complete the Form 656 to include all joint liabilities and any individual liabilities.

• Use paragraph "B" in the Combo letter with the open paragraph stating, "Please complete Sections 3 and 4 of the enclosed amended Forms 656. The taxpayer identified in Section 1 of the form must sign and date Section 8. No additional initial payments or application fees will be required"

• If this is the only perfection issue, the offer will not be returned if the taxpayers fail to respond. The OE/OS must perfect if the offer is to be accepted.

Note: If you receive one offer that combines joint and separate liabilities, follow the guidelines in appropriate Combo "Y" paragraph.

(4) If you receive an offer on behalf of a deceased taxpayer:

1. Research IDRS for the TC 540 or INOLES for the date of death.

2. Look in the case file for Form 56, Notice Concerning Fiduciary Relationship, or any documentation for an authorized person to represent the deceased taxpayer. This can be the Form 56, probate papers, letters of testamentary.

3. If there is no authorization to represent the taxpayer in the case file, request the Form 56 or authorization to represent the taxpayer using the combo letter.

4. If you get a response, continue processing and assign to 6062

5. If no response, return the offer.

(5) When sending a Combo letter to perfect the errors listed above, also request correction of the information shown below, if necessary.

• If the taxpayer's name, physical address, or taxpayer identification number (TIN) is missing or incorrect, it is the PE’s responsibility to ensure the entity information is accurately input.

  Note: If the information can be located on IDRS or other documents submitted with the offer, input the correct information on AOIC and continue processing the offer.

  Note: The full name, address, Social Security Number (SSN), Employer Identification Number (EIN), and/or Individual Taxpayer Identification Number (ITIN) of the taxpayer must be entered on Form 656. If the taxpayer(s) uses a mailing address that is different from the street address, the physical home address should be included as well. If the home address line is blank or the taxpayer does not include an address, then verify with the taxpayer their specific circumstance which may be the use of an address of their representative, a Low-Income Tax Clinic (LITC), or a PO Box.

  Example: If the taxpayer is homeless and living on the street then they do not have a physical address. The taxpayer could place an address where to contact them, e.g., post-office box, employer, relative, LITC if they are represented.

• An amount of money is offered, but the payment terms are not specified.

(6) If the taxpayer did not include a tax period with an outstanding liability on the original Form 656 and the entity is the same (such as a Sole Prop), the PE will add the periods to the AOIC MFT screen. If the taxpayer has a separate entity (Corp. LLC (after 1/1/2009), Partnership) that was not included on the original Form 656, the PE will no longer be responsible for loading periods of a separate entity to the MFT screen on AOIC until such time the OE/OS secures the amended and associated Form(s) 656. This includes any liability under MFT 35, assessed under the Affordable Care (ACA) Provision 1501, Individual Shared Responsibility Payment (SRP) IRS 5000A. All PEs are required to make pen and Ink changes to ensure the Form 656 matches the MFT screen on AOIC see IRM 5.8.8.3, Pen and Ink changes. See IRM 5.8.2.9, Sorts and Payment Processing, for when to load certain entities.

(7) When a taxpayer has included a tax period(s) for which there is no apparent amount due, do not add the tax period(s) to AOIC. Contact the taxpayer to determine if any issues are pending that may result in additional tax.

(8) If the basis for compromise is not indicated but it can be determined by reviewing the package, continue processing the offer.

(9) Document the AOIC history to summarize any perfection issues.

(10) An offer can be investigated but cannot be accepted until all errors are corrected and/or an amended Form 656 is signed. Therefore, offers will not be returned by the PE if the taxpayer fails to respond to any perfection issue listed in paragraph 5 above.(physical address, TIN missing/incorrect, offer amount but no terms).

(1) Case building for field and COIC cases should include the following in each case file:

• Ensure all prints of IMFOLT, BMFOLT for each tax period are in the case file.

Note: The prints are needed for the CSED dates and IMFOL/BMFOL must be printed before the TC 480 is input.

• Review the Form 656 to see if the POA signed the offer on behalf of the taxpayer. If the POA signed, a copy of the Form 2848 dated the same date as the Form 656 or prior to the offer signature date must be maintained in the case file and a statement detailing the basis for allowing the POA signature in lieu of the taxpayer’s signature of the Form 656 must be included in the AOIC remarks. See IRM 5.8.1.15.8, Signatures, for additional information.

(2) PE will generate the TC 480 and Status 71 through the AOIC system. However, there may be situations when the TC 480 and Status 71 cannot be systemically generated (e.g., imminent statute). In those cases where AOIC does not systemically generate the appropriate TC 480 and/or Status 71, COIC must manually input the appropriate codes.

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

(4) PEs should offer Secure Messaging and the Document Upload Tool (DUT) to obtain taxpayer correspondence quickly and securely in lieu of mailing the documents. The use of the tool is voluntary for compliance employees.

(1) PE will determine if estimated tax payments (ES) are required and request any delinquent payments as part of their case perfection actions. Taxpayers who may be responsible for ES include self-employed individuals, retirees, investors, corporations, or wage earners with inadequate withholding.

(2) In order to be considered for an OIC, taxpayers must be current with filing and payment requirements for the year in which the offer was submitted. ES are generally due quarterly, April 15th, June 15th, September 15th, and January 15th of the following year.

• To determine whether ES are required, use the mandated OIC IAT Screening and Research tool.

• Copy and paste your results from the IAT tool (ES Compliance Check) into AOIC remarks. If there is a shortfall, request via the Combo letter

(3) Before requesting ES, review the OIC package to determine if the taxpayer no longer has an ES requirement for the current year.

(4) OIC IAT ES Compliance Check computes ES based on the last posted return. Review to ensure the last filed return is recent. If not, the taxpayer may be filing as secondary under another TIN or may have delinquent returns.

(5) If the taxpayer files an original return with the Form 656 for a recent year that has not posted to IDRS, then the ES calculation on OIC IAT will not be correct. You will need to manually compute the required ES utilizing the ES worksheet found on: OIC Policy - COIC - All Documents (sharepoint.com), to determine the amount owed.

(6) If a manual ES calculation is required, complete the ES worksheet using the most recently filed return.

• If the total balance due is $1,000 or more, the taxpayer has an estimated tax requirement.

• Check IMFOLT on the current year to ensure the ES are posted and are sufficient for the year the offer was received. ES credits usually post as a TC 660, TC 670, or TC 430. If there are no ES or there is a shortfall, the PE is required to request the correct amount owed in the combo letter

• Always check IDRS for dishonored payment(s). If the payment was dishonored, add it to the amount you are requesting.

Note: If research indicates the taxpayer has adequate withholding, or the tax liability is less than $1,000.00 then no ES is required.

(7) Determine the amount due up to the current date. If the next quarterly payment will be due in the next 21 days, include that quarter in the computation. Request the payment or the shortfall using the approved mandatory open paragraph on the Combo letter: “Our records indicate you are required to make Estimated Tax Payments for tax year(s) %A [up to 2 tax year, i.e., 2022 & 2023]. You must make payment of %B by %C for us to consider your offer or provide verification that your estimated tax payments or withheld income tax are sufficient so far for the tax year(s) indicated. If your estimated tax requirement is less than the requested amount, include an estimated tax calculation along with other supporting information such as profit and loss statement or year-to-date paystub, as applicable. In addition, you must continue to make your estimated payments for each quarter as they become due while we are considering your offer. The amount of your required quarterly payment is %D . Your next payment of %E will be due on %F. The payments are due on April 15th, June 15th, September 15th, and the following January 15th. If you do not make these estimated payments, we will return your offer without further consideration”. If the request includes payments for more than one year, provide the breakdown in an open paragraph.

(8) If the taxpayer does not respond to the combo letter requesting the correct amount of ES due, then you can return the offer for non-compliance.

(1) The Combo letter on the AOIC system is designed to communicate with the taxpayer and/or their representative to advise the taxpayer that their offer has been received or to request the necessary corrective action(s).

(2) If there is a Z freeze on the account, do not send a letter, refer to in-house RO for additional research. See IRM 5.19.1.3.5, For Other Account Issue Requiring Referrals or Redirect or AM Research Portal. Never discuss with the taxpayer or POA that there is a criminal investigation taking place or tell them there is a Z freeze or other criminal coding on their account.

(3) If no perfection is required, issue the AOIC Combo letter, Paragraph A. The date of possible taxpayer contact must reflect 120 days from the date of the Combo letter. Document the AOIC remarks with this information. Include Pub 1, Your Rights as a Taxpayer, and Pub 594, The IRS Collection Process.

(4) If perfection is required, prepare the Combo letter using the paragraphs that address all deficiencies. Include Pub 1 and Pub 594.

(5) Before mailing the AOIC Combo letter to the taxpayer and representative, if appropriate, you must ensure the representative is authorized to receive correspondence. If a disclosure issue exists, use the applicable paragraph to indicate this in the AOIC Combo letter, and do not send a copy of the letter to the representative. Instead, send the representative a letter notifying them that correspondence has been sent to their client and they must contact their client for the information.

(6) Post-date all AOIC Combo letters five (5) calendar days. Schedule follow-up for the 45th day from the date of the letter or phone call. This means that at least 50 calendar days (5 post-date plus 45 calendar days from the date of the letter) will have elapsed before an established follow-up date.

(7) Document the AOIC remarks to summarize all applicable perfection issues and the mailing date of the letter or phone call.

(8) Input the appropriate follow-up date to ensure timely interim letters are sent.

(9) Retain a copy of the signed and dated AOIC Combo letter in the file.

(10) Assign the offer to the applicable AOIC assignment number.

(11) If there is no response to the Combo letter, the OIC may be returned with no further contact. A return for failure to perfect an offer does not require a Form 1271, Rejection Memorandum. The taxpayer has no appeal rights when the offer is closed as a return. For additional information on return reconsideration procedures see IRM 5.8.7.3, Return Reconsideration.

(1) If the Combo letter requested critical perfection information but the taxpayer fails to respond, the offer may be returned with no further contact.

(2) If the offer is assigned to 51XX and the taxpayer responds, incorporate the response into the file and assign to 5500 Response Received or 5558 SE Response Received , as appropriate.

(3) Responses received on cases assigned to 5150 (field) must be reviewed immediately, assigned to a PE for expedite processing, and transferred to the appropriate FOIC group.

(4) All other responses must be reviewed within 10 calendar days of assignment to the PE.

(5) Upon reviewing the response, take the next appropriate action: assign to 60XX OE hold file or return.

(6) If the taxpayer or their representative requests an extension of time to comply with the request for information, a reasonable amount of time should be granted. Document the AOIC history indicating the new deadline for the response and return offer to 51XX with new follow up date. If the taxpayer and/or the representative fails to meet the additional deadline, return the offer with no further contact.

(7) If the request included:

• Missing TIPRA payments,

• Missing ES payments

• Perfection of Form 656, Offer in Compromise (missing signature(s) and/or pages),

• Missing or incomplete Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses, and the taxpayer failed to provide or address the missing payments and/or forms; research does not reflect the payment(s) have been received, and no special circumstance were identified, the offer may be returned with no further contact. For additional information on return reconsideration procedures see IRM 5.8.7.3, Return Reconsideration

• If the taxpayer submits a new or amended Form 656 Offer in Compromise, in response to the Combo Letter requesting the TIPRA shortfall and does not provide the shortfall requested, the offer should be returned.

• If a taxpayer submits a new or amended Form 656, Offer in Compromise, in response to the Combo Letter, after an offer has been returned (all return criteria), requesting the previously submitted application fee or TIPRA payment be applied to the new offer, the new offer should be loaded and returned for no application fee or TIPRA payment.

• A phone call is appropriate to inform the taxpayer/POA that the offers will be returned, and the taxpayer can submit a new Form 656, Offer in Compromise, with a new application fee and TIPRA payments.

Exception: A taxpayer may only use an application fee or TIPRA payment from a previously closed offer if they meet the requirements in IRM 5.8.7.3, Return Reconsideration.

• Taxpayer failed to provide or address the missing payments or forms, internal research does not reflect the payment(s) have been received, and no special circumstances were identified, the offer may be returned with no further contact. For additional information on return reconsideration procedures see IRM 5.8.7.3, Return Reconsideration.

(8) Update AOIC remarks summarizing the documents or payments received.

(9) Sign any related Form 656 with the current date. Retain the original and any amended Form 656 in the case file. Amended Form 656 no longer need to be signed as long as the original Form 656 in the case file is signed. See IRM 5.8.1.15.8(4), Signatures.

(10) The PE is required to initiate the next appropriate action on cases where taxpayers have responded to the Combo letter within 10 calendar days from the date the offer is assigned to the PE.

(11) An interim letter, advising 90 days for the next taxpayer contact, must be sent after the PE reviews the response, prior to assignment to an OE holding inventory. Document the AOIC Remarks that the interim letter was issued. If interim letter was done manually (not through GII) then clearly annotate AOIC remarks the date the letter was mailed and set a follow up for 90 days.

(1) The PE is responsible for answering incoming calls from taxpayers, tax representatives and internal customers on the COIC toll-free telephone line.

(2) Generally, these calls involve taxpayer inquiries regarding the status of pending offers or questions about a letter they received.

(3) For the majority of the calls, the PE should access the offer on AOIC and, by reviewing the remarks screen, satisfactorily answer the taxpayer's questions. If there is no offer on AOIC, research AMS and cc ENMOD to see if a 656-B was sent to the taxpayer due to incomplete offer submission.

(4) There will be times when it will be necessary for the PE to take additional follow-up actions to address the taxpayer's concerns.

(5) The table below illustrates when follow-up actions must be taken:

(6) If the taxpayer calls and their offer is assigned to a hold file, and they are requesting a lower TIPRA periodic payment because they can no longer afford the payments, advise the taxpayer they must be current with the payment terms they originally proposed. If they are not, they can choose to withdraw their offer and resubmit a new offer with a lower periodic payment. If the taxpayer is current, they can submit an amended offer with the new payment amount and the OE/OS will determine if they qualify for the new amount. They cannot submit an amended offer to avoid TIPRA that is already due per IRM 5.8.3.6, Perfecting Offers.

1. Advise that if a taxpayer assigned to the hold file requests to amend the terms of their offer, advise them that the IRS will only consider an amended offer if the taxpayer is current on TIPRA payments when the amended offer is submitted.

2. Advise the taxpayer if they are current on TIPRA payments and they submit an amended Form 656, that contract will be associated with the case file.

3. When the case is assigned for investigation, the OE/OS will determine if the TIPRA terms were current and if the taxpayer qualifies for amended terms, per IRM 5.8.7.4.2.2, Amended Offer after Failure to Make Required Periodic Payments.

4. Advise if the taxpayer mails an amended Form 656, to write AMENDED and the OFFER NUMBER at the top . If they are not current with the terms proposed on the original Form 656, they must send any accrued payments due with the amended offer.

5. The PE is not responsible for determining any TIPRA payment shortfall or if the amended offer will be accepted. Do not change the proposed terms in AOIC.

(7) Any additional discussions with the taxpayer or tax representative that may require follow-up actions should be discussed with the manager.

(8) All phone calls must be well documented in the AOIC Remarks Screen. Document AMS if there is no offer on AOIC.

(1) If the taxpayer submits an original tax return(s) with the offer submission and it is not signed, follow IRM 5.8.3.6(1) procedures. If the taxpayer fails to respond, the offer will be returned without further consideration.

(2) If the tax return is properly signed:

• Make a copy for the case file.

• Annotate "OIC-PAO" in red in the middle of the top margin of the return.

• Complete a Form 3210, Document Transmittal, and write "OIC - Expedite" in the Remarks area.

• Follow guidance on expedite processing of tax returns, found on OIC Share Point at: OIC - Counsel, State Tax Law, NFTL, Geographical Taxpayers, Processing Tax Returns - All Documents (sharepoint.com).

• Document AOIC.

(1) After the offer is deemed processable and a Combo letter has been sent, the offer should be held until the follow-up date expires to allow the taxpayer to provide the requested information.

(2) If the taxpayer or their representative requests an extension of time to comply with the request for information, a reasonable amount of time should be granted. Document the AOIC history indicating the new deadline for the response and update the follow-up date. If the taxpayer and/or the representative fail to meet the additional deadline, return the offer with no additional contact.

(3) After the designated time period has passed and no response has been received, the "No Reply" return process will be initiated by the COIC site designated manager. The AOIC system will generate all the necessary letters and documents to allow for the closing of the case off of AOIC.

(4) Before closing the offer, check AOIC to verify that no response was received. Check IDRS to ensure there is no Combat Zone, -C Freeze, on the account. For additional information see IRM 5.19.10.6.3, Combat Zone Freeze Codes.

(5) When returning the offer:

• Retain the original Form 656, Offer in Compromise, any amended Forms 656, and a copy of the return letter in the file.

• Cross out all IRS received dates with an "X".

• Stamp the Form 656 with RETURN and add the current date. Make a copy to send to the taxpayer and their representative (if appropriate)IRM 5.8.3.19.

• Update the case remarks on AOIC, including the reason for the return.

• Assign to the manager to sign, date, and close off AOIC.

• Forward the entire case file to Appeals, if the offer is part of an open Collection Due Process (CDP), once the case is closed.

(1) Form 657, Offer in Compromise/Revenue Officer Report serves to establish coordination between the field Collection RO group, the field OIC group and the COIC sites.

(2) All OICs forwarded with a Form 657, will be processed following normal procedures.

(3) If the offer account is in Status 26 and the Form 657 was not received, the COIC site will contact the RO by E-mail and copy their manager to request Form 657 and continue processing the offer. Update the account(s) to Status 71. Copy the E-mail request into the AOIC Remarks

(4) If there is not sufficient information to support the field RO solely to delay recommendation, case build and assign to the field for additional evaluation following expedite procedures.

(1) The PE must verify that the TC 480 has posted to each tax period shown on the Form 656.

(2) If the TC 480 has not posted, it must be manually input. If a manual input is required, input the TC 480, place the letters TC in red directly after the offer number on the outside of the case file and, notate the AOIC history to identify the need for a manual reversal when the case is closed.

(3) If the request is from FOIC and the PE received a DCI requesting the manual input of the TC 480, document AOIC that a manual reversal is required. Forward the completed DCI with a print of the Query screen to be associated with the case file.

(4) The table below provides instruction for inputting the TC 480.

(5) If a tax return is submitted with the offer and has a balance due: Manually upload the balance on the Form 1040 and TC 480 and ST. 71 on the MFT module. If there is no balance due, DO NOT load.

(1) For payments processed through Paper Check Conversion (PCC) Ogden Accounting receives the initial notification of a dishonored OIC payment from the Federal Reserve Bank through the Electronic Verification and Image Services (ELVIS) automated system.

(2) The Ogden Dishonored Check Unit will notify the taxpayer by mailing them a copy of the dishonored check and Form 12993-A, Check for Offer in Compromise Payment Not Accepted by Bank.

(3) Ogden Accounting will E-fax copies of the dishonored payments to the COIC site that originated the Form 3210, Document Transmittal .

(4) Notification of dishonored payments that are processed through Remittance Strategy-Paper Check Conversion ( RS-PCC) will originate from Ogden Accounting and E-faxed to the originating site.

(5) Upon notification of a dishonored application fee, and/or TIPRA (initial) payment, the site will determine the current AOIC offer assignment.

(6) If the dishonored payment was for a subsequent TIPRA (periodic) payment, see IRM 5.8.7.2.2.5, Return for Dishonored Payments. If the offer is in a hold file, bad check the payment screen and annotate AOIC remarks with actions taken. Associate dishonored payment documentation with the case file. If the taxpayer has not corrected the dishonored payment issue, return the offer.

(7) If the payment has been moved from the 4710 Account to the Master File, the Dishonored Check Unit will reverse the payment with a TC 671. If no notification of the dishonored payment is received, the dishonored check can also be identified by the TC 671 posted on IDRS.

(8) The PE will select the bad check option on the AOIC payment screen for the dishonored payment to ensure an accurate balance is shown. See table below.

(9) Upon notification of a dishonored application fee and/or TIPRA payment, the offer will be immediately pulled and returned to the taxpayer with the appropriate AOIC letter for a dishonored check. The PE will be responsible for selecting the bad checking option on the payment screen on AOIC and updating the remarks with the following information:

• Which check(s) (application fee, TIPRA payment, or both) was returned,

• The check number; and

• Date the check was dishonored

• If the offer is already closed and you cannot update the payment screen, annotate in AOIC remarks which action number was dishonored.

  Note: If the dishonored check was for a subsequent periodic payment, it will be addressed by the offer examiner or offer specialist. See IRM 5.8.7.2.2.5, Return for Dishonored Payments.

(10) If you receive notification of a dishonored payment and the taxpayer qualified for the low-income waiver, and submitted a payment with their offer, continue processing the offer and select the bad check option on the payment screen and clearly annotate the remarks on AOIC of your actions.

(11) There may be no notification of dishonored checks. Check IDRS for the posting of a TC 671 that may also include a secondary TC 280 or TC 286, dishonored check penalty. Annotate which check was dishonored, for example, application fee, TIPRA or subsequent. Enter as much information as you have available, for example, bank name, check number, amount etc.

(12) If the payment was dishonored while still in the 4710 account, Accounting will annotate their copy of the Form 3210 as appropriate. See IRM 5.8.8.17, Notification of Dishonored Application Fee and/or TIPRA Payment for guidance.

(13) 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 days of the date of the initial AOIC return letter. The replacement payment must be in the form of certified funds (bank or postal money order, cashier check, etc.) or through EFTPS and received within a reasonable amount of time. See IRM 5.8.7, Return, Terminate, Withdraw, and Reject Processing, for reconsideration procedures.

(14) When contacted:

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

• A due date for receipt of the payment must be provided to the taxpayer or the authorized representative.

• Advise the taxpayer or their representative to submit the payment by overnight mail or by EFTPS.

• Document the case history.

(15) Inform the taxpayer or the authorized representative that the certified funds must be mailed to either of the following addresses:

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

(17) If the payment was dishonored while still residing in the 4710 Account, the payment should be processed through established deposit procedures. A copy of Form 3210 must be forwarded to the appropriate MOIC function. Clearly indicate on the copy of Form 3210 that the payment is a replacement for a dishonored check. MOIC will load the payment on the AOIC deposit screen once the AOIC record is reloaded. MOIC is responsible for ensuring the payment is applied to the Master File as originally intended.

(18) If the payment was dishonored with a TC 671 on the Master File, prepare a Form 3244, Payment Posting Voucher, to post the payment as a replacement for the dishonored payment.

(19) Upon receipt of the replacement payment, the employee that processes the payment must also:

• Reload the offer on AOIC, if appropriate.

• Verify if the payment was received within the established deadline as annotated in the AOIC remarks.

(20) If the payment is not received by the specified due date, the payment will be processed in accordance with TIPRA payment requirements, and the case will not be opened as a reconsideration. See IRM 5.8.7.3, Return Reconsideration, for reconsideration procedures.

(1) When an erroneous processability determination is corrected because the taxpayer was in bankruptcy at the time the offer was filed, if the related application fee remittance was forwarded for deposit, the COIC sites will need to determine whether the remittance has been deposited and credited to the taxpayer’s liability. An application Fee Refund/Apply Listing should be generated from AOIC to identify application fees that were initially determined to be processable, but later determined to be not processable. Generation of this listing is required in order for the COIC site to verify and authorize a manual refund. If a manual refund is needed, see IRM 21.4.4.2, Manual Refunds, for instructions how to prepare a manual refund and ManualRefund_1156.docx (sharepoint.com), Manual Refund Tool

(2) The COIC sites must generate the Application Fee Refund/Apply Listing on a monthly basis.

(3) Generally, when an offer is deemed not processable, the IRS includes the taxpayer's application fee, and in some cases the initial TIPRA payment, see IRM 5.8.2.4, Processability, with the return disposition letter. However, depending on the elapsed time between inputting a processability change on AOIC from "Y" to an "N", the IRS may have already deposited the related application fee and applied the payment to the taxpayer's liability on Master File.

(4) To determine whether or not a manual refund of the application fee should be issued, research the completed Form 3210 , Document Transmittal, to see whether the application fee was deposited by the IRS or returned to the taxpayer via manual refund procedures.

(5) Thorough research and care is required when determining which offers on the application Fee Refund/Apply Listing should receive manual refunds.

(6) To request the MOIC function to issue manual refunds from the 4710 account, prepare a Form 4442 that includes:

• The offer number,

• The taxpayer(s) name and

• The taxpayer(s) identification number (TIN).

(7) Records that support the COIC site's decision to either remove the offer record from the Refund/Apply Listing or to issue a manual refund must be retained for one year. At a minimum, the file should consist of:

• Copies of the Refund/Apply Listing or a memorandum detailing the requested information,

• Copies of the Form 3210 and

• Any other supporting documentation necessary to support the decision, including, but not limited to, the Remittance Processing System daily remittance registers.

(8) Refunds of the applied application fee and TIPRA payment(s) are allowed if the taxpayer was in bankruptcy at the time the offer was received. The taxpayer’s deposit is always refundable in erroneous processability determination situations.

(9) All IDRS manual refunds must be monitored to ensure they are issued to the taxpayer and to avoid duplicate refunds.

(10) When a manual refund is generated:

• Open an IDRS control base and place in "M" status.

• The status of the refund must be updated weekly on the Manual Refund listing.

• Monitor open controls until posting of the TC 840.

• Close IDRS control when the manual refund has posted.

(1) There may be occasions where a taxpayer or Power of Attorney requests expedited processing of their OIC due to an emergency or perceived emergency situation. Situations that may warrant expedited case processing include (but are not limited to):

• A contract or business agreement requiring the taxpayer, as a condition of the contract or agreement, to resolve the tax liability by a specific date,

• Availability of the money to fund the offer is limited to a certain time.

• A terminal illness may affect the ability to complete the payment terms.

• If a procedural or other type issue creates the need for a new offer to be filed and the intent is only to correct the error or defect rather than rework the offer or work it as a new submission. These situations will be rare and generally have Policy or TAS involvement. You can contact the OIC Policy mailbox for guidance.

(2) Processing Forms 656, Offer in Compromise, must be given priority consideration and handled expeditiously due to pending collection action.

(3) Refer offers received with a request for expedited processing to management for a decision on whether or not expedited treatment is warranted.

(4) If a decision is made to expedite offer processing, document the AOIC history indicating the basis for the decision. Form 656 should be clearly labeled at the top "Emergency Processing Requested." Immediate processability and assignment for investigation should be made.

(5) Every effort should be made to close the offer within 90 calendar days of receipt. In an attempt to bring the case to a prompt and timely resolution and to meet the special needs of the taxpayer, immediate contact should be made with the taxpayer to request any additional information needed.

(6) If a decision is made not to expedite the case, document the basis for the decision on the AOIC history. The manager will contact the taxpayer by telephone or correspondence explaining the basis for the decision. The case should be worked under routine processing.

(1) Taxpayers who wish to be represented must submit a properly executed Form 2848, Power of Attorney and Declaration of Representative. Review the form to ensure it includes required essential elements for validity as listed in IRM 21.3.7.5.1, Essential Elements for Form 2848 and Form 8821. Input the representative's information on AOIC and retain a copy of the form in the paper case file. Forward the original for recording on the Centralized Authorization File (CAF).

(2) Send all original correspondence to the taxpayer and provide a copy to the representative if the box is checked on the Form 2848 and the POA is authorized for all tax periods.

(3) Individuals who are not authorized to practice before the IRS with respect to a collection matter (such as unenrolled return preparer and registered tax return preparer) may accompany taxpayers to meetings with a completed Form 8821, Taxpayer Information Authorization, or other proper authorization, and receive and provide information that relates to the offer investigation. They are not authorized to represent the taxpayers or sign documents relating to offers in compromise. See IRM 5.1.10.7.2, Right to Retain Representation.

(4) If the offer contains liabilities for tax years or periods that are not included on Form 2848, send a combo letter to the taxpayer asking for an updated Form 2848/8821.

(5) If during the investigation, it is discovered that the POA no longer represents the taxpayer, secure a letter revoking the POA and document the case history. Remove the POA information from AOIC.

(6) Where a recognized representative has unreasonably delayed or hindered an examination, collection, or investigation by failing to furnish, after repeated requests, non-privileged information necessary to the examination, collection or investigation, the IRS employee conducting the examination, collection, or investigation may be given permission to bypass the representative and contact the taxpayer directly for such information [26 C.F.R. 601.506 (b) (Statement of Procedural Rules)]. Prior to contacting the taxpayer directly, the IRS employee must first initiate bypass procedures. See IRM 5.1.23.6, By-Passing a Taxpayer's Authorized Representative.

(7) If you have a joint offer and only one spouse has a POA, the PE will have to update the Entity screen on AOIC by removing one spouse to compose a letter for the taxpayer and the POA. Then go back to the Entity screen and do the same for the other spouse. Once the letters are generated, they are to be mailed in separate envelopes to avoid disclosure. Once the PE has prepared both sets of letters, it is the PE’s responsibility to go back to the Entity screen and add both taxpayers back on the Entity screen. AOIC remarks should clearly reflect actions taken.

(1) Form 4442, Inquiry Referral, will be prepared by Automated Collection System (ACS), Toll Free, and Walk-in operations to provide information submitted by the taxpayer on a previously filed offer in compromise. Normally, these forms will be prepared if the taxpayer has yet to be contacted or notified of the status of the offer within 45 calendar days of the offer being submitted for processing.

(2) Form 4442 will be faxed to the appropriate COIC sites. The forms should be reviewed within 48 hours of receipt and any necessary action taken on the account based on the information provided.

(1) Taxpayers have a right to receive correspondence about their Offer in Compromise. The IRS is required to exercise due diligence to find and use taxpayer’s last known address. It is important that all Undeliverable Mail is worked as a priority to ensure that the correspondence is mailed to the taxpayer’s current address.

(2) IDRS research should be done utilizing the CC ENMOD or IMFOLE to see if there is a new address on file. If there is a new address, then re-mail the undeliverable notice in a new envelope. If no new address is found, telephone the taxpayer or POA for better address.

(3) If the taxpayer is deceased, and there is no secondary taxpayer, POA, or fiduciary on file, do not re-mail the undeliverable notice. Instead, include the undeliverable notice in the case file. If there is a valid fiduciary or POA on file, re-mail the undeliverable letter to their address of record.

(4) If the address on the USPS yellow address sticker is not on AOIC/IDRS, (1) re-mail the undeliverable letter to the address on the yellow sticker, (2) send Form 8822, Change of Address, to the taxpayer, (3) add 30 days to the suspense date on AOIC and input remarks on AOIC documenting the actions taken.

(5) The IRS may change an address using information received from the USPS, National Change of Address (NCOA) database. Upon receipt of any undeliverable mail piece with an affixed USPS "yellow label", and IRS office should examine, research, and update the address as follows:

• If the taxpayer’s name printed in the letter and what is shown on the "yellow label" are exactly the same, update the taxpayer address to the "yellow label" address

• If the taxpayer’s mailing address differs from the "yellow label" and the name printed on the "yellow label" is an exact match to the correspondence, update the taxpayer’s mailing address to the "yellow label" address. Reissue the correspondence to the taxpayer’s updated mailing address

• If the taxpayer first name is like that on the "yellow label", but the last name is an exact match, confirm whether IRS records show any other taxpayers with similar first names and the exact same last name on the same address. If not, update the taxpayer address. Otherwise, do not update the taxpayer address.

• In all other cases do not update the taxpayer’s address.