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Part 8. Appeals

Chapter 22. Collection Due Process

Section 3. Back-End Processing for Collection Due Process and Equivalent Hearing Cases

8.22.3  Back-End Processing for Collection Due Process and Equivalent Hearing Cases

8.22.3.1  (11-01-2006)
Overview of Back-End Processing

  1. In April 2005, APS took on closing responsibilities for CDP and EH cases that were performed by other functions such as Centralized Case Processing (CCP), Automated Collection System Support (ACSS) and the Centralized Offer in Compromise (COIC) sites.

  2. CDP cases are suspended in the office that issues the determination letter. CDP cases may be suspended in both field and campus offices. If the taxpayer does not petition Tax Court for a review of Appeals determination within 30 days after the CDP determination letter is issued (additional time is applicable if an Innocent Spouse notice of determination or an Abatement of Interest claim disallowance letter was included with CDP NOD), the field offices will send the CDP case to one of the Appeals campus CDP units for back-end processing.

  3. Memphis, Fresno, and Brookhaven campus sites process CDP/EH case closures

  4. This section provides guidance for APS employees on closing responsibilities for CDP and EH cases and for processing collection alternatives and adjustments.

  5. APS back-end responsibilities include:

    1. Updating the CDP Tracking System (CDPTS)

    2. Inputting TC 521 cc 76 or 77

    3. Inputting closing information to ACDS, including PEAS

    4. Inputs to IDRS on payment agreements, tax and penalty adjustments, and currently not collectible.

      Note:

      APS restrictions on what they cannot adjust on IDRS is discussed in this IRM.

8.22.3.2  (11-01-2006)
Case Closing Actions

  1. APS campus sites complete backend actions on CDP/EH cases that originate both in field Collection and the Automated Collection System (ACS).

8.22.3.2.1  (04-08-2009)
IDRS Control Bases

  1. ACS will reassign its IDRS control base to the Memphis or Fresno Appeals Processing Services when they forward a CDP/EH case to the respective site (see IRM 5.19.8.4.9).

    ACS will reassign to APS using the following codes:

    Fresno APS: 6626900001

    Memphis APS: 6620200001

  2. APS will close the control base at the conclusion of CDP back-end processing on all ACS originated cases. The control base can be closed using either IDRS command code ACTON or at CDPTS Stage 13.

  3. Close using IDRS command code ACTON:

    Example: ACTON

    C0#,,C

  4. To close via CDPTS, the following is input at Stage 13:

    1. Returned to Office = Appeals (if granting an alternative)

    2. Returned to Office = ACS (if sustaining)

      Note: By entering "Appeals" in " Returned to Office," CDPTS will automatically update to Stage 24.

    3. Returned to location = 6693 (Fresno), 6695 (Brookhaven), 6697 (Memphis)

    4. You will receive a pop-up box asking: Do you want to close a control base?

      Answer: "Yes"

    5. You will receive a pop-up box to: Enter the control base number

      Select the control base number that is in the box

    6. You will receive another pop-up box to: Enter group or employee # for this control base

      Memphis and Brookhaven Campus will enter: 6620200001

      Fresno will enter: 6626900001

8.22.3.2.2  (04-08-2009)
Processing Employees Automated System (PEAs)

  1. Assign the CDP WUNO on PEAS when received in the centralized APS campus office.

  2. The PEAs type will be "CLS." The subtype selected will reflect the action required on the case:

    • "ACDS Only"

    • Special Processing – if adjustments or account action is required

  3. APS employees will:

    1. Close cases from ACDS

    2. Determine and input the TC 521 date on CDPTS

    3. Update the CDPTS

    4. Input adjustments to accounts

    5. Input collection alternatives

    6. Create the closed office file

  4. The case will not be closed out of the TE’s inventory on PEAs until all actions have been completed.

  5. If the record has multiple years, each year may be closed as action has been completed; the entire case must not be closed if action, including cycling adjustments, have not been completed.

  6. Suspense PEAs, if necessary, during the process.

8.22.3.2.3  (04-08-2009)
Determine the TC 521 Date

  1. The TC 521 date is the date the determination becomes final.

  2. If the taxpayer does not file for a judicial review, compute the TC 521 as follows:

    1. If Letter 3193 is issued, TC 521 = 30 days after the letter is issued.

    2. If Form 12257 is secured, TC 521 = date ATM signs waiver.

    3. If Form 12256 or a withdrawal is received, TC 521 = the date Appeals receives the withdrawal.

    4. If there was a spousal defense issue, the TC 521 = CDP Determination Letter Date + 90 days.

    5. If there was an abatement of interest issue, the TC 521 = CDP Determination Letter Date + 180 days.

  3. If the taxpayer files for a judicial review, compute the TC 521 as follows:

    1. A Tax Court decision without a waiver paragraph: TC 521 = Date decision entered + 90 days

    2. A Tax Court decision with a waiver paragraph: TC 521 = Date decision entered. See IRM 8.22.3.7.

    3. A Tax Court decision for dismissal: TC 521 = Date decision entered + 90 days

  4. The CSED will systemically be computed by IDRS with the input of the TC 521 as long as the IMF indicator is identical to that input with the TC 520.

    Example:

    The CSED updates systemically on a joint case with an CSED indicator of "B" for both.

  5. A manual computation is ONLY required when the account is joint and only the Primary (P) or Secondary (S) taxpayer requested the hearing.

  6. The new Collection Statute Expiration Date (CSED) can be manually computed using the following tools:

    1. APGOLF "Number of Days" Calculator. This tool calculates the number of days between the TC 520 and TC 521 dates.

    2. APGOLF "Target Date" Calculator. This tool calculates the new CSED date when the number of days the CSED is suspended (see (b) above) is added to the current CSED.

  7. If CSED was suspended for only "P" or " S" , input new CSED via REQ77 with manually computed CSED.

8.22.3.2.4  (04-08-2009)
How to Input TC 521

  1. How to input a TC 521 using CDPTS:

    1. The user adds a new stage 13 on the CDPTS web screen.

    2. If the hearing type is DP, the web screen prompts the user " Do you want to request input of the TC 521? Yes or No."

    3. If the user responds "No" , no further action is taken.

    4. If the user responds "Yes" , the web screen prompts the user for the TC 521 transaction date.

    5. CDPTE will automatically generate the closing code by hearing type, cc 76 for DPLN and DPBO and cc 77 for DPLV.

    6. It will add a new TC 521 record, and return a message to indicate if the action succeeds or fails.

    7. If there is more than one module related to the same request, the web screen will prompt each module associated to the same request, and repeats step c and d.

  2. Delete the existing stage 13:

    1. If the user deletes the existing stage 13 on the web screen, the hearing type is DP and CDPTE previously generated a TC 521, the system will alert the user: "A TC 521 cc 76/77 was previously generated and may need to be reversed."

  3. The FRM 77 web screen is available via the CDPTS to allow the user to make the necessary updates/reversals to the TC 520/521 cc 76/77.

    Note:

    The CDP Tracking System FRM 77 screen cannot be used to input TC 521 when the CSED will not update systemically. You must input TC 550 from the " cc" REQ77 on IDRS. A TC 550 is not always required since it extends the CSED systemically for both spouses even when only one is needed. See IRM 5.1.9.

  4. If Stage 1 is deleted after Stage 13, the system will alert the user, "You may need to request reversal of the TC 520/521 cc 76/77."

8.22.3.3  (10-19-2007)
ACDS Entries: CDP, EH, RJ and CDPTD

  1. ACDS entries for closing CDP, EH, RJ and CDPTD cases.

8.22.3.3.1  (04-08-2009)
ACDS Closing Codes

  1. CDP cases are closed with the following closing codes:

    Closing Code Action
    04 Agreed with waiver (Form 12257)
    05 Defaulted determination letter
    08 Docketed - Appeals secured agreement
    10 Docketed - Used for all cases settled with an Area Counsel secured agreement only. See IRM 8.22.3.7 (3) Note.
    11 Dismissed - lack of jurisdiction
    12 Dismissed - lack of prosecution
    13 Disregarded Hearing Request
    16 Withdrawn (Form 12256 or other written withdrawal)
    17 Tried Case - Used for any cases tried by Counsel which resulted in a court rendered decision. See IRM 8.22.3.7(3) Note.
    20 Premature referrals or rescinded CDP cases
    42 Remanded cases (interim)
    43 Petitioned cases (interim)

  2. EH cases are closed with the following closing codes:

    Closing Code Action
    13 Disregarded Hearing request
    14 Fully sustained
    15 Partially or not sustained
    16 Withdrawal

  3. RJ cases are closed with the following closing codes:

    Closing Code Action
    14 Collection is following Appeals' CDP determination
    15 Collection is not following Appeals' determination
    16 Appeals' CDP determination is revised in cases involving change in circumstances.

  4. Separate Timeliness Determination (CDPTD) cases are closed with the following closing codes:

    Closing Code Action
    14 Appeals agrees with Collection's timeliness determination
    15 Appeals disagrees with Collection's timeliness determination
    16 Appeals partially agrees with Collection's determination

8.22.3.3.2  (10-19-2007)
ACDS Dates and Action Codes

  1. ACDS dates and action codes.

8.22.3.3.2.1  (10-19-2007)
CDP Default: CLOSING CD = 05

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = TC521

    • LTODATE = Default Date

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.2  (10-19-2007)
CDP Waiver Form 12257: CLOSING CD = 04

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLOSED: Enter date ATM signed Form 12257

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.3  (10-19-2007)
CDP or EH Closed With Form 12256 Withdrawal: CLOSINGCD = 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLOSED: Enter date Form 12256 received by hearing officer

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.4  (10-19-2007)
CDP or EH Closed as a Premature Referral: CLOSINGCD = 20

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.5  (10-19-2007)
EH Closure: CLOSINGCD = 14 (sustained) or cc 15 (not sustained)

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.6  (10-19-2007)
Retained Jurisdiction: CLOSINGCD = 14, 15, or 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.3.2.7  (10-19-2007)
CDPTD: CLOSINGCD = 14, 15, or 16

  1. ACDS Entries:

    • PAYCODE = 7

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

8.22.3.4  (04-08-2009)
CDPTS

  1. See IRM 8.22.1 for a complete discussion of CDPTS.

  2. APS will update CDPTS to Stage 13 during back-end processing as follows:

    1. Stage 13 - Update when case is closed in Appeals. If a Determination Letter was issued, this will be after completion of the suspense period and, if applicable, any court reviews. If a Decision Letter or Closing Letter (with withdrawal or Form 12257 Waiver) is issued, Stage 7 and Stage 13 may have the same date. TC 521 will be input at Stage 13 for both field and ACS closures. See IRM 8.22.3.2.3. Determine the TC 521 Date.

    2. When updating CDPTS at Stage 13 with "Collection Sustained " (CS), the "Returned Office" is either:

      • A = ACS (with applicable Location Code)

      • C = Collection-Field (with applicable Location Code)

    3. When updating the CDPTS at Stage 13 with Collection Alternative (CA), the "Returned Office" is P (for Appeals) unless the Collection Alternative is a MMIA or mandatory follow-up 53, in which case the Collection Alternative must be returned to Collection and the "Returned Office" is either :

      • A = ACS (with applicable Location Code)

      • C = Collection-Field (with applicable Location Code)

  3. After updating the case to Stage 13, print a CDPTS case listing screen shot and verify that all of the necessary periods were included in the update. The copy of the case listing screen shot should be included in the closed office file (see also IRM 8.22.3.6.1).

8.22.3.5  (11-01-2006)
Closing Actions for the Case File

  1. Send original returns for refiling before starting the following closing actions.

  2. Close PEAS:

    1. Use PEAs Closing Code 03

    2. "Complete date" will be equal to date of the TC 521 action, if a CDP case; will be equal to the date the decision letter is issued if an EH case.

  3. For cases originated by ACS: on IDRS, insert TC 290 with hold code 3 and blocking series 18.

8.22.3.5.1  (10-19-2007)
ACS Notification of CDP/EH Closures

  1. ACS cases will not be returned to ACS. ACS cases will be sent to"files" .

  2. APS will provide ACS with a copy of a Form 5402 from each ACS-originated case closure, regardless of Appeals closing determination, sustained or alternative.

  3. APS will:

    1. batch the 5402's

    2. prepare a Form 3210 transmittal

    3. overnight express mail them to the respective ACSS CDP coordinators at Fresno, Cincinnati, Philadelphia, Kansas City at the close of business each Friday

8.22.3.5.2  (10-19-2007)
Revenue Officer Notification of CDP/EH Closures

  1. Revenue Officer Collection case files will be returned to the originating Revenue Officer (RO).

  2. Prepare transmittal Form 3210 with the address of the originating RO (found on the Form 5402) and mail the original administrative file to the Revenue Officer.

8.22.3.6  (10-19-2007)
Maintaining a Closed Office File for CDP and EH cases

  1. APS maintains a "closed office file" for all CDP and EH case closures.

8.22.3.6.1  (04-08-2009)
Documents for a CDP and EH Closed Office File

  1. The following documents will be part of a CDP/EH closed office file:

    1. Form 5402

    2. Appeals Case Memo

    3. ACDS Case Summary Card

    4. CDP Notice (Letter 1058, Letter 3172, LT11, et al)

    5. Form 12153 or Written Request for appeal

    6. Envelope with postmark associated from taxpayer

    7. Determination or Decision Letter & attachment

    8. Waiver form 12257

    9. Court Decision (if applicable)

    10. Officer in Compromise (if applicable)

    11. Waiver Form 14041 (if applicable)

    12. All transcripts reviewed by the hearing officer.

    13. Correspondence between the taxpayer and Appeals.

    14. Case activity record or other history notes.

    15. All documents and materials submitted by the taxpayer.

    16. Tape recordings or transcriptions.

    17. The APS generated copy of the CDPTS listing screen that verifies periods for which Stage 13 was input at closing.

8.22.3.6.2  (01-30-2009)
Retention Period for CDP/EH Closed Case Files

  1. Closed office files are typically retained for review by:

    • TIGTA

    • GAO

    • Field Operations

    • Tax Policy and Procedures

  2. Ensure files are readily accessible and identifiable by:

    1. Completing the "Appeals CDP Case Closure" cover sheet on ACDS/APGolf, and attach it to the top outside of the documents.

    2. Filing alphabetically

    3. Filing by year of closing

  3. Retain files for two years and destroy two years after the end of the fiscal year in which the case is closed or when determined to be no longer needed in current operations, but not less than 9 months after the end of the fiscal year in which case is closed. See IRM 1.15.10 Records Management, Records Control Schedule for Appeals.

    Example: A CDP case is closed on ACDS on 11/02/2008 (FY2009). Destroy the closed office file no later than 9/30/2011 (2 years after the end of FY2009), and no earlier than 6/30/2010 (nine months after the end of FY2009).

8.22.3.7  (04-08-2009)
Tax Court Decision

  1. Counsel will hold cases until the decision becomes final, which is 90 days after the decision is entered for Tax Court, plus 10 days to allow for mailing.

  2. If the taxpayer does not appeal, Counsel will return court cases to Appeals on Transmittal Memorandum Form 1734.

  3. Review Form 1734 and input the appropriate ACDS closing code. See IRM 8.22.3.3.1. If it is not clear from the Form 1734 which is the appropriate closing code to use, refer to the Court's decision document(s).

    Note:

    A "Docketed Case" requiring closing code 10 is one that was docketed but settled pursuant to an agreement of the parties in the case. Cases requiring closing code 10 are those beginning with the words "Pursuant to the agreement of the parties in this case...", or similar wording, on the Court's decision document.

    Note:

    A "Tried Case " requiring closing code 17 is one that was docketed and was not settled, but received a court rendered decision. Cases requiring closing code 17 are those with a decision document from the Court beginning with the words, "Ordered and Decided," or similar such words, and do not first refer to an agreement.

  4. Update the CDP tracking system. See IRM 8.22.1.1.3.

  5. Update TC 521. See IRM 8.22.3.4 for updating TC 521 via CDPTS.

  6. If a decision document contains a CDP waiver paragraph, which would be placed below the judge's signature, the collection statute starts on the date the decision is entered.

  7. A Tax Court may grant litigation fees and costs to a petitioner (taxpayer) in a CDP case. The field attorney who handled the case, not APS, is responsible for handling litigation fees and costs.

  8. An Order of Dismissal is a Tax Court decision. Dismissal reasons include:

    1. Petition not timely filed (dismissed for lack of jurisdiction)

    2. Filing fee not paid (dismissed for lack of jurisdiction)

    3. Taxpayer didn't show up for the trial (dismissed for lack of prosecution)

    4. Petition not filed in the correct court (dismissed for lack of jurisdiction).

8.22.3.7.1  (10-19-2007)
Appealed Tax Court Decision

  1. A Tax Court decision on a tried case can be appealed by either the petitioner or the U.S. Government

    Note:

    "S" cases cannot be appealed.

    .

  2. Counsel holds tried case files for 90 days after the Tax Court decision is issued.

  3. Counsel will notify Appeals when the decision becomes final (after the case is finished in the Court of Appeals and/or Supreme Court).

8.22.3.7.2  (04-08-2009)
Assessment of Civil Penalties under IRC 6673

  1. The Tax Court may impose a penalty against a taxpayer not exceeding $25,000 under IRC 6673(a)(1) if:

    • a taxpayer institutes or maintains a proceeding primarily for delay

    • takes a position that is frivolous, or

    • unreasonably fails to pursue available administrative remedies.

    Note:

    A penalty award under section 6673(a)(1) is not asserted against the taxpayer in any notice issued by the IRS. It is pled before the court.

  2. Section 6673(b)(2): If a court (other than the Tax Court) determines that the taxpayer is proposing a frivolous or groundless suit, the court may award sanctions, penalties, or costs under its rules. IRC 6673(b)(2) allows the "award" to be assessed and collected like a tax.

  3. APS will assess civil penalties under IRC 6673(b)(2).

  4. Clearly document on Form 5402 and the Appeals CDP Case Closure Sheet that an IRC 6673 penalty was assessed.

  5. The penalties will be assessed on a Civil Penalty Module:

    • MFT 13 (Business Master File) or

    • MFT 55 (Individual Master File)

  6. Assessing the penalty:

    1. Research IDRS command codes BMFOL, IMFOL, INOLE, EINAD or SSNAD to ensure the penalty is being assessed on the correct filer’s account

    2. Use IDRS command code ADJ54,

    3. Input TC 240

    4. Input the appropriate penalty reference code: 643 for Tax Court (6673(a)); 644 for other than Tax Court (6673(b)) (Reference - Section 11.11 in Document 6209).

    5. Input the dollar amount of the penalty

    6. Input blocking series - Hold Codes

  7. Use blocking series 52X if this is the first penalty assessment MFT 13 or 55 for a taxpayer and tax periods; all subsequent assessments will carry blocking series 53X.

  8. Input a second TC 290 for ZERO with Blocking Series 96X upon posting of the 643 penalty. This will prevent another function outside of Appeals from erroneously abating the penalty.

  9. For computation of the IRC 6673 civil penalties refer to Form 8278.

  10. To set up an account for assessing and collecting the IRC 6673 penalty, see:

    • IRM 20.1.7.1.9 - Creating Entities or Namelines for Non-Return Civil Penalty Cases

    • IRM 20.1.7.1.9.1 - BMF Entities

    • IRM 20.1.7.1.9.2 - IMF Entities

    • Exhibit 20.1.1-3 - Penalty reason code chart; Document 6209 for additional information regarding these codes and indicators

8.22.3.7.2.1  (04-08-2009)
Statute of Limitations for Assessing Costs Under Section 6673(b)(2)

  1. There is no return of tax to trigger the running of the statute of limitations prescribed by section 6501. The costs to be assessed under the authority of section 6673(b)(2) are not reported on any document filed by taxpayer. Further, the costs are neither related to nor based on a tax return filed by taxpayer.

  2. APS should assess the IRC 6673(b)(2) penalty promptly upon receipt of the judgment (i.e. order of the court).

8.22.3.8  (04-08-2009)
Premature Referral and Rescission of Notice Criteria

  1. A CDP Hearing request will be classified as a Premature Referral (PR) and returned to Collection based solely on the following criteria:

    1. Already considered by Appeals (Duplicate submission)

    2. Not entitled to a CDP hearing (CDP Letter(s) never issued)

    3. Invalid Request (No signature by taxpayer/authorized representative).

  2. Appeals and Settlement Officers will rescind CDP notices they determine were issued in error.

  3. APS will take following actions on rescinded notices:

    1. Input TC 972 AC 069 to all modules using same date as TC 971 AC 069.

  4. APS will take the following actions on PRs:

    1. Reverse the TC 520 with TC 522. Use TC 520 date as TC 522 date.

    2. Close on ACDS with Premature Referral Closing Code 20.

    3. At Stage 7 of the CDPTS, input "PR" Premature/Invalid Referral Reason Code

    4. At Stage 13 of the CDPTS, input closing code 20.

8.22.3.9  (10-19-2007)
Collection Alternatives

  1. Collection Alternatives or back-end processing that may be requested on CDP or EH cases include:

    • Installment agreement (IA)

    • Currently Not Collectible (CNC)

    • Abatement of Tax

    • Abatement of Penalty

    • Abatement of Interest (ABINT )

    • Innocent Spouse (IS)

    • Offer in Compromise (OIC)

    • Credit transfers

8.22.3.9.1  (10-19-2007)
Installment Agreements

  1. Installment Agreements are arrangements where the Service allows taxpayers to pay liabilities over time.

8.22.3.9.1.1  (04-08-2009)
General Information

  1. There are various types of installment agreements:

    1. Streamlined Installment Agreements 5.14.5 and 5.19.1.5.4.

    2. Guaranteed Installment Agreements 5.14.5 and 5.19.1.5.4.2.

    3. Extension of Time to Pay 5.14.1.6 (4) and 5.19.1.5.3.

    4. In-Business Trust Fund Express Installment Agreements 5.14.5 and 5.19.1.5.4.5.

    5. In-Business Installment Agreement 5.14.7.

    6. Partial Payment Installment Agreements 5.14.2 and 5.19.1.5.5.

    7. Direct Debit Installment Agreements 5.14.10 and 5.19.1.5.4.16.

    8. Payroll Deduction Agreements 5.14.10 and 5.19.1.5.4.17.

    9. Regular Installment Agreements 5.14.4.

    10. Manually-Monitored Installment Agreements 5.14.8.3 and 5.19.1.5.4.21.

  2. Taxpayers make their payments in one of the following methods

    1. Direct Debit from their bank account,

    2. Payroll Deduction from their employer, or

    3. Payment via check or money order.

  3. Payroll Deduction Installment Agreements (PDIAs) are agreements where employers deduct payments from taxpayer’s wages and transmits them to the Service.

  4. Direct Debit Installment Agreements (DDIAs) allow the Service to debit a taxpayer’s checking account for the agreed upon installment amount.

  5. DDIAs are processed in the CSCO sites. Fax the installment agreement along with the routing and account number (usually a deposit slip) to a DDIA Coordinator for input. The DDIA coordinators are on SERP, Who/Where Campus DDIA Liaisons. Refer to IRM 5.19.1.5.4.16, Direct Debit Installment Agreements, for additional discussion.

    Note:

    There is a legal requirement for any DDIA to have the taxpayer’s signature. The IRS can accept an original signature, electronic signature or faxed signature.

  6. APS will input to IDRS, IDRS-monitored IMF and BMF accounts. For a description, format, "History Item" entries and response for the Command Codes relating to Installment Agreements, see:

    1. LEM 2.4.30

    2. Exhibit 2.4.30-1

    3. Exhibit 2.4.30-9

    4. SERP Job Aids

  7. All installment agreements require a paper document, either Form 433-D or Form 2159-D.

  8. Only PDIA's or DDIA's require a taxpayer signature.

  9. Installment Agreements not compatible with IDRS-monitoring are Manually Monitored Installment Agreements (MMIAs). Hearing officers will identify an MMIA on the CDP Form 5402 by selecting MMIA from the Installment Agreement drop down menu.

  10. Centralized Case Processing will only accept MMIAs for processing from Revenue Officers or ACS. As a result, APS will not input an MMIA to status 60. APS will send a copy of the Form 5402 and administrative file to Revenue Officers. For ACS cases, APS will return only a copy of the 5402 for processing.

  11. There are four types of status codes for Installment Agreements:

    1. Status 60 – Active agreement

    2. Status 61 – Suspended agreement

    3. Status 63 – Deferred agreement: Used to cross reference TINS where collection activity has been deferred until modules under related accounts have been satisfied. These IAs are common on business taxpayers where the officer has a related trust fund recover penalty assessment.

    4. Status 64 – Defaulted agreement

  12. Where Appeals denies the taxpayer an IA, reverse TC 971 AC 043 with TC 972 AC 043. The 971/972 input dates need not be the same. See IRM 8.22.3.9.1.1(13), below, for occasions where the 971 and 972 dates should be the same.

  13. Input TC 972 AC 043 with the same date as the TC 971 AC 043 when:

    1. The 30-day suspense period for filing for a judicial review concludes

    2. The Tax Court case decision is entered, if a petition is filed

    3. A Form 12257 waiver is secured

    4. A withdrawal is received

  14. More information pertaining to IDRS inputs for all types of Installment Agreements can be found in IRM 5.19.1.

8.22.3.9.1.2  (10-19-2007)
IA Processing Information

  1. Use the following procedures when closing a CDP case with an installment agreement:

    1. Input a STAUP for four cycles. This will prevent a notice from being mailed to taxpayer while you monitor TC 521.

    2. Close the case on ACDS.

    3. Suspend the case on PEAs with Suspense Reason Code S09 – Monitoring On-Line Adjustment.

    4. Add a PEAs follow-up date equal to the expected posting date.

    5. Once the TC 521 posts, input Command Code IAGRE with the terms of the Form 433D. The TC 971 AC 063 will post systemically as a result of input of CC IAGRE.

    6. On the date the IA is input, remove the PEAs case from suspense and close the case on PEAs.

8.22.3.9.2  (10-19-2007)
Currently Not Collectible

  1. The hearing officer will enter a CNC closing code on Form 5402. The hearing officer will also indicate in the "Remarks" section of Form 5402, any non-CDP periods which should also be placed into CNC status.

  2. Use IDRS Command Code REQ77 to input an account to CNC.

    Note:

    For a complete discussion of CC REQ77, refer to IRM 2.14. and the Job Aid for IDRS command codes.

  3. The hearing officer must prepare a paper Form 53 if they request a mandatory follow-up. Send the paper Form 53 to Compliance Case Processing for input.

8.22.3.9.3  (10-19-2007)
Adjustments

  1. An account adjustment on a CDP/EH may involve tax, penalty and/or interest.

  2. IRM 21.5., Account Resolution, contains the guidelines for processing adjustments and will tell you if an action may be taken. Follow these guidelines when working with adjustments.

  3. You may also need to reference other IRMs, such as:

    • IRM 3.8. (Deposit Activity)

    • IRM 5.19. (Liability Collection)

    • IRM 20.1 (Penalty Handbook)

    • IRM 20.2 (Interest)

    • IRM 20.2.3 (Command Code PINEX)

    • IRM 21.1.2 (Reference Materials Overview)

    • IRM 21.1.3 (Operational Guidelines Overview)

    • IRM 21.5.3 (General Claim Procedures)

    • IRM 21.5.4 (General Math Error Procedures)

    • IRM 21.5.6 (Freeze Codes)

    • IRM 21.6 (Individual Tax Returns)

    • IRM 21.7 (Business Tax Returns and Non Master File Accounts)

    • IRM 25.6 (Statute of Limitations

8.22.3.9.3.1  (10-19-2007)
Tax

  1. Tax issues heard within CDP will not have separate WUNO’s except for Innocent Spouse.

  2. APS will input adjustments to tax.

  3. The following documents may be used to request adjustments:

    1. Form 3870 - Request for Adjustment

    2. Form 2424 – Credit Transfer

    3. Form 4159 – Payment Tracer

    4. Form 4549 – Income Tax Examination changes .

  4. Assign the CDP WUNO to the TE on PEAs for closing, with PEAs TYPE"CLS" and the appropriate SubTYPE for the case.

8.22.3.9.3.1.1  (10-19-2007)
Automated Substitute for Return (ASFR) Program

  1. The ASFR program is a non-filer or return delinquency program Compliance uses to assess tax against taxpayers who have not filed or refuse to file individual income tax returns.

  2. APS will abate the SFR/ASFR assessment and reverse withholding as requested by the hearing officer.

    Note:

    If a taxpayer files a return after the SFR, the assessment based on the SFR is not abated. An additional amount may be assessed off of the taxpayer's delinquent return. The additional assessment is limited to the excess of the amount on that return over the SFR assessment.

  3. For a new assessment and statutory notice of deficiency (SND), forward the entire case file to the ASFR function. Any original documents should be recharged to ASFR. See IRM 4.13.7 for routing instructions and an explanation of appropriate adjustments.

  4. Close the case on ACDS.

  5. When all actions are completed, close the PEAs case.

8.22.3.9.3.2  (10-19-2007)
Penalty

  1. Hearing officers prepare Form 3870 with the abatement information.

  2. The hearing officer will request blocking series 96X (penalty abatement refusal) for the TC 290 (-0-) transaction if they deny a penalty abatement.

    Note:

    This will prevent a later abatement of a penalty sustained by Appeals

  3. If an appeals employee subsequently decides to abate a penalty previously sustained by Appeals, input a TC 290 with a blocking series 97X (reversal of penalty abatement refusal).

    Note:

    Only Appeals personnel can use the above two blocking series.

  4. APS will never process Trust Fund Recovery Penalty adjustments. Send these adjustment requests to the Compliance Technical Advisory unit indicated on Form 3870. See SERP for addresses of the Technical Advisory unit.

8.22.3.9.3.3  (04-08-2009)
Abatement of Interest Under IRC 6404(e)

  1. Appeals Officers may resolve an abatement of interest by:

    1. sustaining in full

    2. abating in full

    3. partially abating

  2. Interest abatement cases are controlled on a separate WUNO using type code ABINT and feature code DP.

  3. Request for abatements will be made on Form 3870, Request for Adjustment, or Form 8485, Assessment Adjustment Case Record.

    Note:

    APS will determine the "from" and "to" dates for the interest abatement and the amount of tax on which to compute the interest. In some settled cases, appeals officers may obtain a Form 906 Closing Agreement.

  4. Refer to the following for guidance on interest abatement:

    • Delegation Order 228 (Rev. 3)

    • IRM 20.2, Interest Handbook

    • IRM 20.2.7, Abatements and Suspension of Interest: IRC 6404 and IRC 7508, for information relating to Interest Abatement Requests and Claims, Interest Abatement Coordinators, Interest Calculation, etc.

    • IRM 8.7.7, Claim and Over assessment Cases, provides a complete discussion on Abatement of Interest under IRC 6404(e)

    • Exhibit 8.7.7-1. for examples of interest computations

  5. Close the case as follows:

    Step Action Additional Instructions
    1. Control the CDP and ABINT case Use separate work unit numbers
    2. Cross-reference the WUNOs of the CDP and ABINT in Notes on the CSC  
    3. Assign the CDP WUNO to the TE on PEAs for closing Use PEAs TYPE "CLS"
    4. Assign the appropriate subTYPE for the case Use PEAs SubTYPE ACDS "Only"
    5. Assign the ABINT WUNO to the TE on PEAs, using PEAs TYPE " SND" PEAs SubTYPE "Issue"  
    6. Issue the determination letter See IRM 8.20.6. for instructions on issuing the ABINT determination letter.
    7. Close the CDP WUNO on ACDS  
    8. Suspend the CDP case on PEAs Use Suspense Reason Code S99-Other
    9. Add a PEAs follow up date equal to the ABINT default date The default date is the SNDATE plus 240

  6. Suspend the CDP file with the ABINT file until the ABINT case defaults or is closed from Court.

  7. Close the ABINT work unit.

8.22.3.9.4  (10-19-2007)
Innocent Spouse

  1. The CDP APS Campus sites will:

    1. send the Innocent Spouse case to APS - Covington for final actions on the IS claim.

    2. suspend the CDP case on PEAs with Suspense Reason Code S07 – Waiting on Account Transfer.

    3. remove the case from PEAs suspense and close the case on PEAs when notified by APS - Covington that IS WUNO actions have been completed.

    4. close case on CDPTS and ACDS.

  2. The APS - Covington unit will:

    1. control the IS case on PEAs

    2. update the Innocent Spouse Tracking System (ISTS).

    3. update IDRS.

    4. input IS adjustments, as needed.

    5. close the IS case on ACDS.

    6. suspend the IS case on PEAs with Suspense Reason Code S07 – Waiting on Account Transfer.

    7. add a PEAs follow-up date equal to the expected posting date.

    8. close the IS case on PEAs after adjustments post.

    9. file the IS administrative file according to standard procedures.

    10. inform APS - CDP, at the conclusion of their closing actions on the IS claim, so the final CDP actions on CDPTS, ACDS, and PEAS, may be completed.

8.22.3.9.5  (04-08-2009)
Levy Release

  1. Levy Releases. Levy releases are an interim action.

  2. Hearing officers should request levy releases by contacting Collection before the case is closed to APS.

  3. If APS is requested to release the levy, return the case to the Hearing Officer through the APS manager.

8.22.3.9.6  (10-19-2007)
Lien Resolutions

  1. There are various types of lien resolutions. Most resolutions require interim actions on the part of the hearing officer.

8.22.3.9.6.1  (04-08-2009)
Lien Release

  1. Lien releases are an interim action.

  2. Hearing officers must request a lien release from the Advisory Group before the case is closed to APS.

  3. If the hearing officer has not requested the lien release prior to closing the case, refer the case to the APS Manager.

8.22.3.9.6.2  (10-19-2007)
Discharge/Subordination

  1. Lien subordinations and discharges are interim actions that the hearing officer must complete before closing the CDP/EH case.

  2. The hearing officer will send an ARI to the Technical Advisory unit for the State where the property is located.

  3. See IRM 8.22.2.4.6 section titled "Lien Discharges and Subordinations" for additional information.

8.22.3.9.6.3  (10-19-2007)
Withdrawal

  1. Lien withdrawals are interim actions that must be completed by the hearing officer before the case is closed to APS.

  2. If the hearing officer has not requested the lien withdrawal prior to closing the case, refer the case to the APS Manager.

8.22.3.10  (10-19-2007)
CDP/EH Offer in Compromise (OIC) Processing: Overview

  1. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles their tax liability for less than full payment. Taxpayers may submit an OIC as an alternative to collection in a CDP or EH hearing. See IRM 8.23 for more information on OICs.

  2. Beginning October 15, 2007, the Centralized Offer In Compromise unit will, with few exceptions, investigate all CDP/EH OICs meeting COIC criteria. After completing the investigation, with the exception of OICs they accept, COIC will return all offers to Appeals. Where COIC accepts the offer, COIC will complete all back-end processing and return copies of the OIC documents to the hearing officer. Appeals will adopt COICs acceptance decision. Appeals will make the final determination where COIC rejects, returns, or the offer requires mandatory withdrawal.

  3. Appeals will retain to investigate and make a determination on CDP OICs that do not meet COIC criteria, and in limited circumstances, OICs meeting COIC criteria.

  4. CDP OICs, where COIC does not complete the back-end processing as discussed in (2) above, are retained with the CDP file and processed by the APS CDP Campus sites.

    Note:

    Do not forward the OIC separately to Campus APS OIC unit in Brookhaven.

  5. Characteristics of a CDP case with a related OIC:

    1. The OIC and CDP are controlled under separate WUNOs

    2. Each WUNO has Feature Code DP

    3. Where COIC investigates the OIC both the CDP and OIC WUNO will also have Feature Code CO

    4. The WUNO’s of the CDP and OIC are cross-referenced in " Notes" on the case summary card

8.22.3.10.1  (10-19-2007)
CDP OIC Processing: Accepted OICs

  1. Back-end processing on OIC cases will differ depending on whether COIC or Appeals accepts the OIC. CDP/EH back-end processing will not change.

  2. See IRM 8.22.3.5 for CDP or EH file closing actions.

8.22.3.10.1.1  (04-08-2009)
Accepted OICs - COIC Investigated

  1. COIC will take the following actions on CDP/EH OICs they accept:

    1. Issue the OIC acceptance letter.

    2. Forward original documents (Form 7249, et al) to the Monitoring OIC (MOIC) unit.

    3. Forward the required documents to the Public Inspection File.

    4. Return to Appeals, copies of the acceptance letter, Form 7249, and amended Form 656, if applicable.

    5. STAUP CDP periods to status 71 (prevents periods from reverting to collection status when TC 520 cc 76/77 is reversed).

    6. Close the case on AOIC as accepted.

  2. The Appeals CDP/EH OIC file where COIC accepted the OIC should contain the following copies of OIC documents:

    Note:

    The following copies will stay with the CDP/EH case file. APS is not required to send any documents on COIC-accepted OICs to MOIC.

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 7249, Offer Acceptance Report

    • Acceptance Letter, 673(P), signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables

  3. The Appeals CDP/EH file where COIC accepted the OIC should contain the following original CDP/EH documents:

    1. Closing letter, i.e., Waiver Form 12257, Decision Letter, or Notice of Determination

    2. Customized CDP 5402

    3. Separate ACM, if applicable

    4. Case Activity Record

    5. Original correspondence between the Service and the taxpayer

    6. Form 12153 (or other written request)

    7. Form 12153A/12153B

  4. APS will take the following closing actions on CDP/EH cases where COIC investigates and accepts the OIC:

    1. Issue the CDP Notice of Determination, EH Decision Letter or Form 12257 Waiver following established procedures.

    2. Close the OIC WUNO on ACDS.

      Note:

      Since COIC issues the acceptance letter, APS will issue only the applicable CDP/EH closing letter.

  5. ACDS inputs for accepted OIC WUNO:

    Note:

    Immediately close the CDP OIC WUNO when the CDP is closed with a Form 12257 Waiver. Suspend the OIC WUNO with the CDP WUNO where the CDP is closed with a Notice of Determination.

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt: = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period.

      Enter 0 (zero) for any other tax periods.

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. Paycode = 7

    5. LACTION – COIC accepted OIC. Direct ship by COIC to MOIC

      Note:

      APS will not have IDRS-input requirements on COIC accepted OICs

  6. Closed Office File: APS will maintain a copy of the OIC documents in the CDP and EH closed office file. See IRM 8.22.3.6.1.

8.22.3.10.1.2  (04-08-2009)
Accepted OICs - Appeals Investigated

  1. The files of CDP/EH OICs accepted by Appeals should contain the following original documents:

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402

    • Appeals Case Memo

    • Acceptance Letter, 673(P), signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables

    • Sanitized TDS transcript.

  2. APS (local or campus) will retain the OIC with the CDP when a CDP Notice of Determination is issued. The OIC and CDP file must be held pending expiration of the default period or until a final decision has been entered by the Court. The local APS office will send both files to the APS CDP Campus site after the suspense period.

  3. Local APS sites will promptly send to the APS CDP Campus sites for back-end processing EH cases and CDP cases where a Form 12257 Waiver is secured.

  4. APS (local and campus) will ensure the case is ready and complete for closing by verifying inclusion of:

    1. Form 5402 for both CDP and OIC; STAUP 71 information

    2. Acceptance Letter 673

    3. Form 7249, including Counsel signature, where applicable

    4. ACM

    5. Sanitized MFTRAX or TDS transcript

    6. ATM's approval

  5. APS will date and issue the OIC acceptance letter to the taxpayer as an attachment to the CDP Notice of Determination or EH Decision letter or Form 12257.

    Note:

    The CDP Letters and the OIC Acceptance Letter must have the same date.

  6. The APS CDP Campus site will process three (3) separate files:

    1. OIC acceptance file

    2. CDP case file

    3. OIC Public Inspection File

  7. OIC acceptance file. Forward the following documents on Form 3210 to the Campus Monitoring OIC (MOIC) unit at the campus, Brookhaven or Memphis, that will monitor future compliance. See "Offer-in-Compromise (OIC) Compliance Campus Locations for Back-end" at the SERP"Who/Where " tab. These are original documents unless indicated otherwise:

    Note:

    In the Remarks section of the Form 3210, note the following: " Accepted CDP offer that may requiring closing actions on AOIC."

    • Form 656 and any amendments to the original Form 656

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402 (copy)

    • Appeals Case Memo (copy)

    • Acceptance Letter, 673(P), signed by the ATM; it may also be signed by the Area Director or the Director, Field Operations (copy)

    • CDP determination or decision letter and attachment or Form 12257 waiver (copy)

    • Sanitized MFTRAX or TDS transcript

    • Co-Obligor agreement, if applicable

    • Form 656-A, hardship waiver of the application fee, if claimed

    • Financial statements

    • AET and IET schedules

    • ACDS history (copy)

  8. CDP/EH administrative file. OIC documents for the CDP/EH administrative case file. These are copies of the original documents:

    1. Form 656, Offer in Compromise and amendments

    2. Form 5402 for OIC WUNO

    3. Form 7249, Offer Acceptance

    4. MFTRAX or TDS transcript

    5. Signed and dated Acceptance letter (L673)

    6. Collateral agreements, if applicable

  9. Public Inspection File. See "Advisory Units Contact List" at Who/Where tab on SERP on where to send these documents:

    1. Copy of Form 7249

    2. Sanitized transcripts

  10. Closed Office File: APS will maintain a copy of the following OIC documents in the CDP and EH closed office file. See IRM 8.22.3.6.1.

    • OIC Form 5402

    • Acceptance Letter

    • Form 7249

    • ACM

    • Form 656 and amendments

  11. ACDS inputs for accepted OIC WUNO:

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period.

      Enter 0 (zero) for any other tax periods.

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. Paycode = 7

    5. LACTION – Accepted OIC file to MOIC (Memphis or Brookhaven )

  12. Process any OIC payments to the campus OIC unit noted on the acceptance letter.

  13. Input STAUP 71 on all CDP periods to prevent levy action.

    Caution:

    The TC 521 input on the CDP periods will return the periods to their pre-CDP status until MOIC inputs TC 780. The taxpayer may receive a notice to pay or be subject to erroneous levy action if STAUPs are not in place. Also, verify STAUP 71 and TC 480 inputs on all non-CDP periods.

8.22.3.10.2  (04-08-2009)
Rejected CDP OIC Processing

  1. The back-end processing instructions are the same for CDP/EH OICs investigated by COIC and returned with a rejection recommendation and CDP/EH OICs investigated and rejected by Appeals because Appeals makes the final determination on all OICs.

  2. A rejected CDP/EH OIC will have a separate file, but the file is not returned to COIC. The rejection file remains with the CDP/EH file.

  3. The rejected OIC will not have a rejection letter separate from the determination or decision letter. The hearing officer discusses the rejection in the attachment to the decision or determination letter.

  4. All OIC documents remain with the CDP/EH file.

8.22.3.10.2.1  (04-08-2009)
ACDS and IDRS Inputs for Rejected OICs

  1. Close the CDP/EH OIC on both IDRS and ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for rejected OIC WUNO:

    • CLOSINGCD = 14 (OIC Rejected)

    • WUaccpOFRAmt = 0 (zero)

    • Paycode = 7

  3. IDRS inputs for rejected OIC:

    1. Input TC 481 on each tax period included in the rejected OIC.

    2. The date of the Notice of Determination or Decision Letter = date of TC 481 and closing date of OIC WUNO.

8.22.3.10.3  (04-08-2009)
Withdrawn OIC

  1. A withdrawn CDP/EH OIC will have a separate file, but the file is not returned to COIC. The withdrawn OIC file will remain with the CDP file.

  2. The withdrawn OIC will not have a withdrawal letter separate from the Notice of Determination or Decision letter. The hearing officer discusses the withdrawal in the attachment to the decision or determination letter.

8.22.3.10.3.1  (04-08-2009)
ACDS and IDRS Inputs for Withdrawn OIC Cases

  1. The CDP/EH OIC should be closed both on IDRS and ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for withdrawn OIC WUNO:

    • CLOSINGCD = 16 (OIC Withdrawn)

    • WUaccpOFRAmt = 0 (zero)

    • Paycode = 7

  3. IDRS inputs for withdrawn OIC:

    1. Input TC 482 on each tax period included in the withdrawn OIC.

    2. Where the OIC withdrawal was sent via certified mail or hand delivered, the date of the TC 482 is the IRS received date.

    3. Where the request for withdrawal was received via fax, phone or regular mail, the TC 482 date is the same as the date of the Notice of Determination or Decision Letter and the closing date of the OIC WUNO.

8.22.3.10.4  (04-08-2009)
Sanitized MFTRAX or TDS Transcript

  1. A sanitized MFTRAX or TDS transcript has the following items " blacked out" (redacted) so that they are unreadable and not available in the public inspection file.

    1. SSN of the taxpayer

    2. Name and SSN of a co-obligor spouse if the spouse is not a party to the OIC

    3. Number of exemptions

    4. Filing status

    5. Adjusted gross income

    6. Taxable income

    7. Principal Industry Activity Code

    8. Transaction codes with neither debit or credit money amounts. The entire line including the date should be redacted

    9. Transaction codes and explanations dealing with fraud, negligence or criminal investigations, but not the date and amount of the transaction

    10. Power of Attorney/Tax Information Authorization (POA/TIA) on file.

      Note:

      See IRM 8.23.4.2 and IRM 5.8.8.3 for additional information on sanitizing transcripts for accepted offers.

Exhibit 8.22.3-1  (10-19-2007)
Sources of Information and IDRS References

The following sources of information explain the IDRS requirements for back-end processing of collection alternatives:

IRM 2.3 IDRS Terminal Responses – Use and contents of the IDRS – also provides instructions on command codes
LEM 2.4 IDRS Terminal Input – Instructions to Input of Entity and Tax Account Transaction Codes
IRM 2.8 Audit Information Management System (AIMS)
Doc. 6209 IRS Processing Codes & Information – a reference guide on IDRS
SERP-IRM 21.1.2 Reference Materials Overview, for additional information on SERP; SERP Job Aids

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