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The Internal Revenue Code (IRC) contains both civil and criminal provisions to address fraud. Revenue officers may conduct
civil investigations before, during or after criminal investigations of the same taxpayer. If the investigation is conducted
simultaneously with the criminal investigation, the process is referred to as a parallel investigation.

Collection employees should be alert to the presence of a TC 914, Active Criminal Investigation, on related tax modules in
pre-contact analysis. The TC 914 is not an entity code but the presence of the code on any module in the case may indicate
the need to apply parallel investigation procedures.

Parallel proceedings involve simultaneous investigations or litigations of separate civil and criminal aspects of a case involving
a common individual or entity. Some potential civil remedies that could occur in a parallel proceeding are IRC 6672 Trust
Fund Recovery Penalty investigations, injunctions for pyramiding taxpayers, Notice of Federal Tax Lien filings, issuance of
levies, jeopardy levies, service of summons, and pursuit of erroneous refunds.

Civil and criminal parallel investigations are conducted as separate investigations. They are not joint investigations but
do require significant coordination between the operating divisions throughout the civil investigation and litigation processes.
While regularly scheduled coordination meetings are required (see IRM 5.1.5.5), Criminal Investigation must not direct the
revenue officer’s actions in the civil investigation.

Policy Statement 4-26 (P-4-26), Criminal and Civil Aspects in Enforcement (formerly Policy Statement 4-84), provides guidance
on taking civil enforcement action when the taxpayer is under criminal investigation. See IRM 1.2.13.1.11. See also LEM
5.1.5, for additional criteria for withholding collection activity when a taxpayer is under criminal investigation.

IRS policy concerning parallel investigations and the procedures in this IRM are intended to provide guidance in identifying
the best alternative from the civil and criminal sanctions available, prevent additional loss of tax revenue, and foster voluntary
compliance.

Civil enforcement actions with respect to taxable periods of the same and other types of taxes not included in the criminal investigation generally do not imperil successful criminal investigation or subsequent prosecution. Therefore,
civil enforcement action for such taxable periods or other types of tax will proceed concurrently unless there is agreement
between the responsible functions to withhold civil action in whole or in part during the criminal investigation. See P-4-26,
IRM 1.2.13.1.11(4).

Any proposed civil enforcement action must be coordinated to minimize adverse consequences on the criminal investigation. For example, a revenue officer should not take the following
actions without first obtaining the approval of the Special Agent in Charge:

Because civil enforcement actions with respect to the same taxable periods and same types of taxes for those periods included
in the criminal investigation may imperil the criminal investigation or subsequent prosecution, the consequences of civil
enforcement action must be carefully weighed. However, there generally should be no suspension of collection action on assessed
amounts of tax liabilities reported on filed returns. See P-4-26, IRM 1.2.13.1.11(8).

If a conflict exists when a criminal investigation and collection action are ongoing at the same time, the affected operating
divisions must resolve the conflict and determine how and when the civil and criminal actions should proceed.

A six way meeting will be held with the revenue officer, the revenue officer group manager, the special agent, the supervisory
special agent (SSA), SBSE Area Counsel, and Criminal Tax Counsel. The local Fraud Technical Advisor should also be consulted
and attend the meeting, if possible. If a case is open in the U.S. Attorney’s Office or the Department of Justice, representatives
from those offices should also be invited to the meeting.

A decision will be made as to whether to conduct parallel investigations, to proceed solely criminally, or to proceed solely
civilly. In some instances, civil action may be suspended temporarily (for no more than 90 calendar days), for example, to
permit CI to complete an undercover investigation or execute a search warrant. In such cases, a date should be set for a follow
up meeting to revisit the issue of going forward with civil actions. See IRM 5.1.5.3.1, Temporary Suspension of Civil Action. If the case requires suspension of civil action for more than 90 calendar days, the procedures in IRM 5.1.5.3.2, Case Monitoring When Civil Action is Suspended, should be followed.

Any disagreements on how to proceed should be elevated and resolved in accordance with the guidelines in P-4-26. See IRM
1.2.13.1.11. Any disagreements with the U.S. Attorney and/or Department of Justice should be brought to the attention of the
Special Counsel for Civil/Criminal Coordination, Tax Division, Department of Justice.

Once agreement is reached that a parallel investigation will take place, criminal investigators and revenue officers should
coordinate the development of the evidence that will support both the criminal and civil actions while being mindful of the
legal requirements and constraints.

Revenue officers should consult their local Fraud Technical Advisor (FTA). FTAs can provide guidance to revenue officers during
parallel investigations due to their knowledge of both Collection and Criminal Investigation procedures.

Ongoing communication is essential for a successful parallel investigation.

A coordination meeting must take place within 30 calendar days of the decision approving the parallel investigation. The participants
must include the revenue officer, special agent, their respective managers and SBSE Area Counsel and Criminal Tax attorneys.
The local Fraud Technical Advisor (FTA) should also attend the meeting, if possible. If a matter has been referred to the
Department of Justice (DOJ) and/or U.S. Attorney’s Office (USAO), the DOJ/USAO attorneys should be included in coordination
activities.

Civil and criminal investigators and IRS attorneys should regularly coordinate their efforts through case status meetings
held at least quarterly until the collection actions are complete. These coordination meetings will facilitate sharing important
case developments.

The purpose of the case status meeting is to communicate the case developments and facilitate information sharing between
Collection and CI. In grand jury cases, CI will not be able to share information subject to grand jury secrecy rules and IRC
disclosure provisions. With the assistance of the FTA, the revenue officer should be prepared to discuss the collection plan
of action and the impact of these actions on the criminal proceeding. CI will not direct the actions in the collection investigation.

Use of special investigative techniques, such as undercover operations, or instances where there is the active pursuit of
a search warrant should be communicated to Collection when practical. The timing of collection actions may affect special
agent or revenue officer safety during a special investigative technique or the execution of a search warrant. Therefore,
close coordination and communication is necessary when CI utilizes these techniques. Any decisions on how and when to proceed
should be weighed in favor of employee safety concerns.

If concerns are raised about the criminal investigation or the collection investigation, those concerns or objections should
be resolved by consultation among the collection and criminal personnel and their supervisors, Counsel attorneys and their
managers. When the matter has been referred, the DOJ and/or USAO attorneys should also be included in the decision making
process.

The revenue officer will advise the special agent assigned to the parallel investigation of all meetings with the taxpayer(s)
prior to such meeting.

If the special agent has informed the taxpayer under investigation of his or her Fifth Amendment rights, the revenue officer
must explain to the taxpayer or his or her representative at each meeting that the revenue officer is conducting a civil investigation
and the information provided will be shared with Criminal Investigation (CI).

If a taxpayer under investigation inquires about criminal implications or whether the taxpayer is the subject of a criminal
investigation before CI has contacted the taxpayer, the revenue officer must be careful to provide accurate information and
not mislead the taxpayer. The revenue officer should inform the taxpayer that they are conducting a civil investigation, and
that the information obtained can be shared with CI. Under no circumstances should the revenue officer inform the taxpayer
that the case has been referred to CI. This is CIs responsibility. The revenue officer should immediately notify the special
agent of the contact with the taxpayer.

There is no specific prohibition on conducting joint revenue officer and special agent interviews of taxpayers. However, revenue
officers and special agents must clearly identify themselves and their roles at these meetings and prepare a joint Memorandum
of Interview (MOI). The MOI should be prepared by the special agent and signed by both interviewers. The revenue officer should
receive a copy of the MOI, while the special agent retains the original. All interview notes must be provided to the special
agent.

CI may in some cases request that the revenue officer not contact the taxpayer or representative. In such cases, the revenue
officer should refrain from issuing Letter 3164P or any appointment letters to the taxpayer or representative. SBSE Area Counsel
should be involved in any decision to conduct an investigation without contacting the taxpayer or representative.

Revenue officers and special agents should attempt to use different witnesses to prevent the possibility of inconsistent testimony
and potential discovery issues raised during the civil or criminal judicial process.

If the decision is made to use the same witness, the SBSE Counsel Attorney, Criminal Tax Attorney and DOJ or Assistant U.S.
Attorney assigned to the case should be consulted and coordinate any selection of these witnesses.

Sharing information between revenue officers and government attorneys assigned to the case is a key ingredient in developing
civil and criminal cases simultaneously and efficiently.

Unless prohibited under grand jury secrecy Rule 6(e) of the Federal Rules of Criminal Procedure and disclosure provisions
of IRC 6103, Confidentiality and Disclosure of Returns and Return Information, information sharing between civil and criminal
functions is appropriate. Judicial districts and appellate courts have diverse rulings on what constitutes grand jury information;
therefore, the determination about what information can be shared will be made on a case by case basis.

Special agents can develop evidence administratively through summonses, search warrants, witness interviews, and undercover
operations. Evidence developed administratively before using the grand jury process may be shared by CI with Collection. Information
obtained from CI should be included in civil investigation files as the information may be useful in future civil actions
at the conclusion of the criminal case, including probation cases involving civil liability resolution.

In the coordination meeting noted above, Collection should request CI to separate non-grand jury information from grand jury
material for civil investigation purposes. The non-grand jury information should be dated and initialed to document that the
information was obtained prior to the grand jury.

Revenue officers must inform CI that civil files are available. Access to all available information in the civil file must
be provided to CI. Prosecutors have a duty to disclose certain information to criminal defendants; therefore, it is absolutely
necessary for the special agents and Assistant U.S. Attorneys to be made aware of and provided with all the information in
the collection file, including documents, interview notes and any other information that Collection gathers. The sharing of
information should be done so that there are no unnecessary delays.

Collection actions generally will be temporarily suspended if CI is conducting an undercover operation or developing probable
cause to execute a search warrant. Nevertheless, the benefits of an undercover operation or search warrant should be weighed
against the need to prevent additional tax revenue loss.

Information obtained through a search warrant is generally not grand jury information. Search warrant information obtained
during the grand jury process can be made available to revenue officers if no grand jury information was included in the affidavit
for the search warrant. Criminal Investigation should consult with the Assistant U.S. Attorney assigned the case prior to
turning over any information or documents obtained through the grand jury process.

Use of search warrant or undercover evidence should be coordinated with Area Counsel, CI and their respective Counsel, and
the Assistant U.S. Attorney.

IRC 7602(d) does not allow a summons to be issued or enforced concerning any person if a Department of Justice (DOJ) referral
has been made by the IRS for such person. IRC 7602(d)(2) defines a “referral”
as either an IRS recommendation to DOJ for tax related grand jury investigation or criminal prosecution of the taxpayer
or a criminal investigation request from DOJ made to the IRS pursuant to IRC 6103(h)(3)(B). Coordination between SBSE and
CI is critical because pursuing a grand jury investigation or making a prosecution recommendation precludes using summonses
in collection investigations.

IRC 7602(d)(3) states for purposes of what constitutes a referral that each taxable period and each type of tax is treated
separately.

If a taxpayer has been referred to DOJ for criminal prosecution and the revenue officer wants to issue an administrative summons
to the taxpayer, the revenue officer and approving manager should speak with Area Counsel, the special agent, and Criminal
Tax Counsel along with any DOJ attorney or Assistant U.S. Attorney assigned to the case prior to issuing the summons. During
this conference, the parties will determine whether an administrative summons would be permissible under IRC 7602(d)(1) and
whether the issuance of a summons would adversely affect the criminal investigation or prosecution.

Criminal Investigation refers cases to the Department of Justice (DOJ) Tax Division for prosecution. When DOJ has accepted
the referral of the case, it is considered under the jurisdiction of DOJ.

IRC 6103(h)(2) & (3) allows DOJ attorneys from both the civil and criminal sections to contact either civil or criminal investigators
to solicit case information that may help perfect the matter referred to DOJ. Requests should be in writing and coordinated
with CI and Disclosure. Grand jury information can be disclosed only to those parties on the grand jury list. Revenue officers
will generally not possess grand jury information, but should be aware that any such information in their possession cannot
be disclosed except in these very limited circumstances. Contact Area Counsel in the event there is any question about the
information requested.

Advisory is often the default point of contact for these cases. When Advisory receives requests for information from CI or
DOJ on these cases, an employee will determine whether the case is being actively investigated or in an inactive status such
as queue assignment or CNC.

For cases under active collection investigation, the Director, Collection Area Operations is responsible for coordinating
collection activities with CI. In cases under DOJ jurisdiction, active cases will also be coordinated with DOJ through CI.
A transmittal memorandum from the Director, Collection Area Operations will be addressed to CI and will include:

Criminal Investigation will be responsible for:

Advisory will report to CI on the inactive cases noted above, including the following information:

Criminal Investigation (CI) will notify the Advisory Territory Manager of each new case where a criminal investigation has
been opened by issuing a Notification Memorandum to the Advisory Territory Manager (formerly known as the Technical Services
(Advisory) Manager).

Advisory will forward the Notification Memorandum to the appropriate Field Collection Territory Manager no later than 10 business
days of receipt for cases under active collection investigation (status 26) or Compliance Initiative Program (CIP) cases,
including any related entities. Receipt and transmittal of the Notification Memorandum will be documented in ICS history.

For cases that are in notice stream or queue status, no further action is required.

For NF 181 Other Investigations (“OIs”
) currently open and new TC 914 cases, take the following actions:

When the decision is made to suspend all civil action due to the criminal investigation, cases in status 26 will be transferred
to Centralized Case Processing (CCP) for monitoring. If a decision is made to take civil action, follow the parallel investigation
procedures set forth in IRM 5.1.5.4, above.

The following cases should not be transferred to CCP for monitoring:

CCP will monitor balance due and delinquent return cases. A TC 914 should appear on all modules showing a delinquency before the case is transferred.

Following the conviction of a defendant for a criminal tax violation or tax-related offense, the court may order the defendant
to comply with certain tax-related conditions of probation or supervised release, and/or order the payment of restitution
to the IRS. Public confidence in the tax system requires that the IRS exercise due diligence to ensure taxpayer compliance
with conditions of probation relating to the IRS.

If a defendant is not sentenced on a criminal tax violation, these procedures relating to the monitoring of probation cases apply only if there is an IRS-related condition of probation.

To ensure that any noncompliance with IRS-related conditions of probation is detected and appropriate parties are timely notified,
coordination between Criminal Investigation, Examination, and Collection is essential. When the defendant is required to pay
restitution to the IRS, coordination with the Atlanta Submission Processing Center (SPC) may also be necessary to determine
whether such payments are being received. See IRM 5.1.5.24.2, Restitution Payment Processing, below.

The conditions of probation are set forth in a document signed by the judge called a Judgment and Commitment Order (J&C).
CI is responsible for providing Advisory with the conditions of probation.

To ensure effective coordination in monitoring probation cases and the timely exchange of information, single points of contact
will be designated in Advisory to serve as liaisons for probation cases.

CI will provide Advisory with notification of a new probation case by providing the conditions of probation directly to the
Advisory probation liaison. CI will use Form 13308, Criminal Investigation Closing Report (Tax and Tax related only), to transmit
the criminal case judgment and other necessary information.

Upon receipt of a new probation case from CI, the Advisory probation liaison will take the following actions no later than
10 business days of receipt of the Form 13308:

The civil actions to be taken on a probation case and the timing of those actions will depend upon the conditions of probation.
The following table provides some of the more common scenarios and corresponding civil actions that should be taken:

The Advisory probation liaison is responsible for

The Advisory probation liaison will conduct a yearly compliance check (e.g. determine the need for an OI to the field to secure
a delinquent return or address a new liability that has been assessed) on or before the date of the defendants projected
release date or the tentative date on which the defendants term of probation ends.

The Advisory probation liaison will explain the required action requested in any Other Investigation (OI) issued to a revenue
officer and provide any relevant information and documents.

Generally, OIs will be issued to a revenue officer in the following circumstances:

Investigations initiated to the field will be worked promptly and any required enforcement actions concluded expeditiously.
These investigations are nondiscretionary for revenue officer field groups.

Revenue officer closing actions will be reported to the Advisory probation liaison by memorandum attached to the closed case
file.

After completing all actions on the OI, the revenue officer will return the case file to the Advisory probation liaison using
Form 3210, Document Transmittal.

In highly technical and specialized cases, assignment to an Abusive Tax Avoidance Transaction (ATAT) collection group will
be warranted.

The Advisory probation liaison will review all data available including, but not limited to, the CI Closing Report, Judgment
and Commitment Order, and ICS case history and sub code. An OI will be issued to the appropriate Collection ATAT group no
later than ten business days after determining if one or more of the following criteria are met and actions are needed by
the field:

If there is uncertainty as to whether the OI should be issued to an ATAT group, the Advisory probation liaison should contact
the Collection ATAT Coordinator for guidance. If the Collection ATAT Coordinator determines that an OI has been inappropriately
assigned to an ATAT Collection group, the OI can be reassigned to a general program Collection group based on zip code assignment.

A current list of Collection ATAT Coordinators and the geographic area covered is maintained at http://abusiveshelter.web.irs.gov/AbusivePromotions/CollectionGroups.htm.

A variety of conditions may be imposed by the court as conditions of probation. Some of the more common IRS-related conditions
of probation are:

Lack of cooperation with the IRS includes failing to file returns or filing frivolous returns, failing to schedule or appear
at scheduled appointments, failing to provide complete records in a timely manner, putting assets beyond the reach of the
IRS, and any actions causing unwarranted delays in resolving tax compliance issues.

Noncompliance with the conditions of probation must be immediately reported to the Advisory probation liaison. Revenue officers
should not report noncompliance directly to the probation officer.

Depending upon whether the defendant signed a Form 8821, Tax Information Authorization, or provided a separate written consent
to the disclosure of his return information, the Advisory probation liaison will either contact the probation officer directly
or provide the information regarding noncompliance to CI. If the defendant did not sign a Form 8821, or similar consent, CI
will contact the probation officer regarding the noncompliance.

IRC 6103(h)(4) allows disclosure of returns and return information to a U.S. Probation Officer for the purposes of informing
the court of any noncompliance during a defendants probationary period under the following circumstances:

Unless a Form 8821, Tax Information Authorization, or a similar written consent to disclosure, is obtained from the defendant,
Advisory and other Collection employees are not authorized to disclose the information directly to U.S. Probation Officers.
If contacted directly by a U.S. Probation Officer for information, employees should advise that the information will be provided
to CI for the required coordination with the Disclosure Officer and the Assistant United States Attorney as appropriate.

There are several actions that may be taken by the IRS when faced with an uncooperative and noncompliant defendant, such as:

While it is the responsibility of the Special Agent in Charge (SAC) to take whatever steps are necessary to initiate appropriate
legal action in any instance where the taxpayer has failed to comply with the conditions of probation (IRM 9.3.1.8.1(4)),
CI and SB/SE share joint responsibility in ensuring compliance with court orders (IRM 9.5.14.8(1)). In order to ensure compliance
with IRS-related conditions of probation, and to take appropriate actions to address noncompliance, the probation officer
must be timely informed of incidents of noncompliance throughout the probation period.

Once noncompliance with IRS-related conditions of probation is identified, the Advisory probation liaison will notify CI to
determine the best course of action for communicating with the probation officer. If a Form 8821 or similar consent to disclosure
has been provided, the Advisory probation liaison may report incidents of noncompliance directly to the probation officer.
However, CI must be kept apprised of any such communications along with the status of the taxpayers compliance.

If the defendant has not complied with the conditions of probation relating to the IRS, a determination must be made whether
to seek revocation of probation.

If revocation of probation is sought, CI should contact the probation officer and, if appropriate, the prosecutor to explain
that revocation of probation appears to be necessary in the case.

Once a decision to seek revocation has been made, the IRS must assist the probation officer and the prosecutor in obtaining
or providing any necessary testimony and documentation.

When revenue officer investigation determines that the defendant moved to another state, the Advisory probation liaison will
be notified of the new address and other relevant information.

In all cases, the name, telephone number and address of the new probation officer will be obtained.

Because the CI field office where the case is assigned will not change, the Advisory probation liaison assigned to the case
also will not change even if the defendant moves to another territory.

The Advisory probation liaison is authorized to issue OIs to revenue officers in other territories in probation cases.

In a criminal tax case, the offense generally results in the loss of government property, i.e., the money to which the government
was entitled under the tax laws but which was not paid by the defendant.

Through a restitution order, a court can require a defendant in a criminal tax case to pay money to the IRS in order to redress
the losses he or she inflicted on the Federal Treasury.

A court can impose restitution as an independent element of a sentence or as a condition of probation or supervised release.

Restitution is generally limited to losses caused by the offense(s) of conviction. The major exception to this general rule
is in cases involving plea agreements. The parties to a plea agreement in any criminal tax case may agree to restitution in
an amount greater than the loss attributable to the offense(s).

The district court must determine the amount of restitution and must state that the defendant is required to pay a sum certain.

Probation cases should be closed no later than 10 business days after:

The Advisory probation liaison will periodically check (at least annually) whether the conditions of probation have been terminated
early by the court. See IRM 5.1.5.15.2(3). The case should be closed no later than 10 business days after learning that the
conditions of probation were terminated by the court.

Enter history on ICS that describes the closing actions taken.

Close any open NF OI – 182 on ICS.