25.1.10  LB&I Fraud Referral Procedures

Manual Transmittal

November 08, 2012

Purpose

(1) This transmits revised IRM 25.1.10, LB&I Fraud Referral Procedures.

Material Changes

(1) Material changes to the IRM are listed in the table below:

IRM Description of Change
25.1.10.1 Deleted the web site in paragraphs (2) and (3).
25.1.10.2 Rephrased paragraph (1) and deleted the remaining three paragraphs due to redundancy.
25.1.10.4 Deleted the contents in paragraph (1), except for the reference to IRM 25.1.3 and deleted paragraph (3).
25.1.10.5 Deleted everything but the reference to IRM 25.1.3.3, 25.1.3.4, & 25.2.3.5.
25.1.10.6 Replaced the content in paragraph (1) with a reference to IRM 25.1.4 and replaced the content in paragraph (2) with "If the case is grand jury, all quarterly conference participants must be on the 6(e) order" .
25.1.10.7 Deleted most of the content and replaced IRM reference 25.1.4.3.4 with 25.1.4.3.5.
25.1.10.8 Replaced the content with reference to IRM 25.1.6.

Effect on Other Documents

This material supersedes IRM 25.1.10, dated July 18, 2008.

Audience

Large Business & International (LB&I), LB&I Counsel, Criminal Investigation (CI), Small Business/ Self Employed (SB/SE)

Effective Date

(11-08-2012)

Signed William P. Marshall, Director, Fraud/BSA, SB/SE

25.1.10.1  (11-08-2012)
Overview

  1. This section outlines guidelines which apply to LB&I.

  2. The detection and deterrence of fraud is every compliance employee's responsibility and should be a top priority when discovered. Active involvement of the team manager is essential to the success of a fraud referral. When an examiner suspects a potentially fraudulent situation, the employee will discuss the case, at the earliest possible convenience, with his/her manager. SB/SE Compliance established groups of fraud technical advisors (FTAs) to assist compliance personnel in all IRS operating divisions, in identifying and developing fraud. A list of the FTAs and their managers can be found on the National Fraud Program web site.

  3. The procedures prescribed in Sections 25.1.1, Overview/Definitions, through 25.1.7, Failure to File, should be followed, unless otherwise specified in this section.

  4. Any questions regarding LB&I fraud procedures should be referred to the Pre-Filing Technical Guidance (PFTG) – National Fraud Program Analyst. Additional information is available on the LB&I – PFTG fraud web site.

25.1.10.2  (11-08-2012)
Fraud Development within LB&I

  1. Team managers will contact the local FTA when indicators of fraud are identified. See IRM 25.1.2, Recognizing and Developing Fraud.

25.1.10.3  (11-08-2012)
Role of LB&I Counsel

  1. LB&I Counsel has established a counter-fraud working group to monitor fraud issues and to ensure consistency in fraud matters. The counter-fraud working group consists of experienced Counsel in each LB&I Division Counsel Area. LB&I attorneys should coordinate all civil fraud matters and criminal fraud referrals with their appropriate Area coordinator. LB&I attorneys will work with the teams and the FTAs to review and provide assistance on all criminal fraud referrals and assertions of the civil fraud penalty and the fraudulent failure to file penalty. Except as required in IRM 25.1.10.8, the timing of advice or involvement of LB&I Counsel will be left to the discretion of the team manager; however, early intervention is recommended.

25.1.10.4  (11-08-2012)
Referrals to Criminal Investigation (CI)

  1. See IRM 25.1.3, Criminal Referrals.

  2. Referrals of privately-held entities or individuals must be signed by the examiner and team manager. Referrals related to publicly-traded entities must additionally be signed by the territory manager prior to submission.

25.1.10.5  (11-08-2012)
Referral Evaluation

  1. See IRM 25.1.3.3, Referral Evaluation, IRM 25.1.3.4 Accepted Criminal Referrals, and IRM 25.1.3.5, Declined Criminal Referrals.

25.1.10.6  (11-08-2012)
Quarterly (Four-way) Conferences with CI

  1. Quarterly conferences are critical to the effective management of a joint investigation. See IRM 25.1.4, Administrative Joint Investigation, for more information on quarterly conferences and the role of a cooperating examiner in a joint investigation.

  2. If the case is grand jury, all quarterly conference participants must be on the 6(e) order.

25.1.10.7  (07-18-2008)
Parallel Investigations

  1. CI should contact the team manager to determine if ongoing civil activity may continue on related tax returns or taxes. See IRM 25.1.4.3.5, Parallel Investigations.

25.1.10.8  (11-08-2012)
Civil Fraud

  1. See IRM 26.1.6, Civil Fraud.

25.1.10.9  (11-08-2012)
Third Party Examinations

  1. Potential third party examinations that have indications of fraud should be secured for examination by the LB&I team. If the identified third party is located outside the team's geographical area, or it is determined that the examination should be assigned to another operating division, prepare Form 5346, Examination Information Report, and forward it to Attention: LB&I Info. Item Classifier, Ogden Service Center – LB&I Planning and Special Programs (PSP) – MS 4912 for review and assignment.


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