25.15.17  Reconsiderations

Manual Transmittal

March 08, 2013

Purpose

(1) This transmits revised IRM 25.15.17 Relief from Joint and Several Liability, Reconsiderations.

Material Changes

(1) Editorial changes have been throughout this IRM.

(2) Updated the letters to be issued.

(3) IRM 25.15.17.1(1) changed when a final determination will be reconsidered.

(4) IRM 25.15.17.1(3) further defined reconsideration inventory priority.

(5) IRM 25.15.17.1.1 added stage numbers and clarified Exception in paragraph 4.

(6) IPU 111060 issued 05–27–2011 IRM 25.15.17.2(3)e added instructions to issue Letter 3659C to IRM 25.15.17.2(3).

(7) IRM 25.15.17.2(3)a new.

(8) IRM 25.15.17.2(4) Removed ESTAB because if using AMS, the actual command will not be used.

(9) IRM 25.15.17.2 removed section on cases previously non-qualified and moved instructions to IRM 25.15.7 under second request instructions.

(10) IRM 25.15.17.3(4)c revised instructions for associating claim with previous TC 290.

(11) IRM 25.15.17.4 completely revised.

(12) IRM 25.15.17.5(3) added when to remind RS of date Tax Court rights will expire.

(13) IRM 25.15.17.6 added procedures for filing cases on the 90–day wall and contacting the RS when abuse is alleged.

(14) IRM 25.15.17.6(2) added when to remind RS of date Tax Court rights will expire.

(15) IRM 25.15.17.7 added how to obtain access to ACDS.

(16) IRM 25.15.17.8 clarified second letter is for the same claim in the title.

Effect on Other Documents

IRM 25.15.17, Reconsiderations, dated February 23, 2011. IRM Procedural Update (IPU) 111060, issued May 27, 2011, has been incorporated into this IRM.

Audience

Employees working innocent spouse reconsideration claims.

Effective Date

(03-08-2013)

Steve Klingel
Director, Reporting Compliance
Wage and Investment Division

25.15.17.1  (03-08-2013)
Overview

  1. A final determination will be reconsidered any time a Requesting Spouse (RS) submits information not previously considered (new information or information that the IRS failed to previously consider) as long as the collection statute expiration date (CSED) or refund statute expiration date (RSED) is still open. This includes claims in the Innocent Spouse Tracking System (ISTS) Stage 12, 30, or 99. There is no limit as to how many times a case can be reconsidered as long as the taxpayer has submitted information not previously considered.

    Note:

    If the information is the same as previously considered, send Letter 5188C, to the RS explaining the request for relief was previously considered and since they did not submit any new information we cannot reconsider their request. See IRM 25.15.17.3 (3) and (4), Post Determination, for additional instructions when the claim was previously in ISTS Stage 30 or archived.

    Caution:

    See Rework, IRM 25.15.7.11.10, Rework, if the additional information is submitted before a final determination was issued.

  2. Although the final determination will be reconsidered, any determination reached in the reconsideration process will not be considered a Final Determination for purposes of IRC 6015(e). Thus, there is no right to petition any court for a reconsidered determination.

  3. RECON cases in ISTS Stage 12 must be worked with priority over other replies. The RS still must petition the Tax Court within the time frame per the final determination. Reconsideration requests received with 30 days or less remaining on the time to petition the Tax Court must be evaluated as soon as possible.

25.15.17.1.1  (03-08-2013)
Definitions

  1. Rework - A Rework is when a taxpayer submits information after a preliminary determination was issued but prior to issuance of a final determination.

  2. RECON - A RECON is when a taxpayer submits additional information not previously considered after the issuance of a final determination. This is applicable whether the case is in ISTS Stage 12, 30, or 99.

    Note:

    The information has to be different than what was previously considered.

    Example:

    1 - ISTS Stage 12 shows a claim was denied for lack of verification and now the taxpayer provides the previously requested information.

    Example:

    2 - ISTS Stage 12 shows a claim was denied for knowledge and now the taxpayer provides documentation to show he/she did not have knowledge.

    Example:

    3 - Claim is in ISTS Stage 30 and taxpayer submits additional information, not previously considered.

  3. Post Determination - A post determination is a claim in ISTS Stage 30 or archived, where the taxpayer sends correspondence but does not send additional information or sends information that was previously considered.

    Example:

    1 - Claim is in ISTS Stage 30 or archived, and taxpayer writes and ask for a reconsideration but does not submit any new information to be considered.

    Example:

    2 - Claim is in ISTS Stage 30 or archived and taxpayer states it is not fair that I am held responsible but does not submit any new information to be considered.

    Example:

    3 - Claim is in ISTS Stage 30 or archived and taxpayer sends information which was previously considered.

  4. Refundable Payments for RECONs - Use the IRS received date of the RECON when determining if a payment is eligible for refund.

    Example:

    RECON for tax year 2005 is received 10-20-10. Original claim was received on 6-1-08. There was a refund offset on 4-15-07. Per IRC 6511, this payment would not be refundable because the RECON was received more than two years after the payment.

    Exception:

    If the RECON is due to IRS error (this includes IRC 6015(f) claims previously denied for timeliness), then you consider the date of the original claim.

25.15.17.2  (03-08-2013)
Screening

  1. When the RS submits additional information and the case is in ISTS Stage 12:

    1. Place in appropriate folder.

    2. Update the IDRS control base with activity code "RECON" and the received date of the additional information.

    3. Update ISTS to ISTS Stage 24 on the original claim with the received date of the additional information.

    4. Forward the case to the appropriate team.

  2. When the RS submits additional information and the case was previously in ISTS Stage 30:

    1. Place in appropriate folder with an ISTSR Input Record and Activity Sheet.

    2. Open an IDRS control base to the appropriate team with activity code "RECON" and the received date of the additional information.

    3. Update ISTS to Stage 24 on the original claim with the received date of the additional information.

    4. Send Letter 3659C.

    5. Forward the case to the appropriate team.

  3. When the RS submits additional information and ISTS is archived, update ISTS as a new claim.

    1. Place in appropriate folder with an ISTSR Input Record and Activity Sheet.

    2. Open an IDRS control base to the appropriate team with activity code "RECON" and the received date of the additional information.

    3. Update ISTS to Stage 01 with activity "ARC" and the received date of the of the additional information.

    4. Update ISTS to Stage 02 if applicable, Stage 03 and Stage 05 with comment item "RECON" (do not update to Stage 24).

      Reminder:

      Do not input transaction code (TC) 971 action code (AC) 065.

    5. Send Letter 3659C.

    6. Forward case to the appropriate team.

  4. When the RS submits additional information on an innocent spouse claim that was previously worked but not built on ISTS, request the document from files and create the ISTS as it should have been created originally and then process per the procedures above.

25.15.17.3  (03-08-2013)
Post Determination

  1. Notate Activity Record, "Received information, however the information was previously considered, no change in determination."

  2. Issue Letter 5188C to the RS, but do not provide appeal rights.

    Note:

    Do not issue any letter to the Non-requesting Spouse (NRS).

  3. If claim was previously in ISTS Stage 30:

    1. Update ISTS to Stage 31.

    2. Close the IDRS control "NOCHANGE" .

    3. Associate the claim with the previous TC 290, per guidelines found in IRM 3.5.61.11(2), Requests for Association of Attachments.

  4. If claim was previously archived:

    1. Update ISTS to a 2nd claim or higher, if applicable, Stage 01 with "ARC" , Stage 29 "SREQ" Stage 30 "NOACCTP" , and Stage 31.

    2. Close IDRS control "NOACCTP" .

    3. Associate the claim with the previous TC 290, per guidelines found in IRM 3.5.61.11(2), Requests for Association of Attachments.

25.15.17.4  (03-08-2013)
No Change to Prior Determination - Reconsiderations

  1. If the claim was previously disallowed for more than one reason and you are still disallowing it for one of the original reasons, treat as no change to prior determination.

    Example:

    The claim was previously disallowed because it was equitable to hold the RS liable. There was no economic hardship, taxpayer had actual knowledge, and is non-compliant. Now the RS proves there is a hardship but did not prove no actual knowledge or compliance, treat the claim as no change from the prior determination.

  2. Notate Activity Record, "Received additional information, no change in determination."

  3. Issue Letter 5188C to the RS, but do not provide appeal rights. Remind the RS of when his or her Tax Court rights will expire if less than 90 days from date of final determination letter.

    Note:

    Do not issue any letter to the NRS.

  4. If claim was previously in the ISTS Stage 12:

    1. Update ISTS to Stage 12X with the received date of the additional information.

    2. Update IDRS to original 90-day purge date.

    3. Refile on the 90-day wall.

      Note:

      If the time to petition Tax Court has expired, close case, do not update IDRS to 90-day purge date or refile on the 90-day wall.

  5. If claim was previously in ISTS Stage 30:

    1. Update ISTS to Stage 30 with applicable Activity Code.

    2. Close IDRS control "NOCHANGE" .

    3. Associate the claim with the previous TC 290, per guidelines found in IRM 3.5.61.11(2), Requests for Association of Attachments.

  6. If claim was previously archived:

    1. Update ISTS to a 2nd claim or higher, if applicable, Stage 01 with "ARC" , Stage 29 "SREQ" Stage 30 "NOACCTP" .

    2. Close IDRS control "NOCHANGE" .

    3. Associate the claim with the previous TC 290, per guidelines found in IRM 3.5.61.11(2), Requests for Association of Attachments.

25.15.17.5  (03-08-2013)
Determination Is the Same But the Reason Is Different - Reconsiderations

  1. If the claim was previously disallowed for more than one reason and you are still disallowing it, but for a new reason, treat as no change to prior determination. See IRM 25.15.17.4, No Change to Prior Determination - Reconsiderations.

    Example:

    The claim was previously disallowed because the RS had actual knowledge of the item causing the deficiency/understatement, now they prove they had no actual knowledge, but you determine it is equitable to hold the RS liable.

  2. Notate Activity Record, "Received additional information with a new reason for disallowing."

  3. Issue Letter 5188C to the RS, give appeal rights. Advise the RS of when his or her Tax Court rights will expire if less than 90 days from date of final determination letter.

    Note:

    Do not issue any letter to the NRS.

  4. Prepare amended workpapers.

  5. If claim was previously in ISTS Stage 12:

    1. Update ISTS to Stage 25 with activity "ADDI" and Stage 12X with the new reason code for disallowing.

      Note:

      Stage 25 date must be one day earlier than Stage 12 date.

    2. Input 90-day purge date. To calculate the purge date:
      If 45 days or more remains on the purge date, keep the same purge date.
      If less than 45 days remains on the purge date, add 45 days to the date Letter 5188C is sent.

    3. Update the IDRS controls with code section of new disallowance, D6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date and control to 02XXX00090.

      Note:

      D means disallowance and P means partial disallowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number

      .

    4. Refile on the 90-day wall.

  6. If claim was previously in ISTS Stage 30:

    1. Update ISTS to Stage 25 with activity "ADDI" and Stage 12X with the new reason code for disallowing.

      Note:

      Stage 25 date must be one day earlier than Stage 12 date.

    2. Input purge date. This is computed by adding 45 days to the date Letter 5188C is sent.

    3. Update IDRS controls with code section of new disallowance, D6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date and control to 02XXX00090.

      Note:

      D means disallowance and P means partial disallowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number.

    4. File on the 90-day wall.

  7. If claim was previously archived, build new claim:

    1. Update ISTS to Stage 12 with the new reason code for disallowing.

    2. Input purge date. This is computed by adding 45 days to the date Letter 5188C is sent.

    3. Update IDRS controls with code section of new disallowance, D6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date and control to 02XXX00090.

      Note:

      D means disallowance and P means partial disallowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number

      .

    4. File on the 90-day wall.

25.15.17.6  (03-08-2013)
Determination Changed to Allow Relief in Full or Part - Reconsiderations

  1. Notate Activity Record, "Received additional information, changing determination to A6015(b, c, fd, or fo) or P6015(b, c, fd, or fo)." See IRM 25.15.14.4.1.11, Stage 11 - Preliminary Determination Letter Issued, for additional information.

  2. Issue Letter 4986C when relief is fully allowed, or Letter 4987C when relief is partially allowed, to the RS. Give appeal rights if allowing relief in part. Remind the RS of when his or her Tax Court rights will expire, if less than 90 days from the date of the final determination letter. See IRM 25.15.7.11.9(1) Caution, Taxpayer Notification/Suspense Procedures, before issuing the letters when abuse is alleged.

  3. Issue Letter 4983C when relief is fully allowed, or Letter 4984C when relief is partially allowed, to the NRS giving him/her 30 days to appeal.

  4. Prepare amended workpapers and Form 3465, Adjustment Request, if applicable.

  5. If claim was previously in ISTS Stage 12:

    1. Update ISTS to Stage 25 with activity "ADDI" and Stage 12X.

      Note:

      Stage 25 date must be one day earlier than Stage 12 date.

    2. Input purge date. To calculate the purge date:
      If 45 days remains on the purge date, keep the same purge date.
      If less than 45 days remains on the purge date, add 45 days to the date Letter 5188C is sent. The RS still must petition the Tax Court within the time frame per the final determination.

    3. Update IDRS control base with new determination, A6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date and control to 02XXX00090.

      Note:

      A means allowed and P means partial allowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number.

    4. If refund is due, put case in appropriate folder.

    5. Refile on 90-day wall.

  6. If claim was previously in ISTS Stage 30:

    1. Update ISTS to Stage 25 with activity "ADDI" and Stage 12X.

      Note:

      Stage 25 date must be one day earlier than Stage 12 date.

    2. Input purge date. This is computed by adding 45 days to the date Letter 5186C is sent.

    3. Update IDRS control base with new determination, A6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date, and control to 02XXX00090.

      Note:

      A means allowed and P means partial allowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number

      .

    4. Mirror module, if applicable. See IRM 25.15.15.2, First Read, for mirroring procedures.

    5. If refund is due, put in appropriate folder.

    6. Input TC 971 AC 065, using the received date of the RECON on accounts with a balance due.

    7. File on the 90-day wall.

  7. If Archived (new claim built):

    1. Update ISTS to Stage 12.

    2. Input purge date. This is computed by adding 45 days to the date Letter 5186C is sent.

    3. Update IDRS control base with new determination A6015(b, c, fd, or fo) or P6015(b, c, fd, or fo), purge date and control to 02XXX00090.

      Note:

      A means allowed and P means partial allowance. For IRC 6015(f) use fd for an understatement and fo for an underpayment. XXX is for the team number

      .

    4. Mirror module, if applicable. See IRM 25.15.15.2, First Read, for mirroring procedures.

    5. If refund is due, put in appropriate folder.

    6. Input TC 971 AC 065 on account with balance due.

    7. File on the 90–day wall.

25.15.17.7  (03-08-2013)
Cases Closed in Appeals

  1. If a case was closed in Appeals (Stage 16 or 20 on ISTS) and meets the guidelines for reconsideration, the Cincinnati Centralized Innocent Spouse Operation (CCISO) must determine if the reconsideration will be conducted by CCISO or Appeals.

  2. The examiner in CCISO must know the Appeals closing code to determine if the case will be forwarded to Appeals or worked in the CCISO. The Appeals closing code can be determined by checking the Appeals Centralized Data System (ACDS). To obtain read-only access to ACDS, the examiner must obtain the appropriate approvals through an online 5081 request.

  3. If the Appeals Closing Code is 03, 04 or 05, send the case to Appeals.

  4. A claim can't be reconsidered if res judicata applies. See IRM 25.15.3.5.1, Res Judicata, for information about res judicata. Res judicata generally applies to cases closed with Appeals Closing Codes 10, 12, or 17. Res judicata might also apply to cases closed with Appeals Closing Code 08 or 21. If applicable, advise the RS that the claim can't be reconsidered because res judicata applies.

  5. Appeals Closing Codes 08 and 21 are also used for cases that were dismissed for lack of jurisdiction. CCISO will reconsider any Tax Court case dismissed for lack of jurisdiction.

  6. Reconsideration requests on cases previously closed in Appeals that meet the guidelines for reconsideration should be routed to the Covington Campus Appeals office.

25.15.17.8  (03-08-2013)
Issuance of a Second Final Determination Letter Under IRC 6015 for the Same Claim

  1. The RS may petition the Tax Court by filing a petition not later than the 90th day after the Service mails a final determination letter under IRC 6015(e)(1)(A).

  2. The Service cannot rescind a final determination letter issued under IRC 6015 because the innocent spouse provisions do not have a statutory provision comparable to IRC 6212(d) specifically providing for the recession of a statutory notice of deficiency.

  3. Situations occur due to Service delay or error, where it is unfair burden to require the RS to file a petition. Situations also occur where the Service grants relief, but later discovers the RS and/or NRS provided fraudulent information.

    Note:

    When a taxpayer timely requested an appeals hearing, but it was not associated, follow IRM 25.15.7.11.10, Rework.

  4. In very limited circumstances, the Service may issue a second final determination letter for the same claim, i.e., Service delay or error or taxpayer fraud.

25.15.17.8.1  (03-08-2013)
Basic Requirements

  1. A second final determination letter may be issued if the RS has not yet petitioned Tax Court and the original determination was based on Service delay or error or taxpayer fraud.

  2. The decision to issue a second final determination letter is made at higher review level than the first final determination letter and is documented in writing.

  3. In the Small Business/Self-Employed (SB/SE) Division, Compliance Policy Technical Support Managers (second level) must sign the second letter. Reviewers are not authorized to sign a second final determination letter.

  4. Wage and Investment, Compliance Operations Manager must sign the second final determination letter.

  5. A new preliminary determination letter will need to be issued because the NRS has appeal rights of all partial and full allowances and the RS has appeal rights on all partial and full disallowances. Once the taxpayers have been given their appeal rights, a second final determination letter will need to be issued.

  6. The second preliminary determination letter needs to explain the reason for the second letter.

25.15.17.8.2  (03-08-2013)
Service Delay or Error

  1. Service delays that may justify issuance of a second final determination letter generally involve a failure to associate taxpayer correspondence in a timely manner, and such information would change the outcome. Examples include the following:

    1. The RS timely requests an Appeals conference in response to the preliminary determination letter. The request is not associated with the case file prior to issuance of the final determination letter.

    2. The RS timely responds to the preliminary determination letter and includes additional information that would change the initial determination. The correspondence is not associated with the case file prior to issuance of the final determination letter.

    3. The NRS timely responds to the Service's questionnaire and offers to participate by submitting information that would clearly change the examiner's determination. The correspondence is not associated before issuance of the final determination letter.

25.15.17.8.3  (03-08-2013)
Taxpayer Fraud

  1. Taxpayer fraud that may justify issuance of a second final determination letter may occur where the RS or NRS fraudulently represented or omitted significant facts that led the examiner to conclude the RS was entitled to relief. This could occur when significant assets were transferred to the RS to avoid collection or the RS's involvement in the activity associated with the deficiency/underpayment was misrepresented.

  2. The taxpayer's actions should be documented with reliable evidence, not allegations and conjecture alone, before approval is given to issue a second final determination letter.

25.15.17.8.4  (03-08-2013)
Notification to the Non-requesting Spouse (NRS)

  1. The NRS must be notified of the second final determination by mail.


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