1.34.4  Unpaid Assessments

Manual Transmittal

August 25, 2015


(1) This transmits revised IRM 1.34.4, Organization, Finance, and Management, Revenue Accounting, Unpaid Assessments.

Material Changes

(1) Added the following new sections:

  1. IRM, Overview.

  2. IRM, Background.

  3. IRM, Authorities.

  4. IRM, Definitions.

  5. IRM, Acronyms.

  6. IRM, Responsibilities.

  7. IRM, Classifications.

(2) Changed IRM, Introduction, to Overview.

(3) IRM, IRS/GAO Agreement - Book Value Adjustments and Memo, moved to new section, Internal Revenue Service and Government Accountability Office Agreement - Book Value Adjustments and Memo.

(4) IRM, Case Files, moved to new section 1.34.9, Case Files.

(5) IRM, Account or Programming Correction and the Issues Page, moved to new section 1.34.10, Account or Programming Correction and the Issues Page.

(6) IRM, Matters for Further Consideration (MFCs) and Audit Inquiry Forms (AIFs), moved to new section, Matters for Further Consideration and Audit Inquiry Forms.

(7) IRM, Miscellaneous Samples, moved to new section, Miscellaneous Samples.

(8) IRM, CASTS Database, moved to new section, Custodial Audit Support and Tracking System Database.

(9) This revision includes changes throughout the document to update the office name of Business Analysis and Support Section to Revenue Transactional Analysis Section, to update Modernization and Information Technology Service to Information Technology, and other minor editorial changes.

Effect on Other Documents

IRM 1.34.4 Unpaid Assessments, dated June 17, 2009, is superseded.


Analysts in CFO, Financial Management, Revenue Oversight and Support Office, Revenue Transactional Analysis Section

Effective Date


William H. Maglin II
Associate Chief Financial Officer,
Financial Management  (08-25-2015)

  1. This Internal Revenue Manual (IRM) provides guidance and responsibilities for the Unpaid Assessment (UA) portion of the annual IRS financial statement audit.

  2. The Chief Financial Officer (CFO), Financial Management (FM) Unit, Revenue Oversight and Support Office, Revenue Transactional Analysis Section, develops and maintains this IRM.  (06-17-2009)

  1. The Chief Financial Officers (CFO) Act of 1990 requires that the Internal Revenue Service (IRS) produce auditable financial statements. Congress has charged the Government Accountability Office (GAO) with the audit of IRS Financial Statement. After the completion of each year’s audit, GAO reports the results in a Report to the Secretary of the Treasury. This report is commonly known as the "Blue Book." GAO can also document findings or concerns in subsequent management letters. While other samples are mentioned, these desk procedures pertain to the Unpaid Assessments (UA) sample of the financial audit. Specific details about classification, collectibility, and sampling are contained in GAO's Methodology for Review of Unpaid Assessment Cases document. Also, specific details about the Custodial Audit Support and Tracking System (CASTS) database are contained in CASTS system documentation.

  2. IRS has developed programming to divide its inventory of UA into five financial classifications based on generally accepted accounting standards. The classifications include Taxes Receivable (TR), Compliance Assessments (CA), Write-Off (WO), MEMO, and Split Classification.

  3. The largest portion of the custodial assets reported on the financial statement are in the Taxes Receivable classification. The value of the Taxes Receivable is reported on the face of the IRS financial statement. The other classifications are included in the supplemental information.

  4. It is crucial that IRS has documentation that supports the classification of each sampled module and documentation to support the amount estimated as collectible for each Taxes Receivable module in the sample. Otherwise, the module will be considered mis-classified and its value projected to the appropriate population of unpaid assessments. If GAO finds too many mis-classifications, the audit may be at risk.  (08-25-2015)

  1. The authorities for this IRM include:

    1. Chief Financial Officers Act of 1990, Pub. L. No. 101–576.

    2. Government Accountability Office Policy and Procedures Manual for Guidance of Federal Agencies.

    3. 31 USC 3505. Federal Accounting Standard Accounting Board (FASAB)

    4. 31 USC 3512, Executive Agency Accounting and other Financial Reports and Plans.  (08-25-2015)

  1. Abatements - Reductions in tax assessments that are a normal part of the IRS tax administration process. Abatements may occur for a number of reasons. For example, a taxpayer may file an amended return claiming a lower tax liability than previously reported or a qualifying corporation may claim a net operating loss which created a credit that can be carried back to reduce a prior year’s tax liability.

  2. Assessment - A change to the amount of tax, penalty, and interest to the taxpayer’s account.

  3. Book Value - The net amount at which an asset or liability is carried on the books of account. It equals the gross or nominal amount of an asset or liability minus an allowance or valuation amount.

  4. Compliance Assessments (CA) - Unpaid assessments for which neither the taxpayer nor a court has affirmed that the taxpayer owes amounts to the Federal Government . Examples include assessments resulting from IRS examinations or non-filer enforcement programs in which the taxpayer does not agree with the recorded tax assessment. IRS reports the balance of compliance assessments in its Required Supplementary Information. Statutory provisions require that IRS maintain these accounts until the statute for the collection expires. The statutory period for collection is generally 10 years from the date IRS records the tax assessment.

  5. Unpaid Assessment Audit - A component of the annual GAO financial statement audit. An analysis to determine whether the statistically selected samples of unpaid assessments are (1) classified correctly, (2) recorded at the correct amount, and, for those items correctly classified as Taxes Receivable (TR), (3) whether they are fully or partially collectible. The results of this analysis will be used to project amounts to be reflected as gross and net TR and the corresponding allowance for doubtful accounts, Compliance Assessments (CA), and Write-Off (WO) on IRS financial statements and/or accompanying information. The audit sample is selected from tax modules as they were posted on master file.

  6. Financial Statements - An entity’s financial activity and status for a specified period. Under Federal law and applicable accounting standards, the financial statements for a Federal agency usually include a balance sheet, statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of custodial activity.

  7. Fiscal Year - The twelve-month accounting period used in the Government. It begins on October 1 and ends on September 30, and is designated by the calendar year in which it ends.

  8. Government Accountability Office (GAO) - An independent, nonpartisan agency that works for Congress. Often called the congressional watchdog, GAO investigates how the Federal Government spends taxpayer dollars. GAO performs the annual financial audit of the IRS financial statements since IRS collections are significant to overall Federal receipts and to the consolidated financial statements of the U.S. Government . Annually GAO determines whether:

    1. IRS financial statements are fairly stated, and

    2. IRS management maintains effective internal controls.

    GAO also tests IRS compliance with selected provisions of significant laws and regulations and its financial systems’ compliance.

  9. Integrated Data Retrieval System (IDRS) - A system used to perform research on taxpayer accounts which interfaces with master file. It is used to perform additional research on all imperfect and multiple–split receipts. It is also used to process larger volumes of multiple–split receipts. IDRS is different from the Integrated Submission and Remittance Processing (ISRP) System because it is downloaded from the master files. Thus, it is used not only for payment processing, but also for research purposes and for processing assessments and abatements.

  10. Master File - A detailed database system of taxpayer information and tax processing activity. The master file system consists of two major files:

    1. Individual Master File (IMF).

    2. Business Master File (BMF).

    The master file records tax information related to individual and business taxpayers by tax year or tax period. This includes such data as the assessed tax, interest and penalties, receipt of payments and other adjustments to the assessments. The master file records the type of return filed, date the return was received and processed, expiration dates for assessment of additional taxes against taxpayers, collection activity (for example, unpaid assessment account sent to revenue officer for collections) and status of the taxpayer’s account (for example, account paid in full, taxpayer filed bankruptcy, taxpayer is deceased).

  11. Memo Accounts - Balance due accounts in IRS records that are excluded from valid tax receivables according to Federal financial standards. Examples of assessments meeting the Memo criteria include:

    1. Federal filers.

    2. Fraudulent/frivolous assessments.

    3. Assessments made clearly in error.

    4. Complex global netting issues on multi-year examination cases.

    5. Non-master file duplicate assessments.

    6. Credits that are posted to one module with the assessment on another module not yet merged.

    IRS excludes the balance of Memo accounts from its gross unpaid assessment balance.

  12. Non-Master File - A database which enables IRS to process taxpayer accounts that cannot be processed on the master file. The non-master file may be used for:

    1. The rapid implementation of new tax laws that may require extensive system modifications for which time or resources may not be available to timely make changes in the master file.

    2. Processing accounts which have an excessive number of transactions for the master file to systemically handle.

    3. Processing accounts which have an account balance too large for the master file to systemically handle.

    4. Immediate, legal assessments (within 24-36 hours), for those instances when the master file would be too slow to post the assessment (4-6 weeks).

    5. Reversal of erroneous abatements-accounts that require reversal of erroneous abatements when the statute for assessment has expired and processing of full collection child support accounts.

  13. Split Classification - Unpaid assessment that falls into two classifications at the same time. For example, a percentage of the assessment is Taxes Receivable (TR) due to the taxpayer agreement or court ruling and the remaining percentage is followed by an unagreed subsequent assessment that is classified as Compliance (CA). Another Split Classification would be Taxes Receivable and MEMO.

  14. Taxes Receivable (TR) - A custodial line item reported on the balance sheet which is comprised of unpaid assessments (taxes and associated penalties and interest) due from taxpayers for which IRS can support the existence of a receivable through a taxpayer agreement, such as filing of a tax return without sufficient payment, or a Court ruling in favor of the IRS. IRS reports taxes receivable on its balance sheet net of an allowance for doubtful accounts. Taxes Receivable is a proprietary (or financial) accounting term and not a budget term. Taxes Receivable does not constitute budget authority against which an agency may incur an obligation. For Federal proprietary accounting, taxes receivable are assets that arise from specifically identifiable, legally enforceable claims to cash or other assets through an entity’s established assessment processes. Taxes Receivable includes only unpaid assessments made through the end of the period plus related fines, penalties and interest. Taxes Receivable does not include amounts received or due with tax returns received after the close of the reporting period or amounts that are compliance assessments or pre-assessment work in process.

  15. Write-Off (WO) - Unpaid assessments for which IRS does not expect further collections due to factors such as taxpayer's death, completed bankruptcy, or insolvency. A WO may at one time have been a TR or a CA, but the absence of any future collection potential prevents them from being considered as receivables under federal accounting standards. Reported in Required Supplementary Information.  (08-25-2015)

  1. The following chart contains acronyms that are used throughout this IRM.

    AC Action Code
    ACS Automated Collection System
    AIF Audit Inquiry Form
    AIS Automated Insolvency System
    ARDI Accounts Receivable Dollar Inventory
    BB Big Blue
    BMF Business Master File
    BNIF Block Not In File
    BOD Business Operation Division
    BVA Book Value Adjustment
    CA Compliance Assessment
    CASTS Custodial Audit Support and Tracking System
    CC Closing Code
    CCP Centralized Case Processing
    CFO Chief Financial Office
    CIS Correspondence Imaging System
    CNC Currently Not Collectible
    CSED Collection Status Expiration Date
    DC Disposal Code
    DCI Data Collection Instrument
    DLN Document Locator Number
    DNIF Document Not In File
    DOD Department Of Defense
    DUS Dollar Unit Sampling
    ELF Electronic Filing System
    EONS Electronic Online Network Systems
    FLC File Locator Code
    FM Financial Management
    FPLP Federal Payment Levy Program
    FRC Federal Records Center
    FSC Filing Status Code
    FY Fiscal Year
    FYE Fiscal Year-End
    GAO Government Accountability Office
    IA Installment Agreement
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    ISRP Integrated Submission and Remittance Processing System
    IT Information Technology
    MFC Matter for Further Consideration
    MFT Master File Tax
    MFTRA Master File Transcript
    NMF Non-Master File
    OIC Offer in Compromise
    PBC Primary Business Code
    PCA Private Collection Agency
    RA Revenue Accounting
    RGS Reports Generation Software
    RO Revenue Officer
    RTAS Revenue Transactional Analysis Section
    SME Subject Matter Expert
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TC Transaction Code
    TDA Taxpayer Delinquent Account
    TETR Telephone Excise Tax Refund
    TFRP Trust Fund Recovery Penalty
    TIN Taxpayer Identification Number
    TMB Total Module Balance
    TP Taxpayer
    TR Taxes Receivable
    UA Unpaid Assessments
    URP Underreporter Program
    WO Write-Off  (08-25-2015)

  1. This section provides responsibilities for:

    1. Chief Financial Officer.

    2. Associate Chief Financial Officer for Financial Management.

    3. Director, Revenue Oversight and Support Office.

    4. Chief, Revenue Transactional Analysis Section.  (08-25-2015)
Chief Financial Officer

  1. The Chief Financial Officer is responsible for overseeing financial policy for the management and reporting of the custodial assets.  (08-25-2015)
Associate Chief Financial Officer for Financial Management

  1. The Associate Chief Financial Officer for Financial Management is responsible for establishing, maintaining, and ensuring compliance with custodial revenue policy and procedures for internal accounting operations and financial reporting.  (08-25-2015)
Director, Revenue Oversight and Support Office

  1. The Director, Revenue Oversight and Support Office, is responsible for maintaining the integrity and accuracy of the data and business rules used to segment the inventory of unpaid assessments for operational and financial reporting purposes and is responsible for analyzing unpaid assessment and excise activity to accurately present inventory data to the Department of the Treasury, Congress and GAO.  (08-25-2015)
Chief, Revenue Transactional Analysis Section, Revenue Oversight and Support Office

  1. The Chief, Revenue Transactional Analysis Section, is responsible for maintaining the integrity and accuracy of the data used to segment the inventory of unpaid assessments for financial reporting purposes and is responsible for analyzing unpaid assessment and excise activity to accurately present inventory data to the Department of the Treasury, Congress and GAO.  (08-25-2015)

  1. IRS has developed programming to divide its inventory of UA into financial classifications based on generally accepted accounting standards. (The largest portion of the custodial assets reported on the financial statement are in the Taxes Receivable classification). This section describes the classifications.

    1. Taxes Receivable (TR)

    2. Compliance Assessment (CA)

    3. Write-Off (WO)

    4. MEMO

    5. Splits

  2. It is crucial that IRS has documentation that supports the classification of each sampled module and documentation to support the amount estimated as collectible for each Taxes Receivable module in the sample. Otherwise, the module will be considered mis-classified and its value projected to the appropriate population of unpaid assessments. If GAO finds too many mis-classifications, the audit may be at risk.  (08-25-2015)
Taxes Receivable

  1. Taxes Receivable are taxes and associated penalties and interest due from taxpayers for which IRS can support the existence of a receivable through taxpayer agreement (such as filing of a tax return, Installment Agreement, Offer In Compromise, agreed examination), or a court ruling favorable to Internal Revenue Service. In addition, an unpaid assessment will be considered a tax receivable when the IRS:

    1. Disallows an unsubstantiated credit because of a missing or incorrect Taxpayer Identification Number (TIN) or increases the tax due to an unsubstantiated deduction (i.e., missing schedules), or corrects a mathematical error on the taxpayer's return.

    2. Notifies the taxpayer and at least sixty (60) days have elapsed from the time the taxpayer is notified of the change.  (08-25-2015)
Compliance Assessment

  1. Assessments made resulting from one of IRS's compliance programs when classified as a Compliance Assessment are not proposed assessments and have actually completed the assessment process and specific amounts due have been determined and the person(s) or entities from whom the tax or duty is due have been identified. In these cases, the taxpayer may still have some right to disagree or object, such as in the case of assessments made at the conclusion of an audit that may still be in appeals or tax court waiting final decision.

  2. An assessment resulting from an IRS audit or examination in which the taxpayer does not agree with the results is a CA and is not considered a receivable under federal accounting standards. Cases where IRS cannot obtain sufficient documentation to support taxpayer agreement may also result in assessments classified as a Compliance Assessment.  (08-25-2015)

  1. Write-Offs are unpaid assessments for which IRS does not expect further collections due to factors such as taxpayer's death, completed bankruptcy, or insolvency. Write-Offs may at one time have been Tax Receivable or a Compliance Assessment, but the absence of any future collection potential prevents them from being considered as receivables under federal accounting standards.  (08-25-2015)

  1. IRS created an additional financial category (Memo) to report on unpaid tax assessments that are unique to IRS and do not meet any of the other financial classifications. IRS must record assessments that are later found to be “frivolous” returns (e.g., tax protestors, fraudulent returns, etc.) and IRS has other special processes where tax assessments are made but will not be collected pending additional actions that will resolve the receivable balance including multi-year audits on large corporations. These balances should not be recorded in the financial statements.  (08-25-2015)
Split Classification

  1. There are times when an unpaid assessment falls into a Split Classification. A Split Classification occurs when an unpaid assessment is defined as TR due to the taxpayer agreement or court ruling and is followed by an unagreed subsequent assessment that is classified as CA. Another Split Classification would be TR and Memo.

  2. A Split Classification is not systemically defined in all cases. A manual input of an action code and percentage is required to define each classification. The percentage will provide how much of the Total Module Balance (TMB) belongs to each classification and may result in a variance.

  3. To calculate the split classification percentage between TR and CA assessments, the RTAS analyst will input a Transaction Code (TC) 971 Closing Code (CC) 209. For a TR and Memo split, a TC 971 CC 210 will be input. Prior to manually transmitting an action code, the RTAS analyst will complete a split Allocation Worksheet found on the CASTS home page, to calculate the classification split.  (06-17-2009)
Internal Revenue Service and Government Accountability Office Agreement – Book Value Adjustments and Memo

  1. The definition of Book Value Adjustment (BVA) has been determined by agreement between RTAS and GAO.

  2. If an assessment, abatement, or credit transfer is pending or posted at the time the case is reviewed by IRS, but was not posted at the sample pull cycle, a BVA may be appropriate.

  3. There are various scenarios that may require an adjustment to the book value. The audit methodology already includes exceptions for cases such as complex audits, frivolous returns, etc. In addition to those types of situations, the IRS may also consider a BVA on certain modules that fall outside the norm, even in the absence of solid supporting documentation. In such special circumstances, intangible evidence may indicate a near certainty the balance will be eliminated or reduced.

  4. The correct classification is not always obvious. When the case has extenuating circumstances, RTAS will exercise reasonable judgment to determine the proper classification for the financial statements.

  5. The charts below have guidelines for determining whether or not a BVA is appropriate. For more information and example situations, please refer to the Methodology for Review of Unpaid Assessment Cases.  (06-17-2009)
Types of Book Value Adjustments

  1. Amended Return or Subsequent Adjustment

    Amended Return or Subsequent Adjustment
    If ... Then ...
    Received prior to sample cutoff and posted after No BVA
    Received prior to sample cutoff and is unpostable No BVA
    Processing was delayed Internal Control, Matter for Further Consideration (MFC) but no BVA
    Received after sample cutoff No BVA
  2. Penalties

    If ... Then ...
    Abatement for reasonable cause posted after the sample cut off. No BVA
    Assessment of penalties, lien fees, etc. No BVA if generated transaction
    Manually assessed No BVA
  3. Payments - As with the processing of assessments and abatements, there is generally a normal delay of two weeks between the receipt of a payment and the posting of the payment to the master file.

    If ... And ... Then ...
    Payment is received before the sample pull date Payment is posted after the sample pull date BVA
    Payment is received after the sample pull date Payment is posted to the sample module Count as a collection
  4. Misapplied Payments

    Misapplied Payments
    If ... Then ...
    We have proof the payment was applied as Taxpayer (TP) directed No BVA
    We have proof the payment was applied as TP directed, if the overall TR dollars are unchanged. No BVA, but you must get the ARDI transcript for the other module from IT to prove it is in TR.
    We do not have proof the payment was applied as TP directed, if the change is between TR and any other classification. BVA
  5. TC 706: Credit is not available to offset until the return or credit on the "from" module posts. Offset credit should post the same cycle as the credit posts on the other module.

    TC 706 Offset
    If ... Then ...
    TC 706 offset credit posts to sample module No BVA, as credit becomes available the same cycle the offset credit transfer is generated
  6. Trust Fund Recovery Penalty (TFRP) BVAs

    If ... And ... Then ...
    There is a mis-posted TC 538 Both modules involved are in the same financial classification No BVA, but you must get the ARDI transcript for the other module from IT to documents its classification
    Payment for the TFRP is received prior to the sample pull date The related cross-referencing of the payment on the BMF (TC 538) is not posted until after the sample pull date BVA, because the BMF module balance was overstated at the time of the sample pull


    IRS policy allows nine weeks to process the posting of the cross-reference payment on the BMF module. However, regardless of whether or not the IRS time frame was met, the condition above will require a BVA.  (06-17-2009)
Case Files

  1. RTAS maintains case files on TR cases of more than $25 million, CA and WO cases of more than $10 million, and Memo classification cases of more than $10 Million. We will retain these case files in the Section until the balance due goes below the dollar threshold, or until the Collection Statute Expiration Date (CSED) expires on the balance. The cases are kept in blue file folders, and commonly referred to as "Big Blue" or "BB" cases.

  2. When audit samples are selected, new case files must be assembled for non-BB cases.  (06-17-2009)
Contents and Assembly

  1. Completed case files ready for final review should be assembled with the GAO control sheet on top, followed by the classification Data Collection Instrument (DCI), then the Collectibility DCI, the Accounts Receivable Dollar Inventory (ARDI) transcript, Master File Transcript (MFTRA) Request and the rest of the file contents.

  2. Folders:

    1. Large-Dollar Big Blue (BB) cases will stay in blue folders.

    2. Other cases will be in folders of a designated color for the year and sample type. These colors change each year in order to keep sample items distinct.

    3. To ensure visibility of the TIN, when putting more than a few pages in a folder, fold the bottom along one of the other fold lines. If the case contents are too large to fit in a folder, put them behind the folder. Large case files that do not fit in a folder can be put in a box. Just make sure the TIN, etc., is visible.

    4. Remove old, outdated ARDI and MFTRA transcripts and, as documents are logged in and filed in the folder, discard the duplicate faxed requests, etc.


    Retain BRTVU or RTVUE and collectibility documentation, including case notes from prior years.

    Obliterate all sample numbers that pertain to a prior year audit. (Multiple sample numbers could lead to misfiled documents.) If the folder is old and worn out, replace it with a new one.


    Do not discard ANY GAO notes, forms, or documents from prior audits. This includes MFTRA transcripts if there are any GAO notations on them.

  3. Labels:

    1. For new BB cases, use a generated printed label or write the TIN, Master File Tax (MFT), tax period(s) and plan number (if any) on the folder on a blank label.

    2. The sample is received in an electronic file format and includes the TIN, MFT, tax period, plan type and GAO sample number. These fields are imported into a word processing software program and used to create and print the labels for the yearly sample. Sometimes more than one module per taxpayer is in the sample. There should only be one folder per sampled taxpayer, regardless of the MFT or tax period. If there are multiple tax periods sampled, attach the labels to the same folder.


      If the sample includes a BB module as well as an Under-$26-million module, use the blue folder and a folder of the sample’s designated color. Rubber band the two folders together.

    3. For BB cases selected for a sample, overlay the existing label with the new label that has the current sample number on it.

  4. Sticky Notes: Use small sticky notes to mark the module under review on MFTRA. Sticky notes should also be used to flag the original return, Form 2749, Request for Trust Fund Recovery Penalty Assessment, Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Over-assessment, etc. In other words, you should flag pertinent items that are essential to show the correct classification and collectibility of the module under review. This will assist both RTAS reviewers and GAO as they go through case file contents.

  5. ARDI Transcripts: The ARDI transcripts contain pertinent information from IRS classification program, master file, and the account’s dollar value as of the extract cycle for each sampled module. The transcripts are generated by IT and made available to RTAS at the start of the audit. If additional or replacement transcripts are needed, they can be requested from IT Internal Management.

  6. MFTRA Transcripts:

    1. Complete MFTRA transcripts are required for each taxpayer in the sample. Transcripts for sample cases are automatically generated at the start of the UA audit. Transcripts are also generated for cross-reference officers identified in TFRP modules.

    2. Staple transcripts together in the upper left-hand corner. Use a binder clip for transcripts that are too thick to be stapled. Only if the transcript is too thick for a binder clip should a rubber band be used. We don’t want case file contents to roll up inside the folder.

  7. Shelving Buckets: Do not force too many case files into a bucket. Add buckets and rearrange on the shelves or trucks as necessary. Multiple boxes or extra-large documents can be stored in the storage room. Check the "Oversized Doc" box on the CASTS documentation page if documentation is stored separately from the case folder, and notate it within the case folder as well.

  8. Receipt of Documentation:

    1. As documents are received, they must be date-stamped and the associated Form 3210, Document Transmittal, (if any) should be date-stamped and acknowledged. Acknowledgements are sent to the appropriate GAO Coordinator regardless of who actually sent the documents. It is up to the coordinators to get back to the people who assist them. When you are checking in mail, you must verify that each Document Locator Number (DLN) received was the one requested. Do this before acknowledging and returning the Form 3010, Document Transmittal, and before logging the documents into the CASTS.

    2. If the wrong DLN or no DLN is received, fax the Form 4251, Return Charge Out, or Form 2275, Records Request, Charge and Recharge, to the appropriate coordinator for follow-up. During the UA audit, follow-up requests may be skipped because of time constraints, and because the coordinators are receiving weekly reports that tell them the document’s status. Also, verify that each document in a box is logged in and filed in the correct case file. Occasionally, multiple documents are stapled together when they are shipped. Make sure this is not the case.

    3. If a request is received that shows the DLN is charged out to one of us, check CASTS for the current audit year, and check the prior years’ archived databases to see if it was previously received. See Exhibit 1.34.4-1, Chief Financial Office, Revenue Transactional Analysis Section, Integrated Data Retrieval System, Employee Numbers.The DLN may have been refiled, filed with the dropped case files or never received.

  9. $10 Million and Over Accounts:

    1. We receive monthly reports from IT of all new, changed, or dropped modules that have balances of $10 million or more for CA, WO, and Memo accounts. For TR modules, the report will print for modules that have balances of $25 million or over.

    2. Ongoing case files are maintained in the RTAS office for all of these active large dollar accounts. This is because these cases have a high likelihood of being selected for the UA audit.

    3. Accounts between $30 million and $31 million will have a 100% selection rate for TR. Since many of the new accounts are settled very quickly, you may choose to monitor the case for a period of time before you request case file documentation. For new accounts identified in May or June, you should request documentation immediately, since these are not likely to be resolved before selection of the audit sample.

    4. There are IRM procedures that require Exam and Appeals to forward copies of documentation when they make assessments of $10 million or more. If such documentation is received, hold on to it for use in our case files.

  10. Refiles: Case files for the under $10 million and miscellaneous sample cases are retained in the RTAS office until after the sample for the next year’s audit has been selected and we are certain that GAO will not be revisiting the sample. Once it is determined what, if any, documentation is needed for the current year’s audit, the DLNs can be refiled. The Form 4251, Return Charge Out, must be removed, or if the document is small, clearly marked as a refile. Otherwise, Files treats these as new, incoming requests. Also, the appropriate refile information on CASTS must be entered to show that the DLN was refiled. Enter refile information on the current audit year, not on any prior audit years.

  11. Dropped Cases: Each month, cases will drop out of the UA $10 million or $25 million inventory. If you have any assessment or abatement documentation in dropped case files, please retain them or give them to the team analyst assigned to the Abatement Audit. The documents may be needed for the GAO Abatement Audit.  (06-17-2009)
Classification Documentation

  1. The ARDI Program Requirement Package (PRP) 180, Section 15 (IMF), and PRP 480, Section 95 (BMF), documents the IRS classification program. To be able to determine if a module is correctly classified, you must know how certain accounts are handled and why. These PRPs, along with the documentation and procedures described below will be used to determine if IRS unpaid assessment inventory is reported accurately on the financial statement.  (06-17-2009)
Document Locator Number Documentation

  1. The majority of the documents used to support IRS classification are posted to the taxpayer’s account and filed by DLN. The controlling DLN, and all TC 29X and TC 30X DLNs for each module in the Under $26 Million sample are extracted from the MFTRA print file when it is returned from master file. The data is used to print the MFTRA transcripts. These DLNs are automatically mass-requested at the start of the UA audit. The DLNs mass-requested and other data, e.g., TC 530 date, name control, etc. are extracted from the print file and returned electronically to be imported to CASTS.

  2. Often, the DLNs mass-requested are not sufficient to support classification, especially in the case of a multi-year audit. If the sample module has Exam involvement, review the MFTRA of the account to determine if it is a multi-year audit. Review the tax periods before and after the sample period for a TC 30X or TC 421 that posted about the same time. The Exam work papers usually are filed with the latest balance due account, but not always. As of January 2000, Exam and Appeals are required to input TC 971 with Action Code (AC) 057 when they are closing modules with a refile DLN that does not contain the Exam work papers. The cross-reference account data input with the TC 971 will be that of the module containing the work papers.

  3. The Exam blocking series should indicate if documentation is attached. See IRM 4.4.1 AIMS/Processing Handbook, Instruction, Exhibit 4.4–7, Blocking Series. Because of time constraints, it is usually necessary to order any likely DLNs, even if some of the documents prove to be unrelated to the assessed balance. Order additional DLNs using IDRS Command Code ESTABDG. This command code is reserved for GAO requests.


    TC 30X DLNs with blocking series 760-769 will not be automatically requested. You must request these manually if they are needed.

  4. If the examination audit is still open, (-L freeze on the module) use IDRS command code AMDISA to determine the location of the audit. You can determine the location by using the Exam website http://sbse.web.irs.gov/AIMS/ . Click on "Contacts," go to the Employee Group Code list, and look up the information by Primary Business Code (PBC). Request copies of the necessary documentation from the appropriate coordinator.

  5. If a Form 4251, Return Charge Out, or Form 2275, Records Request, Charge and Recharge, request response is received which indicates the document is an RGS document, request the Report Generation Software (RGS) file from one of the designated RTAS analysts who have RGS access.

  6. ESTABD with the definer G was created for, and is to be used only for, the GAO audit of IRS financial statement. The programming for the definer G causes the literal "GAO Financial Audit" to be printed directly beneath the DLN. Documents requested using ESTABDG will be sorted to the top in each Form 4251, Return Charge Out, run. The sort cannot be changed locally. Files and Files Record Center (FRC) have instructions to treat these as the highest level expedite requests.

  7. Follow current ESTAB procedures to request DLNs. Notate your name, phone number and office symbols in the comments area. Additional comments such as "New $10 Million," "abatement sample," are helpful when associating documents. If the request is for a specific sample case, notate the sample number in the comments field on the ESTAB request.

  8. ESTABD with the definer X can be used to request Correspondence Imaging System (CIS) prints. Include the CIS number in the Remarks area on the request.

  9. Sometimes the necessary documentation has been destroyed. See Exhibit 1.34.4-3, General Document Retention Criteria. In 1990, when Congress added an additional four years to the six year CSED, the retention period for only the controlling DLN on some balance due accounts was extended for an additional four years.

    1. If you receive a Form 4251, Return Charge Out, marked "destroyed" without a copy of the appropriate CSED extended list attached, review the retention criteria to ensure that the document should have been destroyed. The Form 4251, Return Charge Out, notations are OFTEN incorrect in this regard. If the document should not have been destroyed, contact the appropriate campus coordinator and ask them to have Files check the CSED extended list. Remember that documentation for Form 1120, U.S. Corporation Income Tax Return, and Form 706, United States Estate Tax Return, modules have a 75-year retention. If you are uncertain, ask the RTAS CSED Subject Matter Expert (SME).

    2. A copy of the applicable CSED list should be attached by Files or FRC to all Form 4251, Return Charge Out, responses marked "destroyed."

  10. Sometimes the necessary documentation was not filed with the DLNs posted on the balance due account. This may be because the module was part of a multi-year audit, the assessment was made on NMF but the documentation has a master file DLN, etc. And, occasionally the documentation just cannot be located. Whatever the reason, alternative documentation must be obtained. Use whatever resources are available to obtain this.  (06-17-2009)
Electronically Filed Document Locator Numbers

  1. Electronically Filed (ELF) DLNs should be requested using IDRS Command Code TRPRT, (or through the MeF portal for Form 1120, U.S. Corporation Income Tax Return, only.) The chart below shows location codes for ELF DLNs. File Location Code (FLC) 66 can be either ELF or paper, so it is excluded from the chart. See IRM, Automated DLN Assignment for MeF, SCRIPS, and SFR/IRC 6020(b), for more details.


    Some of the ELF location codes have changed over the years. There are some older DLNs with these location codes that will be paper documents, and vice versa. If you find this to be the case, use manual procedures to request the DLN.

    ELF DLNs by Location Code
    10–19         14   16      
    20–29             26 27    
    30-39 30   32              
    50–59     52              
    60–69         64          
    70–79 70   72     75 76     79
    80–89 80               88  
    90–99 90   92 93         98*  
    * For F1120, U.S. Corporation Income Tax Return, with blocking series 500-978, TC 150 posting cycle after 200312.  (06-17-2009)
Other Documentation

  1. Appeals File: If there is a TC 300 with a disposal code (DC) 07 posted prior to or immediately following the assessment causing the balance due, contact the GAO Appeals Coordinator for the Appeals File. The coordinator will forward the information request to the appropriate Appeals Office Liaison.

  2. Tax Court Decisions: A TC 300 with DC 11, or TC 520 closing code (CC) 72, posted prior to or immediately following the assessment causing the balance due is an indication that the taxpayer petitioned Tax Court. If the case goes to trial, the presiding judge will ordinarily issue a report setting forth the findings of fact and an opinion. The case is then closed in accordance with the judge's opinion by entry of a decision stating the amount of the deficiency or overpayment, if any.

    1. The decisions resulting from a trial may also sometimes be located through Lexis-Nexis. You can access Lexis-Nexis through Servicewide Electronic Research Program (SERP).

    2. Appeals processes almost all of the assessments from Tax Court. Request these from Appeals using the same procedures used for an Appeals case. Appeals has access to District Counsel’s Compliance Application Tracking System (CATS) tracking system and should be able to locate the decision.

    3. Copies of the Appeals Memorandum or Tax Court Decisions are often included with the final doc code 47 closing documents. If you have a 47 doc code in the file and these documents are attached, it is not necessary to contact Appeals.

  3. Trust Fund Recovery Penalty (TFRP) Cases: Make screen prints of IDRS command code UNLCER for the business and all responsible officers. If information cannot be found on UNLCER, include a screen print in the case file for GAO that shows "No Data Available" and annotate that all campuses were checked. If there are no TC 971s, or UNLCER information is not available, wait for the assessment document. Using the signature on the assessment document (return), use IDRS command code SSNAD or NAMES on that officer’s name to see if a TFRP assessment can be located.

    1. For non-sample cases, (BB $10 million or $25 million) order complete MFTRA transcripts for each officer and, if MFT 55, penalty reference 618, for the business. Request the TFRP file from CCP. (TFRP file retention is 12 years.) See the DCI for detailed information.


      If the sample item is the Form 941, Employer's Quarterly Federal Tax Return, and the officer’s UNLCER shows more than one business, you do not need to do anything with the other businesses.

    2. The purpose of the trust fund analysis is to provide complete cross-referencing of all accounts for GAO to determine if any audit adjustments or re-classifications need to be made. When re-computing the trust fund modules, if you cannot get the same total that was assessed or there are payments requiring posting to accruals, use the special TFRP program on certain computers in the RTAS office. Attach the Page 4 printout to the DCI.

  4. Offer in Compromise (OIC) Cases:

    1. If the account has a TC 480, there should be a file that contains the original offer, IRS response, etc., at either the campus or area office.


      OICs returned "not processible" will not have a paper file.

    2. Request all OIC documentation through CCP. Request only a copy of the latest Form 656, Offer in Compromise, that contains the sample module. If it is determined later that the entire file is needed, request it through CCP. Because CCP has little lead time, make every effort to quickly determine whether the complete file will be needed so that CCP is allowed as much time as possible. CCP will work requests for Centralized Offers in Compromise (COIC) cases worked at the Brookhaven and Memphis locations, also.

    3. Doubt as to Liability cases are not loaded onto Automated Offer in Compromise (AOIC). They are worked by Exam. If there is an open TC 480 and no AOIC, check with Exam.

  5. Installment Agreement Cases (Status 60): Make screen prints from IDRS Command Code IADIS. Check for cross-reference indicators on the IADIS prints for associated modules related to a business or an individual account if working a business taxpayer case. This is needed to check for payment applications that may be going to other modules. A pattern of payments as indicated in the agreement will support IRS TR classification, since the original documents are not normally retained.

  6. Math Error Returns: Returns with math errors are classified as TR. The agreement with GAO is that this is a valid classification if 60 days have elapsed and the taxpayer has not replied to the math error notice. However, our programming does not account for the 60 days; it classifies based on whether or not the math error switch is turned on.

    1. If you review a math error case during the audit, compare the TC 150 posting cycle to the sample pull cycle to see if at least nine cycles (63 days) have elapsed. If 60 days have not elapsed, put the case aside and monitor it.

    2. After the 60 days has passed, check IDRS TXMOD to see if a control base has been opened, or if a history item indicating TP reply has been entered. Also, a current STAUP is an indication that the taxpayer has replied. Check Account Management Services (AMS) for notations of TP contact.

    3. If the taxpayer has replied, classify the case according to the reply. You may need to issue a DCI to get information.

    4. If no reply or indication of contact is found, no additional action is necessary. Complete the UA audit case review and DCIs as normal.  (06-17-2009)
Alternative Documentation

  1. Sometimes we cannot get the usual documentation we need to support case classification. In such cases, we will have to pursue alternative documentation in order to support taxpayer agreement or court findings. The following are some options that may be used in lieu of tax returns, Form 870, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Over-assessment, waivers, court cases, or other items.

  2. A Form 900,Tax Collection Waver, may be used to support a TR classification. If the taxpayer agreed to an extension of the CSED (TC 550), request a copy of the Form 900, Tax Collection Waver, through the appropriate coordinator if the TC 550 has a definer code of "1." Otherwise, no Form 900, Tax Collection Waver, exists. Use the DLN of the TC 550 to determine which coordinator to contact. The Form 900, Tax Collection Waver, will list the applicable tax periods and amounts. Do not order the Form 900, Tax Collection Waver, if the DLN is 2779999999992. This is a systemic input of TC 550s due to RRA98.

  3. Bankruptcy courts can uphold or discharge IRS assessments. Many of their more recent rulings are on the PACER/RACER system, which the CCP coordinator can get. Some bankruptcy decisions can also be found on Lexis-Nexis, which is accessible thru SERP.

  4. Judgments (TC 520, CC 80) are filed at the county courthouse. Contact CCP for documentation pertaining to these. Some judgments can also be found on Lexis-Nexis.

  5. Sometimes the documentation to support collection will have documentation that also supports the classification of the account. If the account is assigned with a TSIGN to a revenue officer, controlled on IDRS, had recent examination activity, etc., the employee working the account may have pertinent documentation. Contact the appropriate campus coordinator or CCP and ask them to contact the employee. The Taxpayer Advocate Service (TAS) may have copies of needed documentation, etc. You will probably want to use General DCI for this.  (06-17-2009)
Collectibility Documentation

  1. To determine what documentation to request from the field offices, MFTRA and IDRS must be reviewed for the collection status of the account. Then, depending on where the account is in the collection process, documentation should be requested, and if the account is in active collection, you will need to send out a collectibility DCI. See IRM, Collectibility Data Collection Instrument.

    1. Do not issue a DCI for TC 470 or STAUP information unless you can determine who is actively working the case. STAUPs are often input by IRS employees who are taking taxpayer telephone calls. The employee who inputs the STAUP has nothing to do with the case. A STAUP or TC 470 is just an indication that some function is looking at the case, or the taxpayer has made contact with IRS. We are not really interested in why the STAUP was input; we want to know what is going on with the account.

    2. During the UA Audit, collectibility DCIs will be sent through GAO coordinators. As the audit progresses, some accounts will change status. There may be instances where you need to issue a late DCI because of recent changes to the account.

  2. Bankruptcy cases: Most areas are now maintaining their case files on the paperless Automated Insolvency System (AIS) instead of using paper files. Prints from AIS, if supported by prints from the bankruptcy courts PACER/RACER system are acceptable. The retention on bankruptcy files is only two years, so do not request a paper bankruptcy file if it has been closed for longer than two years.

  3. DCIs are sent out only if someone is actively working a case. In other words, the case must have an open IDRS control base, AMDIS in an active status, TSIGN, etc. Do not send a DCI if there is no current activity on the module or account.  (06-17-2009)
Account or Programming Correction and the Issues Page

  1. Occasionally, we will find an account needing corrective action. It could be that we find payments not applied, the wrong amount assessed, etc. Using a General DCI, you should refer these to the appropriate coordinator, along with copies of any substantiating information you have. Ask to be notified as to what corrective action was taken and when it will be completed. If the account is in the sample or found in our research, then corrective action needs to be taken as soon as possible.

    1. When extensive problems that affect the processing of multiple accounts are identified, document the problem on the CASTS Issues Page. These issues will be assigned to RTAS analysts after the UA audit for additional research and possible action. The CFO issues a report at the conclusion of the audit that details problems identified.

  2. During the audit process, certain situations are identified which require programming changes or enhancements. Also, GAO frequently changes or adds to existing criteria. We maintain an ongoing list of needed changes and ideas for enhancements. Use the Issues Page on CASTS to notate the issues. For the changes and enhancements to be in effect for the next year’s audit, we must submit the Unified Work Request (UWR) no later than February each year. The earlier we submit the UWR, the more time there is to review and test the changes.  (06-17-2009)
Matters for Further Consideration (MFCs) and Audit Inquiry Forms (AIFs)

  1. During the audit, GAO provides IRS with written questions, MFCs and AIFs, which if not cleared, not only have a negative impact on the audit, but also can provide the basis for GAO’s internal control weakness determinations and management letters. We must research these fully and carefully respond in writing. Attach IRM references, policy statements, or any other items to support the IRS position.  (06-17-2009)
Miscellaneous Samples

  1. GAO frequently selects other types of IRS inventory to audit. These audits normally will have a separate job code. Caution: Be careful of disclosure issues because not all job codes entitle GAO access to taxpayer information.

  2. The various inventories are targeted because GAO or Congress suspects there is a problem with how the inventory is handled. If GAO doesn’t find any problems, they usually discontinue the audit after one or two years. Consequently, it is extremely important that any necessary supporting documentation is provided, and that all issues, questions, MFCs and AIFs are resolved completely and timely. Some inventories targeted in the past include frozen credits, Non Master File (NMF), abatements, liens, installment agreements, manual interest, and Department of Defense (DOD) contractors.  (06-17-2009)
Custodial Audit Support and Tracking System (CASTS) Database

  1. The CASTS database was created to track DLNs, monitor case file progress, generate reports and collect statistics, for the GAO Unpaid Assessment Audit. Its use has expanded to include other audit samples. Caution must be exercised when entering information, and entries should be as consistent as possible from one analyst to another.

  2. Take the time to become familiar with each screen. Most fields have explanatory, pop-up instructions or drop-down menus. If others are needed, they can be added. There is a separate remarks screen, which is tied to each specific MFT, tax period and form. The remarks screen can be used as clarification when the existing fields on the main forms don’t suffice. Keep remarks as brief as possible so that the entire field can be viewed without scrolling through it. Use abbreviations and remember lowercase letters take up less space than uppercase letters. Uppercase letters are used for the name control.

  3. Detailed instructions for entering data into and generating reports from CASTS can be found in separate CASTS documentation. As CASTS has frequent updates and changes, it is not practical to attempt to keep procedures current in this document.

  4. The information below is general, and can be used for broad guidance and familiarity. Within CASTS, the Control Page and Documentation Page are the main two pages that are used year-round, as they track cases both for the audit and for large-dollar "Big Blue" cases. Collectibility DCIs and the General DCI may also be used year-round.

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