May 13, 2011

Control No.: SBSE-05-0511-026

Expires: May 13, 2012

Impacted: IRM 5.8


Scott D. Reisher
Collection Policy

Centralized Offer in Compromise Streamline Offer Processes

The purpose of this memorandum is to provide instruction for streamline offer processing. The procedures defined in attachments "A" for Process Examiners and "B" for Offer Examiners, will be incorporated in the next revision of Internal Revenue Manual (IRM) 5.8.3, Centralized Offer in Compromise Transfers, Perfection, and Case Building, and 5.8.5, Financial Analysis.
As a result of a study conducted on the OIC program in 2009, a streamline offer program was implemented on June 28, 2010 in the Brookhaven and Memphis COIC Campuses. Currently, COIC criteria is defined as a wage earner and self-employed taxpayer with gross receipts of $500,000 or less and no employees. Qualified streamline OIC taxpayers have total household income of $100,000 or less and a total liability of less than $50,000. These offers will be worked with greater reliance on internal research, telephonic communication, and additional allowances for expenses and future income calculation.
If you have any questions, please feel free to contact me or a member of your staff may contact Diane Morris, OIC Senior Program Analyst or Ilene Nodiff-Robinson, Senior Tax Analyst. Field offer, field collection and COIC personnel should elevate their questions through the appropriate management chain.
Attachments: (2)
Chief Appeals
Chief Counsel
National Taxpayer Advocate
* * * * *

Attachment A
Interim Guidance Memorandum SBSE-05-0511-026
Streamline Process Examiner Procedures

The following processes will remain unchanged:
  • Processability will be conducted following established IRM 5.8 guidelines

Case Building
  • Field transfer cases will be case built following procedures outlined in IRM
  • Offers will be screened for the "Screen for Obvious Full Pay" process
  • Cases requiring a related offer will be case built following established guidelines.

Identification of Streamline Offer Criteria
  • Taxpayer is a wage earner or self employed individual, with gross receipts of $500,000 or less with no employees
  • Total liability is less than $50,000, including accruals. Research should be conducted to determine if all liabilities and entities are included in the total balance due. (QUERY SCREEN)
  • Total household income is $100,000 or less. Form 433A, line 32 must be $8,333 or less.
  • Complete internal case building only; IDRS
  • Do not review offer for missing documentation or critical perfection of F 656.

                 Streamline Process Examiner Procedures

 If                                                                         Then

 Total liability < $50,000 and total annual                 Assign to OCC 12
 household income is $50,000 or less ($4,166
 or less on F 433, line 32)

 Total liability <$50,000 and total annual                  Assigned to OCC 13
 household income is $50,001 - $100,000 (More
 than $4,166 and up to $8,333 on F 433, line 32)
  • BCOIC will use a Yellow Folder to identify streamline cases and MCOIC will use an Orange Folder.
  • Send the taxpayer a Combo "A" letter. Include Pubs 1 and 594 with taxpayer's letter.
  • Assign to 6400 Wage OE or 6450 Self-Employed OE cases.
  • The OE will complete critical perfection of the Form 656. (i.e. physical address, offer amount)

Streamline Case Building Exception
  • If the taxpayer is not in filing compliance and/or there is a shortfall of the 20% TIPRA lump sum payment:
  • Send a Combo letter to the taxpayer for unfiled tax returns and/or additional payment. (Do not review the Form 433A for any other missing information)
  • If the POA is not authorized to represent the taxpayer on all periods, include the applicable paragraph.
  • Assign wage earner cases to 4000 and self employed cases to 4050.
  • Use the appropriate Yellow or Orange folder, based on the processing site.
  • If no response, return the offer under current IRM 5.8 procedures
     Total Liability is less than $50,000 and Income is Unknown
  • If there is no Form 433A, Form 433A is blank, or the taxpayer submits only the Form 433B:
  • Send a Combo letter requesting the Form 433A. If taxpayer is not in filing compliance and/or there is a TIPRA 20% lump sum shortfall, also address these issues in the Combo.
             Note: If the POA is not authorized to represent the taxpayer on all periods, include the applicable paragraph.
  • Mark the outside of the folder, "433A"
  • Assign the case to 5100 or 5158, as appropriate.
  • When the response is reviewed, check for Streamline Criteria (Total Annual Income $100,000 or less).
  • If the offer meets streamline criteria, update AOIC to the applicable OCC, assign to 6400 or 6450, as appropriate, and put in the appropriate Yellow or Orange folder.
  • If offer does not meet streamline criteria, continue with regular case processing.
       Whenever a Combo letter is sent, input a follow-up in AOIC.
       Do not send the "Business Stuffer".

* * * * *

Attachment B
Interim Guidance Memorandum SBSE-05-0511-026
Streamline Offer Examiner Procedures

 OFP: 810 66015 Wage Cases
          810 66014 SE Cases

 Initial Case Actions

 If. . .                                                     Then . . .

 The total liability is < $50,000 and the           Verify that the offer is assigned
 total annual household income is $50,000     to OCC 12.
 or less

 The total liability is <$50,000 and the      Verify that the offer is assigned
 total annual household income is             to OCC 13.
 $50,001 - $100,000

 The taxpayer's reply to the combo letter     Make one phone attempt to secure
 stated that they were not liable for a       the return.
 tax return, but internal research
 identifies taxable income requiring a        Note: The requirement to address
 tax return                                              all compliance issues has not
                                                             changed with streamline

 The terms of offer are a periodic payment    The OE is still required to
 offer                                                         monitor periodic payments during
                                                                the investigation

 # * * * # * * * # * * *                                   # * * *
                                                               # * * *
                                                               # * * *

                                                               # * * *
                                                               # * * * # * * * # * * * # * * *

                                                               # * * * # * * * # * * * # * * *
                                                               # * * *

Initial Financial Analysis
  • Financial information will be loaded to Decision Point (DP) utilizing the dollar amounts the taxpayer supplied on the Form 433A and/or 433B.
  • Internal research and/or documentation submitted with the offer will be reviewed to determine if these amounts are reasonable.
  • The figures provided by the taxpayer should only be questioned and adjusted in the AET or IET analysis if there are significant discrepancies.
  • Any request for additional information will be made through phone contact and request for fax responses, when possible.
  • Follow IRM 5.8 guidelines for allowable standards and expenses.


 If . . .                                             Then . . .

 DP calculations result in a full pay    Call the taxpayer/POA to discuss the

                                                      Determine if there is additional
                                                      information that may change

                                                      o If there is no additional
                                                         information, proceed with

                                                     o If additional information
                                                        changes determination to an
                                                        increase, follow streamline
                                                        process below

                                                    o If additional information
                                                       changes determination to an
                                                       acceptance, proceed with
                                                       acceptance processing

                                                       Note: Include copy of first DP
                                                       summary page in the offer file.

 DP calculations result in an            Proceed with acceptance processing.
                                                    There is no need to apply Streamline

 DP calculation results in an increase  Follow streamline processing below

Streamline Processing
General Verification Rules
  • Verify the taxpayer provided information through internal research.
  • The use of oral testimony may be allowed and should be well documented, unless the information appears questionable.
  • Complete internal record checks to determine ownership and equity in real and personal property, including motor vehicles.
  • Low Income Waiver -- Low Income Waivers will be considered valid if the taxpayer meets the low income guidelines as defined on the Form 656 at the time of submission or current income, whichever is less. The taxpayer may provide the information on the Form 656-A, Income Certification for Offer in Compromise Application Fee (For Individual Taxpayer Only), or by checking the box in Section 4 on the Form 656 (Revised 3-2011).

Streamline Financial Analysis

  • Income reported by the taxpayer on the Form 433A and/or 433B will be used for the Income Expense Table (IET) unless a significant discrepancy is identified through pay stubs or internal research. This same income will be used when validating the Form 656-A.
  • # * * * # * * * # * * * # * * * # * * *
  • # * * *
  • # * * *
  • # * * * # * * * # * * # * * * # * * * # * * * # * * * # * * *
Note: Other than the reductions above as stated in the Streamline Financial Analysis, do not reduce equity in hard assets without conversation with the taxpayer.

Initial Analysis / Follow-Up Timeframes
  • Offers worked under streamline processing are not subject to initial analysis and follow-up actions defined in IRM, Initial Offer Actions.
  • Offers will be worked as expeditiously as possible with no unwarranted delays.

General Taxpayer/POA Contact Rules
  • Any request for additional information and/or communicating the preliminary findings of the offer evaluation will be made by phone, to the greatest extent possible. If additional information is required, all due consideration should be given in accepting oral testimony. When calling to share preliminary findings, clearly explain how the determination was made. Ask the taxpayer if there is anything further that should be considered and whether there may be special circumstances that were not conveyed in the original offer submission.
  • Three phone attempts must be made at different times of the day over two business days. If you are able to leave a message on an identified VMS, request a call back within two business days. This is considered a successful call.
  • If you are not able to reach the taxpayer/POA by phone within two business days or the taxpayer/POA does not return your call, send a quick note requesting a call back within ten calendar days of the date of your letter.
  • Phone contacts and attempted contacts must be documented in the case history.

Appropriate Use of Additional Information Letters

  • Additional information letters will NOT be used to secure financial verification. They may be used for the following requests only after three unsuccessful phone attempts:

1. Securing estimated tax payments
2. Securing TIPRA periodic payments
3. Securing an amended F 656 needed to accept the offer

NOTE: The additional information letter will be post dated 5 calendar days. The letter should request the information ten calendar days from the date of the letter. Allow an additional 5 calendar days for the response for a total of 20 calendar days. Extensions should be given upon request, as appropriate.

Case Determinations
1. Returns
  • Cases should be returned for appropriate reasons, following established guidelines (compliance issues, failure to provide information considered necessary for case development, etc.).

2. Full Pay Rejections*
  • Call the taxpayer to discuss the determination. Three attempts, within two business days, should be made.
  • If phone contact cannot be made, send a quick note.
  • Identify the reason for the full pay determination and discuss with the taxpayer to see if there is additional information/special circumstances that would change the determination. Update AET/IET as needed.
  • If there is no change to the determination, send to the IAR and issue the rejection letter. Follow rejection procedures in IRM 5.8.7, Offer in Compromise -- Return, Terminate, Withdraw and Reject Processing.
Note: If no response to quick note, send rejection letter with the IET/AET and DP Summary page. A predetermination letter (PDL) will not be issued.

3. Increase after Streamline is applied*
  • Call the taxpayer to discuss the case decision. Three attempts, within two business days, should be made.
  • If phone contact cannot be made, send the quick note.
  • Determine if taxpayer has additional information/special circumstances which would change determination and update AET/IET as needed.
  • If there is no change to the determination and the taxpayer agrees to the increase, send the taxpayer an amended Form 656 or addendum to sign.
  • If there is no change to the determination and the taxpayer does not agree to increase the offer, send to the IAR and issue the rejection letter.
Note: If there is no response to the quick note, send the rejection letter with IET/AET and DP Summary page. The PDL will not be issued.

4. Acceptance
  • Follow regular processing procedures
  • It will not be necessary to create an acceptance closing report on streamline offers. Document AOIC with all required information.
  • Amended Forms 656 may be faxed.

* In the case of either two or three above, if the taxpayer provides new information with the rejection letter, before sending the case to Appeals, follow current procedures and review the new information to see if it changes the case decision.
Posted at 05/23/2011 01:40:41 PM