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5.8.2  Offer Receipts

5.8.2.1  (11-15-2004)
Overview

  1. Jurisdictional responsibility must be determined upon receipt of a taxpayer's proposal to compromise. This section provides instructions for initial case processing on new offers. It also provides directions for processing payments, powers of attorney, and emergency case processing.

5.8.2.2  (11-15-2004)
Initial Receipt of Offers

  1. All initial offer receipts that are submitted based on Doubt as to Collectibility (DATC), Effective Tax Administration (ETA), or Doubt as to Liability (DATL) for either Trust Fund Recovery Penalty (TFRP) or Personal Liability for Excise Tax (PLET) must be processed by the appropriate Centralized Offer In Compromise (COIC) site. Form 656 instructions advise taxpayers to send offers to the appropriate COIC site based on the taxpayer's state of residence.
    1. 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
    2. 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, Rhode Island, South Carolina, South Dakota, Vermont, Virginia, West Virginia or if they have a foreign address the offer will be processed by Brookhaven COIC Unit.

     

  2. Doubt as to Liability (DATL) offers other than those mentioned above are to be forwarded to the taxpayer's Area office Examination function. Forward the offer to the appropriate Area office using Form 3210, Document Transmittal.
  3. Offers that are received elsewhere by Service employees must be immediately date stamped and forwarded to COIC for processing within 24 hours of receipt. 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 and Form 657,
    • Collection Information Statement (CIS) with attached substantiation,
    • Current Power of Attorney or Form 8821, Authorization to Disclose,
    • Any information gathered during the field investigation that verifies or refutes amounts claimed on the CIS submitted with the offer,
    • Form 656-A, Income Certification for Offer in Compromise Application Fee (if applicable), and
    • Application fee payment (if applicable).

     

  4. 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 deposit is attached.

5.8.2.3  (11-15-2004)
Form 656, Offer In Compromise

  1. Individuals or self employed taxpayers filing an offer based on Doubt as to Collectibility (DATC) or Effective Tax Administrations (ETA) must complete and attach the most current version of Form 433-A, Collection Information Statement for Wage Earners and Self Employed Individuals.
    1. Two or more taxpayers who jointly owe the same liability (including spouses living separately or divorced) may submit a joint offer in compromise on one form 656 showing each name, address and taxpayer identification number. However, separate offer forms (one for each person) may be submitted if the individuals deem it to be appropriate for their particular situation.
    2. Taxpayers who owe both joint and individual liabilities must submit two offers.

      Note:

      These taxpayers should never be asked to submit three offers, even if they each owe separate and joint liabilities.


     

    If… Then…
    The taxpayers owe joint years and in addition one of the parties individually owes tax
    1. One Form 656 listing the joint tax periods (both parties must sign) and a 2nd Form 656 listing the tax periods owed by the individual (the individual only signs this offer), or
    2. One Form 656 from the individual listing all periods owed, including the joint years and 2nd Form 656 from the other party listing all periods owed including the joint years (the individuals will sign their own Form 656).
    The taxpayers each owe separate liabilities and together owe joint liabilities One offer from the taxpayer with the individual liability listing all periods owed including the joint years and one offer from the other taxpayer listing the joint tax periods (the individuals will sign their own Form 656).
    A taxpayer is solely responsible for a liability (e.g., employment taxes) and jointly responsible for another liability (e.g., income taxes) and only one person is submitting the offer Only one Form 656 is required, listing all of the liabilities. Also see IRM 5.8.6 for information concerning co-obligor agreements.
    A taxpayer submits a joint offer for joint liabilities and also owes other liabilities (e.g., corporate taxes), either solely or jointly with other persons Separate offers must be submitted for each entity.

     

  2. All other forms of business entities (partnerships, corporations, limited liability corporations (LLC), etc.) must submit the most current version of Form 433-B, Collection Information Statement of Businesses.
  3. Taxpayers that submit an offer to compromise individually owed tax and also have a substantial interest in an ongoing business may also be required to submit a Form 433-B for that business.
  4. When corporate offers are being considered, corporate officers, shareholders, or others determined to be responsible for a Trust Fund Recovery Penalty (TFRP) may be required to submit a Form 433-A. When partnership or LLC offers are being considered, the general partners and the LLC's owners may be required to submit a Form 433-A as well.
  5. In conjunction with an acceptance letter, Form 656 constitutes a binding agreement between the government and the taxpayer.

5.8.2.3.1  (11-15-2004)
Total Liability

  1. Each separate tax period and type of tax must be indicated on Form 656. Trust Fund Recovery Penalties (TFRP) assessed prior to August 2000 will reflect the last quarter only, while those made after August 2000 will include an assessment for each quarter. Verification on Integrated Data Retrieval System (IDRS) will be required to determine how the assessment was completed. If an offer is accepted that has TFRP assessments, the casefile must include information identifying the BMF periods that comprised the TFRP assessment.
  2. A taxpayer may submit an offer that does not include all outstanding liabilities. Prior to accepting the offer, Form 656 must be amended to include all outstanding tax liabilities.
  3. An offer submitted under Doubt as to Liability (DATL) will be accepted for only the tax periods that are in question.

5.8.2.3.2  (11-15-2004)
Explanation of Circumstances

  1. Taxpayers may use the designated space on Form 656 or attach a separate statement to explain why they are submitting the offer.
  2. If special circumstances exist, the taxpayer must explain the situation on the Form 656, Item 9, and attach all supporting documents to assist in verification of the special circumstance that is being claimed.

5.8.2.4  (11-15-2004)
Signatures

  1. Each taxpayer that is party to an offer should personally sign the Form 656. When unusual circumstances prevent this (e.g. the taxpayer is incapacitated), an authorized representative may sign the Form 656 for the taxpayer.

    Note:

    Geographical distances between the representative and the taxpayer is not an acceptable reason for a representative to sign on the taxpayer's behalf.


    The case file should include a copy of the properly executed Form 2848, Power of Attorney and Declaration of Representative or CFINK print as verification of the representative's authority.

  2. Since Collection Information Statements (CIS) require certification under penalty of perjury, the taxpayer(s) must personally sign the Form 433-A and/or 433-B.
  3. In the case of joint offers in compromise, all parties, or their designated representative as indicated in paragraph (1) above, must sign the Form 656 to ensure the provisions of the agreement bind all parties.
  4. 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 second line.
  5. 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 appointment document.
  6. If an offer is submitted on behalf of a deceased taxpayer, when there is no estate or fiduciary, 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.

5.8.2.5  (11-15-2004)
Initial Processing of Offers in Centralized Offers in Compromise (COIC)

  1. When an offer is received in COIC, an employee will:
    1. Date stamp the form upon receipt in the IRS Received Date Stamp block of Form 656 and create separate offer sorts, as follows:
      • Any offer remittances other than $150 per offer

      Note:

      Multiple offers submitted with one remittance intended as the application fee for all will not be processed. Do not load the offer to the AOIC system. See IRM 5.8.3.3.


      • Application fee of $150 only (i.e., the only remittance is $150).
      • Offers with no remittance.
      • Doubt as to Liability (DATL) only Examination issues
      • Appeals Collection Due Process (CDP) offers

      Note:

      Do not load these to AOIC. See IRM 5.8.3.4.2.

       

    2. Verify the case is the type of offer that is processed by the COIC site and if not route it to the proper jurisdiction.
    3. If the offer is the responsibility of the Collection function, Query IDRS to ensure the receipt is a new offer.
    4. If the offer is the responsibility of the Collection function, add the offer to the Automated Offer In Compromise (AOIC) data base as a " U" (undetermined) case

      Note:

      To add the offer as an " undetermined" case the following fields should be completed on the AOIC record:
      • Screen 1 - complete the IDRS TIN, OFFER TIN, and date received fields.
      • Y-Entity screen - complete at the minimum the name control field or at local discretion the entire name of the taxpayer(s) as reflected on the Form 656.
      • Write the AOIC offer number on the top right of Form 656 in "red ink" .

       

    5. Upon receipt COIC will prepare Form 13479, COIC Application Fee Tracking Report, if applicable.
      • Use one line on the report for each remittance. One offer may have more than one line completed on the Form 13479 if accompanied by multiple remittances. Do not put more than 5 offers on one Form 13479.
      • Write the offer number on the upper left hand corner of the remittance(s) and in the " Offer #" column on the Form 13479.
      Complete the "SSN/EIN " , "Name Control" , "Check Amount" , "Check Type" (e.g., money order, bank check, government check, personal check, etc.) and "Check No." columns.
      Attach all remittances to the front of the Form 13479. Have Receipt and Control/Payment Perfection Unit (PPU) acknowledge receipt of the checks identified on the Form 13479 by initialing the form in the column marked "R&C Initial" .
      Secure the remittances with Part 3 of the Form 13479 and release to PPU after they have acknowledged receipt.
      Retain parts 1 and 2 of the Form 13479 with the batch of offers and forward for assignment to the Process Examiners (PE).
    6. Review submitted documents for an emergency processing request (i.e. "Please Rush" , "Urgent Matter" etc.). See IRM 5.8.2.6 for processing these requests.

     

5.8.2.6  (11-15-2004)
Emergency Processing

  1. Taxpayers may request that their offer be expedited due to an emergency or perceived emergency situation. Situations that may warrant expediting case processing include:
    • 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.

     

  2. Offers received with request for expedite processing should be referred to management for a decision on whether or not expedite treatment is warranted.
    • If a decision is made to expedite the offer processing the manager should document the AOIC history indicating the basis for the decision. The Form 656 should be clearly labeled at the top "Emergency Processing Requested" , and an immediate processability determination, and assignment for investigation should be made. 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 advise of any additional information needed.
    • If a decision is made not to expedite the case, the manager should document the basis for the decision on the AOIC history. Contact the taxpayer by telephone or correspondence explaining the basis for the decision. The case should be worked under routine processing.

     

5.8.2.7  (11-15-2004)
Processing Deposits Received with Offers

  1. Deposits are defined as payments of part or all of the offered amount submitted prior to acceptance. Offers do not require deposits, but deposits may be received with new offers or any time while an offer is being considered. A deposit may be required when considering a compromise of an accepted offer as discussed in IRM 5.8.9.3, Potential Default Cases.
  2. Deposits 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. The amount is annotated on the Deposit Screen of the taxpayer's AOIC record by the Monitoring OIC (MOIC) employee processing the remittance.
  3. COIC sites will establish local procedures with their remittance processing office, for handling remittances and ensuring that deposits are timely processed.
  4. During the course of an investigation an offer examiner or an offer investigator must process any deposit received on a pending offer within 24 hours of receipt. The employee who receives the deposit will:
    • Generate From 2515 from AOIC, complete the form and attach the deposit.
    • Attach the Form 3210 and include the following information:

      1. Offer number
      2. Taxpayer's ID number and name
      3. Amount of the deposit
    • Transmit the deposit by traceable methods to the appropriate MOIC unit for processing.

     

5.8.2.8  (11-15-2004)
Processing Offers Received in Area Offices From Centralized Offers in Compromise (COIC)

  1. Once the COIC units have loaded the offer to AOIC and a processability determination has been made, all processable offers in the following categories will be transferred to the appropriate compliance area to be worked in a field group:
    • Corporations
    • Partnerships
    • Estates and Trusts
    • Currently incarcerated taxpayers
    • Trust Fund Recovery Penalty (TFRP) - Doubt as to Liability (DATL)

     

  2. After case building, the centralized sites will transfer the following types of individual taxpayers to the appropriate compliance area to be worked in the field groups:
    • Self-employed taxpayers (Form 1040 Schedule C or F filers)
    • Sole proprietorships with or without employees
    • Owners of closely held corporations
    • Partners in a partnership which serves as a primary source of income (i.e. not investments)

     

  3. All offers forwarded to area offices for investigation will be sent to a central point designated by the area office. Within 5 business days of receipt of the offer case file from the COIC site the area office will:
    • Acknowledge receipt of the offer file(s) by signing and returning the acknowledgement copy of Form 3210.
    • Accept transfer of the offer record on AOIC.
    • Determine the destination of the offer assignment and reassign the offer to the appropriate offer group on AOIC.
    • Send the offer file to the appropriate group manager for assignment.
    • Send a letter to the taxpayer providing the address of the office that will handle the investigation including a name and phone number of a contact person and an anticipated date of assignment to an offer investigator. The AOIC Transfer Letter may be used for this purpose.

     

5.8.2.9  (11-15-2004)
Interoffice Transfers

  1. Offer cases may be transferred from one office or site to another if:
    • the taxpayer relocated,
    • the case was originally received in the wrong jurisdiction, or
    • because of work realignment.

     

  2. Misdirected offers should be transferred from one COIC site to another while in undetermined status ( "U" ), before a processability determination is made.
  3. Transfers from one office/site to another should be made if the taxpayer relocates and either the investigation has not been started or there is a substantial change in circumstances. Transfer letters should be generated and sent to the taxpayer by the transferring office/site.
  4. To transfer cases the transferring office will take the following steps:
    • Document the history with the taxpayer's new address and the location of the receiving office.
    • Correct the address on the Y-Entity screen on AOIC.
    • Prepare and mail the AOIC transfer letter.
    • Transfer the case on AOIC (press (C)ontrol and (T)ransfer and input the correct area office code).
    • Prepare the Form 3210 and mail the case by traceable mail to the receiving office.

     

5.8.2.10  (11-15-2004)
Powers of Attorney

  1. Taxpayers who wish to be represented must submit a properly executed Form 2848, Power of Attorney and Declaration of Representative. 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 unless the taxpayer has indicated otherwise by checking any item on line 7 of Form 2848.
  3. Unenrolled preparers may accompany taxpayers to meetings and receive and provide information that relates to the offer investigation. They are not authorized to represent taxpayers or sign documents relating to offers in compromise.
  4. If the Form 2848 does not include liabilities that are included on the offer a letter cannot be sent to the representative covering these periods. Instead send a redacted letter to the representative. The letter sent to the taxpayer can request completion of a Form 8821 or a Form 2848 to cover the missing periods.

5.8.2.11  (11-15-2004)
Processing of Forms 4442's From Automated Collection Services, Toll Free, or Other Service Divisions

  1. Form 4442 will be prepared by ACS, Toll Free and/or 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 offer was submitted for processing more than 45 calendar days and the taxpayer has yet to be contacted or notified of the status of the offer.
  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.

5.8.2.12  (11-15-2004)
Imminent Collection Statute Expiration Dates

  1. The section has been removed since the provision eliminating the suspension of the collection statute during the time an offer is pending was repealed on March 10, 2002.

 
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