.8.2 Centralized Offer in Compromise Initial Processing and Processability
- When an offer is received in the COIC site, date stamp the form upon receipt in the IRS Received Date Stamp block of Form 656
- Sort in the following categories:
- Form 656 with check(s) for more than $150
- Form 656 with check for $150 only and no waiver
- Form 656 with waiver and a check for more than the $150 application fee
- Form 656 with check for $150 and a waiver
- Form 656 with waiver only
- Appeals Collection Due Process (CDP) offers, with checks
- Out of Area Transfers, with checks
- Doubt as to Liability (DATL)
- Query Automated Offer in Compromise (AOIC) to ensure the receipt is a new offer.
- Verify the jurisdiction of the offer.
If the office of jurisdiction is… Then… Collection
- Add the offer to AOIC
- Process in accordance with current guidelines.
COIC Interoffice Transfer
- Determine processability
- Load the offer on AOIC
- Process the payments in accordance to current guidelines.
- Transfer the offer to the correct COIC site.
- Process the payment(s) through PCC to the 4710 account.
- Forward to the Brookhaven Centralized DATL Site.
- Load the offer on AOIC
- Process payments in accordance with current guidelines.
- Immediately forward the case to the appropriate field office drop point.
Appeals Follow the procedures described below.
- Research IDRS for entity verification, bankruptcy, cross reference TINS and freeze codes.
- Print the first page of IMFOLT and include in every case file.
- Complete the following actions on AOIC:
- Load entity information
- Initiate Data Download
- Write the AOIC offer number on the top right corner of the Form 656, Offer in Compromise, in red ink.
- Write the AOIC offer number in blue or black ink in the upper left hand corner of the remittance.
Note:For RS-PCC offers include the offer number in the remarks section of the Form 3244.
- Research CFINQ. If valid POA information is found, load the information on the AOIC POA Screen.
- Follow procedures in IRM 220.127.116.11 to make a processability determination.
- Multiple offers submitted with one remittance intended as the application fee(s) and/or payment(s) for all will be processed. Load the cases to the AOIC system.
- COIC PEs are solely responsible for determining processability on all offers received and worked by the Service; including DATL offers to compromise a TFRP or PLET. All other DATL offers are processed by the Centralized DATL Unit (see IRM 18.104.22.168, above). This determination must be made within 24 hours of receipt of an OIC at the appropriate COIC site.
- Each new receipt will fall into one of the following categories:
- Not processable – The taxpayer does not meet one or more of the minimum established criteria for offer consideration.
- Processable – The taxpayer meets the minimum criteria for offer consideration.
- The COIC sites are solely responsible for determining offer processability. An OIC will be returned as not processable if one or more of the criteria below are present:
- Taxpayer in Bankruptcy – An offer will not be considered while a taxpayer is in bankruptcy. See IRM 22.214.171.124.3 below for procedures on conducting additional research on bankruptcy OICs.
- Taxpayer did not submit the application fee with the offer – The application fee of $150 or the signed Form 656-A, Income Certification for Offer in Compromise Application Fee, must be submitted with each Form 656.
- Taxpayer did not submit the required initial payment with the offer. (1) Lump Sum Cash offers must include 20% of the offered amount or a signed Form 656-A; (2) Short Term and Deferred Periodic Payment offers must include initial proposed installment payment with the offer or a signed Form 656-A.
Exception:If the taxpayer submits the $150 application fee and a portion (but not all) of the required initial lump sum payment, the offer will be deemed processable, but not perfected.
- An OIC is considered pending when a delegated IRS official signs and dates the Form 656 in the appropriate section. This date is the official offer pending date. If the offer is determined to be processable, the PE must immediately sign and date the waiver on the Form 656.
Note:The pending date entered on AOIC must match the date the delegated official signed the Form 656. This date must also match the TC 480 date when it posts to IDRS.
- No application fee or TIPRA payment is required for offers based solely on DATL.
- The Form 656-A applies only to individual taxpayers.
- Review for processability criteria.
If... Then... The offer is not processable contact the Counsel Attorney and explain why the offer cannot be processed. The offer is processable follow current IRM procedures, including loading the offer on AOIC.
- All docketed cases will be worked by field offer groups. Once processability is determined, COIC should immediately forward the entire case to the Area drop point. Include the Expedite Transmittal sheet in the case file.
- Document the AOIC history.
- In some cases, it may be necessary to conduct additional research to determine whether a taxpayer is still in bankruptcy or has been discharged or dismissed. If the taxpayer failed to indicate the date of dismissal or discharge on the Form 433-A or Form 433-B, bankruptcy should be verified using IDRS, Automated Insolvency System (AIS) and Public Access to Court Electronic Records (PACER) before returning as not processable.
Circumstance… And… Then… Upon receipt of an initial offer with an application fee and TIPRA payment IDRS research shows an open TC 520 with a bankruptcy closing code present on any liability Follow current procedures to refund or return the application fee and TIPRA payment, as appropriate. Upon receipt of a subsequent periodic payment, and there was previously no open TC 520 with a bankruptcy closing code present on any liability at the time the offer was deemed processable IDRS research now shows an open TC 520 with a bankruptcy closing code present on any liability (posted date is prior to waiver date) Follow current procedures for not processable return to refund or return the application fee and TIPRA payment, as appropriate.
Note:Field OS must contact the appropriate COIC site.
During the investigation an open TC 520 with a bankruptcy closing code is discovered on any liability The posted petition date was after the receipt of the original offer or subsequent periodic payments Contact the local Insolvency function for instructions on processing subsequent payments. Return the offer.
- The following TC 520 closing codes can be used to identify when a taxpayer has filed bankruptcy: 60 - 67, 81, 83, and 85 - 89. See Document 6209, IRS Processing Codes and Information, for additional information.
- Document the AOIC history with any findings.
- Complete the AOIC Payment Fee Screen and generate Form(s) 3244 or 2515, Record of Offer in Compromise, as appropriate.
- Complete the Terms Screen on AOIC.
- Verify MFT screens are populated through Data Download or manually input all required information.
Note:The MFT screen must reflect the liability(s) at the time the offer was submitted. Do not update the liability(s) to reflect TIPRA payments, during the investigation. The exception would be if the change was due to abatement, another assessment, or a refund offset. Additional tax period(s) may be added at any time.
- On all IMF cases enter "P" if the offer is for the primary taxpayer of the controlling TIN on the entity, enter " S" if the offer is for the secondary taxpayer, or "B" if both husband and wife are making a joint offer. If only one party of a joint liability is submitting the offer, remove the "Y" from the MFT screen. This will take the case out of Status 71.
Note:See IRM 126.96.36.199.2 below for guidance on when it is appropriate to change the status code.
- Include a Master File print or a current IDRS print showing the liabilities and CSEDs at the time the offer was submitted with each case file.
- Check for any freeze codes such as: -Y (offer in compromise), -W (litigation), -Z (Criminal Investigation), -A (duplicate return), -V (bankruptcy), -L (AIMS) that may require special action. Freeze codes indicating CID, bankruptcy, Exam issues (i.e. AIMS), duplicate return filed, other litigations should be worked in accordance with guidelines in this IRM.
- Check all SSN, EIN, and ITINs known or found for the taxpayer. At a minimum check the following IDRS command codes: ENMOD, INOLES, CFINQ, BMFOLI, SUMRY, and IMFOLI. If any data is found, print and include it in the file.
- Research IDRS command codes TXMOD and FFINQ for additional data, but it is not necessary to include printed copies in the file.
- Verify the taxpayer has submitted the appropriate Form 656, Form 433-A and/or Form 433-B.
- Verify the taxpayer has submitted the application fee, required TIPRA payment, or signed Form 656-A for each offer submitted.
- Review AOIC and prior case histories for any previous offers. Document the current case history with the findings. This will allow the OE/OS to determine upon initial analysis if the offer was submitted solely to delay collection. See IRM 5.8.3 for additional processing guidance.
- Document the AOIC history.
- The PE must verify that the TC 480 has posted to each tax period shown on the Form 656.
- If the 480 has not posted or required manual input, document the AOIC history indicating that the 480 had to be manually input, therefore must be manually reversed at closing.
- The table below provides instruction for inputting the TC 480.
If... Then... TC 480 is not present Input the TC 480 using CC REQ77. Use the date the Form 656 was signed by the IRS official for the transaction date, not the date the taxpayer signed.
Note:If the TC 480 is manually input, it must be manually reversed.
All TC 480s present do not have the same date the Form 656 was signed
- Input TC 483 using CC REQ77
- Input TC 470 using CC REQ77 to prevent balance due notices from issuing.
- Input TC 480 using CC REQ77 with the correct date; include a posting delay code of 1.
Note:The TC 480 dates for the amended 656 must have the same date the original offer was signed by the IRS official. If the TC 480 is manually input, it must be manually reversed.
- If the offer is determined to be processable, it may be necessary to change the status code to 71.
- If tax periods are in status 60, 61, 53, or if the Form 657 indicates that no TDAs are to remain in the field, remove the "Y" on each tax period on the MFT screen. Do not change the status of those accounts, unless the taxpayer has defaulted the installment agreement or the taxpayer submitted a periodic payment offer (see paragraph 4 below).
- The status code may be changed if the module is a Status 53 - with Closing Code 03 (unable to locate) or Closing Code 12 (unable to contact).
- Periodic payment offers in status 60 – if the offer was submitted under the criteria for periodic payment, the indicator should be changed to Status 71 showing the taxpayer no longer is required to make both the TIPRA payment and the installment agreement payment simultaneously. If reinstated, the fee for the IA will be waived. See Exhibit 5.8.2 – 1 below for instructions.
- When returning the offer as not processable, the return letter should specify all reasons for the determination.
- If the offer is not processable:
- Complete the AOIC payment screen as applicable to the not processable criteria.
- Prepare the return letter.
- Stamp the Form 656 with RETURN in red (or circle the date in red if a red ink stamp is not available) and write the date that the offer was determined to be not processable.
- Cross out all IRS received dates with a red "X" .
- In addition to identifying the reason(s) for the determination, also address any issues concerning combined joint and separate liabilities, if appropriate; for example, individual and corporate or partnership liabilities on one Form 656. In those cases, include "Option AF" in the return letter.
- Annotate the AOIC remarks with the payment information, specifying the reason(s) for the not processable determination.
- If payment was processed through RS-PCC, prepare the Form 5792, Request for IDRS Generated Refund (IGR), for a manual refund.
Note:The Forms 5792 on not processable offers will be processed according to normal manual refund procedures outlined in IRM 21.4.4, Manual Refunds.
- Do not sign the Form 656.
- Managers and journey level PEs may sign and date the letter and close the case on AOIC with a final disposition code of 10.
- Send the Form 656, the return letter, Publications 1 and 594 to the taxpayer along with all other documents originally sent. If a POA is present, send the representative a copy of the letter. If disclosure issues exist, use the appropriate paragraph to indicate this in the return letter, and do not send a copy to the representative.
- If the Form 656 was forwarded by an RO with a Form 657 and it is determined to be not processable, the COIC site should forward the Form 657 and a copy of the not processable letter to the approving official of the Form 657. If a Form 656 was forwarded by an RO without a Form 657, forward a copy of the return letter to the RO assigned the collection case for information.
- Caution should be exercised to ensure that no IDRS prints or other internally generated documents are sent to either the taxpayer or the POA. All internal documents should be destroyed. Nothing is required to be maintained in local closed files on these cases because this information is available from IRS systems.
- If the offer was originally determined processable and the application fee was deposited, but it was later concluded that this determination was made in error, processing should stop. The case should be closed using not processable procedures defined above. In these cases, it is important to ensure AOIC is updated to "not processable" to reverse the TC 480(s). This will result in the generation of a TC 483 posting to the appropriate modules. The $150 application fee must be refunded to the taxpayer.
- If the taxpayer submits correspondence but does not include a Form 656, the payment and documentation must be returned to the taxpayer with the Form 656 Package. Unless the IRS receives a Form 656, the IRS does not have an offer.
- The procedures defined below provide instruction for processing all payments received with offer submissions.
- Most payments received for the OIC Application Fee and TIPRA payments will be processed by Campus Support utilizing Remittance Strategy Paper Check Conversion (RS-PCC).
- All payments regardless of whether scanned through PCC or RS-PCC must be delivered to Campus Support for processing within 24 hours of receipt. The 24-hour deposit standard must be met.
- COIC is responsible for completing the Form 3244, Payment Posting Voucher, with the following information:
- Tax period
- Transaction received date
- Taxpayer name, address, and zip code
- Transaction code
- Transaction amount
- Prepared by (name and unit symbol)
- DPC code
DPC Definition 33 Offer in Compromise $150 application fee 34 Offer in Compromise 20% lump sum/initial periodic payment 35 Offer in Compromise subsequent payments made during the offer investigation 02 Trust Fund Payments 09 Accepted Offer Payments 99 Miscellaneous
- Write "RS-PCC" on the Form 3210, Document Transmittal.
- Write the offer number on the Form 3210 for each payment processed through RS-PCC.
- Document AOIC remarks with the payment type and application of the funds.
- All payments will be applied to the earliest CSED, in the best interest of the government unless designated by the taxpayer. If the taxpayer designated application of the payment(s), document the AOIC remarks with the information.
- See IRM 188.8.131.52.2 below for a list of payments that cannot be processed through RS-PCC.
- The following payments cannot be processed through RS-PCC and must be processed through Paper Check Conversion (PCC):
- Tax payments (Form 3244, Payment Posting Voucher) that are split payments.
- Government checks not endorsed
- Third party checks not endorsed
- Foreign checks
- Any check that cannot be read by RS-PCC scanner
- Form 656–A is received with a payment. These funds are considered a deposit and must be deposited in the 4710 Account.
- Any funds that are received with the original offer that cannot be identified as the application fee or the initial TIPRA payment These funds are considered a deposit and must be deposited in the 4710 Account.
- Checks posted to the 2395 Account. See the If/Then Chart in IRM 184.108.40.206.
- Payments posting to MFT 51 and MFT 52.
Note:Subsequent payments received during the offer investigation are no longer processed under discovered remittance procedures.
- Payments that cannot be processed through RS-PCC or qualify as a deposit to the 4710 Account must be processed through PCC.
- Complete the payment screen on AOIC.
- Generate Form 2515 from AOIC (make one copy or print 2 copies).
- Prepare Form 3210 annotating "PCC" in the upper right hand corner.
- Complete Form 2515 and attach the payment(s).
- Form 2515 Annotations (Abbreviations) - COIC will use the following to annotate the Form 2515 beside the appropriate entry in the Amount column. The blank space at the bottom of the form may be used for any additional remarks.
Definition Abbreviation Application Fee AppFee Payment Pymt Deposit Dep Estimated Payment ES Refund to Taxpayer
Note:To be used when COIC prepared the Form 3753, Manual Refund Posting Voucher, to refund the Application Fee and then forwards to Cincinnati for processing
RefTP Designated Payment
Note:Indicate MFT and Period
- Forward the Form 3210, Form 2515, and remittance(s) to PCC for processing.
- Forward a copy of the Form 2515 to MOIC. Attach the Transmittal Form 3210.
- Attach Form 3210, Document Transmittal, and include (1) offer number; (2) taxpayer identification number; (3) taxpayer name; and (4) amount of the payment.
- Transmit the payment by traceable methods to the appropriate MOIC unit for processing.
- Annotate in the remarks section of the Form 2515 the payment application (e.g., 20% lump sum, first periodic installment, $150 application fee, and any deposit, if applicable).
Note:If the taxpayer designated application of the payment, enter the appropriate information in the remarks section of the Form 2515. If the taxpayer also submitted a deposit separate from the required TIPRA payment, split the payment as requested. Enter the information according to the offer terms and annotate the difference as the deposit if designated by the taxpayer on Form 656, Section IV. The deposit will remain in the 4710 Account until a determination is made; that is, the offer is accepted, rejected, or returned.
- Retain a copy of the Form 2515 in the case file.
Note:The entries on the Form 2515 must equal to the check(s) amount(s) recorded on the Form 3210.. The Form 3210 and associated documents should be returned to COIC clerical for processing.
- Document the AOIC remarks with the payment type and application of the funds.
Example:One check received in the amount of $650. Payments applied: $150 application fee; $300 payment; $200 deposit.
- Deposits are not treated as payments of tax upon receipt. They are held in a special deposit fund commonly referred to as the 4710 Account. The deposit is not reflected on IDRS nor applied to any specific tax period until the offer is accepted. For those offers previously loaded on AOIC, the amount will be annotated on the Deposit Screen of the taxpayers AOIC record by the MOIC employee processing the remittance.
- COIC sites will treat any remittance (including those for $150) received with DATL offers (non-TFRP/PLET) as a deposit. Since such offers are not loaded onto AOIC, and will be manually monitored by MOIC, employees should list any such remittances on the Form 3210 and prepare the Form 2515 for processing. Utilize the RACS deposit numbering system provided by MOIC to generate and enter a 10-digit control number on both the Forms 3210 and 2515.
Note:A PDF fillable version of the Form 2515 is accessible on the IRS Intranet.
- All payments regardless of whether scanned through PCC or RS-PCC must be delivered to Campus Support for processing within 24 hours of receipt. The 24-hour deposit standard must be met.
- The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was signed into law on May 17, 2006.
- The law stipulates that OIC's received on or after July 16, 2006 must include the application fee and, based on the offer terms, one of the following:
- Lump Sum Cash Offers – The submission of any lump-sum OIC should be accompanied by 20% of the amount of the offer or Form 656-A. The term "lump sum" means any offer of payments made in 5 or fewer installments.
If… Then… A taxpayer submits a Lump Sum Cash offer and the terms are a single amount payable in 5 months or less Load the offer on the Terms Screen as a Cash offer. The taxpayer submits a Lump Sum Cash offer and the terms are a single amount payable in more than 5 months Load the offer on AOIC Terms Screen as a Deferred Offer.
- Short Term and Deferred Periodic Payment Offers – The submission of any periodic payment OIC should be accompanied by the amount of the first proposed installment or a 656-A.
Short Term Periodic Payment Offers Deferred Period Payment Offers If the taxpayer submitted an offer payable in 6 to 24 months... If the taxpayer submitted an offer payable in the remaining time on the statutory period for collection... Then load the offer on AOIC Terms Screen as a deferred offer. Then load the offer on AOIC Terms Screen as a deferred offer.
- Document the terms of the offer on the AOIC Terms Screen.
- If the taxpayer submits both the application fee and the required initial TIPRA payment (20 % or first installment) in one check, the $150 Application Fee will be entered first and the remainder will be applied as the payment amount. A decision concerning whether the submitted payment complies with the offer terms will not be made until a processability determination has been completed.
- Insufficient remittance of the required initial lump sum cash payment (20% of the offer amount) will be considered a perfection issue, but the offer may still be processed. See IRM 220.127.116.11 for more information regarding the perfection of incomplete offers.
- Insufficient periodic payments will render the offer not processable, and the offer will be returned to the taxpayer.
- The required initial TIPRA payment (20% or periodic payment) will be applied to the taxpayer’s liability in all instances. These monies are not refundable to the taxpayer.
- Taxpayers may designate how these payments are to be applied to the tax liabilities. If the taxpayer does not designate how these payments are to be applied, the IRS will apply them to the tax liability with the earliest unexpired CSED.
- Application fees will continue to be refunded to the taxpayer on not processable offers.
- Qualified taxpayers are required to submit Form 656-A for a waiver of the application fee. Taxpayers who qualify for a waiver of the application fee will also be exempted from all TIPRA payments. If, during the investigation, the OE/OS determines the taxpayer does not qualify for the waiver, make one attempt to request the taxpayer submit the required initial TIPRA payment and application fee. If the taxpayer fails to respond, the offer will be returned as a processable return.
- If the taxpayer submits only the $150 application fee and does not submit the any portion of the 20% of a lump sum cash offer or the required initial payment of a periodic payment offer, the offer will be deemed not processable upon receipt, and will be returned. These offers must receive expedited processing to generate the return letter and update the AOIC history to meet the 24-hour deposit requirement.
- The following are procedures for immediate processing of the not processable returns due to receipt of the $150 application fee submitted with a personal check.
- Complete a separate Form 3210 for those offers to be returned based on the receipt of only the $150 application fee.
- Enter no more than 5 offers on the Form 3210.
- Load onto AOIC.
- Hand-carry the Form 3210 to the Campus Support Mail Team to get personal checks stamped as non-negotiable.
Note:COIC will use a non-negotiable stamp on personal checks when the taxpayer fails to submit the appropriate TIPRA payment or the application fee. The Form 3210 will be issued for control purposes only and should be maintained as a record of the payment(s) received. The Form 3210 must also indicate the check(s) were stamped as non-negotiable and the date they were stamped. The checks must be stamped non-negotiable within 24 hours of receipt.
- Personal checks stamped non-negotiable will be returned to the designated COIC function employee housed in the Campus Support mail area.
- Personal checks stamped non-negotiable will be suspended by the COIC function and maintained in a locked file until the completion of the return package.
- Personal checks stamped non-negotiable and the offer package should be returned to the taxpayer through normal mail out procedures.
- The AOIC history must be documented indicating the check was stamped non-negotiable and include the date it was stamped.
Note:Once the checks have been stamped non-negotiable and handled according to the procedures above, the offer package should be assigned to a PE for completion of the return letter and offer package.
- The following are procedures for immediate processing of the not processable returns due to receipt of the $150 application fee submitted with certified funds (money order, bank check, cashiers check, government check).
- Certified funds will be deposited upon receipt and processed through the normal work stream for both the clerical and process examiner procedures.
- The AOIC history must be documented indicating the check was stamped non-negotiable and include the date it was stamped.
- Request a manual refund by preparing the Form 3753, Manual Refund Posting Voucher.
Note:Form 3753 manual refunds on not processable offers will be processed according to normal manual refund procedures outlined in IRM 21.4.4, Manual Refunds.
- Prepare the offer package to be returned to the taxpayer.
- The following procedures will only apply if the processability determination and return package can be completed on an expedited basis and the offer package with the certified funds payment instrument can be returned to the taxpayer within 24 hours of receipt.
- Hand-carry the certified funds payment instrument and return offer package to the Campus Support Mail Team within 24 hours of receipt. The Campus Support Mail Team is responsible for preparation and mailing of the certified package.
- The Form 3210 must be completed by annotating the $150 in red ink to indicate the payment was returned via certified funds to the taxpayer.
- If the processability determination and return package cannot be completed within 24 hours of receipt, the certified funds payment instrument must be deposited upon receipt and processed in accordance with the instructions below.
- Management must establish controls to ensure returned offer packages are associated with the non-negotiable payment instruments and processed in accordance with established procedures.
- It is possible the taxpayer may submit the $150 Application Fee, the required initial TIPRA payment, and a deposit with the Form 656.
- If submitted on one check, the required application fee, required initial TIPRA payment and a deposit must be entered as one amount on the Form 3210 and processed through PCC.
- If submitted on separate checks, the application fee, required initial TIPRA payment, and deposit will be entered on separate lines on the Form 3210 and processed through RS-PCC.
- All checks must be deposited within 24 hours.
- In all cases, the required initial payment and subsequent payments will be applied to the taxpayer’s account, whether the offer is deemed processable or not processable. These funds are non-refundable and should be moved and immediately posted to the taxpayer’s account (either as designated by the taxpayer or to the Government’s best interest if not designated). This does not include deposits or application fees. Deposits and application fees may be refundable.
- If the taxpayer also submitted a deposit and the offer is not processable, the deposit should be refunded to the taxpayer. Prepare the Form 3753, Manual Refund Posting Voucher, to refund the deposit from the 4710 Account, and forward it to MOIC for processing. Annotate the AOIC history screen.
- If the amount submitted with the Form 656 exceeds the amount required, the entire amount will be treated as a non-refundable payment of tax, unless the taxpayer indicates on the Form 656, Section IV, to treat the excess amount (less the $150 application fee if one check was submitted) as a deposit.
- If the taxpayer sends one check, the amount submitted exceeds the required amounts, and the taxpayer indicated how the payment should be applied (for example, as a deposit or an estimated tax payment), process the amount according to the taxpayer’s designation. Any payments other than the application fee, required TIPRA payment, or deposit must be processed on Forms 3244 with the appropriate transaction code and designated payment code (DPC). For example, an estimated payment will be a TC 430 (for IMF) or TC 660 (for BMF), instead of TC 670. This determination will be made by the PE when making a processability determination and applying payments on the Form 3244 using the IRS received date as the payment date.
- The "If and Then" table below provides the criteria for processing of the above sorts:
If you receive a… Then… Form 656, the $150 application fee and required initial TIPRA payment and the terms of the offer is lump-sum or periodic payment
- Load the offer on AOIC.
- Document the case history with check application information, including the Batch Number.
- Process payments through RS-PCC or PCC as applicable.
Form 656 with the $150 application fee and no required initial TIPRA payment (20% or first installment payment) Offers received with a check for the $150 application fee only are deemed not processable upon receipt and will be sorted by the clerical function during the fine sort.
- Load the offer in AOIC.
- Update the AOIC history documenting that the offer is not processable.
- Complete the Form 3210 for a not processable return.
- If the taxpayer submitted a personal check, COIC will stamp the check not-negotiable, generate the return letter, and send to the taxpayer.
- If the taxpayer submitted certified funds (money order, certified check, etc), COIC will generate the return letter, and the funds will be returned by certified mail by Campus Support.
Form 656 from an individual taxpayer with both a $150 application fee and a signed Form 656-A certification, and the required initial TIPRA payment
- Load offer in AOIC.
- Prepare the Form 2515 designating the payment(s) as a deposit and process through PCC.
- Complete the AOIC payment screen indicating "valid waiver " .
Note:If during investigation, the offer examiner determines the taxpayer does not qualify for the waiver, update the AOIC payment screen and request the payments be applied to the liabilities, and continue working the offer.
Form 656 from an individual taxpayer with both a $150 application fee and a signed Form 656-A certification, and no required initial TIPRA payment
- Load offer on AOIC 2. Complete the AOIC payment screen indicating "valid waiver"
- Prepare the Form 2515 designating the $150 as a deposit and process through PCC.
Note:If during investigation, the offer examiner determines the taxpayer does not qualify for the waiver, update the AOIC payment screen and request the taxpayer submit the required initial TIPRA payment. Allow a reasonable amount of time to respond. If the taxpayer does not respond with the required payment, the offer will be a processable return. If the taxpayer submits the payment(s), continue working the offer.
Form 656 from an individual taxpayer with a signed Form 656-A certification (instead of the $150 application fee and required initial payment) Complete the AOIC payment screen indicating "valid waiver " .
Note:If during investigation the offer examiner determines the taxpayer does not qualify for the waiver, update the payment screen and request the taxpayer submit the required initial TIPRA payment and application fee. Allow a reasonable amount of time for a response. If the taxpayer does not respond with the required payment and fee, return the offer.
CDP Form 656 – Appeals Jurisdiction
- Complete the Form 3210 by entering the following: (1) RACS number (2) Offer Number (3) SSN/EIN (4) Name Control (5) Check Amount (6) Check Number (7) Check Type (8) The $150 Application Fee (9) Amount of the required initial TIPRA payment and deposit, if any.
- Prepare the Form 2515.
- Complete the CDP AOIC Remittance Screen.
- Process in accordance to the current guidelines Document the AOIC history with payment application information.
Out of Area Transfers
- Process according to the procedures outlined above, as appropriate.
- Make the processability determination and apply the initial TIPRA payment to the taxpayer’s liability, as appropriate.
- Transfer to the correct area office.
DATL offer (Form 656 L) for a TFRP only liability with a separate application fee DATL offers (Form 656-L) are exempted from application fees and all TIPRA payments. Any fee or payment will be treated as a deposit and processed on the Forms 3210 and Form 2515 through PCC. DATL offer (Form 656 L) for a TFRP only liability with a single remittance that represents both an application fee and a deposit.
- Apply the entire amount as a deposit.
- Complete the Form 3210. Prepare Form 2515 and process through PCC.
Note:DATL offers are still exempted from fees and Subsequent payments (periodic payment offers) made during the offer payments. Any fee or initial payment will be treated as a deposit.
- DATL offers (and any other manually monitored offer such as CDP or DOJ) require the same RACS numbering scheme in place of the offer number on the Form 3210, COIC Remittance Tracking Report and Form 2515 as outlined above.
- Investigation must also be deposited within the 24-hour requirement as defined above.
Note:Subsequent installment payments of a periodic payment offer are non-refundable and should be applied to the earliest tax liability with the earliest CSED or as designated by the taxpayer.
- If the payment is submitted on Form 656-PPV, Partial Payment Voucher:
- Process the payment as described above through RS-PCC or PCC, when applicable.
- Document the case history on AOIC.
- Forms 2515 and 3753 will be forwarded to COIC after processability determinations have been made.
- Forms 3210 will be returned to COIC for processing of all attached Forms 3244. All completed Forms 3210 will be filed and retained in COIC.
- If the offer was determined to be processable and the payments processed through PCC, forward the related Forms 2515 to MOIC for processing with a copy of the Form 3210. The Form 3210 serves as the transfer transmittal.
- If the offer was determined to be not processable and payments processed through PCC, forward the related Form 2515 and Form 3753 to MOIC for processing with a copy of the Form 3210. The Form 3210 serves as the transfer transmittal.
Note:All forms should be forwarded to MOIC on an expedited basis.
- The COIC sites will retain processable offers for further OIC processing and assignment.
- Not processable offers (with the exception of offers returned because only the $150 application fee was submitted with a personal check) will be returned to the clerical function with the associated Forms 3210, 2515, and 3753. The PE will prepare the return letter and envelope for mail out. The following actions must be taken:
- Date and sign the return letter
- Include with the letter any other associated documents
- Seal the envelope for mailing
- Close with final disposition 10 on AOIC
- Include the Form 656
- Return to the clerical function to be mailed
Note:If the offer is being returned because the taxpayer submitted only one $150 personal check, do not seal the envelope. The clerical function must associate the check with the offer package before it is returned.
- The Service only retains the application fee for processable offers; therefore, fees associated with offers that are initially deemed processable but subsequently determined to be not processable must be returned to the taxpayer.
- If a case was erroneously deemed processable, the application fee must be returned to the taxpayer by requesting a manual refund because of the requirement that all application fees and initial payments be deposited within 24 hours. When an erroneous processability determination is corrected, prepare the return letter and correct the AOIC fee screen record. Follow procedures in IRM 18.104.22.168, above, for refund procedures.
- ) An unassessed liability is a liability where no assessment has been made. These procedures do not apply to unassessed Examination or Automated Underreporter cases. See IRM 5.8.1 for definitions of unassessed liabilities.
- If an offer is received that is solely for unassessed periods, COIC will determine processability using the following procedures.
If… Then… The offer is not processable Return the offer. The offer is processable, research IDRS for the return(s), and if IDRS indicates the return has been received, but has not posted
- Continue working the offer
- Post the payments to the taxpayer account. Request input of a TC 570 with "$.00" , to allow the payment to post to the taxpayers account, before the assessment.
The offer is processable, and IDRS does not indicate the return has been received
- Return the offer as a processable return.
- Do not return the application fee
- Return the TIPRA payment(s), and any deposit. Because we do not have an assessment, we must return any TIPRA payment(s), or deposits.
- Post the application fee to the 2395 Account only, using Form 2515.
- Generate the Return Letter on AOIC using paragraph T.
Note:MOIC will notate the Form 2424 with the following comment "offer submitted for an unassesssed liability" .
- The procedures below apply to cases falling under the jurisdiction of Appeals. They do not apply to CDP procedures established for cases investigated by COIC. See IRM 5.8.4 for criteria and guidance.
- OICs submitted directly to the Compliance employee, are occasionally identified as having an open CDP control. When this occurs, the COIC site CDP coordinator will research Appeals Centralized Database System (ACDS) to determine if the CDP is still open, and if a determination letter has been issued.
- If the CDP determination letter has not been issued or a withdrawal has not been signed and dated, the offer is considered to still be open and under the jurisdiction of Appeals.
- If the offer is under the jurisdiction of Appeals:
- Move all payments to the Appeals Fee Screen.
- Delete the offer from AOIC.
Note:It is the responsibility of the COIC site to ensure all TC 480s are appropriately input on all related tax periods. This includes balance due periods not specifically listed on the Form 656. If the module is an MFT 31, request input of TC 470 with Closing Code (CC) 90 to suspend collection activity. It will be the responsibility of Appeals to resolve each TC 480 (e.g. input of TC 481, 482, 483) after conclusion of the offer investigation.
- Forward the case file to Appeals.
- If Collection files a lien while an offer is being investigated, complete the investigation. If the taxpayer files a CDP request because of that lien and the CDP remains open, the offer falls under the jurisdiction of Appeals. Collection cannot work any offer that has an open CDP case. If the case falls under the jurisdiction of Appeals, forward the entire case to Appeals and delete the offer from AOIC. See IRM 5.12.1, Federal Tax Lien – Lien Appeals, and IRM 5.1.9, General Collecting Procedures – Collection Appeal Rights.
Note:Appeals may require Collection's assistance to complete the investigation on complex cases. In those cases, an Appeal Referral Investigation (ARI) may be issued to the field.
- The same processability criteria will be applied to these cases, but these OICs will not be loaded on AOIC.
- CDP offers must be received with the required remittances to meet the basic processability criteria and processing guidelines. These offers will not be controlled on AOIC and will require special handling as follows:
- Payments made on offers not controlled by the AOIC program must be processed manually using a specially designed RACS numbering scheme.
- A manual Form 2515 must be prepared on CDP offers. Include all taxpayer entity information, including the TIN.
- The following numbering scheme should be used in place of the offer number on the PCC Form 3210 and Form 2515:
- The first two digits should be 17 (Memphis COIC) or 18 (Brookhaven COIC), as appropriate.
- The third digit should designate the type of offer (i.e., 1 - for Appeals; 2 - for Exam/DATL; 3 - for DOJ; and 4 - for CI).
- The fourth and fifth digits should be the area office (i.e., Appeals AO) where you are sending the case.
- The six and seventh digits should be the year.
- The remaining three digits should be the sequence #.
Example:The RACS number should be 10 digits – 1714806123
- Assign one RACS number per offer.
- Maintain a log of manually assigned RACS numbers.
- Send a copy of the Form 2515 to MOIC for back-end monitoring.
- The payment date on the Form 2515 must be the IRS received date.
- Appeals will provide COIC with both processable and not processable determination letters containing all necessary information, including the Appeals contact information on Appeals Transmittal Form 3210. Appeals will provide two copies of the Appeals Transmittal Form 3210. One copy is for COIC clerical filing and the other copy will remain with Form 656 and related documents. It is the responsibility of COIC to sign, date, and mail the applicable letter based on the processability determination.
If… Then… The offer is not processable and a remittance was attached
- Prepare the not processable letter and the Form 656 to mail to the taxpayer in accordance to current IRM procedures.
- Fax a copy of the not processable letter to the Appeals employee. The Appeals employee name and fax number should be noted on the Form Appeals Transmittal Form 3210. Also, include a copy of the Form 2515 showing the designation of the monies received with the offer; noncompliance issues, if additional forms and fees are required.
Note:The Appeals Transmittal Form 3210 should remain with the case until a processability determination has been made. A copy should be retained by the Clerical staff in Appeals.
The offer is not processable and no remittance was attached Prepare the not processable letter and the Form 656 to mail to the taxpayer in accordance with current procedures. If the offer is processable and a remittance is attached
- Access the Appeals Fee Screen application of AOIC and input the fee and payment data.
- Input the Appeals employee information noted on the Appeals Transmittal Form 3210 and the Appeals Fee Screen history.
- Document the payment type, application of the funds, and taxpayer designation, if any, on the Appeals Transmittal Form 3210.
- Write the RACS number on the upper left corner of the Remittance.
- Prepare the PCC Form 3210 in accordance to current procedures.
- Mail the processability letter to the taxpayer.
- Send a copy of the letter and the original offer package to the Appeals employee designated on the Appeals Transmittal Form 3210. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210.
Note:The Appeals Transmittal Form 3210 should remain with the case until the processability determination has been made. A copy should be retained by the Clerical staff in Appeals.
If the offer is processable and the taxpayer submitted and qualified for the Form 656-A
- Mail the processability letter to the taxpayer.
- Send a copy of the letter and the offer package to the designated Appeals employee on Appeals Transmittal Form 3210. The Appeals employee name and fax number should be noted on the Appeals Transmittal Form 3210.
- When an offer is received in conjunction with a CDP and is deemed to be processable, the COIC site will input the TC 480 on all related tax periods. This includes the input of a TC 480 on all balance due periods not specifically listed on the Form 656. If the module is an MFT 31, request input of TC 470 with Closing Code (CC) 90 to suspend collection activity. It will be the responsibility of Appeals to perfect the offer document.
- COIC will advise the Appeals/Settlement Officer when it is necessary for the Appeals employee to secure additional Form(s) 656, application fee(s), and/or required initial payments prior to the investigation by generating the letter identifying "Option Y" criteria. See IRM 5.8.3, for examples of these situations. The COIC site will prepare Appeals Transmittal Form 3210 for transmittal of the processable offer back to Appeals. The Appeals Transmittal Form 3210 will include the following information:
- List the specific periods with the TC 480
- Identify an Option Y condition
- Copy of Form 2515 (showing the designation of money; i.e., fee, periodic payment received, 20% or partial payment of 20%)
- Non-compliance issues
- Additional forms, fees, and/or payments
- It will be the responsibility of Appeals to resolve each TC 480 (e.g. input of TC 481, 482, 483) after Appeals concludes the offer investigation. The Form 2515 should show the IRS received date for the date of the payment.
If… Then… It is determined that the case is under Appeals jurisdiction and the CDP condition is identified while the offer is being processed through COIC
- The COIC site CDP coordinator will advise the AO/SO of the processability determination.
- The AO/SO will generate and transmit via encrypted E-mail to the COIC site CDP coordinator the appropriate appeals processable and not processable letters.
- The COIC site will delete the offer record from AOIC and load the fee information to the Appeals application fee screen of AOIC.
- The COIC site will follow current procedures to process the letter and application fee.
Note:If the payment has not posted to IDRS, COIC will change the offer number on the PCC Form 3210, to the Appeals RACS number.
It is determined the case is under Appeals jurisdiction but the CDP condition is identified after the offer has been deemed processable and moved to a workable inventory COIC will:
- Delete the offer record from AOIC.
- Load the information to the Appeals application fee screen.
Note:The application fee and initial offer payment should have already been applied at this juncture.
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