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The National Research Program (NRP) is a nationally mandated program
and the top workload priority. NRP is a comprehensive effort by the IRS to
measure compliance for different types of taxes and various sets of taxpayers.
The NRP approach to measuring reporting compliance balances research quality,
efficiency and the reduction of taxpayer burden. It establishes a tax return
sample that is representative of the taxpayer population. NRP uses case building
data to determine if the return should be considered accurate as filed. The
NRP cases are selected and distributed to the Area PSP offices as directed
by the NRP Headquarters office. Please also refer to
IRM 4.22,National Research Program (NRP) and the NRP web site at

http://nrp.web.irs.gov

.

Each Area PSP will have an NRP Coordinator to administer this program
for the Area. The coordinator duties include:

The Promoter workload for the Area is developed and perfected by the
Lead Development Center (LDC) from leads surfaced by the field or other sources.
The LDC sends approved investigations to the Area PSP and assigns a tracking
code to each investigation. Tracking codes are used to link participant examinations
to the promoter investigation. Refer to IRM 4.32.2.5
,

The Participant workload will generally be developed and perfected at
the Campus. Please refer to the ATAT IRM 4.32.2

Each Area PSP will have a coordinator for the ATAT program workload.
The ATAT coordinator duties include:

The OCCP workload is developed at a national level from information
received from the issuance of various summonses to credit card companies and
third party processors.

The cases are shipped to the Area PSP for assignment to the field. PSP
will perfect the AIMS/ERCS controls on the cases and assign the cases to the
appropriate field examination groups.

A PSP coordinator will be assigned to coordinate the OCCP Program similar
to the ATAT Coordinator duties stated in See
IRM 4.1.3.1.2., Abusive Tax Avoidance Transactions (Promoters and
Participants)

The High Income Taxpayers workload is pre-identified at a national level
from several specific selection models. The cases are shipped to the Area
PSP for assignment to the field examination groups.

The High Income Non Filer (HINF) workload originates from various sources.
Criteria has been established for:

Any leads received in the Area during the year that meet the HINF criteria
will be forwarded to the Memphis Campus for filtering and case building.

Please see IRM 4.1.4.3.6 for the HINF
screening criteria for leads sent to the Area PSP. Cases meeting the criteria
for examination in the Area office will be classified, AIMS controls secured
and the substitute for return (SFR) posted. These cases will be forwarded
to the Area PSP for assignment to the examination groups.

To enhance quality, examination techniques and procedural guidance may
be enclosed in each HINF case file. Please refer to
IRM 4.12, Nonfiled Returns for additional information.

PSP must ensure that the AIMS/ERCS controls have been perfected and
the appropriate project code is applied to the case prior to assignment to
the field.

The following types of returns are computer scored under the DIF System:

All individual returns are computer scored under the DIF System. DIF
returns are generally ordered in bulk, but some returns are delivered to Examination
as Automatics for manual screening without a return order being placed. These
returns are identified as Automatics by the use of Audit Codes. Audit Codes
can be found on Form 5546, Examination Return
Charge-Out Sheet. These Audit Codes are listed in IRM
4.19.1.2.6, Form 1040 Individual Returns Scored by DIF System (Audit
Code Definitions)

Correspondence (CORR) returns are certain individual low and medium
non-business returns that are conducive to correspondence examinations. Returns
identified as “CORR”
will not be ordered by Area offices
without prior written approval from the PSP Territory Manager.

Corporation returns having no balance sheet or assets under $10,000,000
are computer scored under the DIF System. Formula numbers are used to identify
the asset classes when ordering corporate returns on
Form 6897, Corporation Returns Orders . High asset returns, activity
codes 219 through 225, are not DIF scored and are delivered automatically
to Classification at the Ogden LMSB Campus. The Corporation DIF System includes:

Miscellaneous corporate returns are also not DIF
scored. These returns may be sample ordered. These returns could be classified
by screening them in the Statistics of Income (SOI) Division located at the
Campus before shipment to SOI at the Ogden Campus. Miscellaneous corporate
returns include:

Certain corporation returns are identified as Specials
. These returns are delivered to Examination for screening without
a return order and are identified by Audit Codes. These Audit Codes are listed
in IRM 4.19.1.2.7, Form 1120, U.S. Corporation
Income Tax Return.

S Corporation Returns having assets under $10,000,000 are computer scored
under the DIF System. The S Corporation System includes:

Certain S corporation returns are identified as Specials.
These returns are delivered to Examination for screening without a
return order and are identified by Audit Codes. These Audit Codes are listed
in IRM 4.19.1.2.8, Form 1120S, U.S. Small
Business Corporation Income Tax Return.

Form 6356, Individual DIF Returns Order, will be used to order individual
DIF returns. Instructions for completing Form 6356
are found on the back of the form. Returns may be ordered from
any cycle for orders from regular DIF inventory and only from odd cycles for
orders from DIF CORR inventory.

Areas are expected to order returns for the entire Area. However, the
capability for ordering or excluding returns for a specific post-of-duty is
also available. These orders should be kept to a minimum since it deviates
from working the highest DIF returns first. These types of orders are:

See Exhibit 4.1.3-1.,
Inventory and Delivery Report 1040–1 shows the number of DIF
returns available for ordering and the number of returns delivered for screening
by examination class and DIF score range for each file year. High DIF Fast
Track returns are also included in the return counts on this report. This
report also provides the number of Minimum Tax and Alternative Minimum Tax
returns (combined under TXPREFRET). This is a cumulative report which is generated
every even cycle for each file year.

See Exhibit 4.1.3-2.,
Inventory and Delivery Analysis Report 1040–2provides statistical
data on individual returns processed and on returns delivered, including specials.
This report is generated every cycle for the first 40 cycles and every even
cycle thereafter.

Individual returns cannot be ordered from the current file year until cycle 10. For orders prior to cycle 26,Override
Code “1″
will be entered in Column 87 of Form 6356to override the computer block.

Caution: Any 1040 DIF or High DIF Fast Track returns
ordered or received prior to March 31 that are electronically filed (e-filed)
will not generate a TRPRT return to classification (CF & S). If these
e-filed returns are to be classified from paper, they will need to be generated
and printed through IDRS command code TRPRT after March 31.

Although it is not intended to be the standard practice for filling
DIF return orders, previous file year returns can still be ordered after cycle
9 using the current ordering process. Previous file year individual returns
cannot be ordered after cycle 26 of the current file year.
Override Code “9″
will be entered in Column 80
of Form 6356 to override the computer block.
Approval is needed from the PSP Territory Manager to utilize this override
code.

Alternative Minimum Tax returns may be ordered
using Form 6356 with Indicator Code “W”
entered on the order form.

See Exhibit 4.1.3-5, Inventory
and Delivery Report 1040–6 reflects DIF CORR inventory by score range
and deliveries to the campus or Area. Orders must be made in odd cycles.

The Amended Returns inventory contains Category
B (paid) claims as defined in the LEM. Form 8199,
Amended Returns Order, is used to place orders.
See Exhibit 4.1.3-4., Table 1040–5 is the Inventory and Delivery
Report for Amended Returns. These claims are ordered by the year in which
the claims were filed, not by the tax year of the returns
for which the claim applies. The highest dollar claims will be delivered first.
The following categories of amended returns may be ordered:

Form 6897, Corporation Returns Order, will be used to order corporation
returns. This form is separated into two sections, Corporation DIF Returns
Order and Miscellaneous Corporation Returns Order. Instructions for completing
Form 6897are found on the back of the form.
Returns may be ordered from odd numbered cycles only.

Areas are expected to order returns for the entire Area. However, the
capability for ordering or excluding returns for a specific post-of-duty is
available. These orders should be kept to a minimum since it deviates from
working the highest DIF returns first. These types of orders are:

See Exhibit 4.1.3-6.

, Corporate DIF Inventory and Delivery Report 1120–1 shows the
number of DIF returns available to order for screening and the number of DIF
returns which have been delivered by DIF score range.

See Exhibit 4.1.3-7.

, Corporate DIF Inventory and Delivery Analysis Report 1120–2 provides
data on corporations processed and on returns in inventory or delivered, including
specials and automatics. BMF returns will not be ordered from the current
file year inventory until after processing cycle 26 of the current file year.

See Exhibit 4.1.3-8.

, 1120S DIF and 1120F Inventory and Delivery Report 1120–3 provides
data on corporate returns processed and on returns in inventory or delivered,
including specials and automatics.

Indicator Codes are entered on
Form 6897to designate the type of returns ordered as shown in the
following figure:

Figure 4.1.3-2

Orders of miscellaneous returns in the
taxable income category are filled from the top of the ”
file”
(highest income to zero.)

Orders of miscellaneous returns in the
non taxable income category are filled from the top of the ”
file”
(greatest loss to zero.)

Only one indicator code may be used for returns in each examination
class in the same cycle. However, different indicator codes may be used for
different examination classes in the same cycle.

Form 6162, Partnership Returns Order, will be used to order DIF partnership
returns. Instructions for completing Form 6162 are found on the back of the
form. Returns may be ordered monthly.

POD orders are not available.

See Exhibit 4.1.3-9.,
Inventory and Delivery Report 1065–1 shows the number of Partnership
returns available for ordering and the number of Partnership returns delivered
for classification, by DIF score range, Examination Class and file year.

See Exhibit 4.1.3-10,
Inventory and Delivery Report 1065–2 provides analytical data
on Partnership returns processed, inventoried and delivered for classification,
including Automatics and Specials.

Indicator Codes are entered on
Form 6162to designate the type of returns ordered as follows:

According to IRC §761(a)
Partnership Returns, Investment groups that are not required
to file partnership returns, selected for examination by the Campus will be
forwarded to their respective Areas.

Form 5337, Fiduciary Returns Order, will be used to order fiduciary returns.
Instructions for completing Form 5337are
found on the back of the form. Returns may be ordered monthly.

POD orders are not available.

See Exhibit 4.1.3-11., Inventory and Delivery Report 1041 shows the number of Fiduciary
returns available for ordering and the number of Fiduciary returns delivered
for classification during the file year. This report provides the following
information:

Indicator Codes are entered on
Form 5337to designate the type of returns ordered as follows:

U.S. Real Estate Mortgage Investment Conduit (REMIC)
REMIC returns can be ordered using Form 8757
, U.S. Real Estate Mortgage Investment Conduit Income Tax. Returns
may be ordered monthly.

See Exhibit 4.1.3-12., Inventory and Delivery Report 1066–1 shows the number
of REMIC returns available for ordering and the number of REMIC returns delivered
for classification by Examination Class for the file year.

Survey of strategic work should be routed through PSP for their approval.
In order to survey any of these returns from either Status 10 (Survey Before
Assignment) or Status 12 (Survey After Assignment), the examiner and manager
must complete Form 1900, Survey After Assignment
and provide a complete explanation of the reasons for the recommended survey
action.

Once the Form 1900 is signed by both
the examiner and the manager, the group will close the case to Status 41 on
ERCS and forward the case to PSP using Form 3210.
The assigned PSP Coordinator will acknowledge receipt of the return, review
the reasons for the recommended survey, and provide either the acceptance
or rejection of the survey.

If the survey is accepted, the PSP Coordinator will initial and date
the Form 1900 in the explanation block to
show their concurrence with the action. They will copy the
Form 1900 for their records and will close the return to Centralized
Case Processing using Status 51 on ERCS and Form 3210
.

If applicable, the Coordinator will also copy the
Form 1900 and any related case material necessary, analyze trends
and provide this information as appropriate in order to improve workload selection
and classification results.

If the survey is not approved, the PSP Coordinator and/or PSP Section
Chief will provide an explanation to the group with the reasons for rejection.
Reasons for rejection will be based upon a cumulative knowledge of the particular
work in the Area.

Any priority returns recommended by the group for excess survey should
also be returned to the Area PSP using Form 1900with
an explanation for the action. PSP will make the final decision to survey
these returns or reassign them to another group if possible.