Where oh where is my Offer in Compromise?
For each of the last three years the IRS has received approximately 125,000 offers in compromise. That is a lot of Forms to process for the relatively new Centralize Offer in Compromise (COIC) Units. There are only two COIC units. On is located in at the Memphis Service Center in Memphis, Tennessee and the other at the Brookhaven Service Center in Holtsville, New York. While these units are now several years old they are still youngsters in an agency that is approaching a centennial birthday.
Putting together a new unit to handle the 125,000 or so offers each year has been no easy job. The Service has attempted to automate and streamline the process. This attempt has lead to some major problems with the processing of individual offers and on occasion has resulted in absurd outcomes. With the acceptance rate going down to 20% from a high of 39% in 2001, one has to wonder whether the decline in the acceptance rate is the result of a flawed system or an intentional tightening of the criteria for acceptance of offers by agency management with a bias against offers in compromise.
In August of 2003 the IRS revised its procedures for the initial processing of the offer in compromise. Previously, an individual Revenue Officer (RO) who received an offer in compromise while working an assigned case would make some initial determinations and would "load the offer" into the Automated Offer in Compromise System. (AOIC system). Additionally the RO will no longer determine the processability of the offer. This is a major change in the procedure. The job of loading the offer into the AOIC system is merely ministerial and does not represent a big procedural change. However, taking the processability determination from the RO in the field is a major change.
The processability determination is the threshold inquiry made by the IRS. If an offer is determined not to be processable then it is returned to the taxpayer and the taxpayer has no appeal rights. The distinction between a "rejected" offer and a "returned" offer is a big one. The taxpayer whose offer is rejected has appeal rights while the taxpayer whose offer is returned has no appeal rights. An offer that is not processable is "returned" not rejected.
It is no secret that ROs often get confrontational with taxpayers and sometimes this can lead a zealous RO to come down on a taxpayer who is not being as cooperative as the RO would want. In such a case an RO could arbitrarily determine that an offer in compromise submitted by a taxpayer is not processable and the taxpayer would have no avenue to appeal the arbitrary determination.
Another important change was implemented at the same time. As of August last year the COIC sites will now retain, for investigation, all wage earner cases that are deemed processable. I found this hard to believe, but the memo I saw was quite clear. I have yet to see an exception to this procedure but keep expecting one for large tax debts or high income individuals. This also is a major change.
There are two classification of employees that investigate offers in compromise. There is the Offer Examiner and the Offer Specialist. The Offer Examiner is located at the COIC unit in the Service Center. The Offer Specialist is located in the various posts of duty across the county.
The Offer Examiner is likely to have a different background from the Offer Specialist.
Most Offer Specialist were promoted from a Revenue Officer (RO) position. They were trained in and have field experience in investigating a taxpayers ability to pay past due taxes. They have developed a "feel" for collection and utilize not traditional sources of information. Often times they may have a "blood hound" mentality and work hard to collect every penny owed the government. This often leads to a bias against accepting an offer in compromise. The Offer Specialist can drive by the taxpayers home, see what vehicles are parked there, search the local court records for real estate or recent transfers. On the other hand the Offer Specialist, may conduct a personal interview with the taxpayer and is in a better position to recognize that the account is truly uncollectible.
The Offer Examiner is not likely to have been a Revenue Officer and is very likely to have spent most of their career at the Service Center, with a processing background. The Offer Examiner has to rely on the traditional and electronic investigative tools such as Department of Motor Vehicle Records, Secretary of State Reports, Credit Reports, and items reported to the IRS by payors such as W-2s and Form 1099s. The disparity in the investigative ability is lessened somewhat when the offer in compromise was obtained by a Revenue Officer during the investigation of an assigned case. A Revenue Officer receiving an offer in compromise from a taxpayer must fill out the Form 657 and either recommend that the Service withhold collection or that collection not be withheld. An assigned case will have a case history prepared by the Revenue Officer and this history will usually contain the type of information that an Offer Specialist would look for. The Offer Examiner may well rely heavily on the case history and the investigation prepared by the Revenue Officer. However, not all offers in compromise are originated during and investigation by a Revenue Officer and it is in these cases where the Offer Examiner is somewhat handicapped in their ability to get third party information about the taxpayer.
There is no way to know if you would be better off in COIC with an Offer Examiner or with your case being assigned to an Offer Specialist. A lot depends on the personality of the Offer Specialist and the individual facts of your case.
You can find help with your OIC in my ebook Offer Secrets Revealed available at Offersecretsrevealed.com.
Putting together a new unit to handle the 125,000 or so offers each year has been no easy job. The Service has attempted to automate and streamline the process. This attempt has lead to some major problems with the processing of individual offers and on occasion has resulted in absurd outcomes. With the acceptance rate going down to 20% from a high of 39% in 2001, one has to wonder whether the decline in the acceptance rate is the result of a flawed system or an intentional tightening of the criteria for acceptance of offers by agency management with a bias against offers in compromise.
In August of 2003 the IRS revised its procedures for the initial processing of the offer in compromise. Previously, an individual Revenue Officer (RO) who received an offer in compromise while working an assigned case would make some initial determinations and would "load the offer" into the Automated Offer in Compromise System. (AOIC system). Additionally the RO will no longer determine the processability of the offer. This is a major change in the procedure. The job of loading the offer into the AOIC system is merely ministerial and does not represent a big procedural change. However, taking the processability determination from the RO in the field is a major change.
The processability determination is the threshold inquiry made by the IRS. If an offer is determined not to be processable then it is returned to the taxpayer and the taxpayer has no appeal rights. The distinction between a "rejected" offer and a "returned" offer is a big one. The taxpayer whose offer is rejected has appeal rights while the taxpayer whose offer is returned has no appeal rights. An offer that is not processable is "returned" not rejected.
It is no secret that ROs often get confrontational with taxpayers and sometimes this can lead a zealous RO to come down on a taxpayer who is not being as cooperative as the RO would want. In such a case an RO could arbitrarily determine that an offer in compromise submitted by a taxpayer is not processable and the taxpayer would have no avenue to appeal the arbitrary determination.
Another important change was implemented at the same time. As of August last year the COIC sites will now retain, for investigation, all wage earner cases that are deemed processable. I found this hard to believe, but the memo I saw was quite clear. I have yet to see an exception to this procedure but keep expecting one for large tax debts or high income individuals. This also is a major change.
There are two classification of employees that investigate offers in compromise. There is the Offer Examiner and the Offer Specialist. The Offer Examiner is located at the COIC unit in the Service Center. The Offer Specialist is located in the various posts of duty across the county.
The Offer Examiner is likely to have a different background from the Offer Specialist.
Most Offer Specialist were promoted from a Revenue Officer (RO) position. They were trained in and have field experience in investigating a taxpayers ability to pay past due taxes. They have developed a "feel" for collection and utilize not traditional sources of information. Often times they may have a "blood hound" mentality and work hard to collect every penny owed the government. This often leads to a bias against accepting an offer in compromise. The Offer Specialist can drive by the taxpayers home, see what vehicles are parked there, search the local court records for real estate or recent transfers. On the other hand the Offer Specialist, may conduct a personal interview with the taxpayer and is in a better position to recognize that the account is truly uncollectible.
The Offer Examiner is not likely to have been a Revenue Officer and is very likely to have spent most of their career at the Service Center, with a processing background. The Offer Examiner has to rely on the traditional and electronic investigative tools such as Department of Motor Vehicle Records, Secretary of State Reports, Credit Reports, and items reported to the IRS by payors such as W-2s and Form 1099s. The disparity in the investigative ability is lessened somewhat when the offer in compromise was obtained by a Revenue Officer during the investigation of an assigned case. A Revenue Officer receiving an offer in compromise from a taxpayer must fill out the Form 657 and either recommend that the Service withhold collection or that collection not be withheld. An assigned case will have a case history prepared by the Revenue Officer and this history will usually contain the type of information that an Offer Specialist would look for. The Offer Examiner may well rely heavily on the case history and the investigation prepared by the Revenue Officer. However, not all offers in compromise are originated during and investigation by a Revenue Officer and it is in these cases where the Offer Examiner is somewhat handicapped in their ability to get third party information about the taxpayer.
There is no way to know if you would be better off in COIC with an Offer Examiner or with your case being assigned to an Offer Specialist. A lot depends on the personality of the Offer Specialist and the individual facts of your case.
You can find help with your OIC in my ebook Offer Secrets Revealed available at Offersecretsrevealed.com.
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