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Part 25. Special Topics

Chapter 2. Information and Informants' Rewards

Section 1. Receiving Information

25.2.1  Receiving Information

25.2.1.1  (04-27-1999)
Overview

  1. The Information and Informant Rewards IRM provides procedures and guidance for all service personnel and must be strictly adhered to. Any deviation from this IRM must be approved by Headquarters Office.

  2. This section explains the procedures used by the Service when information concerning an alleged violation of federal tax laws is received.

  3. Information from informants can be received via telephone calls, office visits (walk-ins), and correspondence from an individual wishing to report an alleged tax law violation. The information provided will be documented and forwarded to the responsible function for the appropriate action.

  4. The Service always welcomes the receipt of information that indicates a taxpayer is violating the Federal tax laws. However, it is the practice of the Service not to suggest or encourage the informant to submit a claim for reward.

  5. Disclosure restrictions prohibit the Service from revealing to the informant what specific actions are taken by the Service regarding the taxpayer who is alleged to have committed a tax violation.

  6. If the informant wants a reward for the information, Service employees will not make any offer or promise to the informant which would bind a area or service center director to pay a reward.

25.2.1.2  (04-27-1999)
Disclosure/Security Procedures

  1. DO NOT DISCLOSE any tax return or account information to the informant about the alleged tax violator (e.g., whether or not the alleged tax violator filed a tax return). Taxpayers look to the Service to maintain their returns and associated account information in a secure and confidential manner. Any sharing of this information with anyone beyond the taxpayer is considered an unauthorized disclosure unless authorized by IRC 6103.

  2. The identity of the informant must not be disclosed to any other Service officials or employees except on a "need to know" basis in the performance of their official duties.

  3. To maintain maximum security, protect documents and screen displays which identify informant information or the informant. Keep all documents, screen displays, and forms secured. This information must be kept concealed from all employees in a locked file cabinet until it is forwarded to the responsible function each day.

  4. Transmit the information in a double sealed envelope. (Use pink or gray envelopes).

  5. Personnel are required to treat the identity of the informant and the informant’s information as highly confidential and to exercise the security precautions stated above.

  6. See the Physical and Document Security for guidelines on securing informant material.

25.2.1.3  (04-27-1999)
Handling the Information

  1. Information is received by Customer Service Call sites (currently, Fresno, Austin, Atlanta, and Philadelphia Service centers) and should be handled as follows:

    1. Thank the caller for offering to provide information alleging a violation of the Federal tax laws and explain that you will accept all available information relevant to the alleged tax law violation. Use form 3949, "Information Report Referral," to record the information. See 1.6 below "Documenting the Information."

    2. Explain that specific information is most useful to the Service. This includes the taxpayer’s name, address, the tax years involved, the nature of the violation, e.g., the dollar amounts of unreported income or erroneous deductions. Also, whether there are documents (books and records) available to substantiate the allegations.

    3. If the informant requests feedback on actions taken by the Service with respect to his/her information, explain that disclosure laws prohibit Service employees from disclosing any information as to specific actions that may or may not be taken. Service employees may not indicate to the informant the amount of the probable tax recovery.

    4. If the caller requests assistance not related to informant criteria, answer the caller’s question or resolve the issue. If the caller’s question or issue cannot be resolved, prepare a Form 4442 (Inquiry Referral) or transfer the call to the appropriate area. Every attempt must be made to answer the inquiry or issue via the telephone before preparing Form 4442 or transferring the call.

    5. With respect to allegations of misconduct or tax violations by a Service employee, prepare Form 3949 and forward the Form 3949 to your manager for review and forwarding to Treasury Inspector General, Tax Administration (TIGTA) if the manager deems appropriate.

    6. If the informant requests a reward, follow the instructions in "Request for Reward for Information Provided" below.

  2. If an informant call is received by Customer Service in Service Centers other than the Fresno, Austin, Atlanta, and Philadelphia Service centers, take the following action:

    1. Thank the caller for offering to provide information alleging a violation of the Federal tax laws and explain that you will accept all available information relevant to the alleged tax law violation. Use form 3949, "Information Report Referral," to record the information. See 1.6 below "Documenting the Information."

    2. Forward Form 3949 to: Customer Service function, Attn: Informant Referral, in the Service Center having a Customer Service Call site that is located within your area.

    3. If the informant requests a reward, follow the instructions in "Request for Reward for Information Provided" below.

    4. With respect to allegations of misconduct or tax violations by a Service employee, prepare Form 3949 and forward the Form 3949 to your manager for review and forwarding to TIGTA if the manager deems appropriate.

  3. If an informant call is received by Customer Service in the Fresno, Austin, Atlanta, and Philadelphia Service centers, but not by a Customer Service Representative in the Informant Referral area, take the following action:

    1. Transfer the call to 1–800–829–0433, if the line is busy, prepare Form 3949, "Information Report Referral." See 1.6 below "Documenting the Information."

    2. Forward Form 3949 to the Informant Referral area.

    3. If the informant requests a reward, follow the instructions in 1.4 "Request for Reward for Information Provided" below.

    4. With respect to allegations of misconduct or tax violations by a Service employee, prepare Form 3949 and forward the Form 3949 to your manager for review and forwarding to TIGTA if the manager deems appropriate.

  4. Information received by Headquarters and Area Offices should be processed as follows:

    1. Thank the caller and explain that special call sites have been established for receiving information alleging tax law violations. Explain that the responsibility for examining tax returns belongs to the field offices and that Headquarters and Area Offices do not have a direct role in specific tax examinations. Ask him/her to please call 1–800–829–0433 to provide the information.

    2. Forward written information in accordance with "Disposition of the Information" below. Attach a copy of Form 211, if it exists. Forward the original Form 211, if applicable, to the Informants’ Claims Examiner in the service center where the alleged tax violator’s tax return is filed.

    3. With respect to allegations of misconduct or tax violations by a Service employee, prepare Form 3949 and forward the Form 3949 to your manager for review and forwarding to TIGTA if the manager deems appropriate.

    4. If the informant requests a reward, follow the instructions in 1.4 "Request for Reward for Information Provided" below.

  5. Information is received by Area Office/Area P.O.D.s. should be processed as follows:

    1. For information received by telephone, thank the caller and explain that special call sites have been established for receiving information alleging tax law violations. Ask him/her to please call 1–800–829–0433 to provide the information. If the caller does not want to call the 1–800–829–0433 number or be transferred to it, the employee will record all of the information provided on Form 3949. See 1.6 "Documenting the Information" below.

    2. Tell the informant that you will accept all available information relevant to the alleged tax law violation. Explain to the caller that specific information is most useful to the Service. This includes the taxpayer’s address, the tax years involved, the dollar amounts of unreported income and erroneous deductions. Also, whether there are documents (books and records) available to substantiate the allegations.

    3. If the informant requests feedback on actions taken by the Service with respect to his/her information, explain that disclosure laws prohibit Service employees from disclosing any information as to specific actions that may or may not be taken. Service employees may not indicate to the informant the amount of the probable tax recovery.

    4. For information received in writing, prepare Form 3949. See instructions in 1.6 "Documenting the Information" below.

      Exception:

      Service Center Criminal Investigation (CI) will not prepare Form 3949. CI will merely forward the information to the Criminal Investigation in the appropriate area office.

    5. For information received from walk-ins, observe the instructions in c and d above that apply to telephone calls and prepare Form 3949. See instructions in 1.6 "Documenting the Information" below.

    6. With respect to allegations of misconduct or tax violations by a Service employee, prepare Form 3949 and forward the Form 3949 to your manager for review and forwarding to TIGTA if the manager deems appropriate.

    7. If the informant requests a reward, follow the instructions in "Request for Reward for Information Provided" below.

25.2.1.4  (04-27-1999)
Request for Reward for Information Provided

  1. If the informant indicates he/she wants a reward, take the following action:

    1. For telephone and correspondence inquiries, provide Publication 733 (Rewards for Information Given to the Internal Revenue Service) and Form 211 (Application for Reward for Original Information) to the informant.

    2. Advise the informant to return the completed Form 211 to the service center that handles/processes the alleged tax violator’s tax return. The addresses for the service centers are shown on the reverse side of Form 211. Instead of advising the informant to send the completed Form 211 to the tax violator’s service center, the informant may return the Form 211 to the same office.

    3. Under this procedure: establish a suspense file and retain this file for a reasonable time, at least 90 days.

    4. Upon receipt of a completed Form 211: send the original Form 211 to the Informants’ Claims Examiner at the service center where the alleged tax violator files his/her tax return; attach a copy of the Form 211 to the Form 3949, and forward in accordance with "Disposition of the Information" below.

    5. If a completed form 211 is not received within a reasonable time, process the Form 3949 under normal procedures.

    6. For "walk-ins," advise the informant that he/she may complete Form 211 immediately. Give the informant Publication 733 for further information.

    7. With respect to all informants, emphasize that the Service is prohibited from disclosing any information about specific actions taken by the Service regarding the information.

    8. The employee will process the Form 211 in accordance with instructions on Form 3949.

  2. Claims for reward, submitted on Form 211, which are received subsequent to the receipt of the original information will be forwarded to the Service Center Informants’ Claims Examiner in the service center where the alleged tax violator’s tax return is filed. The Informants’ Claims Examiner will follow the instructions in section 1.5 below.

25.2.1.5  (04-27-1999)
Forms 211 and Other Informant Information Received by Service Center Informants’ Claims Examiners

  1. The Service Center Informants’ Claims Examiner, upon receipt of an original Form 211, will:

    1. Acknowledge receipt of the claim, Form 211. Letter 1891 (SC) or the sample letter shown in Section 2, Exhibit 4, of this IRM, may be used for this purpose. However, if the Form 211 does not contain information that warrants further action, do not send an acknowledgment letter. Instead, send a letter of rejection. Letter 1010 (SC), or a similar letter, may be used for this purpose.

    2. Establish a control number and case file—see Section 2 of this IRM, section 2.2:(7).

    3. Retain the original Form 211 in the Informants’ Claims Examiner’s file.

    4. Determine if there is audit or collection activity open for the taxpayer identified on the Form 211. If an open case exists, send a copy of the Form 211, along with any information received, to the office conducting the ongoing activity. If no open case exits, follow the procedures under "Documenting the Information," "Pre-Screening the Cases," and "Disposition of Information" below.

  2. The Service Center Informants’ Claims Examiner, upon receipt of a copy of Form 3949, indicating that a claim for reward, Form 211 may be filed, will:

    1. Establish a file in anticipation of receiving a Form 211. If no Form 211 is received within six months, retain/dispose of the file in accordance with the Records Control Schedule (RCS) 206 (Customer Service).

  3. When the Service Center Informants’ Claims Examiner receives a claim for reward, Form 211, including a Form 3949, and; the forms were forwarded from Criminal Investigation, Field Territory Manager, or Service Center Examination Classification (Customer Service); and the file indicates there is insufficient revenue potential or another reason that the claim lacks tax potential, the Informants’ Claims Examiner will:

    1. Establish a control number case file (see section 2 of this IRM, section 2.2:(7)), process the claim for rejection.

    2. Issue letter 1010 (SC), or a similar letter.

      Note:

      Since no examination was conducted, no formal evaluation report is required to support the rejection.

25.2.1.6  (04-27-1999)
Documenting the Information

  1. Use Form 3949 (Information Report Referral) to record information from informants.

    1. Attempt to obtain all of the information necessary to complete Form 3949. Fill in all blocks/spaces to the extent possible using the information provided by the informant.

    2. It is important that Form 3949 include the alleged tax violator’s name and address, (the SSN, if known), the tax periods, and the specific nature of the violation. The dollar amounts of unreported income or erroneous deductions are also important.

    3. Therefore, if the informant does not have enough information to properly complete Form 3949, ask him/her to call back when he/she has, at least, the alleged tax violator’s name and the alleged tax violation.

    4. Invite the informant to give his/her name and telephone number in case a Service employee wishes to contact him/her at a later date to obtain additional information.

    5. If Form 211 was received with the information, handle in accordance with the instructions on Form 3949.

    6. The information will be screened to determine whether there is tax potential. Customer Service will follow the instructions in "Pre-Screening the Cases" below for certain cases.

      Note:

      If the allegation involves a violation enforced by another agency, and it is not a tax violation, consult with the disclosure office regarding its disposition.

    7. After screening, Customer Service Representatives at Informant Referral areas will forward all Forms 3949 according to "Disposition of the Information" below.

    8. Areas other than Customer Service call site informant referral areas will observe the following instructions.

    9. Forward Forms 3949 that have tax/revenue potential in accordance with "Disposition of Information" below.

    10. If no tax potential exists, for example, no specific tax violation is provided, the tax periods are not given, there is insufficient information to perform IDRS research: do not forward the information; retain Form 3949 in accordance with the Records Control Schedule (RCS) for your function (See RCS 202 for Examination, RCS 204 for Collection, RCS 206 for Customer Service, and RCS 207 for Criminal Investigation).

    11. See section 1.9 for final screening procedures by Criminal Investigation, Field Territory Manager, and Service Center Examination (Classification).

25.2.1.7  (04-27-1999)
Pre-Screening the Cases by Customer Service

  1. Cases with unreported income less than $50,000 per year, alleged failure-to-pay tax, and failure-to-file a tax return, will require pre-screening by Customer Service Representatives to ensure that the cases are forwarded to the appropriate office.

    1. IDRS should be used to determine if there is any open compliance activity (open or closed module) on the alleged violator.

    2. IDRS research will also validate any claims of nonfiling or nonpayment of taxes.

    3. If IDRS indicates, or the informant implies, that the information relates to the Earned Income Tax Credit (EITC), write EITC on the top of Form 3949.

    4. Attach the IDRS transcript to Form 3949, "Information Report Referral," to prevent unnecessary duplication of effort.

25.2.1.8  (04-27-1999)
Disposition of the Information After the Pre-Screening Process

  1. Use the following table to determine where to route the informant referral. Refer to the text for instructions having greater detail than the following table.

    If And Then
    The unreported income is $50,000 or more per year. For all cases. Route to Area Office Criminal Investigation in the area where the alleged tax violator resides.
    The unreported income is $50,000 or more per year and A.O. Criminal Investigation has evaluated the information. 1. There is no CI potential. Route to A.O. Collection if open collection activity; otherwise route to A.O. Examination.
      2. There is no Examination or Collection potential. Retain the file in accordance with 1.6(1)h.2 above.
    The unreported income is less than $50,000 per year. The information was received at Customer Service Call sites:  
      1. No open case exists. Route to Service Center Examination-Classification where the alleged tax violator’s return is filed.
      2. An open case exists. Route to office working the case.
    The unreported income is less than $50,000 per year. The information was received by a Customer Service Representative:  
      1. In Service Centers other than one of the four Service Centers having call sites: Route to one of the four call sites: Customer Service function, Attn: Informant Referral.
      2. In Service Centers having call sites, but not in the Informant Referral area: Route to the Informant Referral area.
      3. In Area Offices or P.O.D.s. Route to A.O. Field Territory Manager if open Collection activity. Otherwise, route to A.O. PSP Support Manager
    The unreported income is less than $50,000 per year. The information was received at Headquarters or Areas and:  
      1. Information is routine in nature. Route to Service Center Examination/Classification where the alleged tax violator’s return is filed.
      2. Information has exceptional tax potential or has unusual aspects. Route to area office where alleged the tax violator resides.
    The unreported income is less than $50,000 per year. The information was received in area offices by walk-in or in writing, and:  
      1. No open case exists. Route to PSP Support Manager in Area Office.
      2. An open case does exist. Route to office working the case.
    The allegation is a violation enforced by another agency, but not a tax violation. 1. The allegation does NOT contain tax information. Consult with supervisor regarding disposition.
      2. There is a question as to whether there is return information at issue. Consult with disclosure office regarding disposition.
    Failure to pay tax and/or failure to file tax return. 1. no open case exists. Route to Field Territory Manager
      2. an open case does exist Route to responsible office.
    Uncollectible Account. For all cases. Route to Field Territory Manager
    1. Potentially Dangerous Taxpayer. Indicator(s) on IDRS account. 1. Route to your manager, or
    2. Person who objects to paying tax with unsupportable argument.   2. Route to the Coordinator who handles such cases.
    An informant alleges the taxpayer is potentially dangerous or a person who objects to paying tax with unsupportable argument. For all cases. Route to your manager, or to the appropriate Coordinator.
    None of the above applies. 1. Tax potential exists. Route to the Examination-Classification Branch in the Service Center having jurisdiction over the alleged tax violator’s tax return.
      2. No tax potential exists. Retain in accordance with 1.6(1)10 above.

25.2.1.9  (04-27-1999)
Final Screening of Information by Function(s)

  1. Procedures for referring screening to Criminal Investigation:

    1. Allegations involving $50,000 or more per year of unreported income are evaluated by the Area Office Criminal Investigation for criminal potential. Such information may be received directly by the Criminal Investigation or it may be forwarded from a Customer Service call site or any other IRS office that received the information.

    2. If it is determined that criminal potential exists, retain the original information in the Area Criminal Investigation for normal processing. If Form 211 is received with the information, send the original Form 211 and a copy of the Form 3949 to the Service Center Informants’ Claims Examiner; retain a copy of Form 211 with the information.

    3. If there is no criminal potential, but there may be examination potential, forward the information, including the Form 3949 and a copy of Form 211, if applicable, to the Field Territory Manager or PSP Support Manager. Send the original Form 211, if applicable, and a copy of the Form 3949 to the Service Center Informants’ Claims Examiner.

    4. If there is insufficient revenue potential, and no claim for reward has been filed, retain the file in accordance with the Records Control Schedule (RCS ) 207 (Criminal Investigation).

    5. If there is insufficient revenue potential to warrant further review for examination activity, but a claim for reward has been filed, or there is an indication a claim may be filed, forward all information including Form 211, if applicable, and Form 3949 to the Service Center Informants’ Claims Examiner. Indicate that the claim should be rejected. No evaluation report is required, since no investigation/examination was conducted.

  2. Procedures for screening by Service Center Examination (Classification) and Field Territory Manager Offices.

    1. Screen the Form 3949 and any attached information, which may include research (IDRS) transcripts, for examination/collection potential. Refer to the criteria for accepting referrals as provided by the Chief, Classification Section, in the Service Center having jurisdiction over the tax violator’s tax return.

    2. If there is insufficient revenue potential to warrant further review for potential examination/collection activity, and no claim for reward has been filed and there is no indication that a claim may be filed, retain the file in accordance with the Records Control Schedule (RCS) for your area. RCS 202—Examination, RCS 204—Collection, RCS 206—Customer Service.

    3. If there is insufficient revenue potential to warrant further review for potential examination/collection activity, but a claim for reward has been filed or there is an indication a claim may be filed, forward all information including Form 211 (if it exists) and Form 3949 to the Service Center Informants’ Claims Examiner. Indicate that the claim should be rejected. No evaluation report is required, since no examination was conducted.

    4. If the information warrants further review for examination/collection, etc., potential, process in accordance with instructions in the applicable function’s IRM.

25.2.1.10  (04-27-1999)
Additional Instructions for Customer Service

  1. Write on a pink or gray envelope, the name of the function to which the information is to be forwarded and the words "informant information."

  2. Separate referrals by function. Secure all pink or gray envelopes.

  3. Daily, forward referrals in the pink or gray envelopes to the appropriate functions, ATTN:___________ /Informant Referral.

  4. If the taxpayer (informant) does not provide enough information to properly complete Form 3949, ask the taxpayer to call back when he/she has the name, address, and the nature of the alleged violation.

  5. Destroy Form 3949 (classified waste) if the form does not include the name and address of the taxpayer alleged to have committed the violation.

25.2.1.11  (04-27-1999)
Storage of Informant’s Information

  1. All written correspondence, received from an informant, must be retained in a secured/locked cabinet—see the Physical and Document Security for guidelines.

  2. Cabinet access must be limited to the person or persons responsible for the security and review of the informant documents.


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