part4-1

The staffing allocation methodology SB/SE uses to prepare the examination
plan considers the following factors:

These programs are those activities Headquarters has determined are
of such importance time must be allocated to them before resources are committed
to other activities. The PSP Territory Manager will discuss this time with
the Area and territory managers responsible for these programs to ensure the
plan response shows the correct time allocations. Examples of these programs
are:

The National work plan, supported by each of the Exam Area plans, provides
a balanced approach for return delivery and allocation of Revenue Agent (RA)
and Tax Compliance Officer (TCO) or Tax Auditor staffing. Resources and inventory
are aligned to accomplish the staff years and return closures reflected in
the fiscal year plans. Our focus provides a balanced coverage in the following
categories:

In preparing the Area response to the examination plan, PSP will:

The revenue agent and tax compliance officer examination plans each
include a line for training returns. The PSP Territory Manager, will review
the training return plan showing the number of returns to be examined by trainees.
The plan should show the training phase, number of agents/tax compliance officers,
activity code(s), number of returns, rates, and Direct Examination Staff Years
(DESY) to be applied.

A classification plan will be prepared using the Area response to the
draft examination plan. When the final plan is received, the classification
plan will be updated for use for the remainder of the year. The classification
plan will be used to plan DIF return orders and schedule agents and tax compliance
officers for classification details. Prior to placing DIF return orders, consideration
should be given to the number of Fast Track High DIF Returns that fallout
for classification automatically, and non-DIF source work. PSP Territory Manager
will provide a copy of the classification plan to the Campus Classification
Manager and to Headquarters. At minimum, the classification plan will include:

The PSP Territory Manager will monitor the classification plan to ensure:

A ratable ordering tool and guide are also available on the Exam Planning
and Delivery Web site,
.http://sbse.web.irs.gov/epd/

The PSP will calculate the Area DIF cutoff score for each activity code,
giving consideration to the selection rate. This is the lowest DIF score necessary
to secure the number of returns required for audit. For example, if the return
plan shows 225 returns for an activity code and the selection rate is 70%,
and the inventory report is as shown below, the Area will need to order 321
returns (225/70%). The DIF Cutoff Score is 500. The number of returns with
DIF scores greater than 550 is 280, which is less than the number of returns
required, so the lowest DIF score on an ordered return will be in the range
of 500 to 550 and the DIF cutoff score is 500.

The PSP Support Manager should monitor the inventory reports to ensure
that Area-wide return orders do not result in the delivery of returns that
are below the DIF cutoff score.

For a POD Supplemental Order, the PSP may order returns below the DIF
cutoff score provided the total ordered does not exceed 110% of the returns
above the cutoff score, i.e., not more than 10% of the returns ordered for
any POD should be below the DIF cutoff score.

Every available means to supply workload above the cutoff score in each
activity code will be exhausted before a request is submitted to order returns
below the cutoff score. For example, for a POD, if the geographical Area permits,
select returns from excess workload of a contiguous POD within the Area.

To monitor the delivery of DIF returns for classification and the volume
and timing of return orders, the PSP should maintain a spreadsheet showing
the date, cycle, and volume of return orders. When DIF orders are posted to
master file, the ordered returns will move from the inventory section to the
delivery section of the Inventory and Delivery Reports (1040-1, 1120-1, etc.).
The returns will appear in the Inventory/Aging By Class section of Table 37
when the returns are delivered to classification. ACIS can also be monitored
for new returns establishing on AIMS in Status 06

SB/SE Campus section will provide monthly DIF classification reports
to the PSP Territory Managers within five days after the close of the month
where there is activity. The reports will capture classification results by
class and by Area.

If select rates are less than 50% for any class, the PSP Territory Manager
will analyze a sample of the accepted returns and review local instructions
to determine the reason for the low selection rates.

Managers should monitor the volume of the surveys and take the necessary
steps to reduce incorrect surveys and/or the number of returns without audit
potential entering the examination stream. See IRM 4.1.3.5
, Survey of Examination Cases.

Examination and disposition of income tax returns will generally be
completed within 26 months (individuals) and 27 months for business returns
after the due date of the return or the date filed whichever is later. Many
priority returns are exempt from this requirement. Exceptions for cases are
listed in IRM 4.10.2.2.2, Examination Cycles.

Average days in process for open cases and closed case cycle time can
be monitored using AIMS open and closed case databases.

Started and unstarted returns by status code are shown in the Inventory/Aging
Sections of Table 36 (Area, territory, and group levels), Table 37 (Area level),
and can also be shown on the ACIS open case database. The PSP should determine
whether there are adequate returns on hand to accomplish the examination plan.
This should include an analysis of time applied, work in process by class,
turnover rates, and base inventory.

On a quarterly basis, PSP and Exam Planning and Delivery will analyze
priority program inventory, projected future inventory, and work plan delivery.
If a significant variance is determined in any specific priority program,
the Area, Exam Planning and Delivery, the Exam Return Selection Team and the
PSP will discuss the possibility of inventory brokering. See
IRM 4.1.2.6, Inventory Brokering.

Selected, Not Assigned inventories (Status 08) should be maintained
at minimum levels. As a general rule, the inventory should not exceed the
return needs for 3 to 4 months.

Assigned, No Time Applied inventories (Status 10) should be kept to
a minimum to allow for a quicker change of direction to meet program needs.

Dollars per hour, dollars per return, return accomplishments and time
applied are monitored using Table 37. Table 37 also provides an analysis of
the results and inventory by project code. The ACIS closed case database also
monitors accomplishments.

The PSP should closely monitor Table 10.1B on a monthly basis to ensure
duplications are eliminated and corrections are made promptly.

Certain ZIP code areas are identified as High Assault Risk Areas (HARA).
If a POD serves both HARA and non-HARA ZIP codes, it will be assigned two
POD codes. For example, POD Anytown (now POD XXX) has 4 HARA and 6 non-HARA
ZIP codes. POD Anytown would be assigned a POD code for the 4 HARA ZIP codes
and POD XXX for the 6 non-HARA ZIP codes it serves.

Separate Individual Master File (IMF) and Business Master File (BMF)
ZIP/POD listings are produced annually from the lookup table and distributed
to Area offices for updating. The validity of these lists must be maintained
to accurately identify examination workload by geographic areas. The PSP Territory
Manager is responsible for correcting those ZIP Codes which appear in POD
999. If the ZIP Codes are valid, they should be incorporated into regular
POD’s.

When the ZIP/POD tables are updated the PSP Territory Manager can:

Specific instructions for updating the ZIP/POD files are provided by
Headquarters annually.

After Cycle 52, the current file year Inventory and Delivery reports
for all individual and corporate returns will be reviewed. For example, the
Inventory and Delivery report for file year 2005 will be reviewed after 12/31/2005.
Any high DIF scored returns remaining in POD 999 should be ordered for classification.