It is possible that a
taxpayer may submit an offer in compromise based on
both doubt as to liability and collectibility,
and/or effective tax administration. Combination
offers are generally worked in Compliance Collection
first, and are added to the Automated Offer in
Compromise (AOIC) program there.
If Compliance Collection
accepts the offer based on doubt as to
collectibility, no action will be required of
Compliance Examination. Collection will take the
necessary steps to close the offer.
If Compliance Collection
rejects the offer, the file will manually be
transmitted to Compliance Examination for
consideration based on doubt as to liability.
Examination action/offer consideration should be
initiated within 30 days and monthly contact should
be maintained with Collection to inform them of the
status and projected closure date.
If the taxpayer also
requested consideration on the basis of effective
tax administration, Compliance Examination will
determine the doubt as to liability issues and
provide a recommendation to Collection regarding any
Detriment to Voluntary Compliance (DVC) issues
related to application of the tax law. In no
circumstance should Collection accept an offer on
the basis of effective tax administration until
doubt as to liability and doubt as to collectibility
has been considered and determined not to be
applicable.
If Examination accepts the
offer based on doubt as to liability, they will
notify Collection so the controls can be closed.
If Examination rejects the
offer based on doubt as to liability and finds no
DVC issues, Examination will prepare the rejection
letter addressing both the Examination and
Collection issues. (Collection should indicate the
reason for their rejection and the appropriate
verbiage/reason paragraph in the file).
If Examination rejects the
offer based on doubt as to liability but identifies
a DVC issue, the file should be forwarded (or
returned) to Collection for consideration of the
collectibility and effective tax administration
issues, and with the recommendation from Examination
on the DVC issue.
Independent Administrative
Review is completed in Examination on the applicable
examination provisions/issues and IAR should have
already been completed in Collection before the file
was received in Examination.
After appropriate
approval/signature is obtained on the rejection
memorandum and letter, the rejection letter will be
date stamped and sent to the taxpayer by
Examination. A copy of the date stamped letter is
sent to Collection to update their AOIC controls. If
the taxpayer does file a timely appeal request, the
offer package will be forwarded to Appeals. If the
taxpayer does not appeal, Examination will close the
offer case and appropriately notify Collection to
likewise close their controls.
The Examination OIC
coordinator should periodically meet with Collection
OIC personnel (and/or inspect Collection closed
Forms 1271, Rejection or Withdrawal Memorandum, and
7249, Offer Acceptance Report) to ensure examination
issues were appropriately considered and/or
coordinated.
Presented by Alvin Brown and Associates,
tax attorney, formerly with the Office of the Chief Counsel of the
IRS.
Call us for all IRS tax issues, problems and emergencies
Protect yourself from IRS intimidation, errors, and penalties.
www.irstaxattorney.com- ab@irstaxattorney.com -
(888)
712-7690 - (703) 425-1400
