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Thursday, September 20, 2012
Offer in compromise IRM 5.8.1
The government, like other creditors,
encounters situations where an account receivable cannot be collected in full
or there is a legitimate dispute as to what is owed. It is an accepted business
practice to resolve these issues through negotiation and compromise.
Pocedures for collection employees to follow
when considering a taxpayer's proposal to compromise.
An offer in compromise (OIC) is an agreement
between a taxpayer and the government that settles a tax liability for payment
of less than the full amount owed.The Secretary of the
Treasury is granted broad authority to compromise tax liabilities in IRC
Section § 7122.The Commissioner of Internal Revenue, under Treasury Regulation
§ 301.7122-1, is authorized to compromise a liability on any one of three
grounds: Doubt as to Collectibility (DATC), Doubt as to Liability (DATL), or to
promote Effective Tax Administration (ETA).
Delegation Order No. 5–1 (rev. 2) in IRM 1.2.44, Delegation of
Authorities for the Collection Process, delegates the Commissioner's authority
Policy Statement P-5-100
states: The Service will accept an offer
in compromise when it is unlikely that the tax liability can be collected in
full and the amount offered reasonably reflects collection potential. An OIC is
a legitimate alternative to declaring a case currently not collectible or to a
protracted installment agreement. The goal is to achieve collection of what is
potentially collectible at the earliest possible time and at the least cost to
the Government.In cases where an OIC appears to be a viable solution to a tax
delinquency, the Service employee assigned the case will discuss the compromise
alternative with the taxpayer and, when necessary, assist in preparing the
required forms. The taxpayer will be responsible for initiating the first
specific proposal for compromise.The success of the OIC program will be assured
only if taxpayers make adequate compromise proposals consistent with their
ability to pay and the Service makes prompt and reasonable decisions. Taxpayers
are expected to provide reasonable documentation to verify their ability to
pay. The ultimate goal is a compromise that is in the best interest of both the
taxpayer and the government. Acceptance of an adequate offer will also result
in creating for the taxpayer an expectation of a fresh start toward compliance
with all future filing and payment requirements.Unless special circumstances
exist, offers will not be accepted if it is believed that the liability can be
paid in full as a lump sum, or by installment payments extending through the
remaining statutory period for collection, or other means of collection.
A DATC offer amount must usually equal or
exceed a taxpayer's reasonable collection potential (RCP) in order to be
acceptable. The exceptions include special circumstances in IRM 5.8.4 and
acceptance on the basis of hardship or effective tax administration (ETA) as
defined in IRM 5.8.11.
The objectives of the OIC
·Effect collection of what can reasonably be collected at
the earliest possible time and at the least cost to the government.
·Achieve a resolution that is in the best interests of
both the individual taxpayer and the government.
·Provide the taxpayer a fresh start toward future
voluntary compliance with all filing and payment requirements.
·Secure collection of revenue that may not be collected
through any other means.
Revenue Procedure 2003-71,
2003-2 C.B. 517, defines the procedures applicable to the submission and
processing of OIC tax liabilities. Notice 2006-68, 2006-31 I.R.B. 105, provides
additional guidance regarding offers submitted on or after July 16, 2006. This
handbook further describes, in detail, those procedures.
The timeliness of case
actions in an offer investigation is important not only to ensure the
efficiency of the process but also is a key component of taxpayer satisfaction.The
guidelines for timely case actions defined in this IRM are intended to provide structure
for the overall offer process and to ensure investigations are completed in a
responsive and efficient manner.Managers and employees must make sure
communications from taxpayers are addressed in a timely manner. Timeliness of
case actions ensures the length of the offer investigation process is
appropriate given the taxpayer's specific set of facts and circumstances.These
guidelines are not intended as absolute measures of performance for individual
employees. Performance evaluations of individual employees must be based on
reviews of actual work produced by the employees and must take into account any
special circumstances that may have impacted the ability of the employees to
meet the specified guidelines. In general, unwarranted inactivity gaps in an
OIC investigation should be avoided, and offer managers should establish
controls to ensure that cases with unwarranted inactivity gaps are identified
and addressed appropriately.
The following list, while
not all inclusive, provides a brief summary of various functions' activities
related to OIC processing.
The IRS may not have the
authority to accept an OIC when:
A.Questions concerning the
amount of the taxpayer's liability or the collection of a liability for all or
part of the periods the taxpayer owes is in litigation being handled by the
Department of Justice (DOJ).
B.The federal tax liability
for all or part of the periods the taxpayer owes has been reduced to a
C.An offer is received that
covers tax periods for which restitution was ordered. Refer to IRM 22.214.171.124.5.
We cannot accept an OIC that in any way modifies the terms of a restitution
order. The IRS may consider an OIC for periods for which restitution was
ordered only if the defendant has paid or will pay the full
amount of the restitution as part of the offer.
D.The IRS has a civil or
criminal prosecution pending against the taxpayer in the DOJ or U.S. Attorneys
E.Acceptance by the IRS is
dependent upon the DOJ accepting a related offer or settlement.
F.If there is a closed
Criminal Investigation (CI) indicator on the account, contact should be made
with Technical Services to verify if restitution was ordered. If restitution
was ordered, the tax period may be under the control of the DOJ. In those
cases, request the guidance of local Counsel before proceeding.
G.If the offer is returned
based on (a) through (d) above, all payments should be applied in accordance to
If there is any indication that one or more
of the above conditions exist, contact Area Counsel for guidance.In some
instances, DOJ may request the case be forwarded to them for inclusion in
pending litigation. However, in DATC offers, DOJ generally request that the
field offer specialist conduct the investigation and make a recommendation to
accept or reject the offer. In those cases, coordinate with Area Counsel to
determine if the request should be worked as a courtesy investigation or if
Collection has jurisdiction to process the offer.All cases identified as a DOJ
case will be immediately forwarded to a field offer group for investigation.
Tax court cases will be
handled by Area Counsel. The IRS has the authority to accept offers where the
liability is the subject of a pending tax court case. See IRM 126.96.36.199.2 for
information on the consideration of offers relating to unassessed liabilities.
Generally, DATC cases will be under the jurisdiction of Collection, unless the
case is under Appeals jurisdiction.All cases identified as
docketed court cases will be immediately forwarded to a field offer group for
investigation.COIC will be responsible for determining
processability on these cases.
The Collection function is
responsible for processing and investigating the following offers:
·All offers based on DATC, including proposed liabilities
still subject to settlement in Examination or Appeals.
·All offers based on ETA.
·All offers submitted under DATL for either a TFRP or PLET
Examination function is
responsible for processing and investigating offers submitted based on DATL
(excluding offers submitted to compromise a TFRP or PLET). DATL only offers are
not controlled on AOIC and Examination is responsible for all case processing.Examination function employees must also
provide the Collection function with a recommendation on offers based on ETA with
public policy/equity issues, when requested by Compliance. See IRM 5.8.11 for
public policy or equity grounds and IRM 4.18.2, Exam Offer-In-Compromise -
Doubt as to Liability Offers.
Offers secured in Appeals
offices in conjunction with related casework such as Collection Due Process
(CDP) or equivalency hearing (EH), will be forwarded to the COIC sites for
processability determination(s), processing of the application fee(s),
deposit(s), required TIPRA payment(s), and mailing of processability letters
provided by Appeals.These offers are not controlled on AOIC.COIC is responsible
for the input of necessary transaction codes to IDRS. See IRM 5.8.2 for
guidelines on determining processability for Appeals CDP offers.
Appeals will normally investigate their own
offers, but if complex issues are identified, they may require the assistance
of field Collection or Examination sources through the issuance of an Appeal
Referral Investigation (ARI).Exceptions to investigation of OICs with an open
CDP that fall under COIC casework criteria may be found in IRM 5.8.4.
Counsel attorneys provide
opinions on OIC's recommended for acceptance when the total liability, including
additions and accrued penalty and interest, is $50,000 or greater.Counsel
attorneys, when requested, may also provide legal opinions for matters related
to investigation and processing of offers.
The Taxpayer Advocate
Service (TAS) is an independent organization within the IRS whose employees
assist taxpayers who are experiencing economic harm, who are seeking help in
resolving tax problems that have not been resolved through normal channels, or
who believe that an IRS system or procedure is not working as it should.The
National Taxpayer Advocate and the Commissioner, SB/SE Division have reached
and agreement (effective Feb. 1, 2008) outlining the procedures and
responsibilities for processing TAS casework when either the statutory or
delegated authority to complete a case transaction rests with the SB/SE
Division. The agreement is known as a Service Level Agreement (SLA).
In preparation for a case being referred to a
SB/SE Division function, the TAS employee is responsible for:
A.Preparing Form 12412,
Operations Assistance Request.
B.Securing all necessary
C.Identifying cases that
require expedite processing. No case will automatically receive expedite
processing; requests for expedite processing will be made on a case-by-case
D.Forwarding Form 12412 and
documentation to the SB/SE Business Unit Liaison.
SB/SE Division is responsible for:
E.Assisting a liaison in each
office or Campus where a Taxpayer Advocate is located.
F.Acknowledging receipt of
the case within one workday for cases requiring expedite processing or within
three workdays for all other cases.
G.Responding to TAS within
three (3) workdays in writing, via facsimile, secure messaging e-mail, or hand
delivery of resolution.
H.Providing TAS with the name
and telephone number of the SB/SE group manager or employee assigned the case.
I.Determining a reasonable timeframe for case resolution.
Upon closing of the OAR, the SB/SE employee
assigned the OAR will complete Section VI of Form 12412, Operations Assistance
Request and return it to the TAS employee assigned the case. The Form 12412
must be returned within three workdays from the date that all actions have been
completed and transactions input.
For further information, refer to the SB/SE
SLA online at http://tas.web.irs.gov under the heading
Offers accepted based DATC
or ETA must include all unpaid tax liabilities and periods for which the
taxpayer is liable.
If a taxpayer submits an OIC for income tax
liabilities is also responsible for employment taxes for a sole-proprietorship,
both the income tax and business liabilities must be included in the accepted
Offers accepted based on DATL should only
include the tax years or periods in question. Liabilities for other tax periods
should not be included in the offer.
An OIC is effective for the
entire assessed liability for tax, penalties, and interest for the years or
periods covered by the offer. All questions of tax liability for the years or
periods covered by the agreement are conclusively settled. Neither the taxpayer
nor the government can reopen a compromised tax year or period unless there was
falsification of information or documents, concealment of ability to pay and/or
assets, or a mutual mistake of a material fact which would be sufficient to set
aside or reform a contract.
The Service will not
consider an offer that is solely for a tax period or tax year that has not been
assessed unless IDRS indicates a return has been received or an assessment is
Taxpayers may submit, and the Service will
consider, an offer to compromise taxes due on tax returns which have been filed
but have not yet been assessed when unpaid liabilities already exist on IDRS.
However, before the offer can be accepted, the unassessed taxes must be
If IDRS does not indicate a return has been
received, an assessment is pending, or unpaid liabilities already exist, the
offer will be returned to the taxpayer.
A compromise will not be
accepted on any tax liability which has become unenforceable due to the
expiration of the statutory period for collecting the debt.
If a taxpayer makes a voluntary payment to a
liability barred by statute, inform the taxpayer that the payment is not
required and ask if they want the payment applied to the account or returned.
The taxpayer must be advised that the payment is purely voluntary. If the
taxpayer’s intentions cannot be ascertained, return the payment to the
Document the case history.
IRC Section § 6305 requires
the Secretary of the Treasury to assess and collect certain child support
obligations certified by the Secretary of Health and Human Services. These
liabilities are identified on the non-master file with a master file tax code of
The Secretary of the Treasury is not
authorized to compromise these liabilities. However, the individual may seek to
pursue any available, equitable, or administrative action in a state court or
before a state agency to determine the correct liability or to recover an
amount collected under this section.
IRM 188.8.131.52 defines an erroneous refund as
the receipt of any money from the Service to which the recipient is not
entitled. Definitions of the categories of an erroneous refund may be found in
IRM 184.108.40.206. A Category D refund is defined as an erroneous refund that does
not fall under any other category where the ASED has expired but the ERSED
remains open. These cases may be identified by the following transaction codes:
·Transaction code 844 (generates the –U freeze)
·Transaction code 700 with a document code 58 and blocking
series 950 – 999
·Transaction code 470 closing code 93
2.If an erroneous refund is
discovered and there are less than two years remaining on the collection
statute, COIC should prepare a Form 4844 to forward to Accounts Management.
Field offer groups should contact Collection Case Processing (CCP), to ensure
the appropriate codes are input and the module are referred to Accounting.
3.If an OIC is submitted, the
offer will be returned to the taxpayer and closed as a processable return.
4.All fees and payments
received should be applied to the liability(s) in accordance to current TIPRA
procedures. See IRM 5.8.4 for additional information.
Effective November 1, 2003,
the Service began charging an application fee for offers submitted after that
The application fee applies only to certain
offers processed under Section § 7122. It does not apply to offers in
settlement under the jurisdiction of the DOJ.
The Tax Increase Prevention
and Reconciliation Act of 2005 (TIPRA) was enacted on May 17, 2006. TIPRA made
major changes to the OIC program effective for all OICs received by the IRS on
or after July 16, 2006.Under the new law, taxpayers submitting
requests for lump sum cash offers must include with the offer a payment equal
to 20% of the offer amount. The payment is treated as a payment of tax and is
nonrefundable. That is, it will not be returned even if the offer is deemed to
be not processable, later returned or rejected. A lump sum cash offer means any
offer of payments made in five or fewer installments.Taxpayers submitting
requests for periodic payment offers must include the first proposed
installment payment with their application. A periodic payment offer is any
offer of payments made in six or more installments. The taxpayer is required to
pay additional installments while the offer is being evaluated by the IRS. All
installment payments are nonrefundable, even if the Offer is deemed not processable,
later returned or rejected.Under this law, taxpayers that qualify as
low-income, based on current criteria, and who submit a Form 656-A, will not be
required to submit the application fee or any TIPRA payment(s).If the IRS does not make a
determination on an OIC within 24 months, the OIC will be deemed accepted. If a
liability included in the offer amount is disputed in any court proceeding,
that time period is omitted from the calculation of the two-year period. Once a
determination letter is issued by the offer examiner or offer specialist, the
24-month time frame will be considered stopped.The 24-month timeframe does not
include the time in Appeals.
All initial offer receipts
that are submitted based on DATC, ETA, or DATL for either TFRP or PLET must be
processed by the appropriate COIC site, based on the taxpayer's state of
·If the taxpayer resides in Alaska, Alabama, Arizona,
California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Mississippi, Montana,
Nevada, New Mexico, Oregon, Tennessee, Texas, Utah, Washington, Wisconsin, or
Wyoming, the offer will be processed by the Memphis COIC Unit.
·If the taxpayer resides in Arkansas, Connecticut,
Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa,
Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri,
Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota,
Ohio, Oklahoma, Pennsylvania, Puerto Rico or other U.S. territories, Rhode Island,
South Carolina, South Dakota, Vermont, Virginia, West Virginia, or if they have
a foreign address the offer will be processed by the Brookhaven COIC Unit.
Offers that are received
elsewhere by a Service employee must be immediately date stamped and forwarded
to their respective COIC site for processing within 24 hours of receipt of the
Form 656, Offer in Compromise.
When an offer is received on an assigned case
by a field revenue officer (RO), Form 657, Offer in Compromise Revenue Officer
Report, must be completed and attached to the offer package. This form is to be
signed by the RO and approved by the manager. The RO should retain all
information related to the collection case and forward only the following
information to COIC:
·Form 656, Offer in Compromise
·Form 657, Offer in Compromise/Revenue Officer Report
·ICS history sheets
·Collection Information Statement (CIS) with attached
·Current Form 2848, Power of Attorney and Declaration of
Representative or Form 8821, Tax Information Authorization, if applicable
·Any information gathered during the field investigation
that verifies or refutes amounts claimed on the CIS submitted with the offer
·A print of the ICS history
·Form 656-A, Income Certification for Offer in Compromise
Application Fee, if applicable
·Application fee and Lump Sum Cash (20%) or Initial
Periodic Payment(s), if applicable
The above information should be transmitted
to the appropriate COIC site using Form 3210, Document Transmittal, and must be
sent by traceable methods if an application fee and/or payment is attached.
centralized DATL processing
unit located at the Brookhaven campus for screening and processing. the offer
should be immediately forwarded using the Form 3210, Document Transmittal, to:
Internal Revenue Service
Centralized DATL Unit
P.O. Box 480 Stop 661
Holtsville, NY 11742–0480
OIC requests are submitted
on Form 656, Offer in Compromise, using the most current version. Computer
generated or photocopied versions of Form 656 are also acceptable provided they
contain the following statement: " I/we affirm that this form is a
verbatim duplicate of the official Form 656, and I/we agree to be bound by all
terms and conditions set forth in the official Form 656."
The form provides detailed instructions for
completing an offer and includes all of the necessary financial forms. When
submitting Form 656, taxpayers must include an application fee of $150 and the
required TIPRA payment, depending on the type of offer, unless they qualify for
the low-income exemption or are filing a DATL offer.
Offers submitted on the basis of DATC or ETA
should include a current version of the collection information statement. For
offers based solely on DATL, no collection information statement is required.
However, the taxpayer must include a written statement explaining why the
liability is incorrect and must include a statement addressing the validity of
the actual assessment(s) or a portion of the assessment(s).
The full name, address,
Social Security Number, Employer Identification Number, 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 address must be included as well.
Taxpayers must indicate the
basis(es) upon which they propose to compromise: DATC, DATL, and/or to promote
ETA.If the taxpayer submitted a
Form 656-L, the basis(es) upon which they propose to compromise should be doubt
as to liability only.The total amount of money offered must be
indicated and must be more than zero. The amount offered may not include money
already paid, expected future refunds, funds attached by levy, or anticipated
benefits from capital/net operating losses.Taxpayers are expected to pay the entire
amount offered in as short a time as reasonably possible. Acceptable offer
terms should be determined by the OE or the OS and should not be limited to the
proposal of the taxpayer.
The amounts and due dates of payments must be
There are three types of payment terms that
the Service and the taxpayer may agree to:
A.Lump Sum Cash — payable in five or
fewer installments from notice of acceptance; must be accompanied by a payment
of 20% of the offered amount.
B.Short Term Periodic Payment — payable in six or
more installments within 24 months (2 years) from the IRS received date; must
be accompanied with the first proposed installment, and additional installments
must be paid in accordance with the taxpayer's proposed offer terms while the
Service evaluates the offer.
If an amended offer is
secured, the 24-month period begins the date the offer is accepted.
C.Deferred Periodic Payment — payable in six or
more installments in 25 or more months from the IRS received date, but within
the time remaining on the statutory period for collection; must be accompanied
with the first proposed installment, and additional installments must be paid
in accordance with the taxpayer's proposed offer terms while the Service
evaluates the offer.
2.A taxpayer may designate
TIPRA payments (pre-acceptance) to a specific liability including trust fund.
Once the offer has been accepted, the funds are applied in the governments best
interest and the taxpayer no longer has the right to designate payments.
designated to trust fund should be posted using DPC 02.
3.The application fee may not
Taxpayers must agree to all
the standard conditions of the agreement as they are printed on the Form 656.
Offers accepted under DATL or ETA based on
Public Policy/Equity are not subject to the waiver of refund condition. See IRM
5.8.11, Effective Tax Administration, discussing public policy/equity offers.
Each separate tax period
and type of tax must be indicated on the Form 656. TFRP assessments made prior
to August 2000, will be assessed on the last quarter only, while those made
after August 2000 will include an assessment for each quarter. Verification on
IDRS will be required to determine how the assessment was completed. If an
offer is accepted that has TFRP assessments, the case file must include
information identifying the BMF periods that comprised the TFRP assessment.
A taxpayer may submit an offer that does not
include all outstanding liabilities. Prior to accepting the offer, the Form 656
should be amended to include all outstanding tax liabilities.
An offer submitted on Form 656-L, under DATL
criteria, will be accepted for only the tax periods that are in question.
Taxpayers may use the
designated space on the Form 656, Offer in Compromise, or attach a separate
statement to explain why they are submitting the offer.
If a special circumstance exists, the
taxpayer should explain the situation and include all supporting documents to
assist in verification of the special circumstance that is being claimed.
Each taxpayer that is party
to an OIC should personally sign the Form 656. When unusual circumstances
prevent this (e.g., the taxpayer is incapacitated), an authorized
representative may sign for the taxpayer.
The Form 656 is considered a legal, binding
contract and therefore must have an original signature. No facsimiles can be
accepted for original or amended Forms 656.
The case file should include a copy of the
properly executed Form 2848, Power of Attorney and Declaration of
Representative, Form 8821, Tax Information Authorization; or verified CFINQ
print as verification of the representative's authority.
between the representative and the taxpayer is not an acceptable reason for a
representative to sign on the taxpayer's behalf.
1.Since the CIS requires
certification under penalty of perjury, the taxpayer(s) must personally sign
the Form 433-A and/or 433-B.
2.In the case of joint OICs,
all parties, or their designated representative as explained above, must sign
the Form 656 to ensure the provisions of the agreement bind all parties.
3.Offers submitted for
corporations should reflect the corporate name on the first signature line. The
signature name and title of the authorized officer should be reflected on the
4.An offer submitted by the
fiduciary of an estate of a deceased taxpayer will be binding on the taxpayer's
estate to the extent that it would be binding on a taxpayer who submits an
offer on their own behalf. Include in the case file a copy of the fiduciary's
If an offer is submitted on behalf of a
deceased taxpayer, when there is no estate, the individual who signs the offer
must have authority. This authority can be designated by a will appointing that
individual as the executor or by written authorization from the probate court.
If a taxpayer who is
currently paying a tax liability through an installment agreement submits an
offer, see IRM 5.8.4 for additional guidance.
For offers pending on or after December 31,
1999, collection by levy on property owned by the offer taxpayer is prohibited
while the offer is pending unless collection is in jeopardy.
The term jeopardy is defined in Policy
Statement P-4-88. Collection is not considered to be in jeopardy because an
undisclosed asset was discovered during the investigation.
Upon receiving information that a jeopardy
levy has been approved, contact the employee issuing the levy. If it is agreed
that the offer was filed to hinder or delay collection, follow procedures in
IRM 5.8.4 (Solely to Delay) to return the offer.
The prohibition on levy does not require
release of a levy that was served prior to the offer submission. The taxpayer's
circumstances should be considered when making a determination to release a
levy or keep it in place while the offer is pending.
Collection by levy is not
prohibited (and the collection statute is not suspended) if the taxpayer has
filed a writte notice waiving the restrictions on levy. However, if the
taxpayer submitted the Form 656 altering any of the provisions of Form 656,
Section V, the offer should be immediately deemed a processable return based on
an altered Form 656.
While an offer is pending there is no
prohibition on filing notices of federal tax lien. See IRM 5.8.4 (Notice of
Federal Tax Lien Filing) for a discussion of filing a notice of federal tax
lien while an offer is pending.
1.The Form 656 states the
Service may file suit or levy to collect the original amount of the liability
if the taxpayer defaults the terms or conditions of an accepted offer. Even
though the Form 656 states the Service may levy without notification, IRC
Section 6331 requires the Service to provide notice to the taxpayer before a
levy is made on the taxpayer's property.
2.All collection action must
be suspended when a taxpayer is identified as being located in a Combat Zone
(CZ) area. This action includes filing of a Notice of Federal Tax Lien. See IRM
220.127.116.11.10.4, Combat Zone Freeze Codes, for additional information.
For all offers accepted
after December 31, 1999, interest on the compromise amount is also compromised.
For all offers accepted before January 1,
2000, on Form 656 revisions prior to 1-2000, interest continues to accrue until
the compromise amount is paid in full.
Over the years various
changes in the tax law has had an effect on the statutory collection period.
See IRM 5.8.10, Special Case Processing, for additional guidance.
Below is a list of common
abbreviations used throughout this IRM.
AET – Asset Equity Table – A table listing
all the taxpayers assets, encumbrances, and exemptions. It then calculates the
equity which is included in the reasonable collection potential (RCP)
AOIC – Automated Offer in
Compromise – Computer application where offers in compromise are recorded and
monitored from receipt to closure. History of the offer investigations
conducted by COIC employees and of actions taken by Monitoring OIC (MOIC) units
are also maintained on this system.
ARI – Appeals Referral Investigation – A
request from Appeals for assistance from the appropriate Collection function on
verifying the accuracy of information reported on a CIS or assistance in
completing the offers investigation.
ASED – Assessment Statute
Expiration Date – The date the statutory period for assessing tax expires.
ATAT – Abusive Tax
Avoidance Transactions – Abusive transactions taken by taxpayers to avoid
paying, such as creating trusts, using off shore credit cards, etc.
CDP – Collection Due Process - Allows
taxpayers a right to a hearing before Appeals regarding proposed collection
enforcement actions or filed Notice of Federal Tax Lien.
CIS – Collection Information Statement – A
financial statement listing assets, income, liabilities, and expenses submitted
by the taxpayer. This financial statement can be submitted on Form 433-A,
Collection Information Statement for Wage Earners and Self-Employed
Individuals, or Form 433-B, Collection Information Statement for Businesses.
COIC – Centralized Offer
in Compromise – Units located in Brookhaven and Memphis campus that complete
initial processing and work less complicated offers to completion. Do not
confuse this with MOIC – COIC units do not monitor or default accepted offers.
CSED – Collection Statute
Expiration Date – The date the statutory period for collecting the tax expires.
DATC – Doubt as to
Collectibility – Basis for acceptance of an offer where there is doubt that the
tax can be paid in full.
DATL – Doubt as to
Liability – Basis for acceptance of an offer where there is doubt that the
liability is correct.
DCSC – Doubt as to
Collectibility with Special Circumstance – Basis for acceptance of an offer
where there is doubt that the tax can be paid in full and special circumstances
exist that warrants accepting the offer for less than the reasonable collection
ETA – Effective Tax Administration – Basis
for acceptance of an offer where this is no doubt that the liability is correct
or can be paid in full. However, requiring the taxpayer to fully pay the tax
would either create an economic hardship or be a public policy/equity issue.
FICA – Future Income
Collateral Agreement – An agreement secured in connection with an accepted
offer that requires a taxpayer to pay a percentage of future income for a set
number of years as additional consideration for acceptance of the offer.
FMV – Fair Market Value – The value a
taxpayer would receive if an asset was sold to a willing buyer given time to
obtain the best and highest possible price.
IA – Installment Agreement – An agreement
under I.R.C. § 6159 to pay the liability over an established period of time.
IAR – Independent Administrative Reviewer –
An independent third party who reviews a decision to reject an offer prior to
that decision being conveyed to a taxpayer. This person is not in the chain of
command of the employees responsible for the rejection of the offer.
IBTF – In Business Trust
Fund – A taxpayer who is in business and owes trust fund (e.g. – Form 941)
ICS – Integrated Collection System –
Computer application used by Compliance employees to monitor inventory.
Histories of OIC investigations conducted by area office employees are
maintained on this system.
IET – Income/Expense Table – A table that
lists the income and expenses both claimed and allowed for purposes of
calculating reasonable collection potential (RCP).
MOIC – Monitoring OIC Unit
– Unit in Compliance Services located in a campus that completes end processing
and monitoring of accepted offers.
NFTL – Notice of Federal
Tax Lien - The notice of the filed Federal Tax Lien
NRE – Net Realizable Equity – Quick sale
value less the amount owed on an asset.
OE – Offer Examiner – A tax examiner
appointed as an offer investigator and located in COIC.
OI– Other Investigation – Form 2209, Courtesy
Investigation, is used for District investigations in locating taxpayers or to
gather information in collecting on assigned cases.
OS – Offer Specialist – A revenue officer
appointed as an offer investigator, generally located in an area office.
PE – Process Examiner – A tax examiner who
completes initial processability determinations on offers and is located in
PLET — Personal Liability for
Excise Tax – Assessments made on individual taxpayers for withheld excise
POD – Post of Duty – Internal Revenue
Service local office(s).
QSV – Quick Sale Value – The amount that
could be obtained if an asset is sold quickly, usually less than FMV.
RCP – Reasonable Collection Potential – The
amount that could reasonably be collected from the taxpayer.
TFRP – Trust Fund Recovery
Penalty – Assessments made on individual taxpayers for the withheld or trust
fund portion of delinquent employment taxes.
TIPRA – Tax Increase
Prevention and Reconciliation Act of 2005 – S