1.4.40 SB/SE Compliance Field Examination Group Manager (Cont. 1)

1.4.40.4
Workload Planning

1.4.40.4.6
Office Examination

1.4.40.4.6.10  (08-01-2003)
Monitoring In-Process Inventories

  1. For a successful program, it is critical that you monitor in process inventory. This allows you to identify overage cases, provide direction and identify problem areas.
  2. A manager should conduct reviews of the cases in an examiner’s overnight file. This review should consist of cases with high time and/or overage inventory.
    1. Note whether priority cases are being given priority
    2. Discover problems and provide direction to auditors
    3. Review work habits and give appropriate feedback
    4. Establish agreed upon action plans and dates to close cases
  3. A manager should conduct periodic reviews of Tax Auditor Daily Report (TADR).
    1. Secure tax auditor’s TADR and all cases worked on a specific day. Determine if the time charged is accurate and justified by the workpapers and/or other actions taken.
    2. Determine if the cases are being worked on the appropriate purge date.
    3. If it appears there is a lack of conclusive action, determine why decisions are not being made.
    4. Identify areas for improvement and provide the necessary guidance.

1.4.40.4.6.11  (08-01-2003)
Interview Correspondence Mix

  1. The interview/correspondence mix refers to the percentage of office examination cases in which a taxpayer interview was conducted versus the number of examination cases that were completed by correspondence, without holding an interview. Interview cases generally are more complex than correspondence cases.
  2. As a group manager, you should monitor the group interview/correspondence mix.
  3. Historically in a field office environment, correspondence examinations were normally those requested by the taxpayer. Over the years, correspondence examinations have increased significantly to include Nonfiler Strategies, Preparer Projects, and other local source work.
  4. Every attempt should be made to limit correspondence examinations at the territory level. Tax Auditors/Tax Compliance Officers and Revenue Agents should be assigned cases requiring face-to-face interviews, which are commensurate with their grade level.
  5. If there is a need to conduct correspondence examinations in field offices, they should be conducted by fully trained TCO/TAs or audit accounting aides. The territories will ensure:
    • The TCO/TAs receive the appropriate training (minimum Revenue Agent/Tax Compliance Officer Unit I Technical Training and Revenue Agent/Tax Compliance Officer Unit 2)
    • They work only those cases suitable for their grade and experience level
    • They issue the appropriate initial contact correspondence
    • They put Project Code 129 and Aging Reason Code 99 on every case they work
  6. Planning and Special Programs (PSP) should ensure the appropriate workload is available to maximize face-to-face interviews and minimize correspondence interviews.
  7. Correspondence interviews should be conducted in accordance with regular Examination procedures. The depth, scope and quality of the examination should not be compromised because the examination is being conducted by correspondence rather than interview. The manager should review cases in accordance with regular case review procedures.

1.4.40.4.6.12  (08-01-2003)
No-Show/No Response Cases

  1. Taxpayers may not respond to the initial contact letter mailed to them or may not show up for the initial appointment. When this occurs the appointment clerk will conduct research in accordance with IRM 4.10.2.8.7, Undeliverable Initial Contact Letters. If a new address is determined, the initial contact letter will be remailed to the taxpayer. If, after the appropriate research is completed, no new address is found, the case will continue through the office audit process.
  2. No Response — When a taxpayer fails to respond to the initial contact letter, action must be taken in accordance with the type of return involved. When income/gross receipts is not an issue, a report is generally prepared and mailed. When income/gross receipts is an issue, determine sources available before preparing the report.
  3. No Show — When a taxpayer schedules an appointment but fails to keep the appointment, a report is generally prepared and mailed. If the taxpayer does not respond to the report and follow-up, you must attempt to contact the taxpayer to encourage him/her to re-schedule and keep the appointment or to solicit an agreement. After you have exhausted all attempts, close the case unagreed. See IRM 1.4.40.4.14.5.

1.4.40.4.6.13  (08-01-2003)
Repetitive Audit Procedures

  1. If a taxpayer alleges that an examination in either of the two preceding years resulted in no change or a small change, then certain procedures may apply. Business returns generally do not qualify for this treatment.
  2. You may research IDRS using command code IMFOLZ which will display the last two audit results. This command code will show the no change issue codes, disposal codes and any deficiency amount. If applicable, the case may be closed no change or as a survey after assignment.

1.4.40.4.7  (08-01-2003)
Assignment of Returns

  1. Many factors influence the actions you take on incoming work. Some examples include:
    • Volume, complexity, and diversity of work flowing into your group
    • Structure, experience, and training level of your group
    • Geographic location of your examiners and your unstarted cases
    • Your Area’s priorities
    • Examination Specialization (ES)
  2. Given these factors, you must devise the most suitable approach for evaluating incoming workload and:
    • Assign to an examiner
    • Hold at the group level
    • Transfer to another group
    • Survey
  3. In addition, you must maintain the flexibility to assign priority work without adversely impacting the ability of each employee to stay current with his in-process work.

1.4.40.4.7.1  (08-01-2003)
Grade Level of Work

  1. Every employee must perform work consistent with the grade of his position.
  2. Exhibit 1.4.40–7 provides guidelines for the grading of all individual returns, all types of corporations and partnership returns. The IRM provides case assignment guides for other types of work such as the Special Enforcement Program, estate and gift tax, and excise tax cases.
  3. Case grading occurs at two different points at the group level.
    1. An initial estimate is made prior to the assignment of a return to determine the appropriate grade of examiner to whom the case should be assigned.
    2. A final grade is determined at case closing and entered on Form 5344 based on factors developed in the case.
  4. Employees may perform some work which is above or below their grade level.
  5. An employee should not routinely perform less difficult work without proper justification. However, such work is appropriate when another employee is unavailable to perform a simple, but essential task or when an employee needs fill-in work to effectively use time.
  6. You may provide an employee the opportunity to perform some higher graded work, when appropriate, to enhance career development.

    Caution:

    You must ensure, prior to the assignment of higher-graded work, that such work will not require more than 25 percent of the employee’s direct examination time. Review Document 11678, National Agreement, IRS & NTEU, Article 16, Details. Retroactive pay is required when it is determined that the time spent on higher-graded work exceeds 25 percent in any four-month period. Effective management requires that a manager either assign the work at the appropriate grade level or secure permission for a temporary promotion. This contract also provides for opportunities for developmental work in LMSB without a temporary promotion.

  7. Once a case is placed in process, it is quite difficult for the manager to control the time applied to the case. It is also quite difficult to control DET versus total time. Thus, in the event that higher-graded work is assigned for developmental purposes, it is critical that there is adequate managerial involvement to ensure the 25 percent DET is not inadvertently exceeded.

1.4.40.4.7.2  (08-01-2003)
Priority Work

  1. To provide guidance for the effective utilization of resources, Headquarters issues the Examination Program Letter each fiscal year to provide guidance on program emphasis and focus the functions. Each area establishes its own goals and priorities tailored to meet those outlined by Headquarters. Your Territory Manager will communicate these to you.
    1. An example is the emphasis on cycle time and overage inventories. Reducing the burden on taxpayers by minimizing the span of our examinations is a priority of the Service. Overage cases are considered priority work.
  2. When assigning returns to your examiners, mandatory start and priority cases must receive first consideration. While transfer of cases between examiners is not desirable, it should be accomplished when necessary to achieve priority needs.
  3. It is essential that you understand your priorities, monitor them closely, and ensure their attainment. Some priority returns, such as claims and Taxpayer Advocate cases, have mandated action dates.

1.4.40.4.7.3  (08-01-2003)
Geographic Considerations

  1. Cases are assigned to your group based upon predesignated geographic boundaries, i.e., zip codes.
  2. When cases are assigned, consideration should be given to the distance to be traveled by the examiner in order to effectively manage travel expenses in accordance with the Travel Handbook.

1.4.40.4.7.4  (08-01-2003)
Surveying Cases

  1. In keeping within the guidelines provided in the IRM (Starting Prior Year Cases), as well as general workload considerations, it will be necessary to survey cases. In deciding which returns to survey, you should exercise your best judgement in each particular circumstance.
  2. Cases should be surveyed when determined by the manager or examiner that examination of the return is not cost effective.
  3. The survey of cases may be performed before or after assignment.
    1. Before Assignment—A stamp, approximately 3′ x 1′ in size should be ordered and will be imprinted on each return surveyed. The format of the stamp should be as follows:
      CLOSED—SURVEY BEFORE ASSIGNMENT
      By ________________ Date___________
    2. After Assignment—A stamp, approximately 3″ × 1″ in size should be ordered and imprinted on each return surveyed by the examiner. See IRM 4.10.2.5 for survey after assignment procedures by examiners.

    A return selected for examination is considered as surveyed before assignment if it is disposed of without contact with taxpayers or their representatives and before assignment to an examiner. Group managers will survey returns before assignment if no examination is warranted, or if the number of returns assigned to the group exceeds the number which can be examined and processed within the examination cycles.

  4. It is critical that you closely evaluate work needs when ordering returns, and that surveys be kept to a minimum. The costs of ordering and then surveying cases is high.

1.4.40.4.7.5  (08-01-2003)
Delinquent Returns and Nonfiler Cases

  1. Nonfiler cases may be assigned to your group as a result of:
    • Collection referrals
    • Package audit procedures in open examinations
    • Information reports
    • Various projects
  2. These cases require special treatment and consideration.
  3. Upon submitting Non-Master File (NMF) or Master File (MF) controls (Forms 5354 and 5345, respectively), a transcript must be secured for each year to verify that there is no imminent statute date. New transcripts should be secured at six-month intervals to ensure that returns have not been filed.

1.4.40.4.8  (08-01-2003)
Managing Open Inventories

  1. Management of inventory is an important component of the critical elements and you, as a manager, play a key role. It is your job to:
    1. Communicate expectations
    2. Monitor progress
    3. Guide employee performance
    4. Improve the effectiveness of audit practices
    5. Meet procedural requirements
  2. You should:
    1. Maintain an awareness of the status of cases under examination
    2. Regularly interact with your examiners
    3. Make prompt decisions regarding the scope of examinations
    4. Facilitate the timely completion of examinations
    5. Make timely decisions to expand the case to include other years or related taxpayers

1.4.40.4.9  (08-01-2003)
Inventory Management Goals

  1. The Service has established a policy that completion and disposition of individual return examinations should occur no later than 26 months after the return was filed or due, whichever is later. The cycle for corporate returns is 27 months. See IRM 4.10.2.2.2, Examination Cycles.
  2. Examinations should be completed as soon as possible. Our goal is to close field examinations in 270 days or less; six months for office examinations.

1.4.40.4.10  (08-01-2003)
Collectibility

  1. You are a very important part of the Service’s mission not only to determine a taxpayer’s correct tax but also to expedite the collection process. Collecting deficiencies as early as possible saves money by reducing collection costs.
  2. The starting point of collectibility is conducting a quality audit. EQMS Auditing Standard 1, Audit Planning, discusses if collectibility was considered. Examiners’ pre-contact responsibility for collectibility potential is described in IRM 4.20.2. If collectibility is an issue in an assigned case, the group manager will make the final determination whether to survey the return or to limit the scope/depth of an examination. See IRM 4.10.2.4.3, Examination of Returns, Pre-Contact Responsibilities, Collectibility.

1.4.40.4.11  (08-01-2003)
Prior Year Inventory Objectives

  1. Certain levels of returns beyond the examination cycle (above) will not be exceeded at June 30 of each year. These levels are 20 percent for field examinations and 12 percent for office examinations.
  2. Certain types of returns (fraud, joint committee cases, and others) are excluded from the computation of the prior year inventory level. Excluded returns are determined by project codes, source and status codes and aging reason codes. See IRM 4.10.2.

1.4.40.4.12  (08-01-2003)
Continuity of Examinations

  1. A fundamental philosophy of quality responsiveness to our external customers is that they are entitled to the prompt and proper resolution of their examinations. This philosophy also helps minimize the level of overage work in our inventory.
  2. While giving consideration to potential morale concerns, as well as the relationships between your examiners, you should utilize transfers of cases between examiners to achieve continuity of case work.
  3. You should provide guidance in limiting the scope of an examination where appropriate. The case file should clearly document such determinations.

1.4.40.4.13  (08-01-2003)
Related Pickup Work

  1. You should strongly encourage and monitor multi-year and related pickup work. This is a specific area in which you have a key role in inventory management and one in which the use of time can be directly impacted. In addition, related pickups ensure appropriate impact when taxpayers are found to have significant noncompliance issues.
  2. When approving related pickups, you should direct the examiner to determine if time expended is worthy of the potential return on that investment.
  3. An employee can commit the Service to an examination of an unassigned return if they cause a taxpayer or a practitioner to conclude that the return is being examined. Normally, a taxpayer or their representative will assume that an examiner has extended the scope of an examination if they question an item on the retained copy of a return or investigate matters not related to the initial examination. Be sure your employees understand this principle.
  4. You must establish a firm understanding that encourages your examiners to pick up returns without your prior approval. Unusual conditions, such as a sudden loss in staffing, may require close control of pickups. At a minimum, examiners should request approval of prior year pickups.
  5. Requisitions for returns and/or controls should be approved by you after determining the examiner’s reason for requesting the return.

    Note:

    It is not necessary for Revenue Agents and TCO/TAs to receive your approval to conduct routine IDRS research.

  6. You should ensure that all examiners obtain approval before initiating an examination of a return previously requested for reference and information purposes (Source Code 45). A photocopy of Form 5345 will be attached to the tax return as a permanent record.

1.4.40.4.14  (08-01-2003)
Closing Returns — General

  1. When a case is closed by an examiner, your objective is to ensure that it is procedurally and technically correct. Your goal is to forward a processable case as quickly as practical. EQMS provides specific case processing guidelines.

1.4.40.4.14.1  (08-01-2003)
Casefile Review

  1. The primary task of case review rests with the group manager. You conduct both technical and administrative reviews of closed cases. The best practice is to conduct case reviews while cases are in process. You have a primary responsibility for quality in the group.
  2. The scope of your review should vary based on your past experience with the specific examiner’s work and with their level of experience.
  3. Reviews may be either informal or formal. Informal reviews do not require written documentation. Periodic reviews can be documented on copies of the monthly 4502 and a brief summary of observations provided to the examiner.
  4. If a significant deficiency is noted, the case should be returned for correction. In-process review guidance should be provided to the TCO/TA. If the error is not significant, you should note, date, and initial your observation on the activity record and the case should be closed. Consideration should be given whether or not to share this with the examiner as formal documentation.
  5. See IRM 1.4.40.5.6for ERCS reports that may be useful in conducting a case review.

1.4.40.4.14.2  (08-01-2003)
Advance Payments

  1. Stress to examiners the need to solicit payments in both fully and partially agreed examinations.
  2. An examiner will not solicit payment from a taxpayer until the examination is complete and an agreement is secured. If the taxpayer offers payment prior to closing as a means of stopping the accrual of interest, such payment will be accepted and processed as a cash bond.
  3. You must ensure that employees transmit remittances to the Centralized Remittance Mailer no later than the workday after receipt. Larger payments demand special attention, including hand delivery. See IRM 4.23.11.5.
  4. Mail must be opened daily. It is critical that mail containing a check is not left unopened while an employee is on leave. The secretary should be trained to understand responsibilities in this area. Additionally, if you are away, you must ensure that your acting manager takes responsibility for advance payments.

1.4.40.4.14.3  (08-01-2003)
Agreed/Unpaid Cases

  1. EQMS Standard #7, Timeliness, states all cases will be closed from the group and forwarded to Case Processing within 10 days of the receipt of a signed waiver or a no-change communicated to the taxpayer.
  2. Large dollar cases are defined as cases with unpaid deficiencies of $10,000 and over, with special priority for those cases of $50,000 or more. See IRM 4.4.18.
  3. Procedures require that you process a large ($10,000) deficiency or overassessment case from the group within three days of the receipt of the waiver. The cases will be closed to the appropriate campus within 22 days of the receipt of the signed waiver.

1.4.40.4.14.4  (08-01-2003)
Partially Agreed Cases

  1. Encourage your examiners to request partial agreements and solicit advance payment of the resulting deficiency.
  2. After a partial agreement is processed, the complete case is closed as unagreed.

1.4.40.4.14.5  (08-01-2003)
Unagreed Case Procedures

  1. Your examiners should inform you when they believe a case will have unagreed issues.
  2. Prior to the preparation of an unagreed report, you should either review the case or discuss it with the examiner to ensure that the taxpayer has been offered an informal conference. The reason for the unagreed case should be clearly established. This is considered in EQMS Standard #8-Customer Relations/Professionalism.
  3. It is in the Service’s best interest to resolve tax controversies at the lowest possible level. Managers and examiners are empowered to consider all the facts and taxpayer documentation provided. In addition, materiality and collectibility should be considered in resolving cases.
  4. The following procedures will be followed:
    1. Managers are required to make contact with taxpayers and/or representatives on all unagreed cases. This includes cases worked by Revenue Agents, Tax Auditors and Tax Compliance Officers. These contacts (whether in person or via telephone) should focus on attempting to reach taxpayer agreement. These efforts should be documented on Form 9984, Examining Officer’s Activity Record, and summarized on Form 4665, Report Transmittal, if forwarded to Appeals.
    2. If a taxpayer or representative has refused to provide significant information to the Examination employee, the group manager will discuss the case with the taxpayer or representative to facilitate receipt of the needed information.
    3. The group manager should verify an address confirmation was done before a No Show/No Response Case is closed unagreed. The examiner or appointment clerk will research the address according to the procedures outlined in IRM 4.10.2.8.7, Undeliverable Initial Contact Letters, when a taxpayer does not respond..
    4. The group manager should return an Appeals case if underdeveloped. If the case is developed, the group manager will offer the taxpayer or representative a pre-appeals conference before closing.
    5. Second line managers will analyze appropriate EQMS reports to determine if the level of managerial involvement in unagreed cases is appropriate.
  5. If the issues cannot be resolved or a conference is not desired:
    1. For Field Examination, the case should be returned to the examiner for the preparation of an unagreed report. The report should be reviewed for accuracy and mailed with the 30-Day Letter.
    2. For Office Examination, the case should be forwarded to Appeals or the 90-Day Letter issued, whichever is appropriate.

1.4.40.4.14.6  (08-01-2003)
Short Statute Cases — 180 Days or Less

  1. Managers should avoid having short statute cases.
  2. Returns with 180 days or less remaining on the statute of limitations must be placed in a red folder. This folder will flag the case until it is closed out of the Area. Using a red folder when an Form 895 is issued at 210 days is an appropriate alternative.
  3. In order to transfer cases to Appeals for resolution of unagreed issues there must be sufficient time remaining on the statute of limitations. The period remaining on the statute is 180 days when received in Appeals (IRM 25.6.22.2.1(4)). There should be 270 days remaining on the statute when the 30-day letter is issued to allow for the 30-day time period, review of the protest and processing by CPS. No extension of the 30-day time period should be allowed without a statute extension.
  4. Area procedures generally require that unagreed cases being forwarded to Technical Services have at least six months remaining on the statute.

1.4.40.5  (08-01-2003)
Monitoring Reports Overview

  1. The data for management information reports and tables is derived from the AIMS database. Each campus produces tables for each area, territory, group and campus examination functions. Copies of the compliance campus data are transmitted monthly to the Detroit Computing Center for additional report generation.
  2. ERCS reports are generated at the group level and are used to monitor case statutes, progress, and status. The group, territory and area can generate tables from ERCS. ERCS has more flexibility and specific detail than AIMS. Refer to IRM 4.7.6, ERCS Reports for additional discussion or the ERCS Technical Reference Manual at http://orion.grb.ser.irs.gov/PROJECTS/EXAM/DOCS/exam_cvr.html

1.4.40.5.1  (08-01-2003)
AIMS Tables 36 and 37

  1. Table 36 is generated at the campus based on closing document data to calculate area, territory, and group statistics. This table is generated on a weekly and monthly basis. Refer to Document 6693, Audit Information Management System. Certain information may be deleted from these tables at the area level and further restricted by the Territory Manager.
  2. You will generally receive the monthly table for your group only. This table shows the group’s accomplishments for the current fiscal year excluding dollar accomplishments. These accomplishments are divided between training and non-training returns. Data is categorized by type of returns such as individual, corporate, partnership, and claims. Table 36 contains aging information for the group’s inventory. It shows cases in Status 10 through Status 90. In addition, this table shows:
    • Current month closures
    • Hours per return
    • No change rate
    • Total claims closed
    • Returns started in current month
    • Mix of returns
  3. This information is grouped into the following categories:
    • Activity Code
    • File Year
    • DIF/DIF Related
    • Local Source
    • Shelters
    • NRP
    • Campus Contacts/IRP
    • Fraud/Enforcement
  4. When analyzing Table 36, it is important to look behind the numbers. The statistics provided by this table provide trends. These tables should be reviewed on a monthly basis and any changes from month-to-month noted. To understand these changes:
    1. Consider the hours per return. High hours may reflect that the group is pursuing issues which do not warrant the time being expended. Ineffective planning and scheduling practices or poor examination techniques contribute to higher time on cases.
    2. A high no-change rate may indicate the group is working the wrong cases. Closer review of work in the group is needed to determine if issues are not being developed.
    3. Table 36 also provides the number of prior year returns assigned to the group. By monitoring the “returns beyond cycle” columns, the manager can adjust the inventory mix to meet the examination cycle and prior year guidelines.
    4. Fraud, joint committee, and other cases are excluded and are categorized on Table 36 as “returns with exclusions.”
    5. The differentiation “with or without exclusions” is determined based on source code, status code and project code information. This highlights one important aspect of proper code utilization.
    6. Review the “no time applied” and “program monitoring” columns to monitor priority returns in unopened status.
    7. “Aging time applied” categorizes your inventory by months in process (status 12). Cases “over 12″ months should be limited, and they require your immediate attention. An excessive number of cases in either the “6–9″ month or “10–12″ month category is an indicator of a potential future problem. A best practice is to conduct in-process case reviews when cases are 4–6 months of age. Emphasize completion of these cases in order to avert an excessive overage situation.
    8. When claims are identified in the “Claims on Hand” column, consult Table 8.1 to identify claims which require prompt attention.
    9. There are additional uses for Table 36. Consult your Territory Manager on a regular basis to determine monitoring priorities.
  5. Table 37 is generated at the Detroit Computing Center on a monthly basis from AIMS and SETTS data. This table is produced for National, area and territory offices. It is distributed only to the higher levels of management because it contains dollar accomplishments. This table is used to monitor accomplishments specified in the Annual Business Plan. Refer to Document 6693, Audit Information Management System.
  6. Table 36 provides management with data from AIMS which is used to monitor examinations, inventory, surveyed returns and accepted returns from classification and is produced at the group and territory level. Table 37 provides management with analytical information for use in managing the Examination programs at the area level. The table provides AIMS data applicable to completed examinations (agreed or unagreed), plus inventory and survey claims and from SETTS applied staff years related to direct examination and non-direct examination activities. Table 37 also has new monitoring tools (for use by the Area Director and PSP) to identify:
    1. major deviations (increases and decreases) for returns and dollars that are included in the cumulative accomplishments statistics for the fiscal year
    2. the count of adjustments/modifications to accomplishments statistics
    3. the number of returns and dollars for current fiscal year accomplishments and prior fiscal year accomplishments that are transferred back to Examination’s inventory in the current fiscal year
    4. the total number of returns and dollars for accomplishments that have been transferred back to Examination’s inventory and reside in the current inventory.

1.4.40.5.2  (08-01-2003)
AIMS Table 4.1

  1. Table 4.1 is the most urgent of the AIMS tables. It must be worked within five days of receipt. It must be dated and initialed by you and the group secretary upon completion. Table 4.1 is a monthly report which lists:
    • Returns in status codes 06, 08, 10, 12, 13, 17, 18, and 41
    • Statutes that will expire in 180 days or less, or have expired
    • Returns charged to the examination group on AIMS
  2. The Partnership Control System (PCS) also generates a similar statute control report (PCS Report 4–1).
  3. The ultimate responsibility for statute protection rests with the group manager. Accordingly, the Table 4.1 should be reviewed carefully to ensure that all prior year returns are properly accounted for on AIMS. The AIMS Handbook provides the necessary steps required to work this table. Also see IRM 25.6.23.6.9.

1.4.40.5.3  (08-01-2003)
Other AIMS Tables

  1. A description of other AIMS Tables may be found in IRM 4.4.27, Reports.

1.4.40.5.4  (08-01-2003)
EQMS Reports

  1. Examination Quality Measurement System (EQMS) — The purpose of Examination Quality Measurement System is to identify areas of nonconformance with the auditing standards. Technical Services (TS) maintains a database of data collected from the post review of a statistically valid sample of closed examination cases.
  2. TS is responsible for analysis of the data and generation of the reports. The reports give you an analysis of cumulative percentage scores for the past month, the past quarter and the past twelve months. The data can be collected for the area or territory. The percentage scores, by standard, for the past twelve months indicate the progress being made, or they may identify areas or trends that need attention in your group. The goal of sample review is to obtain the EQMS data, to provide analysis of the data, and to use the analysis to resolve systemic problems. EQMS trend analysis and corrective measures needed will generally be covered at territory meetings. You should contact the EQMS coordinator in Technical Services to assist in matters involving analyses, interpretation and group meeting presentations.
  3. The EQMS reports are additional tools to assist you in the development of the examiners assigned to your group and the accomplishment of quality examinations. Involve the examiners in your group in solving identified auditing standard problems. This is a good vehicle to share expertise from those more experienced examiners and identify methods of correcting areas needing improvement. The information they contain, however, is not statistically valid below the Area level but can be used effectively in group employee discussions.
  4. The EQMS website has additional information and web based reports available on line at http://cqms.ncal.wr.irs.gov/EQMSWelcome/eqms.htm.

1.4.40.5.5  (08-01-2003)
PCS Reports

  1. Partnership Control System Reports — PCS has a variety of reports available for use by campus personnel, area coordinators, and field groups. Refer to IRM 4.29.4, PCS for a list of the reports.
  2. Report 4–4, TEFRA One-Year Assessment Statute Date List — Lists all records on the PCS with a TEFRA one-year assessment date on the investor record. Key case information for linkage records are reflected on the report.

    Note:

    It would be rare for a SB/SE group to have a TEFRA investor return in the group. Generally, investors worked in the group for non-TEFRA issues are routed to the Campus CTF after a partial assessment. The Revenue Agent should coordinate closure with the TS TEFRA coordinator if the Revenue Agent issues a RAR for both the non-TEFRA and TEFRA issues so PCS controls can be removed before closure at the terminal.

1.4.40.5.6  (08-01-2003)
ERCS Reports

  1. Statute Reports — ERCS simplifies group statute control, but is only a supplement to and not a substitute for the AIMS Table 4.1. To maintain the accuracy of the ERCS statute dates, it is important to work one of the following ERCS reports simultaneously with the AIMS Table 4.1. See the AIMS Handbook.
    1. 895 Report — Lists all open files for which the normal statute date has already expired or will expire within 210 days and all returns with alpha codes. It includes the taxpayer’s name, TIN, MFT, tax period, statute date, date the Form 895 was issued, and the date the Form 895 was returned.
    2. Pending Statute Report — Available for monitoring statutes that will expire within a specified number of days. This report does not include expired statutes or returns updated to an alpha code. It should not be used in lieu of the two reports listed above, but can be used to monitor imminent statutes. It includes statute date, date Form 895 was issued, date Form 895 was returned, taxpayer’s name, TIN, MFT, tax period, form number, status code, and status code date.
  2. Closed Case Report — Generate this quarterly and retain for three years. This procedure was adopted to replace closed case control card requirements.
  3. Inventory Validation Listing (IVL) Overage Inventory Report — Provides a listing by examiner of the entire inventory of a group with an option to list only those examinations exceeding a specific number of days in process. The list will be generated in related case order, alphabetical, or days in process order.
    1. A report of the entire inventory, in related case order, should be printed for review by the manager and given to the examiner after completion of all time input for the previous time reporting cycle.
    2. The report can be printed in order by age of case beginning with the examination which has been in process the longest period of time. The report may be further modified by the option to list only those examinations exceeding a specified number of days in process. Any return meeting the selection criteria will cause all related returns to be included in the report.
    3. This report can be used as indicated: as a workload review sheet; by examiners for planning and scheduling of their assigned inventory; to ensure all returns showing an appointment date and time are in status 12, (action code 01 should never be in status 10); to ensure status 12 cases have action code 00 or are in status 10 unless it is a pre-assigned return or a transfer-in received within the last 3 days; to identify returns in action code 01 with over 30 days in process, that may involve taxpayer procrastination; to identify priority cases that remain unassigned (i.e., claims, audit reconsiderations, prior/subsequent year pick ups, or statute years); to reconcile listed returns and unassigned cases on hand; to use as an overage report and request returns at 180 days for Office Exam groups and 270 days for field exam groups; to verify the accuracy of AIMS or ERCS elements.
  4. Group Alphabetical Inventory Listing — Alphabetically lists returns assigned to an examination group. This report includes the basic entity information and the current status of the return controls.
    1. The report may assist a group in identifying return information when access to ERCS is not available. In locations where ERCS access is limited, this report can be printed monthly.
    2. The report assists AIMS inventory validation. It should be printed and checked for any inaccuracies one month prior to the AIMS IVL cutoff date.
  5. Overage Requisition Report — Lists all requisitions which have not become fully established on AIMS within a specified period of time. It identifies returns which may require additional action in order to establish full AIMS controls.
    1. This report must be printed and reviewed monthly to meet the requirements of the AIMS Handbook. 424 Reject Registers or master file transcripts may provide information indicating the reason a requisition has not become a full record.
    2. This report should also be used by the AIMS coordinator with a 45-day criterion to identify proper follow-up of return requisitions during group reviews.
    3. This report should be retained by the group for one year.
  6. Case Time Analysis — Lists the days and hours applied by all examiners and audit accounting aides. Presents summary totals for all time applied.
    1. This report may be used as part of a case review.
    2. This report should be reviewed when an error has occurred in the time input for a return. Compare to the examiner’s input document to reconcile time applied. Errors can be corrected through the time input correction application.
    3. This report is useful in reviewing all time charged to a return or group of returns.
  7. Daily Time Report — Summarizes an examiner’s time charged for a specific period. This report is useful in resolving time charged errors or inconsistencies in reconciling reporting cycle problems (SETTS file generation). Managers should review reports at least weekly to identify cases without positive action and to ensure priority cases are being worked on catch up days.
  8. DET/Non-DET Report — Provides a total of the direct examination time by activity code for each examiner. Non-direct examination time is detailed by date and activity code. Each area/territory has an established acceptable amount of Non-DET time charged per month. Since this reduces time available for case work, use this report to identify misuse of Non-DET time or incorrect time codes based on the activity listed by the examiner.
  9. Unassigned Report — Used to select returns for assignment, identify new cases assigned to the group, survey returns before assignment, and monitor levels and types of unassigned inventory.
  10. Status Report — Used to monitor workload levels of examiners and the overall workload level of the group. It may assist in determining reassignment of cases from one examiner to another or in determining whether additional returns are needed for examination. You select the status code(s) for the report.
  11. Inactive Case Report — Lists all cases which have had no activity (no time applied) within a specific number of days, usually 30 days for office and field groups. It may be useful when conducting a workload review. Office examination managers should ensure all listed returns are immediately given another realistic purge date based on the TCO/TA’s schedule.
  12. Previously Closed Returns Report — Lists returns which have been closed from an examination group, and later returned to the group for some action. It should be used monthly to identify aging cases for immediate attention. Returns on the list should have positive action, i.e., appointment or assigned to an examiner, within 3 days of receipt.
  13. Source Code Inventory Report — Lists returns with the same source code. It can be used to list such returns as NRP (SC 80 and 91), tax shelters (SC 12 and 39), or DIF-selected returns (SC 02), or DIF related and multi-year pickups (SC 05 and 10).
  14. Activity Code Report — Lists all returns by activity code. These reports can be helpful in analyzing the mix of work or the need for returns necessary to enhance skill levels.
    1. Activity Code Inventory Report lists returns with the same activity codes.
    2. Activity Code Count Report produces a numerical count for all activity codes or only those codes selected. Counts include both started and unstarted inventory by examiner.
  15. Project Code Inventory Report — Lists returns with the same project code. It can be used to list such returns as training or joint committee.
  16. Priority Reports — Lists all returns or counts of returns in examination priority categories.
    1. Priority Inventory Report lists all returns in the priority categories.
    2. Priority Counts Report produces a numerical count of all priority codes selected.
    3. The number of returns in each examination priority category may be obtained. Counts include both started and unstarted inventory by examiner.
  17. Fraud Report — Lists all returns in status codes 17 or 18, used to indicate either referral or fraud case status. It can be used to analyze the effect of fraud cases on cycle time.
  18. Prior Year Report — Lists those returns with a tax period earlier than that defined with a cutoff of the prior year.
  19. High Time Report — Lists those returns which have time applied that exceeds the set time threshold as designated by the requestor. Highest time cases can be identified for managerial involvement.

1.4.40.5.7  (08-01-2003)
Reports to be Worked by the Group

  1. Inventory Validation Listing — Each group performs a complete inventory validation annually for periodic statistical sample inventory validations. The validation involves verifying the physical presence of returns and all AIMS data on all returns shown on your Inventory Validation Listing. IRM 4.4.16, AIMS Handbook, provides time frames and instructions for performing this validation.
  2. AIMS Weekly Update Report — This report will be generated only when a change occurs at Master File that affects a case in your group. The report informs the group of a change which has occurred on the taxpayer’s account or other information which the group needs to know. The report will reflect changes such as the filing of an amended return or a change in the taxpayer’s address. A description of this report, with instructions, appears at IRM 4.4.
  3. 424 Reject Register — This report is distributed weekly to all examination groups which are affected. The report informs the manager that a request to establish a database and/or secure a return (TC 424) has not been accepted at master file. It provides a code which explains why the account rejected. A taxpayer’s account appearing on the register will require follow-up, correction, monitoring, and/or re-input of the requisition.
  4. Statute Date Override Report — Lists returns when statute dates on ERCS and AIMS are different and ERCS has been changed to reflect the statute date on AIMS. For example, when the return was requested through ERCS, the normal statute date was generated. When the requisition became fully established on AIMS, the statute date reflected a late-filed return. ERCS is corrected to reflect the AIMS statute date.
  5. Unexplained Update Report — During the weekly comparison, the AIMS values for project codes, source codes, status codes, activity codes, aging reasons, claim amounts, and POD codes are compared to the ERCS values. If ERCS is updated from the information on AIMS, this report is generated. Special attention should be given to status code changes.
  6. Dropped AIMS Record Report — Lists records open on ERCS but reflecting no data on AIMS. The report is distributed to the group and must be worked. The report should be compared with AIMS and action taken to resolve the discrepancy.
  7. Organization Code Difference Report — Identifies established AIMS records previously noted on the 424 Reject Register which have not been resolved. The group secretary must determine the proper control point of each return.

1.4.40.6  (08-01-2003)
Group Manager Expectations

  1. As a group manager, you play a vital role in accomplishing the Mission of the Service. It is essential that all levels of management identify and prioritize expectations.
  2. These expectations must be consistently established and clearly communicated through all levels of management, especially to you, the first-line manager, who directs the resources.
  3. As a first-level manager, you develop the expectations for your group with your Territory Manager. Your Territory Manager will share the Area Business Plan, emphasizing the relationship of the Area Business Plan to the Balanced Measurement System and individual commitments. You will jointly identify opportunities, agree on goals, develop plans and jointly reach commitments on those plans. These expectations should include the Performance Management objectives in your Managerial Performance Plan. These expectations must be within the provisions of Section 1204 of the Restructuring and Reform Act of 1998.

1.4.40.6.1  (08-01-2003)
Performance Management System (PMS)

  1. The Performance Management System (PMS) is the appraisal system used to evaluate Internal Revenue Service employees. It consists of an ongoing process of setting expectations, monitoring, evaluating and recognizing performance. Managers use the system to inform an employee of what is important and expected of an employee in the performance of his or her job. The Service’s performance management system is designed to strengthen the linkages between Performance Management and the Service’s mission, strategic business goals, business plans and the Balanced Measurement System.
  2. The performance agreements for managers consist of:
    • Responsibilities–representing the core values of the Service, what is important to us as an organization and common to all executives, managers and management officials
    • Commitments–distinct actions/desired results to be achieved during the performance period
    • Summary Evaluation–balances the Retention Standard, Responsibilities and Commitments to determine the final rating
  3. Objectives establish specific expectations for you as a manager. They provide the basis for monitoring your work, providing feedback on your progress and recognizing your accomplishments. Your success in executing programs and implementing Service policies is reflected in your achievement of PMS objectives.
  4. Feedback on the progress toward these goals based on your actions and activities during the year will be obtained through the following:
    • Operational reviews
    • Monthly briefings
    • Midyear assessments
    • Year-end PMS appraisal
  5. Each area/territory has established action items which must be addressed by designated individuals. You will be responsible for those items designated for group managers and/or your particular situation.
  6. There are five competencies applicable to all group managers. See IRM 1.4.40.3.4.
  7. Leadership elements:
    1. Adaptability
    2. Communication
    3. Decisiveness
    4. Integrity/Honesty
    5. Service Motivation
    6. Strategic Thinking
  8. Employee Satisfaction elements:
    1. Continual Learning
    2. Developing Others
    3. Diversity Awareness
    4. Group Leadership
    5. Teamwork
  9. Customer Satisfaction elements:
    1. Customer Focus
    2. Entrepreneurship
    3. External Awareness
    4. Influencing/Negotiating
    5. Partnering
  10. Business Results elements:
    1. Achievement Orientation
    2. Business Acumen
    3. Political Savvy
    4. Problem Solving
    5. Technical Credibility
  11. EEO
  12. These elements may reflect individualized areas of emphasis or concern. Your manager should discuss these expectations with you. These standards should be shared with your employees so they are aware of them.

1.4.40.6.2  (08-01-2003)
Federal Managers’ Financial Integrity Act (FMFIA)

  1. The Federal Managers’ Financial Integrity Act of 1982 (FMFIA) was implemented by the Office of Management and Budget (OMB) Circular A–123, Management Accountability and Control. Its purpose is to safeguard assets and to provide for compliance with the law. Refer to Resource Guide for Managers, IRM 1.4.2, Monitoring and Improving Internal Accounting and Administrative Controls, for a detailed explanation.

1.4.40.6.3  (08-01-2003)
Developing Group/Team Expectations

  1. Your relationship with your manager is very important to you. The first step in establishing this relationship is to understand the manager’s expectations. A discussion with your manager regarding division and territory goals and the assessment of the current condition of your group is the best starting point.
  2. Open lines of communication are very important. You should keep both your manager and group informed of significant matters. Many times you are going to be pulled in a multitude of directions. The various priorities sometimes seem to change on a daily basis. Your manager expects you to be flexible and look for alternatives within the group. At the same time, you should let the manager know what will not get accomplished if your resources are pulled. Finally, you are expected to be a team player. You are sometimes going to have to sacrifice your resources to meet broader organizational goals.
  3. In addition to your own expectations, the PMS expectations of your Territory Manager are the major source in the setting of your group expectations. Though broader in nature, they should assist you in this endeavor. After preparation of your expectations, ensure you understand each and strive to accomplish the expectation. Ensure that the provisions of Managing Statistics and Section 1204 of the Restructuring and Reform Act of 1998 are met when setting expectations for your group or agreeing to those set at a higher level.
  4. You need to effectively communicate in all directions and at all levels.
  5. You must keep your employees informed of what is going on in the territory/area. Furthermore, it is paramount that you maintain open lines of communication with your peer managers. These managers are your support base. They can give you valuable insight on a wide variety of situations. A few examples of ongoing communication are:
    1. How to approach problems
    2. How to address certain situations
    3. What risks you can and cannot take
    4. What assistance your manager can provide

1.4.40.6.4  (08-01-2003)
Communicate Your Expectations to Your Employees

  1. Communicating your expectations and procedures to employees is very important. The high-level definitions of the critical job elements are the same across all IRS occupations. The elements are:
    1. Employee Satisfaction–Employee Contribution
    2. Customer Satisfaction–Knowledge
    3. Customer Satisfaction–Application
    4. Business Results-Quality
    5. Business Results-Efficiency
  2. All of your employees have predetermined critical elements and you should link your expectations to these elements. For example:
    1. Element —Employee Satisfaction–Employee Contribution: employee willingly helps other employees in the group to resolve a problem and shares knowledge with the group.
    2. Element — Customer Satisfaction–Knowledge: employee identified a potential hardship on a refund hold and made a decision that the issue did not meet hardship criteria; employee demonstrated knowledge to deal with unanticipated situation and applied knowledge of IRS procedures and research materials to make the correct decision.

    Reminder:

    IRM 1.5, Managing Statistics in a Balanced Measurement System, provides guidance in using enforcement statistics. Your expectations and your evaluation of your examiners’ performance must not be based on enforcement statistics. Example: As a group manager, you should be concerned about the group’s no change rate. However, you cannot establish a numeric goal/percent for the no change rate for your examiners. Each examiner’s inventory needs to be assessed on its own merits.

  3. Establish yourself as the leader, but at the same time maintain an atmosphere of flexibility. Encourage employee participation and discuss their ideas in an open forum. Once a decision is made, solicit mutual agreement and ensure understanding on the direction to be taken.
  4. New procedures and programs will require implementation. As the team leader, it is your responsibility to communicate any new practices to your employees in a positive manner, using a partnership approach. The success of new procedures and programs rests on your ability to share and implement them in a positive manner. Remember, it is your responsibility to keep the morale of your group high by taking positive actions toward group activities and operations.

1.4.40.6.5  (08-01-2003)
Monitoring and Follow-up Procedures

  1. Once you have established and communicated expectations to your employees, you need to set up monitoring devices to assess progress. Remember, achievements or accomplishments do not happen by accident. It takes careful planning, thoughtful strategy, and monitored execution. Depending on what area you are monitoring, feedback may be specific, written, or informal. Some key areas you will monitor are: Direct Exam Time, Overage Inventory, Statutes, etc. Occasionally, review your monitoring system to determine if it requires revision based on changing priorities and needs.
  2. After expectations have been established, shared, and monitoring devices are in place, establish follow-up procedures. The intent is to make the previous action more effective and efficient. The formality and structure of follow-up procedures will depend on the area involved.

    Example:

    Abusive Tax Shelter cases being monitored by project code 225 may no longer be a priority area. Thus, discontinue running Project Code Report on ERCS. Refund hold cases become a top priority. Use ERCS tracking codes to monitor. Also, share this change in direction with your examiners.

  3. Through open communication, you stand the best chance of gaining your group’s commitment to the organization’s goals and your expectations. As you prepare to set and communicate the expectations for your group, remember the managers you have worked for and their styles of communicating expectations. To be successful you should be prepared to do the following:
    1. Share the area/territory goals
    2. Share your expectations
    3. Ensure employee understanding
    4. Encourage employee input
    5. Solicit employee support
  4. Remember, realistic, challenging goals should motivate and encourage a high level of performance by your employees. As a group manager, you set the tone for your group.

1.4.40.7  (08-01-2003)
Programs and Priorities

  1. As a group manager, you play a vital role in accomplishing the Mission of the Service. It is essential that all levels of management identify and prioritize expectations.
  2. The SB/SE Commissioner establishes and prioritizes goals for each fiscal year as outlined in the business goal strategies. Policy statements, Internal Revenue Manual procedures, and other documents provide guidelines for achieving these strategies.
  3. As an examination group manager, you are responsible for meeting program priorities. In order to accomplish this goal you may need to initiate new projects. Be aware of projects that are a priority to Headquarters, your Territory, or your Area.

1.4.40.7.1  (08-01-2003)
Priorities

  1. An essential goal in planning priorities is to maximize voluntary compliance by conducting high-yielding examinations in non-compliant market segments. Keep this in mind when making return assignments.
  2. Determine the priority of available workload in light of existing commitments, planned objectives, and procedural requirements.
  3. Your group’s work can be divided into three categories: mandatory, priority, and discretionary. A mandatory case is one that neither you nor your employees have authority or discretion to decide to examine or survey. With a priority case, both you and your employees are empowered to survey it if the circumstances of the case justify such action. However, once a final commitment is made to examine a priority case, it acquires the attributes of a mandatory case and should be handled expeditiously. Discretionary work makes up the remainder of your group’s workload. Become knowledgeable about factors that govern the priority of work.
  4. It is essential that you understand your priorities, monitor them closely, and ensure their attainment. Some mandatory programs, such as Headquarters Directed Projects, have definite interim completion goals that should be attained. When assigning returns to your examiners, mandatory and priority cases must receive first consideration. Although transferring work between examiners is not desirable, it should be done to satisfy priority needs.
  5. Some examples of priority cases are:
    • Cases in which either the Government’s or the taxpayer’s interest is in jeopardy due to imminent expiration of the statute of limitations
    • Bankruptcy or receivership cases on which the date for filing claims is about to expire
    • Taxpayer Advocate (TAS) cases
    • Cases returned by Technical Services for reconsideration
    • Requests for prompt examination
    • Delinquent account cases being held by Collection pending action by Examination
    • Cases involving informant’s claims/letters
    • Partnership and fiduciary cases involving Form 8340, Partnership Control System (PCS)
    • Inadequate records follow-up examination
    • Claims for refund
    • Overage cases
    • Offers in Compromise

1.4.40.7.2  (08-01-2003)
Examination Specialization (ES)

  1. The objective of Examination Specialist (ES) formerly known as Market Segment Specialization Program (MSSP) is to target examinations by examiners who have the skills and use techniques to respond to the unique business practices of a particular market segment, profession, or issue. The ES concept is an integral part of a long-range plan to enhance the overall professional competence and expertise of examiners and increase the productivity of examinations. A goal of ES is to increase the efficiency and effectiveness of the Service through the development of issues of merit while providing a high degree of consistency in the treatment of those issues.
  2. The specialization of examiners will better identify both compliant and noncompliant market segments. Areas of widespread noncompliance within market segments will be discussed with industry and business associations to gain a better understanding of positions and to resolve differences. Where necessary, efforts will be made to better educate the taxpayers and to clarify applicable laws and regulations in an effort to reduce taxpayer burden and increase voluntary compliance.
  3. Where possible, you should develop expertise in a market segment by:
    1. Soliciting examiners’ interest in market segment areas
    2. Consistently assigning work in a particular market segment to an examiner to develop their expertise
    3. Soliciting examiners’ input to screen returns in their market segment
  4. The IRM 4.28.1 provides detailed guidance for this program.

1.4.40.7.3  (08-01-2003)
Headquarters Directed Projects

  1. These are high priority programs which have significant impact on future compliance with widespread geographic implications. Your early involvement and continual monitoring is a must.
  2. These projects may be initiated at any time and your involvement to ensure they are started timely is important. These returns should generally be assigned to experienced examiners because the results will be used to measure the accuracy of filed returns.
  3. Examples of such projects include:
    • Abusive schemes and promoter investigations
    • High-risk, high-income taxpayers
    • Offshore credit card project
    • Unreported Income Discriminant Function (UI DIF)
    • High-income Non-filers
    • National Research Project (NRP)

1.4.40.7.4  (08-01-2003)
Compliance Initiative Projects (CIP)

  1. The objectives of Compliance Initiative Projects are to identify whether noncompliance exists, determine the reasons for noncompliance, reduce noncompliance, and make recommendations for increasing future compliance.
  2. CIPs are characterized by the use of data to identify and quantify areas of noncompliance. They usually involve a study, survey, or other analysis of a group of individuals such as those involved in a specific economic activity. CIPs do not include routine business operations.
  3. Authorization by the appropriate Service official is required before initiating any Compliance Initiative Project. See IRM 4.17.1.

1.4.40.7.5  (08-01-2003)
Midwest Automated Compliance System (MACS)

  1. MACS is a computer system that stores three years of tax return data and portions of the Master File for each Area. It is housed in a C–2 secure environment in the Planning and Special Program area.
  2. The system allows you to locate taxpayers by Taxpayer Identification Number, name of either spouse, or partial address. The system can provide local source work by sorting returns into predetermined market segments, identifying a random sample of taxpayers within the market segment, displaying the return data in a format similar to classification, and printing a facsimile of any return filed at the option of the user.
  3. MACS can:
    1. Be used for case building by producing a facsimile of a return which shows major line items including attached schedules, i.e., gross receipts, cost of goods sold, total deductions, etc. The facsimile can be in a single year or three year column format.
    2. Identify non-compliant groups of taxpayers using up to 100 options or filters from a menu of all transcribed return line items and certain Master File items.
    3. Match against other internal or external databases to identify non-filers.
    4. Locate an individual return using only part of a taxpayer’s name or address.
  4. To receive information from MACS, a MACS Research Request form must be completed and submitted to the PSP Manager or designee in the PSP area.

1.4.40.7.6  (08-01-2003)
Governmental Liaison Program

  1. Governmental Liaison is a liaison program to foster joint tax administration between the IRS and state taxing agencies. It also promotes joint initiatives with other federal agencies, local governments, state agencies (other than taxing agencies), and private-sector organizations. Determine the Governmental Liaison Coordinator for your POD.
  2. Governmental Liaison objectives include:
    • Improve voluntary and enforced compliance
    • Reduce taxpayer burden
    • Enhance service to taxpayers
    • Allow IRS and state agencies to perform more efficiently and cost effectively
  3. Field Governmental Liaison initiatives may include:
    • Information exchange
    • Joint early intervention and education
    • Joint enforcement
    • Joint technological activities

1.4.40.7.7  (08-01-2003)
Technical Advisors–Issue Specialists

  1. Technical Advisory Program involves industries and businesses selected because of possible noncompliance. The purpose of specializing is to allow technicians to develop expertise in the industry. Industry specialization also allows the Service to take consistent positions with certain industries and issues. Technical Advisors located in LMSB and Issue Specialists located in SB/SE are both available to assist you.

1.4.40.7.8  (08-01-2003)
Local Source Projects

  1. Local source work consists of high-yield returns initiated at the group level. Historically, this has proven to be much more productive than DIF source returns.
  2. As a group manager, you have a responsibility to be innovative in developing local source work. Be sure to follow CIP guidelines when initiating this type of case work.
  3. Some examples of local source work include return preparer projects. Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) projects, and identified nonfiler projects.
  4. The initial number of returns requested should be sufficient to provide a representative sample of the total population in the project. Based on examination results of the sample returns, a determination will be made to expand or terminate a project.

1.4.40.7.9  (08-01-2003)
Specialty Areas

  1. Ensure that referrals to specialists are made in a timely manner and that examiners are working together to complete the examination as soon as possible. Examples of referrals that may be necessary are:
    • Excise tax
    • Computer Audit Specialists
    • International Examiners
    • Engineers
    • Economists
  2. Monitor time on a case-by-case basis to determine:
    1. The extent of the examiner’s involvement
    2. That the issues are being properly developed

1.4.40.7.10  (08-01-2003)
Fraud

  1. Fraud awareness is part of every program. Examiners should be alert for indications of fraud and are encouraged to discuss these cases with you. The determination of civil or criminal fraud and the development necessary in the case should be discussed thoroughly. The Fraud Referral Specialist can provide assistance in developing the case. See IRM 25.1, Fraud Handbook, and IRM 4.12, Nonfiled Returns Handbook.
  2. Occasionally, you will be requested to provide resources to assist in conducting grand jury investigations. Because of the confidentiality of grand jury information, only a limited number of designated officials are permitted to receive this information. This generally does not include Field Compliance managers.
  3. The sole responsibility of the examiner is to examine books and records and interview third parties to determine the income of the targets of the grand jury. Examiners should be made aware of their limited responsibility. Investigations frequently continue for extended periods; therefore, it is important that feedback on examiner performance is received through the CI manager. The specifics of the investigation activity cannot be provided. However, specifics concerning the examiner’s performance level should be made available to you as the manager.
  4. Tax Compliance Officers and Revenue Agents must discuss any potential fraud case with their manager.
  5. Headquarters Fraud Program Intranet Site (http://www.taxfraud.web.irs.gov/)

1.4.40.8  (08-01-2003)
Guiding and Evaluating Employees

  1. You are responsible for guiding the activities of your group and evaluating your employees. The oversight of your examiners’ inventories is an ongoing task which requires consideration of factors including priorities, skill levels, planning, scheduling, examination potential, available resources, taxpayer cooperation, use of audit techniques, and many more. To ensure that workload priorities are met, there are a number of management tools available. They are:
    • In-process case reviews
    • Workload reviews
    • On-the-job visits
    • Completed case reviews
    • Technical time report reviews
    • Ongoing observation
  2. Information obtained through the above reviews and visits must conform with the requirement of the National Agreement, IRS and NTEU, Document 11678.
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