An OIC is an agreement between a taxpayer and the government that settles a tax liability in exchange for payment of less than the full amount owed. Under 26 CFR 301.7122-1(f)(5), a taxpayer may administratively appeal a rejection of an OIC to the IRS Independent Office of Appeals (Appeals) if, within the 30-day period commencing the day after the date on the letter of rejection, the taxpayer requests such an administrative review in the manner provided by the Secretary.

Authorities that are related to the offer program are:

The Director, Operations Support is the executive responsible for designing, developing, delivering and monitoring short and long-range tax administration policies programs, strategies and objectives for the Appeals organization.

The Director, Policy, is responsible for providing technical and procedural guidance to Appeals employees, establishing and maintaining policies and standard procedures for Appeals workstreams.

Policy is comprised of two teams of analysts: 1) Collection Appeals & Processing Policy, and 2) Examination Appeals Policy. The analyst responsible for the OIC program reports to the manager for Collection Appeals Policy.

All Appeals employees are responsible to be aware of the taxpayer’s rights as articulated in the Taxpayer Bill of Rights (TBOR). See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information, about the TBOR, see Publication 5170, Taxpayer Bill of Rights and TBOR link, https://www.irs.gov/taxpayer-bill-of-rights.

In accordance with IRM 25.30.2.3, Statement of Commitment, Appeals will work collaboratively with the Taxpayer Advocate Service (TAS) to enhance the taxpayer experience. For more information, see IRM 25.30.2, Service Level Agreement between the IRS Independent Office of Appeals and the Taxpayer Advocate Service.

Per IRC 7122(f) and Notice 2006-68, an OIC shall be deemed accepted if it is not rejected, returned, withdrawn or treated as withdrawn under section 7122(c)(1)(B)(ii) because the taxpayer failed to make the second or later installment due on a periodic payment OIC (see IRM 5.8.8.12, 24-Month Mandatory Acceptance under IRC § 7122(f)), before the date which is 24 months after the date of the submission of the offer. Any period during which any tax liability that is the subject of the OIC is in dispute in any judicial proceeding shall not be taken into account in determining the expiration of the 24-month period. The date of submission of an offer for purposes of section 7122(f) is the date the Form 656 or Form 656-L is received in one of the two Centralized Offer in Compromise (COIC) units located in Memphis and Brookhaven. Thus, the 24-month period for deemed acceptance starts the date the offer is received by COIC.

There are two instances where Appeals may receive an OIC without a final decision first being made by Collection, and thus, have an open TIPRA statute (see also Exhibit 8.23.2-1, Open Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) Review):

For optimal tracking of the TIPRA statute, whenever a new Form 656 is received, immediately advise APS with a request to create a new WUNO via Appeals Shared Programs Hub -Home (sharepoint.com).

Refer to Exhibit 8.23.2-1, Open Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) Review, to check for open TIPRA statutes.

Cases identified with an open TIPRA statute must have the proper ACDS statute controls appear on each tax period on the OIC WUNO.

Cases with an open TIPRA statute are subject to the same back-end processing time frames as listed in IRM 8.21.3.2.7, Appeals Technical Employees Statute Responsibility - Closings, and IRM 8.21.4.3, Appeals Management Statute Responsibility - Appeals Team Manager (ATM), meaning:

IRM 5.8.7, Offer in Compromise, Return, Terminate, Withdraw, and Reject Processing, allows for certain OICs to be closed as a processable return. A return letter issued to the taxpayer closes the TIPRA statute under IRC 7122(f). In certain circumstances, Collection may agree to reconsider the offer return, reopen the case, and assign the offer a new offer number. Thus, any reopened case, whether due to IRS error or not, will not have a TIPRA statute. See IRM 5.8.7.3, Return Reconsideration. When this happens a new Form 656 is, generally, not secured.

There may be instances when ATEs need to request documents from the OE/OS that are in the original OIC file. Such situations may be, but are not limited to:

To request OIC file documents from the OE/OS, ATEs will send a secure email directly to the originating OE/OS with a copy to the COIC or FOIC manager.

ATEs will provide OE/OS with a 14-day response time to provide the requested case file documents by secure email.

Sometimes taxpayers have liabilities for multiple entities. For various reasons, it is also sometimes the case that these related offers are submitted by taxpayers after an initial offer is submitted for a different entity. During the course of the consideration of an offer by you, if you become aware that there is an open, related offer under consideration elsewhere in Appeals, then coordinate with whomever the related case is assigned to accept transfer of the related case, so that the cases may share a consolidated assignment, review and disposition.

For purposes of this subsection, related cases will be those related to any joint or individual offer as follows:

If an initial offer is already assigned to you, coordinate with Collection to immediately accept assignment of any related offer that fits example (2)(a) above. Any undeveloped information that is included with a related offer that is transferred to Appeals will be considered “new information” submitted to Appeals. If necessary, undeveloped information will be sent to Collection following the procedures in IRM 8.23.3.4.1.2, Request and Review of Supplemental Information - Collection Issue Offers.

Per IRM 5.8.1.9 , Liabilities to be Compromised, and IRM 5.8.1.9.1, Definition of a Compromised Liability, all assessed taxpayer liabilities should be included in any offer acceptance. If related liabilities exist (as in example 2(a) above), an offer cannot be accepted that does not also include offer(s) for related liabilities. Therefore, if you are accepting an offer, secure the necessary forms and payments needed for the related offer, and forward the package to COIC for the necessary processing. COIC will generally determine processability within 24 hours.

If an initial offer is already assigned in Appeals, Appeals will not accept immediate assignment from Compliance of any related offer that appears in example (2)(b) and its associated Note. Such cases are considered related only for purposes of consolidating assignment once in Appeals. There is no authority for Appeals to accept assignment of these cases from Compliance unless the taxpayer has first undergone the administrative review and rejection process under IRC 7122(e).

When you encounter a situation where a correction needs to be made to IDRS, APS can input the correction. ATEs will submit an ACDS Update Request using the Appeals Shared Programs Hub -Home (sharepoint.com).

Non-CDP OIC receipts must be reviewed to make sure the appeal is timely. The taxpayer may administratively appeal a rejection of an offer to compromise to the IRS Office of Appeals (Appeals) if, within the 30-day period commencing the day after the date on the letter of rejection, the taxpayer requests such an administrative review in the manner provided by the Secretary.26 CFR 301.7122-1(f)(5)(i) .

Occasionally, an appeal is received and the postmark, meter or fax transmission date is illegible or the envelope is missing. To determine timeliness if the postmark, meter or fax transmission date is illegible, or the envelope is missing:

Taxpayers occasionally submit a written appeal before the offer is rejected. IRC 7122(e) states there must be an independent administrative review of any rejection of an OIC before such rejection is communicated to the taxpayer and 26 CFR 301.7122-1(f)(1) provides that an OIC has not been rejected until IRS issues a written notice to the taxpayer or his representative advising of:

These less common instances identify cases that should be returned as a premature referral because Appeals lacks the jurisdictional authority to consider the protest:

A case will not be returned as a premature referral on the basis of your conclusion that Collection did not fully develop certain issues. In those situations you will make a decision after reviewing Collection’s development of the issue against the information and testimony provided by the taxpayer. At closing, Form 5402 under Remarks should specify the reason and IRM section why the case is a premature referral and instruct APS to annotate in AOIC Remarks why the case is being returned to Collection as a premature referral.

In some DATL cases,the DATL Unit may not address the liability, erroneously concluding that Appeals previously determined the tax liability. For example, if an earlier case was listed on the Appeals Centralized Database System (ACDS) as docketed and closed using closing code 21, it could mean the case was dismissed without addressing the liability. If you conclude the liability was not previously determined by Appeals, send the case back to the Brookhaven DATL unit alerting them that the case has an open TIPRA statute by using the Form 3210 entitled, “Appeals Returning DATL OIC (CC21)”, which is available on the Appeals OIC Web Page. If the liability was established by the Tax Court, you should also alert the DATL unit to that fact.

If the case involves unpaid trust fund taxes, the assessment statute expiration date (ASED) is not suspended by the OIC. IRM 5.8.4.22.3(2), Offers from Operating Businesses, states:

Other non-jurisdictional premature referral situations include:

If a new Form 656 is received for a related offer and COIC determines that the offer is not processible, close the work unit as a premature referral. If it is determined that the case is ready for Appeals' consideration, see IRM 8.23.2.3, Receipt, Initial Case Review and Statute Control.

Collection will occasionally receive an appeal of a joint offer that is signed only by one individual. If Collection did not take appropriate action to perfect the appeal request, do not return the case as a premature referral. Initiate a request to APS via Appeals Shared Programs Hub -Home (sharepoint.com) to take corrective action. See IRM 8.23.2.3.4, Requesting Account Corrections.

When a DATC offer is considered and rejected by Collection, the disposition of the case as a rejection indicates that the taxpayer was in current compliance at the time of rejection. If not, Collection should have closed the case to the taxpayer as a “return” with no appeal right. Therefore, you will consider the taxpayer as being in verified tax compliance whenever a rejected case is received, and will not request estimated tax payments or withholdings, even if those appear to have been delinquent or miscalculated prior to the rejection of the case.

You will not return a case as a premature referral to Collection to address issues indicated in (1) above.

You will not monitor a taxpayer's ongoing tax compliance while a rejected offer is under consideration, except as specified in IRM 8.23.2.7, Taxpayer Compliance Issues, and its related subsections.

Because of the risk of rapid and substantial losses to the government due to the failure to make Federal Tax Deposit (FTD) payments, you should follow IRM 5.8.7, Offer in Compromise, Return, Terminate, Withdraw, and Reject Processing, with respect to verification of FTD compliance, and In-Business Trust Fund (IBTF) return filing compliance, but with some noted exceptions.

Generally, you will consider the taxpayer as being in verified FTD compliance whenever a rejected case is received, and will not demand federal tax deposits to be made even if those appear to have been delinquent or miscalculated prior to the rejection. See IRM 8.23.2.7.1(1), Taxpayer Compliance Issues - Delinquent or Insufficient Estimated Tax Payments and Withholdings. For liabilities that accrue during appeals consideration, see (4) below.

You will not return a case to Collection as a premature referral to address issues indicated in (1) or (2) above.

You will not monitor the taxpayer’s regular FTD schedule. However, if you recognize a new IBTF assessment while you are considering the offer, you should give the taxpayer 14 days to pay the entire liability (including penalties and interest) so that the consideration of the offer may continue. If the taxpayer does not pay the new liability in full, you should either sustain rejection of the offer or, in unique circumstances (left to Appeals’ sole discretion), determine to include the liability in the offer and proceed with consideration of the case. See also IRM 8.23.2.8, When a Taxpayer Does Not Remain in Compliance.

If an IBTF tax return becomes delinquent while an OIC case is under your consideration, you should:

Tax returns secured by Appeals should be evaluated only for the taxpayer’s filing and payment compliance.

The taxpayer must timely file returns that become due while an offer is under consideration. You will treat these situations as follows:

You will not return a case as a premature referral to Collection to address issues indicated in (1) above.

Tax returns secured by Appeals should be evaluated only for the taxpayer’s filing and payment compliance.

A taxpayer submitting a Periodic Payment Offer is required to make the periodic installment payments proposed in such offer. If the taxpayer fails to make the periodic installment payments they proposed on Form 656 before the Collection offer examiner advised the taxpayer of the proposed rejection (either verbally or in writing), the case should be returned as a premature referral for Compliance to secure the necessary TIPRA payments.

Review the periodic payment proposal carefully before making a determination whether the taxpayer failed to make required proposed periodic installment payments before the Collection offer investigator advised the taxpayer of the proposed rejection (documented either verbally or in writing).

Refer to Exhibit 8.23.2-2 , Premature Referral of Periodic Payment OIC Appeal, to determine whether Collection neglected to follow significant IRM requirements resulting in the premature referral of a Periodic Payment OIC case.