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Independent Administrative Review

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5.8.12  Independent Administrative Review

5.8.12.1  (05-15-2004)
Overview

  1. IRC Section 7122(d)(1) requires the Service to conduct an independent administrative review of all proposed offer in compromise rejections . The review must be conducted prior to the rejection being communicated to the taxpayer.
  2. The Independent Administrative Reviewer (IAR) is responsible for conducting this review. Generally the IAR should report to the Technical Support manager.

5.8.12.2  (05-15-2004)
Role of the Independent Administrative Reviewer

  1. The Independent Administrative Reviewer (IAR) is responsible for reviewing each case to determine if the proposed rejection is reasonable based on the taxpayer's facts and circumstances. The Offer Investigator's analysis of the taxpayer's financial information should be reviewed to determine if there are special circumstances that should have been considered. The IAR should compare the amount that the taxpayer offered with the reasonable collection potential (RCP) or the Asset/Equity Table (AET) for legal sufficiency.
  2. The Independent Administrative Reviewer (IAR) should consider if the taxpayer's rights have been observed during the offer investigation and during communication and discussions with the taxpayer or authorized representative. These considerations should be based on issues that would impact on the recommended rejection.
  3. The Independent Administrative Reviewer (IAR) must also consider if the taxpayer's facts and circumstances were considered during the investigation. If the file indicates any circumstances that could impact either future earning potential or allowable expenses, the file should document this information and the determinations relating to the taxpayers circumstances.
  4. If the case file indicates issues are raised that meet either Effective Tax Administration (ETA) or Doubt as to Collectibility with Special Circumstance (DCSC) criteria, as defined in IRM 5.8.11, the case history must address these issues and discuss the determinations made.

5.8.12.3  (05-15-2004)
Rejections

  1. The independent administrative review should ensure that all of the facts and circumstances of the case were considered during the investigation and that the decision to reject the offer is reasonable, based on the case analysis.

    Note:

    The Independent Administrative Reviewer (IAR) is not responsible for conducting a quality analysis of completeness and accuracy of the documents used to support the case decision. That is the responsibility of the manager.

     

  2. The following items should be present in the file and used as an aid for the IAR to ensure the decision was appropriate.
    1. Form 656
    2. Form 1271
    3. Rejection Letter
    4. Offer Recommendation Report
    5. Asset/Equity Table (AET)
    6. Income/Expense Table (IET)
    7. Rejection Narrative
    8. Collection Information Statements (CIS)
    9. Case History
    10. Supporting Documents

     

  3. If any information is missing or unavailable that hinders the Independent Administrative Reviewer (IAR) in making a determination that the decision was appropriate, the case file should be returned or a memorandum sent to the Offer Investigator or the manager requesting the missing documentation or supporting information. In the case where the IAR is located off-site the information needed may be faxed to the IAR for inclusion in the analysis.
  4. The case file should indicate an attempt to communicate the results of the offer investigation with the taxpayer or authorized representative, prior to recommending the rejection. This communication can be accomplished by personal contact or by letter.

    Exception:

    The only exception is for those cases rejected based on the "Screen for Obvious Full Pay" criteria as outlined in IRM 5.8.4.5.

     

5.8.12.3.1  (05-15-2004)
Communication

  1. The Independent Administrative Reviewer (IAR) should consider if required communication with the taxpayer or authorized representative was attempted and if these communications were reasonable based on the facts of the case. Communications need not necessarily include phone calls. They may be conducted entirely in the form of letters to the taxpayers.
  2. The case file should document these communications and any specific issues that are in dispute.

5.8.12.4  (05-15-2004)
Independent Review Process

  1. Prior to the proposed rejection being submitted to the Independent Administrative Reviewer (IAR), the authorized approving official must have reviewed the file and signed the Form 1271 indicating concurrence with the proposed disposition.
  2. Once the approving official has signed the Form 1271, the offer must be re-assigned to the Independent Administrative Reviewer (IAR) on AOIC. The file is then forwarded to the IAR for review using a Form 3210, Document Transmittal.
  3. Upon receipt of the file by the Independent Administrative Reviewer (IAR), AOIC should be updated to reflect the individual independent reviewer's assignment number.
  4. Once the offer is reviewed by the Independent Administrative Reviewer (IAR), AOIC must be updated to reflect the results of the review.

5.8.12.4.1  (05-15-2004)
Rejections Sustained by the Independent Administrative Reviewer

  1. If the proposed rejection of the offer is sustained by the Independent Administrative Reviewer (IAR), the reviewer will:
    1. Update the IAR Main Screen on AOIC indicating the appropriate disposition,
    2. Sign Form 1271, as the reviewer, indicating concurrence with the proposed disposition, and,
    3. Return the case file to the originator using a Form 3210, Document Transmittal.

     

5.8.12.4.2  (05-15-2004)
Rejections Not Sustained by the Independent Administrative Reviewer

  1. If the proposed rejection is not sustained by the Independent Administrative Reviewer (IAR), the reviewer will:
    1. Update the IAR Main Screen on AOIC indicating the appropriate IAR disposition,
    2. Prepare Form 5942, Reviewers Report, providing an explanation of why the determination was not sustained and indicating additional actions necessary by the investigating employee,
    3. Route the Form 5942 and the offer case file to the IAR Manager for approval.

     

  2. After the IAR Manager approves the Form 5942, the case will be routed as follows:
    • The Original Form 5942 and the offer file will be returned to the Offer Investigator's Manager.
    • A copy of the Form 5942 will be sent to the Offer Investigator's Territory or Department Manager.
    • A copy of the Form 5942 will be retained by the IAR.

     

  3. The following procedures describe necessary actions once the offer file is received by the originating office:
    If… Then…
    Reconsideration of the offer based on recommendations from the IAR results in a determination to accept the offer Process the acceptance recommendation following procedures defined in IRM 5.8.8.
    Reconsideration of the offer based on recommendations from the IAR results in a determination to continue to recommend rejection of the offer. Update the case file with the additional case actions and any new information and re-submit to the IAR for a second review.
    The investigating employee determines that the rejection is the correct action without further action, after reviewing the Form 5942 The offer file will be returned to the IAR for reconsideration. If necessary, additional history should be included to further support the offer rejection.
    After a second review by the IAR, the rejection still is not sustained by the IAR and the Offer Investigator and his/her manager disagree with the IAR's decision The decision will be raised to the second level manager for resolution.
    •The IAR Manager will forward a memorandum to the Offer Manager with an explanation of why the rejection cannot be sustained.
    •A copy of the memorandum will be forwarded to the Offer Territory Manager or the COIC Department Manager.
    •The IAR manager and the Territory Manager or the COIC Department Manager will discuss the issues to reach a resolution.
    •The final decision will be made by the Territory Manager for cases assigned to the field and the COIC Department Manager, as appropriate.
  4. The original Form 5942, and any other documentation regarding second level management involvement and decisions must be retained in the offer case file as a record of actions taken during the Independent Administrative Reviewer (IAR) process.

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