After further testing I discovered the DTMF tone issue is related to how the caller is routed into IVM.
When the incoming VoIP call arrives through Axon, it is sent to IVM (extension 103) and greeted with a welcoming message (Please hold while we try the next available person...). At this point the DTMF tones are recognized by the greetings OGM menu.
If the caller does not touch any menu items, the call is sent through a blind transfer to group 701 in Axon, which rings the extensions within that group.
If no one is available, or it is after hours, the call is sent back to IVM (via extension 101) for a detailed options list OGM, which is a start OGM, for additional help. At this point the DTMF tones are not recognized by any OGM.
Therefore, the DTMF tone issue must occur after the call is routed from IVM and then back to IVM.
I hope this helps identify where the solution may arise.
Thanks,
-Henry 