The following four components of collectibility will ordinarily be included in calculating RCP for offer purposes:

Within 15 calendar days of the date an offer is assigned to an Offer Examiner (OE) in Centralized Offer in Compromise (COIC) or within 30 calendar days of the date an offer is assigned to an Offer Specialist (OS), the assigned employee must complete the following actions:

In situations where the Field Offer Specialists (OS) are not co-located with the group manager, an additional five (5) days will be allowed from the assignment date to complete the initial case actions. This time accounts for the need to transship the case files to remote locations. Situations where this transit time routinely takes more than five (5) days to accomplish should be reported to the Area Offer in Compromise Coordinator to determine the cause for the delays.

Generally, the AOIC assignment date will be the assignment date of record.

Prior to the income and expense analysis of an individual offer where the taxpayer submitted a Form 656-A certification, the Offer Investigator will determine whether the taxpayers income and family unit size at the time the offer was submitted supported the decision not to pay the application fee. If the Offer Investigator concludes that the income for the family size exceeds the levels for which a Form 656-A certification was allowed (i.e., the taxpayer should have paid the application fee), offer processing should immediately cease. Return the offer using letter code "RET-AB " for failure to pay the application fee.

If additional information is required to make a decision, contact the taxpayer or Power of Attorney (POA) to request the additional supporting documents. If it is determined no information is necessary issue a decision letter.

The offer investigator may analyze the offer through correspondence, in person, which may include telephone contact, an office visit, or a field visit. Letters available on AOIC such as the combo letter or an additional information letter (L-2844) are appropriate to request additional information.

If the request for information is in writing the correspondence must include:

If the request for information is in person (e.g. by telephone, office, or field visit) the contact must include the following information:

Cases transferred from one office to another should have an AOIC transfer letter sent within 15 calendar days of the transfer advising the taxpayer of the location of the office where the case has been transferred and providing the taxpayer with a local contact telephone number. Since cases are often reassigned to a post of duty (POD) once received in the Area office drop point the receiving office will be responsible for sending the transfer letter. If the case cannot be assigned immediately, the taxpayer should be advised of the anticipated date of assignment to an Offer Specialist. A follow up letter should be sent to the taxpayer advising of any delay in assignment if the case is not assigned by the date specified in the original letter.

To eliminate the potential for mis-routed cases, the procedures outlined in IRM 3.13.62, Media Transport and Control, will be followed.

In order to ensure timely case processing, all in-process offers must have follow-up dates scheduled for the next appropriate action.

Throughout the investigation, the scheduling of timely follow-up actions should be reasonable and appropriate, based on the facts of the case. In order to be considered timely, follow-up actions should be significant actions that can reasonably be expected to move the offer investigation toward resolution. Generally, follow-up actions should occur:

Follow-up actions may include:

Case Recommendations

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Closing Actions

During initial analysis of an offer, IDRS should be checked to verify there are no actions for any periods either included or not included on the offer; such as, open audits, underreporter cases, TEFRA proceedings, or amended returns pending but not yet assessed. Pending examination cases may be identified by:

If any potential adjustments are identified the assigned Examination or AUR function or employee should be contacted to determine the status of the audit and informed that an offer based on DATC has been received. The decision on how to proceed with the offer should be based on the status of the potential adjustment.

For example:

Within 7 to 14 calendar days prior to accepting an offer, the Integrated Data Retrieval System (IDRS) should be rechecked to ensure that there are no new audit issues pending.

When one spouse files an innocent spouse claim and the other spouse submits an offer, the assigned Examination employee should be contacted prior to proceeding to ensure there are no additional reasons to delay the offer investigation until the innocent spouse claim is resolved.

If a taxpayer files a Doubt as to Collectibility (DATC) offer but raises an innocent spouse issue during the investigation, the issue should be discussed with the taxpayer. If appropriate, the offer should be withdrawn and an innocent spouse claim should be forwarded to Examination.

If IDRS indicates that the taxpayer has an open innocent spouse claim, or if a Doubt as to Collectibility (DATC) offer and innocent spouse claim are filed simultaneously the taxpayer should be requested to withdraw the offer unless the Examination function advises that the claim will be closed immediately with no change. If Examination indicates that the claim appears valid and the taxpayer will not withdraw the offer it should be suspended pending disposition of the innocent spouse claim.

During a Collection Due Process (CDP) or Equivalent Hearing (EH) assigned to Appeals, an offer may be submitted by the taxpayer. Taxpayers also occasionally submit a Doubt as to Collectibility (DATC) offer during an appeal of a proposed audit deficiency. Appeals retains jurisdiction of both these types of offers, but may send an Appeals Referral Investigation (ARI) to Collection.
An Appeals Referral Investigation (ARI) requesting Collection Information Statement (CIS) verification of a complex nature should be assigned to field revenue officers (RO). The results of the investigation will be reported via memorandum to Appeals and Appeals will conclude the investigation.
Requests for any expeditious treatment of an ARI will be decided on a case by case basis through a discussion between the two functional managers.

Offers based on Doubt as to Liability (DATL) on Trust Fund Recovery Penalty (TFRP) or Personal Liability Excise Tax (PLET) assessments must be reviewed upon receipt to ensure that the case is not pending or was not already heard in Appeals. If a DATL assessment had previously been determined in Appeals or is found to be currently assigned to an Appeals office, the offer should be removed from AOIC and transferred to Appeals. Coordination should be made with Appeals to ensure that the TC 480 (and if applicable Command Code STAUP to Status 71) is re-input with the proper Appeals jurisdiction code, since removing the offer from AOIC will reverse the TC 480.
If an offer based on Doubt as to Collectibility (DATC) only is received and there is an open case pending in Appeals, contact Appeals to determine who will have jurisdiction of the offer.

Open criminal investigations can be identified on IDRS by an unreversed transaction code (TC) 914 or (TC) 916. When these transaction codes are discovered contact must be made with the assigned Special Agent and procedures in IRM 5.1.5 followed. It may be necessary for the group or unit managers to discuss with the Criminal Investigation division (CID) manager to determine the next appropriate action. A decision will need to be made on the appropriate actions to take (including disposition of any application fee or deposit) and what may or may not be discussed with the taxpayer.

Once a taxpayer has been advised of the open criminal investigation, if the assigned Special Agent has no objection, the taxpayer may be asked to withdraw the offer until the criminal matter is resolved. If the taxpayer declines to withdraw the offer a joint decision should be made whether it should be closed as a return or held open until the investigation is closed.

When it is determined that an offer is submitted "solely to delay" collection, the offer should be returned to the taxpayer without further consideration. The term "solely to delay" collection means an offer was submitted for the sole purpose of avoiding or delaying collection activity. A determination that an offer is submitted solely for the purpose of delaying collection should be apparent to an impartial observer. See IRM 5.8.3.19, Offers Submitted Solely to Delay Collection , for a complete discussion of this topic and procedures to follow when a case meeting this criteria is identified.

When an offer is accepted to compromise trust fund tax owed by an operating business, the taxpayer is relieved of a significant operating expense. The effect is to grant the delinquent taxpayer an economic advantage over competitors who are in tax compliance. Recovery of the unpaid trust fund tax amount is a significant issue when considering an offer from a business taxpayer. In the interest of "fairness to all taxpayers" the Service must be cautious to avoid providing financial advantages to those taxpayers through the forgiveness of employment tax debt, as this may be detrimental to competitors who are remaining in compliance with their tax obligations. The following procedures apply to all In Business Trust Fund (IBTF) taxpayers, including sole proprietorships, partnerships, as well as corporations.

If an offer to compromise trust fund tax is being considered for a corporation that is still in business all the issues outlined in IRM 5.8.4.13.1 above should be considered. In addition, the Trust Fund Recovery Penalty (TFRP) must be addressed.

It is the Service's policy that the amount offered to compromise a corporate employment tax liability must include, in addition to what can be collected from the corporation an amount equal to what can be collected from all responsible persons, up to the amount of the TFRP (plus interest, if the penalty has been assessed). However, if the Service enters into a compromise with an employer for a portion of the trust fund tax liability, the remainder of the trust fund taxes may still be collected from a responsible person pursuant to Section 6672 of the Internal Revenue Code.

During initial analysis of an offer received from a corporation involving unpaid trust fund tax the Offer Specialist must determine the Assessment Statute Expiration Date (ASED) of each period and take immediate steps to protect it if expiration is imminent.

The following actions should be taken based on the facts of the case:

If a decision is made to accept the corporate offer and the TFRP is not assessed, as a condition of acceptance of the offer, Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, and Form 2750, Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, must be secured from each responsible person. The ASED should be extended to a date 2 years beyond the anticipated completion date of all terms and conditions of the offer, the applicable compliance provisions, and any related collateral agreements. The complete TFRP administrative file, including the signed Forms 2751 and 2750 should be sent with the accepted offer file to the appropriate Monitoring OIC (MOIC) unit once the offer is accepted. Should the offer default, that unit will be responsible for returning the TFRP Administrative file to the appropriate area office for assessment.

When a cash offer is accepted from a corporation and has been paid in full all employees assigned related TFRP accounts should be notified and asked to initiate the Form 3870, Request for Adjustment, only if the amount offered will full pay the TFRP liability. If the accounts are not currently in active collection status the Offer Specialist (OS) should initiate the adjustment requests. The Form 3870 should request that the TFRP module(s) be brought to a "zero" balance. If any payment or refund offset has been made on the TFRP the Form 3870 should also include the statement "Do not refund any credits on the module" .

When a deferred payment offer is accepted from a corporation the Form 3870, Request for Adjustment, for each related TFRP should be prepared as in (6) above, but should be attached to the accepted file when it is forwarded to the Monitoring OIC (MOIC) unit. A note should be attached asking that the Form 3870 be processed when the offer amount has been paid in full, only if the amount offered will full pay the TFRP liability. Employees assigned TFRP accounts should be notified of the acceptance and should assign all account(s) to IDRS t-sign code "8500" .

In the situation where the amount offered by a corporation combined with the payments already made on related TFRP assessments exceeds the total employment tax liability of the corporation for the same tax periods:

When the Personal Liability Excise Tax (PLET) is assessed at the time we accept an offer from the business, we may still collect from the responsible person any amount not paid by the business. Therefore, do not request abatement of the PLET just because the business's liability has been compromised.

While investigating an offer to compromise excise tax subject to PLET, also:

If the taxpayer should default an accepted offer, an opportunity to assert the PLET will be available at that time. For this reason, when an offer is accepted from a business based in part on our ability to collect the excise tax from responsible persons no PLET will be assessed:

Partnership employment tax liabilities are not "joint and several" as are joint income tax assessments. The Service's ability to collect from the partners is based on state law.

When a partnership liability is compromised for any individual general partner our ability to collect from all other general partners may be affected. Therefore, the amount offered to compromise a partnership tax liability must include what we can collect from the partnership plus what can be collected from each of the general partners. No offer should be accepted to compromise only one partner’s individual liability for the partnership debt.

When investigating partnership offers a Collection Information Statement (CIS) should be secured from the partnership and from all general partners. The reasonable collection potential (RCP) for the partnership must equal what could be collected from the partnership plus what could be collected from all general partners. Generally, an offer based on Doubt as to Collectibility (DATC) from a partnership will not be accepted when the RCP of one or more of the general partners cannot be determined. When it is not possible to secure a CIS from one or more of the general partners, because they cannot be located or they refuse to cooperate or join in the offer, the offer may still be accepted if the investigation is able to establish that there is no collection potential from the non-participating partners.

While the Service is charged with collecting certain child support obligations, we do not have the authority to compromise them. These accounts are identified on the Non-Master-File with a Masterfile Transaction (MFT) code of 59.

If a taxpayer proposes a compromise that includes a child support liability, Service employees should request that the offer be amended to remove the child support obligation. If the offer is acceptable it can be compromised without including the child support debt. If the taxpayer refuses to remove the child support liability the offer should be rejected using the public policy reason and the open paragraph stating that "We do not have authority to compromise child support obligations" .