11.3.31  Tax Check Reports on Federal Appointees

Manual Transmittal

May 20, 2015

Purpose

(1) This transmits revised text for 11.3.31, Communications and Liaison, Disclosure of Official Information, Tax Check Reports on Federal Appointees.

Material Changes

(1) Editorial changes have been made throughout to update IRM/statute/organizational references and to make the text easier to follow and use electronically.

(2) Removed Exhibit 11.3.31-1, Example of Tax Check Unit Waiver, as there are a variety of waivers depending on the agency's requirements..

(3) Removed Exhibit 11.3.31-2, Example of Headquarters Tax Check Report, as there are a variety of responses based on research.

Effect on Other Documents

IRM 11.3.31, Disclosure of Official Information - Tax Check Reports on Federal Appointees dated October 12, 2010 is superseded.

Audience

All Operating Divisions and Functions.

Effective Date

(05-20-2015)


Edward T. Killen
Director, Governmental Liaison, Disclosure and Safeguards

11.3.31.1  (05-20-2015)
General

  1. Federal agencies, the White House, Executive Office of the President, and other governmental entities periodically perform background investigations on prospective employees, contractors, certain award nominees, and others to advance their mission. These investigations may include a federal Tax Check. Agencies will request a Tax Check report to supplement investigations concerning character, loyalty, or suitability of such prospective appointees, employees, contractors or award nominees. This may include positions of sensitive nature or that require high level clearances.

  2. Examples of the types of positions that require a Tax Check are:

    1. Prospective Presidential appointees that require Senate confirmation

    2. Nominees for Presidential "E" Awards established by Executive Order 10978

    3. Candidates for the Malcolm Baldrige Award

    4. Certain other persons/entities

      Note:

      Other consent programs based on IRC §6103(c) for delivery of account transcripts are routinely handled by other locally established procedures.

  3. The IRS Governmental Liaison, Disclosure and Safeguards (GLDS) function is responsible for conducting these tax checks and issuing a report to the requesting agency.

  4. There are three types of Tax Check cases - routine, priority and extreme priority.

    1. Routine cases are assigned to both the Tax Check group and the field Disclosure offices based on inventory needs and are to be processed within 30 days of receipt.

    2. Priority and extreme priority cases are worked by the Tax Check group and are to be processed within 15 days of receipt.

  5. Tax Check requests for tax information are made pursuant to:

    1. IRC §6103(c) based on a written authorization for disclosure of return information to a designee signed by the taxpayer. (See IRM 11.3.2, Disclosure to Persons with a Material Interest, and IRM 11.3.3, Disclosure to Designees and Practitioners.) or

    2. IRC §6103(g) based on a written request signed by the President, to the Executive Office of the President or head of a Federal agency for certain appointments. See IRM 11.3.30, Disclosure to the President for instructions concerning disclosures of return and return information to the President or specified White House employees.

    3. IRC §6103(h)(1) based on Department of the Treasury's tax administration responsibility to ensure current and prospective employees and contractors are compliant with their tax obligations. These Tax Checks are conducted within the Human Capitol and Chief Financial Offices

  6. The authority for Tax Check disclosures under this chapter is IRC §6103(c) and 26 CFR §301.6103(c)-1. Due to the sensitivity or high profile nature of some Tax Check cases, delegated authority to sign certain responses may supersede Delegation Order 11-2. For example, Tax Check reports on White House requests with adverse findings require Commissioner Office review and approval and are signed by the Disclosure Deputy Associate Director, HQ Policy.

    Note:

    Requests for tax compliance checks not described above are worked through routine agency procedures. Disclosure offices should refer requesters to the Transcript Delivery System (TDS) or the campus RAIVS units who are established to handle this type of work.

    Note:

    Disclosures of federal tax information to Probation Officers for taxpayers with tax related convictions are typically handled by the Criminal Investigation function based on IRC §6103(h)(4).

11.3.31.2  (05-20-2015)
Information Disclosed in Tax Check Reports

  1. Generally a Headquarters Tax Check Report provides the following information to the requester for the years specified in the waiver:

    1. Whether the individual has filed federal income tax returns as required?

    2. Whether the individual has failed to pay any tax, penalties, and interest within a specified period after notice and demand?

    3. Whether the individual has been or is under investigation for possible criminal offenses under the internal revenue laws?

    4. Whether the individual has been assessed any civil penalty for fraud under the internal revenue laws?.

    Note:

    The requesting agency will determine the number of years and scope of the Tax Check request. Each agency will state what constitutes "timely" filing and payment in the consent, which may be different from the standards established for IRS employees tax compliance. Reading the consent is critical to ensure the response provides only the years and information that is authorized. Determination of timeliness is based on the consent language.

  2. If our response to any of the above questions is yes then we may provide specific details explaining the adverse determination ONLY if the waiver authorizes that disclosure. If the consent does not authorize the release of detailed information, we can only provide Yes/No responses.Exhibit 11.3.31-2 .

11.3.31.3  (05-20-2015)
Securing Information for Tax Check Reports

  1. The caseworker initiates requests for information needed to prepare Tax Check Reports.

  2. Tax Check Transcripts and/or complete transcripts of account are requested from the MCC and/or through IDRS. The assigned caseworker will conduct research to gather sufficient information to respond to the request. A Tax Check response is a status report on the taxpayer's compliance concerning federal tax filing and payment. Additional information on research techniques and the correct preparation of responses can be found in the Tax Check Desk Guide on the GLDS Share Point site.

  3. The Criminal Investigation (CI) function at Headquarters is furnished the name and social security number from the taxpayer's waiver and is asked to check their records for possible criminal tax cases, generally in one business day.

    1. If no record exists, notification of this fact is returned to the Tax Check Unit by encrypted e-mail.

    2. If adverse information is discovered, the CI Global Financial Crimes Section will be notified and they will prepare a memo advising what information, if any, may be released.

      Note:

      IRC §6103(c) provides that the Secretary shall not disclose taxpayer return and/or return information if it determined that such disclosure would seriously impair federal tax administration. Careful coordination with CI is essential to ensure no impairment of tax administration or unintentional release of information protected by Rule 6(e) regarding grand jury secrecy. See IRM 11.3.27, Disclosure of Return Information to Grand Juries.

  4. If the data secured in IRM 11.3.31.2(1)a), shows no record of filing for any or all of the years covered by the waiver and additional research indicates a filing requirement or an outstanding balance, White House, Executive Office of the President (EOP) and Department of Justice (DOJ) requests only will be forwarded to the Director, CollectionPolicy (HQ) for immediate assignment to a Revenue Officer (RO). These DOJ requests are normally political appointments and handled differently than other requests from DOJ. The DOJ , White House, and EOP requests require that the RO contact the taxpayer within 48 hours of receipt. The tax check case will remain open until the return is secured or all efforts to secure the return have been exhausted. In the meantime, an interim response is sent to the White House, EOP or DOJ to advise that we are attempting to contact the taxpayer to determine if a return(s) was filed or to secure the non-filed return(s). If this is a non-White House request, a referral will be made to Director, Collection Policy for any actions it deems appropriate. This will close the Tax Check case.

  5. If the taxpayer indicates that the return was filed, the RO must secure proof of filing such as a canceled check matching the balance due per the taxpayer's retained copy of the return. In the event that the original canceled check cannot be located, a copy must be secured. If such proof is not obtainable, as in the case of a refund return, a copy of the tax return must be secured by the RO for transmission as a "possible duplicate return" to the appropriate Campus based on the taxpayer's address.

    Note:

    In failure to file cases, returns should not be solicited without consideration for Criminal Investigation implications.

  6. If the RO finds that the return has not been filed, he/she should ascertain whether a return was required to be filed. If a return should have been filed, the ROmust secure the return.

    Note:

    No summons should be issued without first contacting the Collection Coordinator..

  7. If the taxpayer is uncooperative (e.g., fails to respond to calls, fails to meet appointments, and fails to provide documents), that fact along with pertinent details are reported to the Disclosure caseworker. They will make contact with the requesting agency to help secure additional taxpayer cooperation. The caseworker will notify the RO of any additional information obtained from the requesting agency concerning further attempts to contact the taxpayer.

  8. Taxpayers are to be advised not to mail delinquent returns to the campuses for processing. Such actions will delay verification of filing. Returns are not to be sent to the Tax Check Unit as this action will also delay processing of the original or "possible duplicate return" by the Campus. See (6) above.

  9. The results of the taxpayer contact will be reported to the caseworker by secure e-mail.

         

  10. The caseworker will prepare a Tax Check report after the receipt and analysis of all relevant return and return information.

  11. The Tax Check Report will consist of a response for each item listed on the waiver.

  12. Tax Check Reports are either mailed or faxed to the requester based on procedures established with each requester.


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