Scott D. Reisher
Director Collection Policy
- IRC § 7122(d)(1) requires the Service to conduct an independent administrative review of a proposal to reject an OIC. The review must be conducted prior to the rejection being communicated to the taxpayer.
- The Independent Administrative Reviewer (IAR) is responsible for conducting this review.
- The IAR is responsible for reviewing each case to determine if the proposed rejection is reasonable based on the taxpayer's facts and circumstances. The IAR is not responsible for conducting a quality analysis of the accuracy of the documents used to support the case.
- The Offer Examiner/Offer Specialist (OE/OS) analysis of the taxpayers offer should be reviewed to determine if the basis for the rejection determination was appropriate.
- The IAR should consider if the taxpayer's rights have been observed during the offer investigation and during communication and discussions with the taxpayer or POA. These considerations should be based on issues that would impact the recommended rejection.
- The IAR should compare the amount that the taxpayer offered with the RCP in order to determine if the rejection determination is reasonable. If supporting documents indicate any circumstances that could impact either future earning potential or allowable expenses exist, the file documentation provided by the OE/OS should support their decision to exclude or include the determinations relating to the taxpayer's circumstances.
Note:The IAR should review the AET/IET and the taxpayer’s financial information to determine if the RCP amount (IRS calculation) is fully supported by the facts documented in the case file, and in consideration of the taxpayer’s offer, to determine if the rejection determination is reasonable.
- If the case file indicates issues are raised that meet either Effective Tax Administration (ETA) or Doubt as to Collectibility Special Circumstance (DCSC) criteria, as defined in IRM 5.8.11, Effective Tax Administration, the case history must address these issues and discuss the determinations made.
Note:It is not a requirement that the taxpayer specifically ask for consideration of "special circumstances." If the case file identifies the existence of special circumstances that meet ETA or DCSC criteria, this fact should be addressed by the IAR.
- The IAR should ensure that all of the facts and circumstances of the case were considered during the investigation and that the decision to reject the offer is reasonable, based on the case analysis.
- The case file should indicate an attempt to communicate the results of the offer investigation with the taxpayer or POA, prior to recommending the rejection. This communication can be accomplished by personal contact or by letter.
Exception:The only exception is for those cases rejected based on the Screen for Obvious Full Pay criteria as outlined in IRM 18.104.22.168, Offers Worked Under Screen for Obvious Full Pay Procedures (COIC Only).
- When circumstances dictate, the employee should use problem solving and negotiation techniques, and in so doing consider the taxpayer’s/POA/third party’s perspective when working toward case resolution.
- The following items should be present in the file and used as an aid for the IAR to ensure the decision was appropriate.
- Form 656, Offer in Compromise
- Form 1271, Rejection or Withdrawal Memorandum
- Rejection letter
- Asset/Equity Table (AET)
- Income/Expense Table (IET)
- Rejection summary
- Collection Information Statements (CIS)
- Case history
- Any pertinent supporting documents
- If any information is missing or unavailable that hinders the IAR in making a determination that the decision was appropriate, the case file should be returned or a memorandum sent to the OE/OS or the manager requesting the missing documentation or supporting information. In the case where the IAR is located off-site, the information needed may be faxed to the IAR for inclusion in the analysis.
- The IAR should determine if required communication with the taxpayer or POA was attempted and if these communications were reasonable based on the facts of the case. The case file should indicate an attempt to communicate the results of the offer investigation with the taxpayer prior to recommending the rejection.
- Communications may not necessarily be telephone calls. In some cases, they may be conducted entirely in the form of letters to the taxpayer or their authorized representative.
- The case file should document these communications and any specific issues that are in dispute.
- Prior to the proposed rejection being submitted to the IAR, the authorized official must have reviewed the file and signed the Form 1271 indicating concurrence with the proposed disposition.
- Once the approving official has signed the Form 1271, the offer must be re-assigned to the IAR pool on AOIC. The file is then forwarded to an IAR for review using the Form 3210, Document Transmittal.
- No later than seven (7) calendar days after receipt of the file, the Field IAR will load the case onto ICS. AOIC should also be updated to reflect the IAR's assignment number.
- The Field IAR will complete the review and reach a determination no later than 30 calendar days from opening the ICS OI or assignment on AOIC.
- Once the offer is reviewed by the IAR, AOIC must be updated to reflect the results of the review. The Field IAR must also document the results of the review on ICS, and complete the disposition of the assigned Other Investigation.
- When communicating the results of the review, the employee will provide a response that is accurate and communicated in a clear, concise, professional, easy to understand manner.
- If the proposed rejection of the offer is sustained by the IAR, the reviewer will:
- Update the IAR "Main Screen" on AOIC indicating the appropriate disposition.
- Sign the Form 1271 as the reviewer, indicating concurrence with the proposed disposition.
- Field IARs will document the results of their review on ICS indicating concurrence with the proposed disposition and close the OI assignment.
- Return the case file to the originator using a Form 3210.
- If the proposed rejection is not sustained by the IAR, the reviewer will:
- Update the IAR "Main Screen" on AOIC indicating the appropriate IAR disposition.
- Prepare the Form 5942, Reviewer's Report - Technical Services Advisory, providing an explanation of why the determination was not sustained and indicating additional actions necessary by the investigating employee. Field IARs will complete an ICS history entry noting that rejection was not sustained and the specifics of the review are noted on Form 5942 and close the Other Investigation assignment on ICS.
- Route the Form 5942 and the offer case file to the IAR Manager for approval.
- After the IAR Manager approves the Form 5942, the case will be routed as follows:
- The original Form 5942 and the offer file will be returned to the OE/OS manager.
- A copy of the Form 5942 will be sent to the OE/OS second level manager.
- A copy of the 5942 will be retained by the IAR group manager for two years after the year prepared. See IRM 1.15.28, Exhibit 1.15.28-4, Forms Listing.
- The following procedures describe necessary actions once the offer file is received by the originating office:
If… Then… Reconsideration of the offer based on recommendations from the IAR results in a determination to accept the offer Process the acceptance recommendation following procedures defined in IRM 5.8.8, Acceptance Processing. Reconsideration of the offer based on recommendations from the IAR results in a determination to continue to recommend rejection of the offer Update the case file with the additional case actions and any new information and re-submit to the IAR for a second review. The investigating employee determines that the rejection is the correct action without further development, after reviewing the Form 5942 The offer file will be returned to the IAR for reconsideration. If necessary, additional history should be included to further support the offer rejection. After a second review by the IAR, the rejection is still not sustained by the IAR and the OE/OS and the IAR disagree with the decision of the IAR The decision will be elevated to the second level manager for resolution.
- The IAR Manager will forward a memorandum to the Offer Manager with an explanation of why the rejection cannot be sustained.
- A copy of the memorandum will be forwarded to the second level manager.
- The IAR manager and the second level manager will discuss the issues to reach a resolution.
- The final decision will be made by the field second level manager for cases assigned to the field and the second level manager for those cases decided by the COIC sites.
- The original Form 5942 and any other documentation regarding second level management involvement and decisions must be retained in the offer file as a record of actions taken during the IAR process.
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