part4-4

4.1.4 
Other Programs and Other Source Workload

4.1.4.1 
(10-24-2006)
Introduction

  1. This chapter contains information for”Other Program”
    Workload
    and “Other Source”
    Workload. Guidelines and procedures
    described below are to ensure proper identification and authority for workload
    identification, return ordering, inventory controls, classification and quality
    review, including maintenance of select and survey rates.

4.1.4.2 
(10-24-2006)
Other Program Workload

  1. In addition to the priority workload there is specific work identified
    as Other Program work. This category must be worked in concurrence with the
    priority work. The local PSP office has the discretion to select the best
    work available within these types of cases. Due to the sensitive nature of
    some of these cases, emphasis should be placed on starting these cases in
    a timely manner. Refer to the annual Program Letter for current information.
    In the future, programs may be added or deleted from this list.

4.1.4.2.1 
(10-24-2006)
Innocent Spouse-Relief From Joint and Several Liability

  1. Under IRC §6015, a spouse may
    be relieved of income tax liability in some cases when he/she files a joint
    return but is not aware that the return is inaccurate as to items generated
    by the other spouse. In these cases, “Relief from Joint &
    Several Liability”
    provisions are applied.

  2. Taxpayers file the claims using Form 8857,
    Request for Innocent Spouse Relief (And Separation of Liability and Equitable
    Relief).

  3. Refer to IRM 25.15for detailed procedures.
    The majority of the claims are worked at the Cincinnati Centralized Innocent
    Spouse Operation (CCISO).

  4. Cases meeting the criteria listed in IRM 25.15.6.1
    are transferred to PSP for distribution to the field.

  5. Each Area PSP will have an Innocent Spouse Coordinator. The coordinator
    duties are listed in IRM 25.15.6.11.

4.1.4.2.2 
(10-24-2006)
Taxpayer Advocate

  1. There is a Service Level Agreement (SLA) between the National Taxpayer
    Advocate and the Commissioner, SBSE. This agreement outlines the procedures
    and responsibilities for processing Taxpayer Advocate Service (TAS) casework
    when the authority to complete case transactions rests outside of the TAS.

  2. The Taxpayer Advocate Service uses the Operation Assistance Request
    (OAR) process to refer a case to the Small Business/Self-Employed Division
    when TAS lacks either the statutory or delegated authority to effect the resolution
    of the taxpayers problem. The Taxpayer Advocate Service utilizes Form 12412, Taxpayer Advocate Service Assistance Request,
    to initiate the OAR process.

  3. Each Area PSP will appoint a Taxpayer Advocate Liaison who will be responsible
    for accepting the OARs from TAS, acknowledging receipt of the case, reviewing
    the case for appropriate assignment, assigning the case to the appropriate
    employee within the function, and monitoring the case through its conclusion.

  4. Please see the Taxpayer Advocate Web site at http://tasnew.web.irs.gov/for the current
    SLA, updated procedures and information.

4.1.4.2.3 
(10-24-2006)
Audit Reconsideration

  1. The Centralized Reconsideration Unit (CRU) works reconsideration cases
    for individual income tax returns previously worked by the Area office or
    Campus Examination function.

  2. IRM 4.13provides specific guidance for
    cases meeting reconsideration criteria.

  3. IRM 4.13also discusses the required
    criteria the CRU uses if it is necessary to send a case to the Area PSP for
    distribution to the field examination function. Please refer to this section
    for guidance and screening of these cases in PSP.

  4. All requests for an audit reconsideration submitted by IRS employees
    should be mailed to the appropriate Central Reconsideration Unit (CRU) of
    the IRS campus as prescribed in IRM 4.13.7.
    The CRU will screen the requests but will no longer assign or work the employee
    audit reconsideration cases. A centralized section has been established within
    SB/SE Central Examination Area to assign and control employee audit reconsideration
    cases.

  5. The CRU employees will follow the guidelines in
    IRM 4.13.3.2.1 (a thru f) in establishing and preparing the case.
    All employee audit reconsideration cases will be shipped from the Campus to
    the address below, which is part of the PSP office within the Central Examination
    Area. To ensure expeditious handling, use a delivery service that provides
    tracking capability when sending information to the Campus and the Area office.

    Internal Revenue Service

    Attn: PSP

    550 Main Street

    Room 7-403

    Cincinnati, OH 45202

  6. Central Examination Area will send the employee audit reconsideration
    cases to the appropriated Area PSP office for assignment and control. The
    case should be returned to the group and examiner who originally worked the
    examination.

4.1.4.2.4 
(10-24-2006)
State Referrals

  1. Pursuant to IRC §6103(d)a great
    deal of information is disclosed by the IRS to states and vice versa. The
    mutual exchange of information is referred to as the Governmental Liaison
    Data Exchange Program. These exchanges of information aid the administrative
    and enforcement processes of both agencies, while simultaneously contributing
    toward improved taxpayer voluntary compliance and reduction of taxpayer burden.

  2. PSP will screen the referrals received from the state. Cases selected
    for examination will be case built, controlled on AIMS and distributed to
    the appropriate field group.

  3. The procedures for State Referrals may be centralized at the Campus.
    Please check the Exam Planning and Delivery web site for current instructions.

  4. Federal/State initiatives based on data covered by the Fed/State agreement
    signed by the Area Director do not require a Compliance Initiative Project
    (CIP). The data is part of routine business operations. If the data is something “ad hoc”
    that is requested from the state or another governmental
    agency, a CIP is required. However, only Part One approval is necessary in
    order to secure the data. See IRM 4.17for
    CIP requirements.

4.1.4.2.5 
(10-24-2006)
Low Income Housing Credit

  1. Taxpayers may be identified for consideration through internal analyses,
    referrals, or reports of noncompliance filed by state housing agencies using
    Form 8823, Low-Income Housing Credit Agencies
    Report of Noncompliance or Building Disposition, which are processed at the
    Philadelphia Campus.

  2. Selected Form 8823 and other selected
    information is forwarded to the Midwest Area PSP where it is associated with
    the returns and classified. If the return is selected for examination, the
    complete file, (including a LIHC-specific classification check sheet and case-building
    information) is sent to the appropriate Area PSP for distribution to the field.
    Project code 0670 and ERCS tracking code 9812 are used to identify LIHC cases.

4.1.4.2.6 
(10-24-2006)
Historic Rehabilitation Credit

  1. The rehabilitation tax credit is 20% of qualified rehabilitation expenditures
    with respect to historic property and 10% for non-historic property as authorized
    in IRC §47. The National Park Service
    Office of Historic Preservation, as the representative of the Secretary of
    Interior certifies the work in order for a property to qualify for the historic
    tax credit. Copies of their correspondence to the property owner during the
    certification process are provided to the Internal Revenue Service.

  2. The correspondence is sorted in Midwest Area PSP by potential issues
    as identified by the analyst assigned to the program. The returns are associated
    with the correspondence and classified. Returns selected for examination are
    sent to the Area PSP for assignment to the field. Project code 0082 and ERCS
    tracking code 9633 are used to identify Rehabilitation Credit cases.

4.1.4.2.7 
(10-24-2006)
Fishing Industry-Capital Construction Fund

  1. IRC §7518authorizes the fishing
    vessel capital construction fund. This program is co-administered with the
    Department of Commerce, National Marine Fisheries Services (NMFS) and the
    Department of Transportation, Maritime Administration.

  2. The section allows a fisher, by agreement, to establish a capital construction
    fund. The fisher may deposit income from fishing into this account and reduce
    taxable income by the amount of the contribution. Income can be withdrawn,
    tax free, to purchase or repair a qualified vessel. A withdrawal for any other
    purpose is non-qualified and subject to tax at the highest marginal tax rate.
    The fisher is required to submit an annual report to NMFS.

  3. The NMFS submits reports to the IRS detailing all account activity based
    on the fishers’ reports. This report is sent to Western Area PSP as
    the majority of these taxpayers are located in that Area.

  4. The analyst assigned to the program identifies potential issues. Cases
    meeting specified criteria are case built at the Ogden Campus and classified
    in Western Area. Returns selected for examination are sent to the Area PSP
    for assignment to the field. Project code 0120 and ERCS tracking code 9599
    are used to identify Fishing Industry-Capital Construction Fund cases.

4.1.4.2.8 
(10-24-2006)
Offer-In-Compromise (OIC), Doubt as to Liability

  1. Offers in Compromise, based solely on doubt as to liability, not rejected
    by the Campus or from the Area Collection function, may be forwarded to Area
    Examination for further investigation. Area Examination will make a determination
    whether the offer merits further consideration.

  2. Please refer to IRM 4.18, Exam Offers-In
    Compromise for detailed procedures and information.

  3. The OIC coordinator should effectively monitor OIC cases assigned to
    the field and in process. Monthly status updates should be obtained on offers
    in process over 6 months.

  4. PSP is responsible for preparing the Form 4778
    , Examination Annual Compromise Case Report, per
    Form 4.18.5, Review, Closing and Reporting Requirements .

4.1.4.2.9 
(10-24-2006)
Joint Committee Cases

  1. A Joint Committee case can arise either from an examination or the campus
    forwarding to the Area PSP unpaid claims or tentative allowances in excess
    of the jurisdictional amount. The examiner is responsible in determining whether
    a case falls under Joint Committee jurisdiction. The examiner can either examine
    or survey the claim or tentative allowances.

  2. Joint Committee Tentative Carryback Allowances in
    excess of $2,000,000 to the same taxpayer will be selected and referred to
    Area examination after the allowance has been made.

  3. Please refer to IRM 4.36, Joint Committee
    Procedures for detailed procedures and information. The LMSB Joint Committee
    web site is another excellent resource for up to date information on Joint
    Committee cases.

  4. The Area PSP may need to enlist the cooperation of LMSB to examine returns
    related to a Joint Committee case in order to address the Joint Committee
    issues on an SBSE taxpayer.

4.1.4.2.10 
(10-24-2006)
Employee Audits

  1. The tax returns of all Service employees, regardless of grades or position
    will undergo the same initial computer screening process, the same classification
    process, and be subject to the same mass survey procedures applicable to all
    individual income tax returns.

  2. Employee audits require expeditious handling at all levels to ensure
    prompt completion of the examinations.

  3. Employee audits are generated by five different methods. This section
    identifies procedures and reporting requirements for the Area PSP for each
    of these different sources of employee examinations.

  4. The examination of an employees tax return can be initiated by one
    of the following different sources or events:

    1. Treasury mandates (TIGTA referrals)

    2. Executive selections

    3. New employee examinations

    4. Regularly classified employee examinations

    5. Transfers from the campuses

  5. All requests for an employee examination will be transmitted to the
    Director, Examination Planning and Delivery (EPD) for assignment to the appropriate
    PSP.

  6. The Area PSP Territory Manager will determine if an examination of a
    managers return can be conducted impartially and objectively within the Area,
    or if the tax return should be transferred to another Area.

  7. The examination of a return of an executive or senior management personnel
    will be forwarded to the SB/SE Director, EPD for transfer to an Area office
    outside of the employees assigned area.

  8. All other employee tax return examinations will be assigned by the Employee
    Tax Compliance Coordinator to an examination group in a post-of-duty other
    than where the employee works.

4.1.4.2.10.1 
(10-24-2006)
Employee Tax Compliance Coordinator

  1. The Area PSP Employee Tax Compliance Coordinator is responsible for
    the assignment, monitoring, and tracking of all employee returns in their
    Area.

  2. Please also refer to IRM 4.2.6 Classification,
    Examination and Review of Employee Returns.

  3. The Coordinator is to monitor and track each type of
    employee examination. Their tracking record (Audit Log) will include:

    1. Taxpayer identification number and name

    2. Tax periods under examination

    3. Type of examination (TIGTA referral, executive selection, new employee,
      transfers from the campus, or regularly classified employee examination).

    4. Explanation for any delays in the examination process

  4. On a quarterly basis the Director, EPD or their designee will forward
    a monitoring report to the Area PSP ETC Coordinator to be completed and returned
    within 14 days.

  5. Each type of employee audit must be clearly identified, including additional
    employee audits not previously shown on the report.

  6. The reports will be returned to Exam Planning and Delivery

    Exam Planning and Delivery

    IRS

    NCFB C7-114

    5000 Ellin Road

    Lanham, MD 20706

4.1.4.2.10.2 
(10-24-2006)
Employee Audit Classification

  1. The impartial and independent character of examinations of IRS employees
    and officials must be ensured. All employee tax returns should be screened
    by field personnel prior to assignment to an examination group.

  2. Regularly classified employee returns include all returns identified
    during the classification and selection process. Returns that fall below a
    Compliance Initiative, priority or special programs selection criteria are
    considered as accepted as filed for this section.

  3. To ensure impartiality and independence, the classification of employee
    returns will generally not be performed by subordinates, associates or co-workers
    in the same post-of-duty as that of the affected employee. (See Policy Statement
    P-4-9).

  4. If independence of the classification process is in question, the return
    will be forwarded to an adjacent Areas PSP for classification.

  5. Normal classification criteria will be used in screening employee returns.
    The scope of the examination will not be expanded/contracted merely because
    the case has been identified as an employee.

  6. To assist classifiers in identifying employee returns prior to screening,
    an indicator will be placed on the Form 5546,
    Examination Return Charge Out Sheet. If the return is known to be or determined
    to be an employee return, and the indicator is not present, write the word “employee”
    in the information section of the
    Form 5546.

  7. Once an employee return has been selected for examination, the pre-contact
    analysis box of Box B of the Form 6754,
    Examination Classification Checksheet, should be checked.

  8. Once the classification process has been completed, the employee return
    and all other related information will be placed in an orange folder. The
    case file will be stored in a secure file for shipment to the Area PSP for
    assignment when an order is placed through CF & S.

  9. For a regularly classified employee audits, when the return order has
    reached the DIF score level of the employee return, the return will be transmitted
    to the Area PSP in a security envelope. Regularly classified employee audits
    should retain its original source code. Source code 46 is only used when a
    request is made for an employee audit.

4.1.4.2.10.3 
(10-24-2006)
Employee Audit Procedures

  1. All requests for an employee examination, including
    Form 2677, Request for Account History and
    Tax Audit will be routed through the Director, EPD for assignment to the Area
    PSP.

  2. The PSP Territory Manager will take the following actions on receipt
    of a Form 2677:

    1. Request the tax returns for the two most current open years, case build
      the file and classify the returns.

    2. Request transcripts of account history for the open years. Use the information
      on the transcripts to answer the account history questions on the Form 2677.

    3. Forward the case file and the Form 2677to
      a contiguous post-of-duty, not the employees post-of-duty
      for examination.

    4. Examinations may be started using the employees copy of his/her tax return,
      a RTVUE print and/or a MACS print of the return(s).

    5. Employee tax cases will be kept in orange folders at all times.

  3. The following codes apply to employee audits:

    1. Project code 0206 will be used for Executive Selection audits.

    2. Project code 0207 will be used for TIGTA Referrals (Treasury mandates).

    3. Project code 0389 will be used for New Employee audits.

    4. Project cod 0913 will be used for Employee Audits – Transfers From Campus

    5. Source code 46 will be used for employee audits generated by an audit
      request.

    6. Tracking code 7569 will be used to track an employee examination that
      originated in a source code other than 46. An example of other possible source
      codes are DIF, CIP, etc. making the tracking code critical.

    7. Only in unusual circumstances should a case be returned to PSP. The tracking
      code is being substituted for freeze codes.

  4. All employee tax cases are mandatory review by Technical Services. Technical
    Services will forward the case to Centralized Case Processing in Memphis Campus.

  5. If an employee audit has been in any status for more than 90 days, the
    Coordinator will provide an explanation for the delay. For example, if an
    employee audit has been in status 12 for more than 90 days the coordinator
    will contact the assigned group manager and ask for a case status. This information
    will be recorded on the quarterly log in the Status Summary field. This field
    will also be used to record any transfers of the employee audit either between
    groups in the Area or transfers into or out of the Area.

4.1.4.2.10.4 
(10-24-2006)
Employee Audit Requests from TIGTA

  1. The Director, Examination Planning and Delivery (EPD), will receive
    memorandums from TIGTA that request the audit of an employee based upon the
    investigation of a possible understatement of tax liability. Generally, any
    TIGTA request received where the statute of any requested audit year will
    expire in less than twelve months will not be examined.

  2. The Director, EPD or their designee will review the TIGTA audit request
    to determine the statute of limitations and the merits of the referral.

  3. For those TIGTA audit requests with more than twelve months on the statute,
    the Exam Return Selection (ERS) manager will forward the TIGTA memorandum,
    using Form 3210, to the appropriate Area
    PSP Employee Audit Coordinator for case building and assignment.

  4. Any TIGTA initiated employee examination received by PSP will be assigned
    to an examination group and cannot be surveyed.

  5. Upon receipt of the TIGTA memorandum or a Form
    2677Request for Account History and Tax Audit, the ETC Coordinator
    will perform the following steps:

    1. Acknowledge the Form 3210, Document
      Transmittal, and return the proper copy to the initiator.

    2. Record the examination in their TIGTA Employee Audit Log monitoring record.

    3. Request the original tax return and establish the return on ERCS/AIMS,
      using Form 5345, Examination Request Master
      File, and Source Code 46. In order to expedite the employee examination, the
      case file may be sent to the group with MACS returns. The Coordinator will
      forward the original return to the assigned group once received.

    4. Build the employee examination case file to include, the MACS print, RTVUE
      or the original return (with charge-out and labels, if possible), an AMDISA
      print , IRPTRO for the employee and any related returns, and an IMFOLT.

    5. If the employee did not file a return, build a case file with the TIGTA
      memorandum and the IRPTRO and IMFOLT information for the current and two prior
      years. The assigned examination group will interview the employee to determine
      if a return was required to be filed. The group will follow delinquent return
      procedures, if necessary, and complete the examination accordingly.

    6. In order to maintain privacy, the case file will be sent in a confidential
      information envelope addressed to the specific group manager using Form 3210.

    7. Each new quarterly TIGTA Employee Audit Log will contain the cases open
      from the previous quarter and any new cases received in the quarter. Cases
      closed during the previous quarter will be removed from the current quarterly
      log.

4.1.4.2.10.5 
(10-24-2006)
Audit Requests from Executive Services

  1. Requests for executive audits are received by the Director, Examination
    Planning and Delivery (EPD). EPD will determine where the executive audit
    will be assigned. The PSP Employee Audit Coordinator will follow all of the
    procedures outlined above for employee audits.

  2. The request for executive audit will be forwarded to the Area PSP for
    assignment. Any Executive Services initiated employee examination received
    by PSP will be assigned to an examination group and cannot be surveyed.

4.1.4.2.10.6 
(10-24-2006)
New Employee Audits

  1. The Area PSP Territory Manager will receive
    Form 2677, information for new employee examinations from the Director,
    Examination Planning and Delivery.

  2. New employee examinations will be classified in PSP and may be accepted
    as filed in limited instances. (Disposal code 20). When an employees return
    is accepted as filed, the Coordinator will complete a
    Form 1900to include in the file. The Form
    1900 must clearly indicate the reasons for accepting the return.

    1. After establishing the return on AIMS and completing case building and
      IDRS research, the PSP Coordinator may determine that all items reported on
      the tax return are verified, there is no apparent unreported income, or there
      would be only deminimus adjustments based on unreported IRP information. As
      such, the Coordinator may accept the return as filed (Disposal Code 20).

    2. The disposal of this case will also be reported on the New Employee Audit
      Log.

    3. The decision to accept the return as filed is also subject to mandatory
      review per IRM 4.8.4 Mandatory Review. The
      file will be sent to Technical Services for concurrence.

    4. Consolidated Case Processing (CCP) will forward the required information
      to the appropriate Labor Relations office and/or National Background Investigations
      Center (NBIC).

4.1.4.2.10.7 
(10-24-2006)
Survey of Employee Returns

  1. These survey procedures may be applied to new employee examinations
    and regularly classified employee returns. TIGTA Referral (Treasury mandates)
    and Executive Selection cases can not be surveyed

  2. When an examiner believes that an examination of an employees return
    would result in no material change in tax liability, he/she may apply survey
    after assignment procedures. The examiner will complete a
    Form 1900, Income Tax Survey After Assignment, stating the reason
    for the survey action. If the examiners group manager concurs, he/she will
    approve the case and forward it to the appropriate second level official for
    his/her consideration and final approval of the Form
    1900.

  3. Once an employees return has been selected for examination and assigned
    to a group, it can only be surveyed with the written approval of the Territory
    Manager or equivalent position in the Area office. This survey action must
    include a description of any documents and/or other information used to draw
    this conclusion.

  4. If the group manager surveys an employee return, he/she will follow
    the survey after assignment procedures in the preceding paragraphs and forward
    the case to their Territory Manager for approval and forwarding to Technical
    Services for review.

  5. All employee returns require a Form 3198,
    Special Handling Notice, regardless of the type of closure. Check the “Employee Audit”
    Box on Form 3198in
    the “Mandatory Review by Technical Services”
    section when
    closing the case.

  6. In the case of a joint return, the examiner must identify on the Form 3198 the name of the IRS employee and their SSN.
    This information should be recorded in the “Forward to Technical Services”
    block, adjacent to the “Employee Audits” box.

4.1.4.2.11 
(10-24-2006)
Special Enforcement Program (SEP) Leads

  1. SEP agents may not develop their own cases from leads received from
    internal or external sources. All leads are forwarded to the Area PSP. The
    leads will be screened, case built and classified either by PSP or the specialty
    Campus before distribution to the field groups.

  2. PSP will complete preliminary IDRS research for proper screening of
    the lead to determine:

    1. If AIMS controls are present, the lead should be associated with the open
      case file.

    2. If an examination has already been completed, consider reopening procedures.

    3. If the lead identifies a taxpayer who falls within a Strategic Priority
      Program or under another Business Operating Division ( Wage and Investment,
      or Large & Mid-Size Business).

  3. These leads and information items will be screened in the Area PSP using
    the followingSubstantial Noncompliance Factors (SNiF)criteria.
    These factors will be considered in selecting a lead to be case built and
    classified:

    1. Substantial civil tax potential when considering the estimated time to
      work the issue and anticipated adjustment based on the information provided.

    2. Significant dollar amount of the allegation; large, unusual and questionable
      items based on a review of the reported items.

    3. Significant potential tax loss and overall impact of noncompliance issue.

    4. Local Area compliance impact i.e. local celebrity, geographically unique
      industry or area newsmaker.

    5. Emerging noncompliance promotions.

    6. Substantial amounts of income derived from illegal activity such as drugs
      or organized crime.

    7. Allegations of non-tax criminal activity that may have tax implications.

    8. Significant potential for fraud.

    9. Significant potential for litigation. Consider issues with conflicting
      lower court decisions and/or significant gray areas of law.

    10. Non-filer with known income sources below the High Income Non-Filer criteria
      but the information contains significant potential for civil tax. Consider
      the validity of the alleged income not reported and not reflected on an Information
      Report (IRP) document.

  4. If the lead does not warrant further investigation, follow the records
    control schedule of IRM 1.5.23.

  5. Criminal Investigation forwards their Form 6544,
    Cooperating Agent Requestsdirectly to the
    responsible Compliance Field Territory Manager for distribution to the SEP
    group. These requests are not processed through the Area PSP.

4.1.4.2.12 
(10-24-2006)
Claims

  1. Claims related to open examination returns charged to Field Territory
    Managers are not classified by the Campus Examination Operations. These claims
    are forwarded to the Area for association with the return. All other claims
    which meet Category A criteria outlined in the LEM or as defined by instructions
    provided by the PSP Territory Manager or Classification Department Manager,
    are classified by Examination prior to processing. If the claim is selected,
    the original return is secured and forwarded to the appropriate Area PSP Territory
    Manager using Source Code 30.

  2. The Area PSP Territory Manager should provide Area guidance to the Classification
    Department Manager at the Campus for use in the classification of claims.

  3. Classification check sheets will be prepared by the Campus for returns
    selected for Area examination.

  4. If a claim is selected by the Campus and later surveyed by the Area,
    the Area will process the claim and send Letter 570
    to the taxpayer, if Letter 86Cor
    Letter 96C was sent by the Campus informing
    the taxpayer of the selection and status of the return.

  5. Tentative Carryback Allowance Cases with related
    returns (carryback or carryover years) currently open in Area Examination
    will be forwarded to the area. The Campus will take necessary action to update
    or control selected returns on AIMS. The tentative allowance cases will be
    classified by the Campus.

    1. If the Campus Examination classifier determines that additional returns
      are necessary to complete classification, these returns will be requested.

    2. For selected returns, all affected carryback returns should be associated
      prior to shipping to the Areas.

  6. In Tentative Carryback Allowance bankruptcy cases,
    the refund application, the loss year return and any additional returns necessary
    will be classified by the Campus. Area Examination may have already taken
    action on the bankruptcy case. If not and the case is selected for examination:

    1. The loss application(s) will be forwarded immediately
      to the appropriate Area in a folder marked “Bankruptcy—Tentative
      Carryback Case.”

    2. Upon receipt in the Area by the PSP Territory Manager,
      these cases will either be associated with any other examination activity
      underway regarding that taxpayer or, if there is no such activity, the PSP
      Territory Manager will determine appropriate examination action and assignment.

    3. All Examination action must be completed and the
      Accounts Management Branch at the Campus notified of the disposition within
      90 days from the date the application was received by the Service.

4.1.4.2.13 
(10-24-2006)
Return Preparer Program Cases

  1. Each PSP will designate a staff member to coordinate all SB/SE compliance
    aspects of the Return Preparer Program. Please refer to
    IRM 4.1.10, Return Preparer Program .

  2. A preparer program action case is a preparer penalty investigation in
    which clients of a questionable preparer are examined to determine whether
    preparer penalties and/or an injunction are warranted.

  3. IRM 4.1.10 provides detailed procedures
    and information to develop preparer program action cases for distribution
    to the field examination groups.

4.1.4.2.14 
(10-24-2006)
Expatriate Cases

  1. U.S. taxpayers who give up their citizenship to avoid tax are subject
    to special tax treatment for a 10 year period after expatriation under IRC §877. The Philadelphia Campus maintains a database
    of taxpayers who have expatriated. Some of these taxpayers meet the tax avoidance
    criteria based on their assets and prior U.S. tax liability.

  2. When the taxpayer leaves the U.S. they are considered non-resident aliens.
    In the year they relinquish their U.S. citizenship, they file a dual status
    return. A dual status return contains special rules and is a blend of a regular
    Form 1040and a Form
    1040NR. In subsequent years, they file a
    Form 1040NR.

  3. The Philadelphia Campus screens the expatriate database and the Form 8854, Expatriation Initial Information Statement,
    submitted by the taxpayer. The expatriate cases that meet the
    IRC §877 definition of tax motivated abandonment of citizenship
    are sent to SBSE International for classification. The expatriate returns
    all fall under the jurisdiction of SBSE International. Cases selected for
    examination are distributed to Area 15 examiners.

4.1.4.2.15 
(10-24-2006)
8300 and Title 31 Program Leads

  1. Information reports are generated from the Anti-Money Laundering Program
    about the financial transactions of businesses and individuals that may have
    material compliance potential. These information leads are forwarded on Form 5346, Examination Information Report, or Form
    3949, Information Report Referral.

  2. All leads are forwarded to the designated Bank Secrecy Act (BSA) PSP.
    The BSA PSP screens the leads using the SNIF criteria and forwards the SBSE
    income tax leads to the Brookhaven Campus for classification, case building
    and distribution to the Area PSPs for distribution to the field groups.

4.1.4.3 
(10-24-2006)
Other Source Work

  1. Other Source Work is defined at that segment of the population that
    is the most non-compliant and is a non-priority tax return. This work must
    be assigned through PSP.

4.1.4.3.1 
(10-24-2006)
Alien Returns

  1. Generally, nonresident alien returns, Form 1040NR
    , will be examined by SBSE International. Under certain circumstances,
    some may be referred to the appropriate Area PSP Territory Manager for follow-up
    action. Returns on which an election under IRC §6013(g)
    or IRC §6013(h)has been
    taken, and returns falling under IRC §879,
    should be examined in the Area office having jurisdiction over the spouse
    who is a resident or citizen of the United States. Exceptions are as follows:

    1. An exception is made for
      Form 1040NRidentified for examination when an alien comes to an
      Area office for departing alien clearance. If the examination is made from
      a retained copy, and RTVUE does not provide the needed information, Area Examination
      will promptly request the original return from the Austin Campus. The request
      will indicate why the return is needed. If the examination is made of a delinquent
      return or pickup of an unprocessed currently filed return, the return and
      examination report will be promptly forwarded to Austin Campus for processing.

    2. Another exception is for
      Form 1040or Form 1040A selected
      as a part of a regular Area Examination program when it is determined that
      the taxpayer should have filed Form Form 1040NR.
      In these cases, appropriate adjustments will be made based on nonresident
      alien rules. Adjustments will be processed on the original filed Form 1040or Form 1040A.
      In these situations, examiners will prepare Form 3198
      , Special Handling Notice, with notation “Eliminate
      Form 1040 or 1040A annual mailing requirement since taxpayer should file Form
      1040NR.”
      If a joint return was filed, Area examination may examine any
      related pickup of Form 1040NR for the taxpayers
      spouse. The related return and examination report will be forwarded to the
      Austin Campus for processing.

  2. Form 1040and
    Form 1040Afiled and examined in domestic Area offices will not
    be transferred to SBSE International merely because the taxpayer has left
    the United States. However, if the examination will need to be conducted overseas,
    the books and records are maintained overseas, or if the issues are sufficiently
    complex to warrant an international examination, returns may be transferred.
    Questions should be directed to the PSP Territory Manager, SBSE International.

4.1.4.3.2 
(10-24-2006)
Automatics, Specials and Campus Identified Work

  1. Tax returns designated as “automatic”
    must be classified
    and either selected for examination or accepted as filed on classification.
    Certain individual, corporate, partnership and fiduciary returns are identified
    as “automatic”
    . See the LEM for the criteria used to categorize
    these returns.

  2. Certain individual returns are identified as Specials based on specific
    features on the return using Campus Audit Code screening criteria. These returns
    are sent to the Area PSP Territory Manager for classification and assignment.

  3. The Campus may identify other types of cases that need further consideration
    and classification by the Area PSP. These are forwarded to the Area PSP Territory
    Manager. Please refer to IRM 4.19, Campus
    Examination Operations.

4.1.4.3.3 
(10-24-2006)
Bankruptcy Notices

  1. The procedures after receiving Bankruptcy Notice are as follows:

    1. If the taxpayers return is assigned in the Campus
      Examination function, a Bankruptcy notice, will be forwarded for association
      with the return. The Campus will immediately forward the case file to the
      appropriate Area Examination function.

    2. If the taxpayers return is assigned in an Area
      Examination function, the notice will immediately be
      forwarded for association with the return.

    3. If the return is unassigned in central files at
      the Campus, the return and the notice, together with information regarding
      any prior examination record, will be forwarded to the PSP Territory Manager
      for reclassification. If examination is warranted, the return will
      immediately       be assigned to an examiner. If examination is not warranted,
      the return will be accepted as filed.

4.1.4.3.4 
(10-24-2006)
Change in Accounting Method

  1. When National Headquarters issues a letter to a taxpayer authorizing
    a change in accounting method, a copy is sent to the appropriate Area Director
    for follow-up action. The PSP Territory Manager will prepare
    Form 5346for subsequent (unfiled) years. Follow-up action is not
    required in all future years as long as the PSP Territory Manager is reasonably
    certain that the taxpayer is complying with the terms, conditions and adjustments
    upon which permission is predicated.

4.1.4.3.5 
(10-24-2006)
Information Reports/Referrals-Other Types

  1. Information reports and referrals are sent to PSP by field examination
    and other business units. These leads may include information related to returns
    for tax years not yet required to be filed, also known as intercept files.
    These may be received on the following forms:

    1. Form 5346Examination Information Report

    2. Form 3949Information Report Referral

    3. Form 3449Referral Report

    4. Form 5666Tax Exempt and Government Entity
      (TE/GE) Referral

    5. Form 4442Inquiry Referral

  2. These leads will be screened in PSP using the procedures and
    Substantial Noncompliance Factors (SNiF)    criteria in
    See IRM 4.1.4.2.11.    . The leads will be screened, case built and
    classified either by PSP or the specialty Campus before distribution to the
    field groups.

  3. 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.

  4. Information involving one or more specialty taxes (excise, and estate/
    gift tax will be sent to the Cincinnati Campus.

4.1.4.3.6 
(10-24-2006)
Non Filer Leads

  1. The information reports and referrals sent to PSP also include non-filer
    leads received from various sources. PSP will screen all non-filer leads to
    ensure they meet the high income non-filer (HINF) strategy criteria. The HINF
    strategy is designed to address the filing compliance of taxpayers with known
    sources of income exceeding $ 100,000. The sources of income may include IRP
    documents, or alleged information on an information report. Refer to IRM 4.1.3.1.5for an overview of the HINF program.

  2. A non-filer lead with total known income sources exceeding $ 100,000
    at least one source of which is non-employee compensation will be sent to
    the Memphis Campus for case building at the following address:

    Internal Revenue Service

    Classification Department Manager

    Stop 8237 M

    5333 Getwell Road

    Memphis, TN 38118

  3. HINF cases built for examination for an 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.

  4. If the lead does not meet the above HINF criteria, the leads will be
    screened using the procedures and Substantial Noncompliance
    Factors (SNiF)    criteria in See IRM 4.1.4.3.5.
     Information Reports/Referrals-Other Types.

  5. If the lead does not warrant further investigation, follow the records
    control schedule of IRM 1.5.23.

  6. All non-filer cases referred by Collection will reflect Transaction
    Code (TC) 595. In instances where a non-filer will not be pursued, all unfiled
    years/modules must be “satisfied”
    using a TDI satisfying
    transaction code and closing code.

4.1.4.3.7 
(10-24-2006)
Collection Referrals – Form 3031 (Report of Investigation of Transferee
Liability)

  1. The PSP Support Manager or designee should screen all
    Form 3031referred to Examination within 30 days after receipt.

  2. An INOLE should be obtained to determine the taxpayers most current
    address.

  3. ) An AMDIS should be secured to determine if there is an open year in
    status 10 or 12 in a group. If there is, Form 3031 should be sent to that
    group along with a Form 3210, Document Transmittal.

  4. If there is no open year in status 10 or 12, the PSP Support Manager
    or designee should requisition the return(s) on ERCS, associate the return(s)
    with Form 3031 and forward to an examiner
    for verification of assets transferred and case write-up.
    Form 3210, Document Transmittal will be used to forward the return(s).

4.1.4.3.8 
(10-24-2006)
Compliance Initiative Projects (CIP)

  1. Compliance Initiative Project procedures ensure conformance with Service
    policies and procedures regarding privacy, security and disclosure. CIPs are
    characterized by the use of internal or external data to identify, quantify,
    evaluate and correct areas of noncompliance. They usually involve a study
    or other analysis of a group of individuals such as those within an occupation,
    industry, geographic area or specific economic activity or event.

  2. CIP procedures do not apply to routine business operations. Refer to
    IRM 4.17.1.3 for a list of activities not
    subject to CIP procedures.

  3. The SB/SE CIP Coordinator will be located in the Area PSP office. See
    IRM 4.17.2.2for a detailed list of coordinator
    duties.

4.1.4.3.9 
(10-24-2006)
Foreign Collateral Requests

  1. The IRS Tax Attache or Exchange of Information (EOI) program analyst
    will forward foreign initiated requests to the appropriate office for action.
    Under the Memorandum of Understanding (MOU) between LMSB and Small Business
    Self-Employed Division (SBSE), the IRS Tax Attache or the EOI program analyst
    will forward the case to the SBSE Compliance Area Directors. These requests
    are generally referred to the Area PSP for assignment and control to a Revenue
    Agent (RA).

  2. Please refer to IRM 4.60.1.2.5for specific
    procedures for these requests.

  3. It is imperative that the request is assigned to an examiner on a priority
    basis. A response to the IRS Tax Attache or EOI program analyst is required
    within 60 days.

4.1.4.3.10 
(10-24-2006)
Inadequate Records Cases

  1. The PSP Territory Manager should select for examination all returns
    with Form 5346, Examination Information
    Report, attached, indicating that the taxpayer did not maintain adequate records
    of business expenses, unless they lack significant examination potential.

  2. An Inadequate Records Notice (IRN) coordinator should be established
    in each Area to monitor the follow-up investigations.

  3. Please see IRM 4.10.8.15.8for PSP responsibilities
    to monitor and follow up on Inadequate Records Notice Cases.

  4. Returns that are surveyed must have a Form 1900
    , Income Tax Survey After assignment, completed and attached to
    the return.

4.1.4.3.11 
(10-24-2006)
Informants Claims for Rewards

  1. The PSP Territory Manager will receive selected claims through the Informants
    Claim Examiner (ICE) at the Campus. The Campus is responsible for establishing
    on AIMS the returns related to the claim for reward.

  2. Project Code 0153 has been assigned to the Informants Claims for Reward
    program. The Area PSP will ensure that PC 0153 and the Informant Claims Indicator
    has been established on these cases by the Campus. Please see the AIMS IRM 4.4.1for setting the Informant Claims indicator.

  3. The PSP Territory Manager may accept or survey these claims if the available
    information indicates that an examination is not warranted. If the claim is
    accepted or surveyed, the PSP Territory Manager must inform the ICE expeditiously.

  4. The PSP Territory Manager will promptly assign any claims deemed worthy
    of examination to the appropriate group. These cases require seven point protection
    and should be assigned in double sealed pink security envelopes.

  5. The identity of persons who furnish information regarding possible tax
    violations must be protected. All employees must handle
    such information in strict confidence. Special handling must be given to avoid
    disclosure to other than those employees having a “need to know.
    ”

  6. Refer to IRM 25.2, Information and
    Informants Rewards for detailed procedures.

4.1.4.3.12 
(10-24-2006)
Information Returns

  1. The Information Returns Master File (IRMF) will match information returns
    and Currency Transaction Reports (CTR) with any current tax year return ordered from the DIF Programs Correspondence and Self-Employment
    Tax (SET) inventory files, or delivered as an Automatic/Special for the current
    year and two prior years.

  2. This data will be printed on an IRMF transcript and summarized on a
    summary sheet. The transcript and summary will be associated with the related
    return prior to classification.

  3. If the Information Returns Program (IRP) produces an underreporter transcript
    for a return located in an Area, the transcript will be forwarded to the appropriate
    Area and:

    1. If under examination, the transcript should be associated
      with the return.

    2. Returns without time applied, or unassigned, should
      be screened for the IRP issue within 15 workdays after the transcript is associated
      with the return.

4.1.4.3.13 
(10-24-2006)
Midwest Automated Compliance System — MACS

  1. MACS is an automated compliance tool that provides the capability to
    profile a population, identify market segments, and identify issues during
    screening. MACS contains Return Transaction File data and certain Master File
    information for three years for all taxpayers who filed within an Area or
    campus area (IMF, 1120, 1120S 1065 and 1041 only). MACS has stringent operating
    restrictions to ensure the securing of the data and that taxpayer privacy
    is not compromised.

  2. MACS may be used for information on specific taxpayers even if only
    a partial name or address is known. This includes a return facsimile in either
    a one year or three year comparative format and a Cash-T analysis. This information
    may be used for case building or return selection decisions. A MACS facsimile
    may be used in lieu of the original tax return.

  3. MACS may be used to identify potential noncompliance within a market
    segment, and to select a sample of returns to test the level of noncompliance.

  4. No taxpayer compliance contact, including examination action, taxpayer
    education, etc., should be made on specific taxpayers identified using MACS
    prior to the approval of a Compliance Initiative Project (CIP). Refer to IRM 4.17for detailed CIP procedures.

  5. Returns selected for compliance contact using MACS based on any criteria
    other than activity code, POD, NAICS code, DIF, and UIDIF score equal to or
    greater than the local computed DIF cutoff score, must have an approved CIP
    before contact is made.

  6. Refer to IRM 4.3Midwest Automated Compliance
    System (MACS) Handbook for an in-depth explanation and procedures.

4.1.4.3.14 
(10-24-2006)
Prompt Assessment Examination Requests

  1. Any returns referenced in a request for prompt assessment or prompt
    examination that are selected for examination by the Campus Classification
    Section will be controlled on AIMS by the Campus to the appropriate Area office.
    The Campus will use Letter 621C, or another
    appropriate letter, to notify the requester that the request has been transferred
    to the Area for consideration.

  2. Upon receipt of requests for prompt assessments, Examination will proceed
    at the earliest possible date to close the returns which have not already
    been administratively closed. If an Area is not in possession of the original
    returns for the taxable years needed in a prompt assessment request and such
    returns have not been administratively closed, the examination should proceed
    using the taxpayers retained copies. The original returns should subsequently
    be requisitioned.

  3. If the statutory period for assessment as prescribed in
    IRC §6501(d)is about to expire and the taxable years covered
    in the request cannot be closed prior to the expiration date, the taxpayer
    will be given an opportunity to file a consent. In no case should the taxpayer
    be requested to withdraw the request for prompt assessment.

  4. When a request is received by an Area involving a case that is pending
    before Appeals, a copy of the request will be sent to the Appeals office having
    physical possession of the returns.

  5. The PSP Territory Manager will then assign the return(s) to the appropriate
    function, Office or Field

4.1.4.3.15 
(10-24-2006)
Prompt Determination Requests

  1. The Area PSP is responsible for screening Prompt Determination Requests
    received on Bankruptcy cases. Please refer to IRM 4.27.5.3
    for detailed procedures to control the cases on AIMS and respond
    to the trustee or debtor-in-possession.

  2. Per Rev. Proc. 81-17, 1981-20and
    IRB 48, the Service must notify the trustee
    or debtor-in-possession if the return has been selected for audit within 60
    days.

4.1.4.3.16 
(10-24-2006)
Employment Tax Leads

  1. Employment tax has established a Centralized Workload Selection and
    Delivery System at the Cincinnati Campus.

  2. Employment tax leads or workload received by PSP will be forwarded to
    Cincinnati using a Form 3210to the following
    address:

    SB/SE Employment Tax Policy Analyst

    Team 201

    Stop 5701 G

    Covington, KY 41014

  3. Please refer to IRM 4.23.3for classification,
    selection and assignment of employment tax cases.

4.1.4.3.17 
(10-24-2006)
IRC section 338 Elections

  1. All IRC §338
    Elections, Certain Stock Purchases Treated as Asset Acquisitions
    , completed packages should be forwarded to the PSP Territory Manager
    by the Section 338 Technical Reviewer.

  2. For all elections on Form 8023, the
    PSP Territory Manager in the Area where the purchasing corporation is located
    will be responsible for securing all relevant returns and coordinating examinations
    of the returns by using collateral requests or support requests on CEP cases.
    Relevant returns include:

    1. Purchasing Corporation

    2. Selling Corporation

    3. Target Corporation, and/or

    4. Deemed Sale Return

  3. The PSP Territory Manager will ensure that these returns are classified
    in the Area as a group (purchaser, seller and target), and where possible,
    by agents with IRC §338technical expertise.

4.1.4.3.18 
(10-24-2006)
Transfer of Returns

  1. Generally, the examination of any income, estate, or gift tax return
    is the responsibility of the Area in which the taxpayer resides or conducts
    its business or maintains its principal office. The examination will generally
    be assigned to an examiner at the post-of-duty nearest to the taxpayers residence
    for a non-business return or place of business for a business return.

  2. Transfer of returns for examination from Area to Area and between posts-of-duty
    in the same Area will be governed by Regulation 26 CFR 301.7605 (published
    in the Internal Revenue Bulletin in 1990). By observing the regulatory guidelines
    on time and place of examination, the convenience of the taxpayer will be
    balanced with the requirements of sound and efficient tax administration.

  3. In addition to the general guidelines noted below, examiners must be
    familiar with all details of the regulation.

    1. No less than thirteen months will remain on the
      statute of limitations for assessment when the return is transferred from
      one Area to another. (There should be 12 months or more on the statue when received by the receiving Area.)

    2. Campus transfers to Area offices will not be initiated
      with less than seven months remaining on the statute of limitations.

    3. Office Examination: taxpayers will be able to attend
      an audit interview at a Service office closest to their residence in the assigned
      Area providing that office has appropriate personnel.

    4. Field Examination: the audit will be conducted at
      the location where the original books, records and source documents are maintained,
      unless, in the case of small businesses, doing so would significantly disrupt
      the taxpayers operation and require the business to close. This does not
      preclude on-site visits by the examiner.

  4. A taxpayer may request a transfer of an examination if they no longer
    reside or conduct business at the site shown on the original return. The taxpayers
    request to transfer the place of examination must be written and must take
    into account the following factors:

    1. location of the taxpayers residence,

    2. location of the taxpayers business,

    3. where the taxpayers books and records are maintained,

    4. character and extent of inconvenience at origin
      of taxpayers request.

  5. The regulation provides further guidelines on time and place of examination
    with respect to incapacitated taxpayers, Service initiated transfers, location
    of representatives office, seasonal fluctuations in the business of the taxpayer
    or representative, and requests for transfer to offices with insufficient
    resources.

  6. When an income, estate, or gift tax return is transferred from one Area
    to another for examination, the following procedures should be followed:

    1. Form 3185, Transfer
      of Returns—Transfer of Administrative File, will be used as the transmittal
      notice.

    2. All cases will be routed to the PSP staff for review
      prior to transfer. This requirement will ensure that only those cases meeting
      appropriate criteria are being transferred.

    3. The transferring Area will close out the return
      using Disposal Code 30.

  7. The overall impact on compliance should be considered when determining
    if a return should be transferred for examination or should be surveyed.

  8. Examiners should strictly adhere to the “case-by-case
    ”
    standard contained in the regulation for determining if a transfer
    is appropriate. No additional criteria should be developed by examiners or
    Areas.

  9. If an examiner is assigned a case that was transferred from another
    Area and it becomes clear that the books and records and other source documents
    needed to complete the examination are not available in that Area, this case
    should be referred to the group manager for resolution. Group managers (or
    PSP Personnel) will contact PSP staff from the transferring Area to determine
    which Area will complete the examination. If agreement cannot be reached at
    the PSP level, the case will be referred to the Field Territory Manager level
    for resolution. Under no circumstances should the case be returned
    to the transferring Area without prior telephone contact and agreement.     Taxpayers
    and/or representatives should be consulted as necessary during this process
    and should be advised expeditiously where the examination will be completed.

4.1.4.3.19 
(10-24-2006)
Transfers from Technical Services

  1. Technical Services will transfer cases to PSP for assignment to the
    field for field resolution of specific issues.

  2. These may include the following types of cases:

    1. Civil settlement of criminal investigation cases.

    2. Suspense cases.

    3. Suspended IRC §183.

4.1.4.3.20 
(10-24-2006)
Collateral Referrals

  1. Sometimes it is necessary to request information from another IRS office
    or request the examination of another taxpayer in another IRS office in order
    to properly develop the issues being examined. A collateral request is used
    for this purpose. This is not intended to replace the Specialist Referral
    System, where participation of a specialist, such as an International Examiner,
    Engineer or Employee Plans specialist, is being requested.

  2. A collateral request is made when an exchange of information between
    business operating divisions or area offices of the same operating division
    is essential to resolve issues of material tax consequence. A collateral request
    is not limited to a request for information, but also
    includes a request for examination of returns that cross area offices or operating
    divisions.

  3. A collateral request for exchange of information is used only when the
    information cannot be obtained from the taxpayer, the taxpayers representative
    or third parties.

  4. Before making a collateral request, IDRS research must be conducted
    to determine if the taxpayer located within the jurisdiction of the other
    office is currently under examination (status 12 through 18). If the taxpayer
    is under examination, the examiner located in the other jurisdiction will
    be contacted directly to exchange information pertinent to the issues.

  5. Form 6229, Collateral Examination will
    be used to make a request for a collateral examination between Operating Divisions
    or Area offices, or a request for collateral information. All collateral requests
    must receive priority treatment.

  6. Coordination and routing of requests for collateral examination will
    be coordinated through PSP:

    1. Form 6229, Collateral Examination, is
      submitted to the appropriate SB/SE Planning and Special Programs (PSP) office
      (the term PSP encompasses similar positions in other operating divisions when
      referenced in See IRM 4.1.4.3.20.having
      jurisdiction of the out-of-office taxpayer.

    2. All collateral examination requests must receive priority screening by
      the receiving PSP. A decision will be made within 20 work days of receipt,
      whether or not the receiving office will work the collateral request.

    3. If the receiving office rejects the collateral request, a memorandum setting
      forth the basis of the decision will be attached to the
      Form 6229and the declination response forwarded to the initiating
      office.

    4. If the collateral request requires an examination of a return(s), the
      PSP office will secure the relevant returns and establish AIMS controls.

  7. A specific Memorandum of Understanding between SBSE and LMSB is located
    at:
    http://lmsb.irs.gov/hq/srp/MOUSBSELMSB.asp which covers scenarios and
    procedures specific to High Income Taxpayer Strategy (HITS) cases.

  8. A Letter of Understanding between SBSE and LMSB is located at: http://lmsb.irs.gov/hq/srp/downloads/FTCC/MOUDecisionMakingRegFlowThruEntWk.pdf
    which covers Decision Making Regarding Flow Through Entity Workload Across
    Operating Divisions. Special procedures apply for releasing jurisdiction in
    these operating divisions

4.1.4.3.21 
(10-24-2006)
Referrals of Multi-Case Inventory

  1. Form 13649, Multi-Case Inventory Referral,
    will be used to transfer multi-case inventory between Campus Examination,
    Field Examination, Specialty Tax, Wage & Investment or any other Operating
    Division. For example, this form must be used to transfer multiple cases related
    to special projects, return preparer projects, CI Refund Schemes, etc., between
    business units.

  2. The revised Form 13649 allows multi-functional
    transfers of Examination inventory and provides details of the potential workload
    up front to the receiving business unit. The business unit receiving the request
    must make a decision to either accept or reject the referred workload within
    30 days. This ensures timely delivery of the inventory to the appropriate
    business function.

  3. The completed form should be sent electronically to the contact listed
    on the form and coordinated with the respective Exam Return Selection (ERS)
    Analyst from SB/SE Examination Planning & Delivery.

4.1.4.3.22 
(10-24-2006)
Appeals Referrals

  1. A case may be referred to Examination from Appeals (where Appeals jurisdiction
    is not released) where the taxpayer challenges; a) underlying liability as
    to existence or amount or b) spousal defenses. (Refer to Section 3401 of RRA
    98.)

  2. These cases should be given priority and assigned for examination within
    30 days of receipt. These cases must be worked in the Area and cannot be referred
    to any centralized Audit Reconsideration or Innocent Spouse units in the campus.

4.1.4.3.23 
(10-24-2006)
Frivolous Return Program

  1. The receipt and processing of all frivolous documents has been consolidated
    Servicewide at the Ogden Compliance Center (OCC).

  2. The criteria for considering a tax return frivolous is found in IRC 6702and also listed in IRM
    4.10.12.

  3. Documents deemed frivolous should be referred to OCC as listed in IRM 4.10.12.

4.1.4.3.24 
(10-24-2006)
Criminal Investigation Inquiries

  1. Criminal Investigations (CI) may request information on a taxpayer prior
    to starting their initial investigative activity. These inquiries generally
    include an IDRS search to determine whether there is a pending or previous
    examination or investigation relating to a specific taxpayer.

  2. PSP will perform the necessary research and respond to CI regarding
    their inquiry.

4.1.4.3.25 
(10-24-2006)
TEFRA Partnerships

  1. Administrative Adjustment Requests (AAR) may be sent to the Area PSP
    for consideration.

  2. Please refer to IRM 4.31.4for Campus
    criteria for sending AARs to the Area PSP and PSP responsibilities on receipt
    of the AAR.

4.1.4.3.26 
(10-24-2006)
Training Returns

  1. Returns identified as training returns may be selected as a normal part
    of classification and are assigned Project Code 0204. If the returns are not
    used for training, the project code should be removed. All related, subsequent
    year, and/or prior year returns secured in connection with the training return
    will also have Project Code 0204 assigned, regardless of when the related
    examination is started.

  2. MACS may be used to secure training returns with specific issues, based
    on the training needs.

  3. Refer to the Exam Planning and Delivery web site at http://sbse.web.irs.gov/EPD/ERS/training.htm
    for current procedures based on the number and timing of new hires.

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