(1) This IRM transmits a revision to IRM 5.8.8, Offer in Compromise, Acceptance Processing.
(1) Below is a table containing changes impacting this revision of IRM 5.8.8.
| IRM Section | Change |
|---|---|
| 5.8.8.1(3) | Revised “Director” to “director” |
| 5.8.8.1(6) | Revised policy statement title from “Policy Statement P-5-100” to “Policy Statement 5-100” |
| 5.8.8.1.5(1) | Revised to include “Automated Offer in Compromise” spelled out before “AOIC” |
| 5.8.8.1.6(1) | List of acronyms was converted to a table, added a definition for “ETA-NEH” and updated link in the description for “PII” |
| 5.8.8.2(1)b | A note was added to provide instruction in instances where the total of offer payments is less than $1.00 difference from the offer amount |
| 5.8.8.2(3) | Changed verbiage, “is not legally sufficient” to “does not meet legal requirements” |
| 5.8.8.2(4) | New reference added to address rounding of the offer amount to a whole dollar amount |
| 5.8.8.2(6) | New reference added to address pen and ink changes for the offer basis on Form 656 |
| 5.8.8.2.1(6) | Revised verbiage to include adding the last four digits of the offer number on an amended Form 656 and where to find a fillable copy on the OIC SharePoint site. |
| 5.8.8.2.2(1) | Note was added to address that payment with the Form 14640 is not necessary for qualifying low income waiver taxpayers |
| 5.8.8.2.2(2) | Note was added to clarify that levy proceeds received after the offer filing from a valid levy are not considered offer proceeds |
| 5.8.8.2.2(9) | Revised to use the signature date of the Form 656 that is being accepted, whether it is the original or subsequent amended Form 656 |
| 5.8.8.2.2(12) | New reference added to address using the “for IRS use only” box on page 3 of the Form 656 |
| 5.8.8.2.2.1 | Revised entire reference to follow new line descriptions of Form 14640 |
| 5.8.8.3(1), bullets | Letters designation removed from all bullets, former letter “g” bullet removed, 7th bullet revised to advise that balances that cannot be legally compromised should be removed from the offer, and added a bullet to address editing the offer basis |
| 5.8.8.3(2), caution | Revised to include the need for contact if periods cannot be internally verified as to the need to be on the Form 656. |
| 5.8.8.3(3), 2nd Note | New reference added to clarify that pen and ink changes cannot be done on Form 14640, a new Form 14640 must be secured |
| 5.8.8.4(2) | Revised reference to provide more clarity on the Forms 656 that will need to be secured when taxpayers have both joint and separate liabilities |
| 5.8.8.5(2), 3rd bullet | Revised various Form 2261 hyperlinks |
| 5.8.8.5(5), 1st bullet | Changed “e-Fax” to “electronic fax” |
| 5.8.8.5(5), 2nd bullet | Revised Form 7249 hyperlink |
| 5.8.8.6(1) | Revised to state, “. accepted by fax (telephonic or electronic), Document Upload Tool (DUT), or secure messaging where contact with the taxpayer has been made and documented, faxed signatures meet legal requirements. ” |
| 5.8.8.6(2) | Removed “e-fax” and replaced with “electronic fax, DUT, or secure messaging” |
| 5.8.8.7(1) | Revised to add using OIC-IAT for research and revised 1st note to remove reference to command code “AMDIS” and instead look for “SFR assessments” |
| 5.8.8.7(1), 3rd Note | New reference added to address release of levies |
| 5.8.8.7(3) | New reference added to address misapplied payments and/or deposits |
| 5.8.8.7(4) | New reference added to check for out of business BMF entities for open filing requirements and close as appropriate |
| 5.8.8.7(6) | Added to check if DOJ approval is necessary to accept to accept and offer, contact area counsel. Added alpha list to assist with process and a table of items to research on IDRS |
| 5.8.8.7(7) | New reference to address non matching addresses between IDRS and the Form 656, contact with the taxpayer is required to confirm proper address |
| 5.8.8.7(8) | New reference to address that long entity names should appear on one line only and abbreviate only when necessary. Second name lines for IMF entities should only be populated when necessary for delivery. Long BMF entities should also be attempted to condense on one line, but can overflow. |
| 5.8.8.7(9) | New reference to address that use of OIC-IAT research is required again prior to recommending acceptance |
| 5.8.8.7(11)d, 2nd bullet | Revised verbiage to provide more clarity on the Forms 656 that will need to be secured when taxpayers have both joint and separate liabilities |
| 5.8.8.7(11)d, 2nd bullet, Note | Updated hyperlink for OIC SharePoint site |
| 5.8.8.7(11)d, 7th bullet, Reminder | Revised the word “be” to “only contain” when referring to the name of an LLC |
| 5.8.8.7(11)d, 7th bullet, Caution | New reference added to advise that the single member name from the second name line on IDRS should not be added to AOIC entity screen and if was pulled into via data download, should be deleted prior to generating the Form 7249 |
| 5.8.8.7(12), 1st bullet, note | Added note encouraging use of the OIC Acceptance Template |
| 5.8.8.7(12), 2nd bullet | Added new verbiage to address adding special instructions for sale of property, excluding pending levy payments, advise MOIC is there is a deposit, address NMF periods by marking the outside of the offer folder, MOIC special remarks for offer accepted on behalf of deceased taxpayers, monitoring for future returns, and any liabilities purposefully removed rom the offer |
| 5.8.8.7(12), 3rd bullet, Note | New reference added to address that it is not necessary to secure an updated Form 656 if it is within one month of the revision date. After that, an updated Form 656 is required. |
| 5.8.8.7(12), 3rd bullet, Note, Example | Added for clarity of the new note above |
| 5.8.8.7(13)c | Added to include paragraph C to alert taxpayers as to how much has already been paid towards their offer |
| 5.8.8.7(13)c, Note | New reference added that paragraph C should be used even if there is no payment due and show the next payment as “$0.00” |
| 5.8.8.7(13)d, Note | New reference added to state that paragraph B is only needed when the taxpayer is requesting a refund and the fee has been paid |
| 5.8.8.7(14) | Revised dates to be more current |
| 5.8.8.8(4) | Previous reference removed and replaced with statement that the AOIC system will ask if the offer is accepted under ETA or not and OE/OS should respond appropriately based on the basis that the offer is to be accepted under |
| 5.8.8.9 | Revised entire reference to update Public Inspection File (PIF) procedures |
| 5.8.8.10(3)g, Note | New reference added to add requirement for addressing correct jurisdiction, correct balances due and whether or not to refile any NFTL in AOIC/ICS case remarks |
| 5.8.8.12 | Revised title from, “24-Month Mandatory Acceptance under IRC § 7122(f)” to “Mandatory Acceptance under IRC section 7122(f)” |
| 5.8.8.12(1), Caution | New reference added to verify that the correct IRS received is being utilized in the case of a mandatory acceptance |
| 5.8.8.12(2) & Note | New reference added to address managerial review when IRS received entered on AOIC is deemed incorrect. Note address to contact the OIC Policy mailbox when unsure of the correct date |
| 5.8.8.12(5) | Added verbiage that if internal verification indicates no received date stamp was present on Form 656 to use the IRS received date |
| 5.8.8.12(5), 4th bullet, 2nd Note | New reference added to research for a related offer is TC 480 date is prior to the IRS received date |
| 5.8.8.12.2(4) | Added to email a copy of the memo and acceptance letter to the OIC Policy mailbox |
| 5.8.8.13(4) | New reference added to address that case histories and transcripts should be converted to Adobe PDF prior to being electronically transmitted to counsel |
| 5.8.8.14 | Revised title from , “Continuous Wage Levy” to “Continuous Wage Levy and Federal Payment Levy Program (FPLP)” |
| 5.8.8.14(3)g | New reference added to ensure that AOIC/ICS remarks document the date of the levy release was approved and mailed. A copy of Form 668-D is to be included in the case file |
| Exhibit 5.8.8-1 | Changed reference name from “24-Month Mandatory Acceptance Letter (Letter 5540)” to “ Mandatory Acceptance Letter (Letter 6408)”, revised letter name in verbiage and indicated that it is available on the IRS Publishing website, and created new graphics and references for the Letter 6408. |
(2) Editorial changes were made throughout this IRM to update website addresses, business units, legal references, IRM references, and to remove italicized text.
(3) Removed “§” symbol throughout.
(4) Incorporates guidance from Interim Guidance Memos SBSE-05-1021-0063, SBSE-05-0522-0026, SBSE 05-1222-0085, SBSE-05-0223-0001, SBSE 05-0423-0019, SBSE-05-0623-0032, and SBSE 05-0823-0029
IRM 5.8.8 published 12-17-2019 is superseded. This revision incorporates guidance from the following Interim Guidance Memos: SBSE-05-1021-0063 effective 10/28/2021, SBSE-05-0522-0026 effective 05/31/2022, SBSE-05-1222-0085 effective 12/05/2022, SBSE-05-0223-0001 effective 02/28/2023, SBSE-05-0423-0019 effective 04/19/2023, SBSE-05-0623-032 effective 06/26/2023, and SBSE05-0823-0029 effective 08/03/2023.
SB/SE Collection Offer Examiners, Offer Specialists, and other IRS employees who conduct offer in compromise acceptances.
Rocco Stecco
Acting Director, Collection Policy
| Acronym | Definition |
|---|---|
| AET | Asset Equity Table – A table listing all the taxpayer’s assets, encumbrances, and exemptions. It then calculates the equity which is included in the reasonable collection potential (RCP) calculation. |
| 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. |
| CDP | Collection Due Process - Allows taxpayers a right to a hearing before Independent Office of Appeals (Appeals) regarding proposed collection enforcement actions or filed Notice of Federal Tax Lien. |
| COIC | Centralized Offer in Compromise – Units located in Brookhaven and Memphis campus that complete initial processing and work offers to completion. Do not confuse this with MOIC. COIC units do not monitor or default accepted offers. |
| 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 | 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 potential (RCP). |
| ETA | Effective Tax Administration – Basis for acceptance of an offer where there 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. |
| ETA-NEH | Effective Tax Administration-Non Economic Hardship - Basis for acceptance of an offer where there is no doubt that the liability is correct or can be paid in full. However, requiring the taxpayer to fully pay the tax would undermine public confidence that the tax laws are being administered in a fair and equitable manner. |
| FPLP | Federal Payment Levy Program - is an automated levy program the IRS has implemented with the Department of the Treasury, Bureau of the Fiscal Service (BFS) |
| ICS | Integrated Collection System – Computer application used by collection 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 Offer in Compromise – Units located in Brookhaven and Memphis campus that monitor accepted offers for offer payments and compliance for 5 years. |
| 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 Area 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 a field office. |
| PE | Process Examiner – A tax examiner who completes initial processability determinations on offers and is located in COIC. |
| PII | Personal Identifiable Information - Information that can be used to distinguish or trace an individual’s identity, such as name, social security number, date and place of birth, mothers maiden name, or biometric records. Refer to https://irsgov.sharepoint.com/sites/ETD-KMT-KB003/SitePages/Forms/PersonalViews.aspx?PageView=Personal&ShowWebPart=%7BE4110F68%2D42F1%2D4BAD%2D8AD8%2DD22A35522F52%7D&id=%2Fsites%2FETD%2DKMT%2DKB003%2FSitePages%2FPrivacy%2FPersonally%5FIdentifiable%5FInformation&viewid=79eec4a5%2D6f0e%2D463e%2D8fa9%2Dff7dcc3a49a4for further guidance. |
| RCP | Reasonable Collection Potential – The amount that could reasonably be collected from the taxpayer. |
| SRP | Shared Responsibility Payment Beginning in 2014, IRC section 5000A required all individuals to have qualifying health care coverage (called minimum essential coverage or MEC) in each month of the year, qualify for an exemption, or make an individual shared responsibility payment (SRP) when they file their tax return for the year. Pursuant to section 11081 of PL 115-97, for months beginning after December 31, 2018, the amount of the SRP is reduced to zero. |
| TFRP | Trust Fund Recovery Penalty – A penalty imposed by IRC 6672 against any individual or business entity required to collect, account for, and pay over taxes held in trust, who willfully fails to perform any of these activities. |
| TIPRA | Tax Increase Prevention and Reconciliation Act of 2005 – Section 509 – Legislation enacted in May 2006, which made major changes to the OIC program. |