TC 480: Offer in Compromise Pending

What the code actually does

TC 480 marks an offer as pending. IRM 5.19.7.2.6 describes the mechanism precisely: "when an offer is deemed processable, a TC 480 is systemically uploaded via AOIC on each tax module included on the offer. If the offer is not on the AOIC system, then TC 480 is manually input."

Processability is the trigger, and it is a low bar — it is a screening decision about whether the offer can be worked at all, not a view on its merits. So a TC 480 says an offer was accepted for processing, and nothing whatsoever about whether it will be accepted.

IRS Document 6209, Section 8A (the IRS’s reference guide to its data-processing codes) records what it does to the money: each tax module (the record for one tax type and period) is "frozen from offsetting out (IMF only) and refunding." A client with a pending offer should not expect a refund on a covered year to be released.

The statute suspension, stated exactly

The IRM is unusually precise here, and the precision is worth reproducing rather than paraphrasing. "TC 480 suspends the CSED until a TC 481, TC 482, or TC 780 posts. The CSED is extended by the amount of time between the posting of TC 480 and the reversing or accepted transaction code."

The three closing codes are named in the same subsection: "TC 481 = Rejected or Returned (Processable)," "TC 482 = Withdrawn or Terminated," "TC 780 = Accepted." So the suspension is bounded by whichever of those posts, and the length of it is simply the gap between two dates on the transcript — a calculation a practitioner can do themselves rather than take on faith, which is what the collection statute calculator is built for.

Do not add a year

This is the error the page exists to prevent. IRM 5.1.19.3.4.1 sets out the components of the suspension — the pendency of the offer, "the thirty days following rejection of an offer," and "any period when a timely filed appeal from the rejection is being considered by Appeals" — and then limits it: "That is for the period of time between the TC 480 and the TC 481, TC 482, or TC 780."

The extra year belongs to the assessment statute in certain circumstances, not to the collection statute, and importing it here inflates a client’s remaining exposure by twelve months. Where a practitioner is advising on whether to submit an offer at all on an aging liability, twelve phantom months can change the recommendation.

There is a related trap in the opposite direction. The IRM records that "input of TC 480 and a subsequent TC 483, Erroneous Posting of a TC 480, Returned (Not Processable), on the tax module does not suspend the CSED, as this was an erroneous input of TC 480. The CSED reverts back to the original CSED." An offer returned as not processable buys the Service no time at all — so a TC 480 followed by that reversal should be treated as if it never happened.

What people mistake TC 480 for

People confuse it with acceptance. Acceptance is TC 780, a different code with different consequences, and the gap between the two can be a year or more. A client told their offer "is on the system" has been told about processability, not about outcome.

It is also confused with the two reversals, which are not equivalent to each other. TC 481 is a rejection or return of a processable offer; a rejection carries its own thirty-day and appeal periods (IRM 5.1.19.3.4); TC 482 is a withdrawal or termination. Both end the suspension, but only one of them reflects a decision the client can appeal, and reading the wrong one closes a door that is still open.

Finally, people confuse it with collection protection generally. A pending offer does two things: it freezes refunds, and it generally bars a new levy under IRC §6331(k)(1). It does not release a levy the IRS made before the offer was pending. IRC §6331(k)(3) also lets the IRS levy during the offer in three cases: collection is in jeopardy, the taxpayer waived the bar in writing, or the IRS is offsetting a refund. The collection status of the module is otherwise a separate question. Run the client’s numbers through the OIC pre-qualifier while the offer is pending, to test whether it still fits, rather than counting on the pendency.

What to do next

Read the posting date as the start of the suspension and find the closing code that ended it, rather than estimating either.

Do not add a year to the collection statute suspension: IRM 5.1.19.3.4.1 ends it at the closing code.

Check for a not-processable reversal, which unwinds the suspension entirely.

Confirm that every module in the offer carries its own posting, since the IRM requires one per tax period and a missing one distorts the calculation.

Set expectations on refunds for the covered years before the client asks why theirs has not arrived.