25.15.14  Innocent Spouse Tracking System Inventory Validation Instructions

Manual Transmittal

March 12, 2013

Purpose

(1) This transmits revised IRM 25.15.14, Relief from Joint and Several Liability, Innocent Spouse Tracking System Inventory Validation Instructions.

Material Changes

(1) Editorial changes have been made throughout this IRM.

(2) IRM 25.15.14.3(1)e changed "before look" to "historical record" .

(3) IRM 25.15.14.4 updated definitions of stages. Stage 13 to Miscellaneous and reserved stages received their former titles.

(4) IRM 25.15.14.4.1.1(1)a added additional procedures for determining the earliest IRS received date.

(5) IRM 25.15.14.4.1.1(4) added procedures on suspending the collection for second claims.

(6) IRM 25.15.14.4.1.6(1) added definition for AIMS under stage 06 suspense.

(7) IRM 25.15.14.4.1.10(1) removed the words "or reconsidered" .

(8) IRM 25.15.14.4.1.11(3) Exception added procedures for untimely understatement cases per IRC 6015(b) and (c).

(9) IRM 25.15.14.4.1.11(8) added new procedures for entering Reason Code RB on allowed claims but the refund is barred.

(10) IRM 25.15.14.4.1.12(7) changed Letter 4277C to appropriate letter.

(11) IRM 25.15.14.4.1.12(8) added new procedures for entering Reason Code RB on allowed claims but the refund is barred.

(12) IRM 25.15.14.4.1.13 updated to show Stage 13 is no longer reserved.

(13) IRM 25.15.14.4.1.14 reserved Stage 14 (formerly Relief Amount Disallowed).

(14) IRM 25.15.14.4.1.17 reserved Stage 17 (formerly Relief Amount Allowed for Appeals Cases).

(15) IRM 25.15.14.4.1.18 reserved Stage 18 (formerly Relief Amount Disallowed for Appeals Cases).

(16) IRM 25.15.14.4.1.21 reserved Stage 21 (formerly Relief Amount Allowed for Tax Court Case).

(17) IRM 25.15.14.4.1.22 reserved Stage 22 (formerly Relief Amount Disallowed for Tax Court Case).

(18) IRM 25.15.14.4.1.23(1) removed second sentence and IRM reference that was no longer valid.

(19) IRM 25.15.14.4.1.24 added Note for Activity Code LANTZ.

(20) IRM 25.15.14.6.3 updated because Stages 17 and 18 are now reserved and are no longer used.

Effect on Other Documents

This material supersedes IRM 25.15.14, Innocent Spouse Tracking System Inventory Validation Instructions, dated February 25, 2011.

Audience

Employees working an innocent spouse issue

Effective Date

(03-12-2013)


Steve Klingel
Director, Reporting Compliance
Wage and Investment Division

25.15.14.1  (09-01-2003)
Overview

  1. This IRM section provides guidance to IRS employees charged with the responsibility of updating and ensuring the Innocent Spouse Tracking System (ISTS) is current and accurate.

25.15.14.2  (03-21-2008)
Introduction

  1. The Innocent Spouse Tracking System (ISTS) was established as a means for Area Offices and Centralized Cincinnati Innocent Spouse Operations (CCISO) to provide claim status information to taxpayers and for Headquarters to retrieve program management data. This data is used to generate inventory reports. The information generated from the reports is used to plan, do reviews, and brief management concerning program accomplishments.

  2. The system was designed as a means to track the claim from receipt to closing.

  3. An employee with access to the Integrated Data Retrieval System (IDRS) command code (CC) ISTS series can access an IDRS terminal, and retrieve current claim status information.

  4. If the tracking system is not updated timely, the data retrieved will not reflect the true status of the claim. This is why it is extremely important the system be updated timely and validated for accuracy.

  5. As a relief case reaches various stages, the employee with control over the request shall immediately update the account on IDRS to reflect the case progress using the command codes. The controls should be updated within three business days of the case reaching the next processing stage. It is imperative the stages are input accurately and timely. See IRM 25.15.14.4, Processing Stages, for an explanation of each processing stage. See IRM 25.15.14.5, Validating the Inventory Validation Listing (IVL) - Area Offices, for Area office information. See IRM 25.15.14.6 , Validating the IVL - Appeals, for Appeals information. See IRM 25.15.14.7, Validating the IVL - CCISO, for CCISO information.

  6. When ISTS had been opened in error and later deleted, ensure mirroring has been stopped or reversed, as applicable. Close IDRS control base for 9999X, if applicable.

25.15.14.3  (03-12-2013)
ISTS Command Codes

  1. There are nine command codes for ISTS. Taxpayer Advocate Service (TAS) employees should refer to IRM 25.15.11.5, Use IDRS Command Code Innocent Spouse Tracking System (ISTS) to Verify Status of IS Claims. See the ISTS reference guide for an explanation of the command codes listed below. This reference guide can be found at http://win.web.irs.gov/innocentspouse/innocent_jobaids.htm.

    1. ISTSR - This command code generates an ISTSE screen to allow input to ISTS.

    2. ISTSE - This command code is generated by the ISTSR command code. This is where you input the current information or make a correction or delete an entry/entries.

    3. ISTSD - This command code is used to delete an entire record from ISTS. Command code ISTSR is not a prerequisite. This command code should be restricted to the Innocent Spouse coordinator use only in the Area Offices and managers for CCISO for input information.

      Note:

      Do not use this if you only want to delete a stage entry. If you only want to delete a stage entry, use command code ISTSR, enter a D and the stage number you want to delete.

    4. ISTSRT - This command code shows the current status only. This command code will produce a list of all the modules for which a taxpayer has requested relief. No prerequisite command code is required.

    5. ISTSRA — This command code displays all the entries for a database record. This includes all the current stage information, a historical record of all the stages that have changed or all the stages deleted, and the history entries. No prerequisite command code is required.

    6. ISTSRB — This command code displays a module with all its data fields, stages and history comments. The purpose is to give a quick snapshot of the current module data for easy review. No prerequisite command code is required.

    7. ISTSRS — This command code is a summary of all the active and/or inactive modules for an account. It also allows the user to select a case to work with, and to identify the command code and definer to be used to do the work. From this screen you will be able to move to any of the other command codes.

    8. ISTSDU — This command code will restore a module previously deleted. No prerequisite command code is required. This command code should be restricted to the Innocent Spouse coordinator use only in the Area Offices and to managers for CCISO.

    9. ISTSEI— This command code is intended to be used only by the Accounts Management System (AMS) interface with the ISTS. No prerequisite command code is required.

25.15.14.4  (03-12-2013)
Processing Stages

  1. There are 33 stages in the tracking system, some are reserved. Below are the stage numbers and their description. See IRM 25.15.14.4.1, Stage Definitions and Activity, below for an explanation of each stage.

    STAGE EXPLANATION
    01 Receipt of Form 8857
    02 Transferred to office # / received from office #
    03 Screen/First Read
    04 Administrative file requested
    05 Assigned
    06 Suspense awaiting an action
    07 Open case transferred to other function / received from other function #
    08 Local Review
    09 Quality Review
    10 Rework
    11 First/preliminary determination issued
    12 Final determination issued
    13 Miscellaneous
    14 Reserved (formerly Relief Amount Disallowed)
    15 Appeals
    16 Appeals determination issued
    17 Reserved (formerly Relief Amount Allowed for Appeals Cases)
    18 Reserved (formerly Relief Amount Disallowed for Appeals Cases)
    19 Tax Court
    20 Tax Court decision issued
    21 Reserved (formerly Relief Amount Allowed for Tax Court Cases)
    22 Reserved (formerly Relief Amount Disallowed for Tax Court Cases)
    23 Small Business/Self-Employed (SB/SE) post assessment transfer to CCISO
    24 Reconsideration claim
    25 Reconsideration letter required
    26 Determination that cannot be processed
    27 Case Processing
    28 Master File Tax (MFT) Code 31 processing
    29 Non-qualified claim
    30 Closed claim
    31 Letter to RS on closed case
    32 Claims closed as untimely but letter sent to RS to invite him/her to file a new claim
    99 Archived module

  2. Stage 99 is for Archived modules. Modules are archived after they have been closed on the system for more than two years. Archived modules only show Stages 01, 12, 16, 20, 29, 30, and 99. The other stages are dropped before being archived. When reviewing the archived ISTS you will not see the date of the preliminary determination letter. However, if a Stage 12 is shown you will know a preliminary determination letter was issued (when required) prior to the final determination letter as reflected by Stage 12.

  3. When cases progress from stage to stage or from office to office, the action must be recorded on ISTS using command code ISTSR. This should be done within 3 business days of the date the case reached that stage. These stages are required to track and monitor the progress and age of the inventory. It is imperative that the stages are input timely and accurately.

  4. ISTS should be set up under the primary taxpayer identification number (TIN) where the liability generated, e.g., if there is an account on Non Master File (NMF) 20 but the liability generated from Master File Tax (MFT) 30, the account should be set-up under MFT 30. This will eliminate inconsistencies in the set-up.

25.15.14.4.1  (09-01-2003)
Stage Definitions and Activity

  1. This section explains the definition of each of the Innocent Spouse Tracking System (ISTS) stages.

25.15.14.4.1.1  (03-12-2013)
Stage 01 — Receipt of Form 8857

  1. A processable Form 8857, Request for Innocent Spouse Relief, has been received. The received date should reflect the earliest IRS received date. The date should agree with the transaction code (TC) 971 action code (AC) 065 date. You must enter the RS’s two-digit state abbreviation, the Secondary TIN without hyphens, Name Control and an "O" (for old) if Form 8857, as a revision date prior to 2007 and a "1" if Form 8857 has a revision date in 2007 or later.

    1. To determine the earliest IRS received date, follow the outline below:
      (1) IRS earliest date stamp, handwritten, or fax received date
      (2) If Form 8857 has been detached from the Form 1040, use the TC 150 Julian date minus 10 days of the Form 1040.
      (3) If no IRS received date stamp, use the postmark date or private delivery service date on the envelope, if present.
      (4) Service Center Automated Mail Processing System (SCAMPS) digital date.
      (5) If no IRS received date stamp and the Form 8857 is faxed from another IRS function, use the fax date.
      (6) Date the document/correspondence was prepared or signed.
      (7) If no IRS received date, research to see if there was an IDRS control with an IRS received date that the claim was originally received.
      (8) If still unable to determine the correct IRS received date, use current date minus 10 days.

  2. If both taxpayers file a request for relief, the tracking system will keep separate records according to the primary/secondary (P/S) indicator.

  3. See the ISTS Reference Guide found at http://win.web.irs.gov/innocentspouse/innocent_jobaids.htm. The first digit is the business operating division (BOD): 1 for W & I (Wage and Investment), 2 for SB/SE (Small Business/Self-Employed). The next two digits are the area number.

    Example:

    You have a claim in Arkansas, the BOD is 2 and the area number is 08, so you enter 208 in the area field.

  4. If this is a second claim filed, enter as claim # 02. An Activity Description is required to explain why the second claim was filed. Suspend the collection activity by inputting TC 971 AC 065 on a second claim except for those with activity ARC. The acceptable activity codes for a second claim and explanations are:

    ACTIVITY CODE EXPLANATION
    MSC Marital Status Change
    CD Court decision
    ARC Reopened claim previously archived or a reconsidered claim
    PRNQ Previously non-qualified or prior claim was for a different assessment

    Example:

    Prior claim was for an underpayment and new claim is for an understatement.

    PRUN Previously unprocessable
    LANTZ New claim received after a prior claim was denied for untimeliness

  5. Prerequisite stage: none

25.15.14.4.1.2  (07-17-2009)
Stage 02 — Transferred

  1. Form 8857, Request for Innocent Spouse Relief, has been transferred or receipt acknowledged by another office. If Form 8857 has some indication it was detached from Form 1040, research to determine if Form 8857 was received in CCISO or another office. If unsure, research the document locator number (DLN) of the TC 150 to determine which campus processed the original return. Document 6209, IRS Processing Codes and Information, chapter four, lists the File Location Codes (FLC) for the Document Locator Number (DLN). If received from another office you must enter Stage 02 per the instructions below. This transfer stage is usually completed at screening, e.g., research shows an open TC 420.

  2. The receiving office should acknowledge receipt within three business days by inputting another Stage 02 with the received date and then update to Stage 03.

  3. Do not use when transferring the case from a group to Technical Services or Quality Review for review of the case.

  4. Required entry of the office number under TOAREA or FROMAREA.

  5. The date for TOAREA is the date the case was transferred.

    Exception:

    AMS is programmed for 7 days prior to CCISO's received date.

  6. The date for FROMAREA is the date the case was received in that office.

  7. A Stage 02 with a TOAREA entry changes the controlling Area for that case. The Area number in the TOAREA becomes the controlling Area. Activity code is optional, but when entered must be:

    ACTIVITY CODE EXPLANATION
    BKCY Bankruptcy
    COL Collection
    COMM Community Property
    FGY Forgery
    MISC Miscellaneous
    OIC Offer in Compromise
    SELT Select
    TAS Taxpayer Advocate Service
    TFRA Tax Equity and Fiscal Responsibility Act (TEFRA)
    420 Open Examination
  8. Prerequisite stage: 01

25.15.14.4.1.3  (09-01-2003)
Stage 03 — Screen

  1. Form 8857 needs to be screened. This is prior to requesting the administrative file and contacting the taxpayers for additional information and/or for acknowledgement of claim.

  2. Activity description SCREEN will automatically generate.

  3. Prerequisite stage: 01

25.15.14.4.1.4  (05-01-2005)
Stage 04 — ESTAB - Administrative File Requested

  1. The administrative file and returns have been requested from Files.

  2. Activity description ESTAB will automatically generate.

  3. Prerequisite stage: 01

25.15.14.4.1.5  (07-17-2009)
Stage 05 — Assigned

  1. Case has been assigned to a group or an employee.

  2. The following activity codes can be used:

    ACTIVITY CODE EXPLANATION
    ASSIGN Case assigned
    CORRSUSP In suspense waiting for a response to correspondence
    DOCREQ Suspended waiting for document request
    SPCLSRCH Special Search requested for documents
    TECH Case reassigned to Technical

  3. Prerequisite stage: 01

25.15.14.4.1.6  (03-12-2013)
Stage 06 — Suspense

  1. Case is being held in suspense for reasons beyond the examiner’s control. Do not use if awaiting a reply from the RS or Non-requesting Spouse (NRS).

    Note:

    CCISO will use if a case is going to be sent to the Field Office and is awaiting the administrative file or reply from the RS/NRS.

  2. Enter one of the acceptable activity codes as listed below.

    ACTIVITY CODE EXPLANATION
    AIMS Claim is awaiting AIMS closure
    AUR Claim has an Automated Underreporter (AUR) issue
    FIELD Building claim to send to field
    LIT Litigation case
    MIRROR Mirror problem
    PANES Abuse issue
    OTHER Other, can be used for disaster cases, add history item
    RESENDLTR Resent a letter
    WTG1040 Waiting for Form 1040 to post
    WTGCRPOST Waiting for credit to post
    WTGSSNVAL Waiting for social security number (SSN) to validate

  3. Prerequisite stage: 01 and 03 or 05

25.15.14.4.1.7  (09-01-2006)
Stage 07 — Transferred

  1. The transfer or receipt of a case where the RS (RS) or NRS has protested the determination or another office has requested the case.

    Note:

    Do not use when transferring a case from the group to Technical Service or Quality Review.

  2. Required entry of the office number under TOAREA or FROMAREA.

  3. The date for TOAREA is the date the case was transferred.

  4. The date for FROMAREA is the date the case was received in that office.

  5. If a case is going to Appeals, enter one of the activity descriptions listed in the table below in the ACTIVITY field.

    1. APPLPXX if the primary taxpayer appealed

    2. APPLSXX if the secondary taxpayer appealed

    3. APPLBXX if both taxpayers appealed

      Note:

      XX is for the Appeals office location number.

  6. A Stage 07 with a TOAREA entry changes the controlling Area for that case. The area number in the TOAREA field becomes the controlling Area.

  7. Prerequisite stage: 01

25.15.14.4.1.8  (07-17-2009)
Stage 08 — Local Review

  1. This stage has a dual tracking purpose and should only be used by the Area Offices. The first update is when the case has been sent to local review and the second update is after it has been reviewed by the reviewer.

  2. When a case is sent to review, the Activity field must have the activity TOREVU. After the reviewer has reviewed the case, they will enter one of the following activity codes:

    ACTIVITY CODE EXPLANATION
    APPR Approved
    RNSF Returned, determination not supported by facts
    RNSL Returned, determination not supported by law
    ROTH Returned for other reasons
    RPRD Returned for account problem resolution
    MSRT Mis-routed
  3. Prerequisite stage: 01 and 03 or 05.

25.15.14.4.1.9  (07-17-2009)
Stage 09 — Quality Review

  1. This stage has a dual tracking purpose and should only be used by CCISO. The first update is when the case has been sent to Quality Review and the second update is after it has been reviewed by the reviewer.

  2. When a case is sent to review, the Activity field must have the activity TOREVU. After the reviewer has reviewed the case, they will enter one of the following activity codes:

    ACTIVITY CODE EXPLANATION
    APPR Approved
    RNSF Returned, determination not supported by facts
    RNSL Returned, determination not supported by law
    ROTH Returned for other reasons
    RPRD Returned for account problem resolution
    MSRT Mis-routed
  3. Update ISTS to Stage 30 when case is corrected.

  4. Prerequisite stage: 01, 03 or 05.

25.15.14.4.1.10  (03-12-2013)
Stage 10 — Rework

  1. Case is being reworked.

  2. Activity description REWORK will automatically generate.

  3. Prerequisite stage: 01, 03 or 05, 11, 12, 13 or 30. It will also be valid if stage 08 or 09 has Activity RNSF, RNSL, ROTH, or RPRD. This stage is required if stage 08 or 09 has one of these activities.

25.15.14.4.1.11  (03-12-2013)
Stage 11 — Preliminary Determination Letter Issued

  1. Preliminary determination letter has been issued.

  2. Required entry in the Allowed/Partially Allowed/Disallowed (APD) field is one of the following:

    REQUIRED ENTRY EXPLANATION
    A Allowed in Full
    D Disallowed in Full
    P Partially Allowed
  3. Required entry in Code Section:

    REQUIRED ENTRY EXPLANATION
    6015b IRC 6015(b)
    6015c IRC 6015(c)
    6015fd IRC 6015(f) understatement/deficiency
    6015fo IRC 6015(f) underpayment/original liability
    66ceqr IRC 66(c) equitable relief — community property
    66cins IRC 66(c) innocent spouse — community property
    CDP For CCISO use only. Enter when disallowing or partially allowing relief on a Collection Due Process case.

    Note:

    On disallowed deficiency cases, Do Not use "(f)" when entering the code section. Use "(b)" or "(c)" as appropriate.

    Exception:

    If the case is an understatement that is untimely under IRC 6015(b) and (c) but timely under (f), use (fd)

    Note:

    In any other combination of partial allowance/disallowance, the activity code input will be the one which reflects the highest dollar amount allowed. For example, if the total amount of a claim is $1,000 and $500 is allowed under IRC 6015(b), $250 is allowed under IRC 6015(f) and $250 is disallowed, then the activity code input will be "P6015B " , with the appropriate reason code for partial disallowance under (b).

  4. DO NOT use "6015f" when entering the code section unless the taxpayer only requested IRC 6015(f) and you did not consider IRC 6015(b) or IRC 6015(c). It is a given you considered IRC 6015(f) in addition to IRC 6015(b) and IRC 6015(c). Use "6015b" or "6015c" as appropriate.

    Example:

    RS (RS) is seeking relief from a $1,000 understatement,
    $500 is allowed under IRC 6015(b),
    $250 is allowed under IRC 6015(f) and
    $250 is disallowed under IRC 6015(f).
    Enter activity code P6015B, with the appropriate reason code for the partial disallowance under IRC 6015(b).

    Note:

    The relevant information is why you did not grant full relief.

  5. If the request for relief is for an understatement with an underpayment and you allow full relief for the understatement but not the underpayment, the code section entered should be "6015f" for the underpayment. This is true even if the understatement is the highest dollar amount. The relevant information is why you did not grant full relief.

  6. If the request for relief is for an understatement and an underpayment and you allow only partial relief for the understatement and/or the underpayment, the code section will be determined by the highest dollar amount for the disallowed portion. The relevant information is why you did not grant relief.

    Example:


    RS seeking relief for $300 understatement and $800 underpayment;
    $200 relief is allowed for the understatement and $100 allowed for the underpayment.
    Enter "P6015(f)" with the reason code full relief was not granted under IRC 6015(f). This is because you have disallowed $700 for the underpayment.
    Another example is:
    RS seeking relief for $3,000 understatement and $500 underpayment.
    $2,800 relief is granted for the understatement and $100 underpayment.
    Enter "P6015(f)" because the disallowed $400 for the underpayment is the larger disallowed portion.

  7. If the request for relief is for an understatement and an underpayment and you disallow or allow both, the code section will be determined by the highest dollar amount for the disallowed or allowed portion.

  8. If a claim is allowed but the refund is barred you must use Reason Code RB.

  9. Required entry under Reason Code if the APD code is P or D:

    REASON CODE EXPLANATION
    A Liability attributable to the RS
    B RS received significant benefit from the unpaid/unreported liability

    Note:

    Don't use with IRC 6015(c)

    BT At the time the return was filed, the RS had no reason to believe the tax would be paid
    C Collection Statute Expiration Date (CSED) expired after claim filed
    DA Disqualified assets transferred to avoid paying tax
    E It is equitable to hold the RS liable

    Note:

    Don't use with IRC 6015(c)

    FT Fraud/fraudulent transfers of assets between the spouses
    K Knowledge of item giving rise to deficiency
    MS Marital status not met for IRC 6015(c)
    O Other (should only be used with managerial approval)
    OC Offer in compromise was previously accepted for the RS
    P Paid in full after claim was received
    RB Refund barred by Internal Revenue Code (IRC)
    RJ Res judicata
    S Statute barred for filing Form 8857
    V Verification missing

    Note:

    If denying recaptured credits only under IRC 6015(b) or IRC 6015(c) use K if the RS knew about the unreported issue that caused the reversal of the credits. Use A if the RS did not know about the unreported issue that caused the reversal of the credits. Under IRC 6015(f) use E.

  10. Prerequisite stage: 01, 03 or 05.

25.15.14.4.1.12  (03-12-2013)
Stage 12 — Final Determination Letter Issued

  1. Final determination has been issued.

  2. Required entry under ADP:

    REQUIRED ENTRY EXPLANATION
    A Allowed
    P Partially allowed
    D Disallowed
  3. Required entry under Code Section:

    REQUIRED ENTRY EXPLANATION
    6015b IRC 6015(b)
    6015c IRC 6015(b)
    6015fd IRC 6015(f) understatement/deficiency
    6015fo IRC 6015(f) underpayment/original liability
    66ceqr IRC 66(c) equitable relief —community property
    66cins IRC 66(c) innocent spouse — community property

    Note:

    On disallowed deficiency cases, Do Not use "(f)" when entering the code section. Use "(b)" or "(c)" as appropriate.

    Exception:

    If the case is an understatement that is untimely under (b) and (c) but timely under (f), use (fd).

    Note:

    In any other combination of partial allowance/disallowance, the activity code input will be the one which reflects the highest dollar amount allowed. For example, if the total amount of a claim is $1,000 and $500 is allowed under IRC 6015(b), $250 is allowed under IRC 6015(f) and $250 is disallowed, then the activity code input will be "P6015B" , with the appropriate reason code for partial disallowance under IRC 6015(b).

  4. On disallowed deficiency cases, DO NOT use "6015(f)" when entering the code section. It is a given you considered IRC 6015(f) in addition to IRC 6015(b) and IRC 6015(c). Use "6015(b)" or "6015(c)" as appropriate.

    Example:

    RS is seeking relief from a $1,000 understatement;
    $500 is allowed under IRC 6015(b);
    $250 is allowed under IRC 6015(f) and
    $250 is disallowed under IRC 6015(f);
    Enter activity code "P6015B," with the appropriate reason code for the partial disallowance under IRC 6015(b).


    Note:

    The relevant information is why you did not grant full relief.

  5. If the request for relief is for an understatement with an underpayment and you allow full relief for the understatement but not the underpayment, the code section entered should be "6015(f)" for the underpayment. This is true even if the understatement is the highest dollar amount. The relevant information is why you did not grant full relief.

  6. If the request for relief is for an understatement and an underpayment and you allow only partial relief for the understatement and/or the underpayment, the code section will be determined by the highest dollar amount for the disallowed portion. The relevant information is why you did not grant relief.

    Example:

    RS seeking relief for $300 understatement and $800 underpayment;
    $200 relief is allowed for the understatement and $100 allowed for the underpayment.
    Enter "P6015(f)" with the reason code full relief was not granted under IRC 6015(f). This is because you have disallowed $700 for the underpayment.
    Another example is:
    RS seeking relief for $3,000 understatement and $500 underpayment.
    $2,800 relief is granted for the understatement and $100 underpayment.
    Enter "P6015(f)" because the disallowed $400 for the underpayment is the larger disallowed portion.

  7. If you work a RECON and issue appropriate letter and enter a new Stage 12 with the applicable code section and reason code with the date the letter is issued. This stage should be later than the Stage 25 date.

  8. If the claim is allowed but the refund is barred you must enter Reason Code RB.

  9. Required entries under Reason Code if the ADP code is P or D are listed below:

    REASON CODE EXPLANATION
    A Liability attributable to the RS
    B RS received significant benefit from the unpaid/unreported liability

    Note:

    Don't use with IRC 6015(c).

    BT At the time the return was filed, the RS had no reason to believe the tax would be paid
    C Collection Statute Expiration Date (CSED) expired after claim filed
    DA Disqualified assets transferred to avoid paying tax
    E It is equitable to hold the RS liable

    Note:

    Don't use with IRC 6015(c).

    FT Fraud/fraudulent transfers of assets between the spouses
    K Knowledge of item giving rise to deficiency
    MS Marital status not met for IRC 6015(c)
    O Other (should only be used with managerial approval)
    OC Offer in compromise was previously accepted for the RS
    P Paid in full after claim was received
    RB Refund barred by Internal Revenue Code (IRC)
    RJ Res judicata
    S Statute barred for filing Form 8857
    V Verification missing
    Note: If denying recaptured credits only under IRC 6015(b) or IRC 6015(c) use K if the RS knew about the unreported issue that caused the reversal of the credits. Use A if the RS did not know about the unreported issue that caused the reversal of the credits. Under IRC 6015(f) use E.
  10. Prerequisite Stage: 01, 03, or 05.

25.15.14.4.1.13  (03-12-2013)
Stage 13 — Miscellaneous

  1. Effective July 2011 this stage is used for various activities related to cases involving the Lantz Tax Court decision. See Notice 2011-70 for additional guidance.

    ACTIVITY DESCRIPTION EXPLANATION
    CORRSUSP Waiting on reply
    DOCREQ Waiting on document
    LANTZ Special letter issued to RS
    SPCLSRCH Special search for document
    TECH Referred to the Technical Team

25.15.14.4.1.14  (03-12-2013)
Stage 14 — Reserved (Formerly Relief Amount Disallowed)

  1. As of January 2010 stage 14 is no longer required.

25.15.14.4.1.15  (07-17-2009)
Stage 15 — Appeals

  1. Case has been received in the Appeals Office. This is input after Stage 07 FROMAREA has been entered. The activity date should equal the Appeals Centralized Data System (ACDS) received date and should not be earlier than the date in Stage 07.

  2. Prerequisite stage: 01.

25.15.14.4.1.16  (03-21-2008)
Stage 16 — Appeals Determination

  1. Appeals has issued a determination letter or signed Form 870–IS, Waiver of Collection Restrictions in Innocent Spouse Cases, on behalf of the Commissioner.

  2. Activity entries are the same requirements as Stage 12. The activity date should equal the date the determination letter was issued or the date the Form 870–IS was signed on behalf of the Commissioner and the activity entry is the same requirement as Stage 12.

  3. Prerequisite stage: 01 and 15.

25.15.14.4.1.17  (03-12-2013)
Stage 17 — Reserved (Formerly Relief Amount Allowed for Appealed Cases)

  1. As of January 2010 Stage 17 is no longer required.

25.15.14.4.1.18  (03-12-2013)
Stage 18 —Reserved (Formerly Relief Amount Disallowed for Appealed Cases)

  1. As of January 2010 Stage 18 is no longer required.

25.15.14.4.1.19  (09-01-2006)
Stage 19 — Tax Court Petitioned

  1. The RS has petitioned Tax Court.

  2. Activity description TAXCOURT will automatically generate.

  3. Prerequisite stage: 01, 12, 15, and 16.

25.15.14.4.1.20  (03-21-2008)
Stage 20 — Tax Court Decision Entered

  1. Tax Court has entered a decision. The activity date should equal the date the decision was entered and the activity entry is the same requirements as Stage 12.

  2. Prerequisite stage: 01, 12, 15, 16, and 17.

25.15.14.4.1.21  (03-12-2013)
Stage 21— Reserved (Formerly Relief Amount Allowed for Tax Court Cases)

  1. As of January 2010 Stage 21 is no longer required.

25.15.14.4.1.22  (03-12-2013)
Stage 22— Reserved (Formerly Relief Amount Disallowed for Tax Court Cases)

  1. As of January 2010 Stage 22 is no longer required.

25.15.14.4.1.23  (03-12-2013)
Stage 23 - SB/SE post assessment transfer to CCISO

  1. This stage will be used when Small Business/Self-Employed (SB/SE) transfers a post assessment case to CCISO for account processing on allowed and partially allowed cases.

  2. Prerequisite stage: 01, 03 or 05, 11, or 12.

    Note:

    Do not input this stage until Form 3210, Document Transmittal, has been prepared and case ready to ship.

25.15.14.4.1.24  (03-12-2013)
Stage 24 - Reconsideration

  1. Prior to July 2006, this stage was used to update an AUR claim once the 90–day period for the innocent spouse issue had expired and the assessment had not been made. Between July 2006 through February 16, 2009, this was a reserved stage. Effective February 17, 2009, the activity RECON will systemically generate to identify the case as a reconsideration claim.

    Note:

    Activity Code LANTZ is used when the reconsideration is based on the Lantz Tax Court decision.

25.15.14.4.1.25  (07-17-2009)
Stage 25 - Reconsideration of Previously Issued Determination

  1. This stage should be used only when it is necessary to re-issue a preliminary or final determination or issue a reconsideration letter. The activity must be one of the codes listed below:

    ACTIVITY CODE EXPLANATION
    APNC All 6015 provisions not considered
    IRSE IRS Error
    ORT Original return not processed when claims received
    ADDI Additional information

  2. Prerequisite stage: 11, 12, or 29.

25.15.14.4.1.26  (07-17-2009)
Stage 26 - Determination Cannot be Processed

  1. This stage should be used when situations occur that prevent the processing of an account from MFT 30 to MFT 31, e.g., when the NRS is in Chapter 13 bankruptcy making monthly payments or when the collection statute is too short for a transfer to MFT 31. It should also be used for claims when either taxpayer is overseas preventing the claim to be completed (Combat Zone) or if either taxpayer is being investigated by Criminal Investigation.

  2. Acceptable activity codes are:

    ACTIVITY CODE EXPLANATION
    BKCY Bankruptcy
    CSED Collection Statute expires in less than 10 months
    CINV Criminal Investigation
    COMB Combat Zone
    LEVY Levy pending for NRS
    LIT Claim is a litigation case
  3. Prerequisite stage: 01, 03, 12, 16, or 20.

25.15.14.4.1.27  (03-21-2008)
Stage 27 - Case Processing

  1. This stage will be used while the case is in the Processing unit, during the time period while they are determining the amounts and codes for Form 12810, Account Transfer Request Checklist. Stage date may be entered. If it is, it must not be prior to the previous stage. If it is not entered, today’s date will be assumed. Only one Stage 27 is permitted.

  2. Prerequisite stage: 01, 12, 14, or 15.

25.15.14.4.1.28  (09-01-2006)
Stage 28 — MFT 31 Processing

  1. This stage will be used when waiting for the transfer process to MFT 31. Stage date may be entered. If it is, it must not be prior to the previous stage. If it is not, today’s date will be assumed. Only one Stage 28 is permitted.

  2. Prerequisite stage: 01, 03 or 05, 12, 23, or 27.

25.15.14.4.1.29  (07-17-2009)
Stage 29 — Non-qualifying

  1. Form 8857, Request for Innocent Spouse Relief, is non-qualifying. Stage 30 should be input immediately following Stage 29.

    Exception:

    If case has account problems and the case needs to be updated to Stage 27.

  2. Prerequisite stage: 01, 03 or 05.

  3. The acceptable activities are:

    ACTIVITY CODE EXPLANATION
    ACTP Account problems needs correction, no innocent spouse issue
    BSOS Barred Statute One Signature
    CSED Collection Statute Date Expired
    FP Full paid and the taxpayer did not request a refund
    FS Filing Status
    INJS Injured Spouse Claim
    INVA Invalid Joint Election
    NORF No return filed for the year taxpayer is requesting relief
    OT Other Tax
    PAND Pre-assessment no deficiency
    SREQ 2nd request filed for a period and original request is in Stage 99
    UNPR Unprocessable Form 8857
    WITH Withdrawal - can’t be used after a preliminary determination letter has been issued
  4. Prerequisite stage: 01

25.15.14.4.1.30  (01-11-2010)
Stage 30 — Closed

  1. Case is closed.

  2. Time on case entry is no longer required.

  3. The acceptable activity codes are:

    ACTIVITY CODE EXPLANATION
    ACCTCORR Account Correction required and appropriate action or referral completed
    NOACCTP No Account Problem
    NOREPLY No reply from taxpayer for requested information
  4. Prerequisite stage: 01, 03 or 05, 12, and the appropriate relief allowed or disallowed stage. Otherwise 01 and 29 if the case is non-qualifying.

25.15.14.4.1.31  (09-01-2006)
Stage 31 — Letter to RS on Closed Case

  1. This stage should only be used when letters are sent to the RS whose claim was closed. No activity code will generate.

  2. Prerequisite stage: 01 and 30.

25.15.14.4.1.32  (03-21-2008)
Stage 32 — Claims Closed as Untimely Allowed to Refile

  1. This stage is being used for claims that were closed with the activity "S" for statute. Because of McGee v. Commissioner, letters were sent to taxpayers whose claims were closed as being untimely. When the letter was issued, the ISTS was updated to Stage 32 to indicate an invitation was sent to the taxpayer to file a second claim.

  2. Prerequisite stage: 30

25.15.14.4.1.33  (03-21-2008)
Stage 99 - Archived

  1. This stage is used for archived modules. Once a year, modules will be archived and those that have been in Stage 30 for over two years will be archived. Modules can be accessed in this stage but no changes can be made in this stage. Archived modules only show Stages 01, 12, 16, 20, 29, 30, and 99. The other stages are dropped before being archived. When reviewing the archived ISTS you will not see the date of the preliminary determination letter. However, if a Stage 12 is shown you will know a preliminary determination letter (when required) was issued prior to the final determination letter as reflected by Stage 12.

25.15.14.5  (07-17-2009)
Validating the Inventory Validation Listing (IVL) - Area Offices

  1. When an IVL is received and you must validate, see IRM 25.15.14.5.1 through IRM 25.15.14.5.4 for procedures.

  2. One of the best tools available to Area Coordinators is the Examination Records Control System (ERCS). This system controls all records put on the Audit Information Management System (AIMS). It tracks the case from start-to-finish and provides a history of processing of the case. It also gives the date changes of the AIMS statuses, assigned group, etc.

  3. The last resource tool is the ISTS. If a case is not on ERCS, check the tracking system to determine the case’s location.

  4. These resource tools should be all you need to validate the ISTS report.

25.15.14.5.1  (09-01-2006)
Stages 01 through 04

  1. Claims in the ISTS Stages 01 through 04 may not be on the AIMS but if they are, they should have an AIMS Status of 08.

  2. If the AIMS status is higher than 08, ISTS will need to be updated to reflect the correct stage.

  3. If the claim has not yet been established on AIMS, check the unit where the cases are built to ensure the claim is there and its current status is accurate before making any necessary corrections.

  4. If the case building unit does not have the case and the ISTS Stage is 02, check the date the module was input into Stage 02. If this date is recent, it is possible the case is still in transit.

    1. If over two weeks have passed, check with your mail clerk to see if there is a signed Form 3210, Document Transmittal, for the case and if not, contact the sending office to see if they have an acknowledged Form 3210.

    2. You may also need to check ISTS to determine if another office has acknowledged receipt of the case. Sometimes the ISTS will get updated to one office but the case was mailed to another.

  5. If the ISTS IVL shows a case in Stage 03 but as of the date of the report, the ESTAB has been ordered, correct ISTS to Stage 04.

  6. It is also possible that AIMS will show a Status of 10 or 12 and the ISTS will show Stage 03 or 04. This means when the case was sent to the group, ISTS was not updated. AIMS/ERCS will give you the date of transfer in order to update ISTS.


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