3.0.167  Losses and Shortages

Manual Transmittal

September 19, 2013

Purpose

(1) This transmits revised IRM 3.0.167, Losses and Shortages, General - Losses and Shortages.

Material Changes

(1) IPU 13U0256 issued 01-31-2013 IRM 3.0.167.8.1, added exception for general ledger accounts 6905 and 6920.

(2) IPU 13U0256 issued 01-31-2013 IRM 3.0.167.8.1.4, deleted requirement to send RRACS 0155 Report to Erroneous Refund Analyst.

(3) IPU 13U0256 issued 01-31-2013 IRM 3.0.167.8.4.4, deleted requirement to use the Disbursement Loss Relief Checklist for Identity Theft Cases and updated IRM reference for exhibits.

(4) IPU 13U0435 issued 03-04-2013 IRM 3.0.167.8.1.4, added cause and 5 year statute period for Identity Theft Erroneous Refunds.

(5) IPU 13U0435 issued 03-04-2013 IRM 3.0.167.8.4, added 5 year statute period for Identity Theft Erroneous Refunds.

(6) IPU 13U0537 issued 03-14-2013 IRM 3.0.167.8.1.4, corrected IRM reference for Identity Theft Erroneous Refunds.

(7) IRM 3.0.167.4.1, corrected the IRM reference for Remittance Security Coordinator incident reporting to the Situational Awareness Management Center (SAMC). Includes a link to the SAMC Physical Security Incident Reporting Form.

(8) IRM 3.0.167.4.3.2, added new subsection for the Losses and Shortages Analyst.

(9) IRM 3.0.167.8.4.1(6), removed Insufficient funds as an acceptable term and included under Dishonored Check.

(10) IRM 3.0.167.8.4.4, updated Administrative Resolution of Identity (ID) Theft Erroneous Refund Procedures to include the CDDB extract process.

(11) IRM 3.0.167, Various editorial changes.

Effect on Other Documents

IRM 3.0.167, Losses and Shortages, dated September 4, 2012 (effective October 1, 2012), is superseded. This transmits revised IRM 3.0.167, Losses and Shortages. This IRM also incorporates the following IRM Procedural Updates (IPU) which were issued January 31, 2013 through March 14, 2013: 13U0256, 13U0537 and 13U0435.

Audience

Submission Processing in Wage and Investment Division

Effective Date

(10-01-2013)

Paul J. Mamo
Director, Submission Processing
Wage and Investment Division

3.0.167.1  (10-01-2011)
Overview

  1. These procedures provide guidelines for reviewing the facts and evaluating the circumstances surrounding losses and shortages. Losses and shortages include tax collections, seized property and disbursement losses (uncollected erroneous refunds) incurred by the Service. Also contained are requirements for obtaining employee restitution for loss or shortage of collections, and requesting relief for accountable officers. These procedures reference instructions that are contained in other operating manuals which impact on the Director's accountability. These procedures require the monitoring and reporting of all losses/shortages to ensure proper accounting. These procedures do not resolve losses arising from a lockbox arrangement (IRM 3.0.230, Lockbox Processing Procedures).

    Note:

    Lockbox losses are reported to the Planning and Analysis Remittance Security Coordinator and are part of the monthly Remittance Security Report. See IRM 3.0.167.4.5, Reports and Exhibit 3.0.167-18, Remittance Security Coordinator (RSC) Report.

3.0.167.2  (10-01-2013)
Internal Controls

  1. Management has the primary responsibility for providing a system of internal controls. Management is held accountable for internal controls. Management is liable for losses where it fails to provide proper internal controls. However, all personnel have a responsibility for understanding and ensuring that internal controls are functioning as intended.

  2. All Service employees must take care to protect Personally Identifiable Information (PII). Any loss of PII could result in information being compromised to commit identity theft. PII information must be encrypted on computers and e-mail. Sanitize taxpayer PII or use secure messaging. If you suspect or know of a potential information loss, report it to your manager and:

    1. Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.

    2. Situation Awareness Management Center (SAMC) at 1-866-216-4809 or

    3. Computer Security Incident Response Center (CSIRC) at 1-866-216-4809.

    Note:

    See IRM 3.0.167.4.1, Remittance Security Coordinator, for SAMC/CSIRC reporting.

3.0.167.2.1  (10-01-2011)
Statutory Requirements

  1. All applicable laws relating to funds and appropriations must be complied with; each fund or appropriation can only be used for the purpose authorized by law. Accounting records must be designed to show compliance with this requirement.

3.0.167.2.2  (10-01-2011)
Management and Congressional Needs

  1. The accounting system must provide financial records consistent with standards set by other agencies and the Department of the Treasury in connection with its central accounting and reporting responsibilities. The financial data must be accurate and reported timely to meet the needs of the President and Congress for budget activities.

3.0.167.2.3  (10-01-2011)
Technical Requirements

  1. Each accounting system must maintain complete and reliable records for all funds, property, and other assets, as well as liabilities, obligations, receipts, and revenues. All financial transactions must have documents supporting a summary record and financial report. Procedures implemented in carrying out the operation should be simple, efficient, practicable, and must apply all legal and regulatory requirements. The responsibility for each accounting function, such as preparing documents, preparing journals, posting ledgers, reviewing, and balancing must be performed by separate units within the Accounting Operation to provide internal checks and minimize opportunities for fraudulent, unauthorized, or irregular acts.

3.0.167.3  (10-01-2012)
Accountability

  1. The organizational structure, operating procedures and administrative practices are adopted throughout management to provide reasonable assurance that programs and administrative activities are effectively carried out.

3.0.167.3.1  (10-01-2011)
Integrity

  1. The highest standards of truthfulness and honesty must be applied in accounting for the receipt, disbursement, and application of public funds. Management and the Congress must be able to rely on the accuracy of all transactions in future planning. To meet these standards competent leadership and qualified technicians are of prime importance.

3.0.167.3.2  (10-01-2011)
Accountable Officer

  1. An Accountable Officer is any government employee or officer who, by reason of employment, is responsible for or has custody of government funds.

  2. The Federal Accounting Standards Advisory Board (FASAB) establishes accounting concepts and standards. The Federal Financial Management Improvement Act (FFMIA) of 1996 prescribes that agencies implementation and maintenance of financial management systems substantially comply with Federal Financial Management Systems requirements, applicable Federal Accounting Standards and U. S. Government Standard General Ledger at transaction level and audits to report compliance.

  3. The Field Director, Submission Processing, is normally the Accountable Officer for the campus accounting system. The Field Director, Submission Processing, usually delegates the authority for carrying out the accounting function. However, the ultimate responsibility remains with the Field Director, Submission Processing who can be held financially responsible if proper controls are not maintained. The Accountable Officer is responsible for ensuring that the following principles and standards are met in maintaining the accounting system.

3.0.167.3.3  (10-01-2013)
Certifying Officer

  1. A Certifying Officer is one of several types of Accountable Officers.

  2. A Certifying Officer is a government officer or employee whose job is or includes certifying vouchers for payment. This means verifying and certifying that payments made by the agency are legal, proper and correct.

  3. A Certifying Officer is different from other accountable officers in one important way: a Certifying Officer does not have physical custody of public funds. In spite of this fact, the accountability for public funds rests primarily with the Certifying Officer.

3.0.167.3.4  (10-01-2011)
Liability of Accountable Officers

  1. Collecting officers are those who receive or collect money for the government, such as certain officers of the Service. Officers who receive or collect money for the government are accountable to the government for all money collected. Service employees who receive or collect money for the government are responsible for the physical safety of taxes collected. These employees must surrender to the government all taxes collected and are responsible for repayment for any money lost, stolen, burned, etc., while in their custody, unless relieved.

  2. Under Delegation Order 1-20 (formerly DO 152, Rev. 4), IRM 1.2.40.18, the Commissioner has delegated to the Field Directors, Submission Processing, the authority to certify and approve Internal Revenue Collections as an Accountable Officer. Other officials can be designated by a Division Commissioner.

  3. Accountable Officers who have physical custody of Government funds are held to a standard of strict liability. They are, in effect, insurers of the public funds in their custody and are excusable only for losses due to acts of "God or the public enemy" .

  4. An Accountable Officer is automatically liable at the moment either a physical loss occurs or an erroneous payment is made. The fact that a loss or deficiency has occurred raises a presumption of liability on the part of the accountable officer, and the burden of proof to rebut this presumption rests with the officer who has sustained the loss.

3.0.167.3.5  (10-01-2011)
Responsibilities of Accountable Officers

  1. Treasury Directive 32–04, dated February 16, 2007 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx establishes requirements and responsibilities.

3.0.167.3.6  (10-01-2011)
Accountability of the Campus Field Director, Submission Processing

  1. When entrusted with or statutorily made responsible for public funds, government employees are, in effect, trustees for the taxpayers. These "accountable officers" encompass such officials as authorized certifying officers, civilian and military disbursing officers, collecting officers, and other employees who, by virtue of their employment, are responsible for or have custody of government funds. These officials are personally liable for the loss or improper payment of the funds for which they are accountable.

  2. Directors are held accountable for losses occurring within their accounting jurisdictions until employee restitution is made or relief is granted.

  3. It is important to distinguish between liability and "relief" . The basic legal liability of the accountable officer is strict, and automatic. Lack of fault or negligence does not remove liability, but may provide a basis for "relief" under the relief statutes discussed.

  4. Exhibit 3.0.167-1, List of Accountable Officers, contains a list of Directors who have been designated under Delegation Order 1–18 (formerly DO-125, Rev 5, DO-185, Rev 1 and DO-235, Rev 1), IRM 1.2.40.17 as Accountable Officers.

    Note:

    If a former accountable officer is deceased, relief is still requested under the deceased accountable officers name for receipt losses, deposit discrepancies, and disbursement losses.

3.0.167.3.7  (10-01-2013)
Field Director, Submission Processing Signature Authorization

  1. These instructions provide the minimum requirements and general guidelines for Losses and Shortages.

  2. The Field Director, Submission Processing, is authorized to sign memorandum to request relief of irregularities in the account of Accountable Officers, administrative resolution of physical/disbursement losses and deficiencies and/or reimbursement from an appropriation of funds available for the activity in which the loss occurred.

  3. Memorandum requesting relief and/or resolution, with the required supporting documentation/attachments (case file, history sheets, checklists, account transcripts, correspondence, case listing, etc.), must contain a written signature when submitted to the Director, Submission Processing for review and approval (e.g., Deposit Discrepancies, Employee Embezzlement, Employee Fraud, Disbursement Losses, 7804(c) Assessment, etc.).

  4. Memorandum requesting additional information, assistance and/or providing notification of an irregularity, may be digitally signed by the Field Director, Submission Processing (e.g., Internal Controls, Preliminary Report, Supplemental Report, Counsel, etc.). These documents are generally considered supporting documentation for relief and/or resolution requests.

    Exception:

    Digital signatures are not acceptable for documents sent to the general public (e.g., see Exhibit 3.0.167-3, Sample Correspondence 7804(c) Assessment and Exhibit 3.0.167-16, Sample Memo for Requesting Information from Banks).

3.0.167.4  (10-01-2012)
Remittance Security

  1. Remittance Security is the physical security controls over remittances. Adequate security equipment and facilities must be provided to safeguard money, securities, etc. This ensures remittances are secured to protect taxpayer information in all remittance operations.

  2. Key duties of remittance processing and reviewing or changing tax accounts are divided or segregated among different people to reduce the risk of error, fraud, theft or embezzlement.

  3. Fraud, theft or embezzlement may include, but are not limited to:

    1. Altered Remittances - Endorsed and/or made payable to someone other than the IRS. This may include change to the money amount.

    2. Stolen Remittances - Instrument negotiated for cash or to steal the identity of the taxpayer.

    3. Counterfeit Currency - Imitation currency produced without the legal sanction of the federal government.

  4. All Service employees are responsible for protecting personally identifiable information (PII). IRM 10.5.1, Policy, Roles and Responsibilities provides this guidance.

  5. Employees and managers should become familiar with IRM 1.4.6, Managers Security Handbook.

3.0.167.4.1  (10-01-2013)
Remittance Security Coordinator

  1. Each Submission Processing campus selects a member of the Planning and Analysis Staff as the Remittance Security Coordinator (RSC).

  2. The RSC is the individual responsible for centralized control, coordination and protection of the taxpayer for potential embezzlement/theft cases.

  3. The RSC is responsible for reporting any loss of personally identifiable information (PII) to the Situation Awareness and Management Center (SAMC) for cases reported on the Remittance Security Report. Reporting should be completed to SAMC within 24 hours of the RSC being notified of the potential loss.

  4. The SAMC Incident Reporting Form can be found at http://awss.web.irs.gov/PhysicalSecurity/IR/Default.shtml. The Incident Type must be one of the following:

    • Loss or Theft of Sensitive Data (e.g. 809 Receipt Books or packages lost during shipping)

    • Disclosure of Sensitive Data (e.g. PII)

    • Counterfeit Currency

    • Loss of Remittance

    • Theft Lockbox

    • Theft Tax Remittance

  5. Submit the SAMC Incident Report via the website. You will receive a confirmation e-mail with an Incident Tracking Number. Forward the e-mail with a brief explanation of the incident to the Losses and Shortages Analyst.

    Note:

    If the incident involves the loss or theft of an IRS IT (Information Technology) asset (e.g. an IRS issued computer, laptop, router, printer, removable media, CD/DVD, flash drive, floppy, cell phones, Blackberry, etc.), report the incident to the Computer Security Incident Response Center (CSIRC).

  6. The following are examples of situations that could potentially involve loss of PII.

    IF remittance is. . . THEN it . . .
    Lost in Transit (IRS to IRS) Should be reported by RSC
    Lost or Stolen in house Should be reported by RSC
    Altered Check or Money Order Should be reported by RSC
    Misapplied Payment Should not be reported
    Payment sent to another agency by taxpayer Should not be reported
    A Lockbox issue or theft Will be reported by the bank

  7. Remittance Security Coordinator changes must be sent to the Headquarters Losses and Shortages Analyst.

    Note:

    A list of Remittance Security Coordinators (RSC) can be found at http://win.web.irs.gov/SP/Security_Info_&_Internal_Control/Remittance_Security_Coordinators.htm

3.0.167.4.2  (10-01-2012)
Control

  1. The Remittance Security Coordinator will ensure that cases are controlled (Hardcore Payment Tracer Unit) while potential embezzlement/theft cases are investigated.

    Note:

    These cases are sensitive and require security and limited access.

    1. The Remittance Security Coordinator receives a Form 3210, Document Transmittal, or Taxpayer Advocate Service (TAS) may send an Operations Assistance Request (OAR), from the area that identified an altered remittance or potential embezzlement/theft.

    2. The Remittance Security Coordinator insures that the account(s) are controlled until notified by TIGTA there is no embezzlement/theft or until the proper credit has been applied from the 7610 Account or the lockbox bank.

    3. The Remittance Security Coordinator expedites a TIGTA request for refund from the Special Agent In Charge (SAC) for IRS reimbursement of TIGTA seeding remittance (Imprest Fund). The TIGTA memo must be signed by the SAC and include the Imprest Fund Checking Account Number and the Bank Routing Number. The RSC will submit the request as a manual refund using Form 3753, Manual Refund Posting Voucher, from the Unidentified Remittance (4620) Account to be made payable via direct deposit to the Imprest Fund Cashier.

    4. The Remittance Security Coordinator will receive via UPS from the TIGTA SAC under Form 3210, Document Transmittal, cover sheet and memorandum, a cashiers check or money order for tax remittance money seized by TIGTA during an investigation and forfeited by the court to TIGTA. The Remittance Security Coordinator will hand carry the check or money order to the Receipt and Control Deposit function. The funds will be deposited into the Treasury General Fund and credited to the affected taxpayers account.

3.0.167.4.3  (10-01-2012)
Coordination

  1. The Remittance Security Coordinator (RSC) coordinates cases and potential cases with the Treasury Inspector General for Tax Administration's (TIGTA) Office of Investigations, Headquarters Losses and Shortages Analyst, Receipt Loss Coordinator, local Lockbox Field Coordinator, Erroneous Refund function and the Hardcore Payment Tracer function.

3.0.167.4.3.1  (10-01-2012)
Treasury Inspector General for Tax Administration (TIGTA)

  1. The Remittance Security Coordinator is the TIGTA contact.

  2. The Remittance Security Coordinator:

    1. Receives memorandum from TIGTA.

    2. Contacts the Special Agent provided in the memorandum, if additional information is needed.

      Note:

      TIGTA will issue a memorandum within 10 days of interviewing the complainant.

    3. Receives the Report of Investigation (ROI) from TIGTA (Final Report).

    4. Coordinates cases between Receipt Loss Coordinator (formerly 7600 Coordinator) and Lockbox Field Coordinator.

    5. Coordinates with the Erroneous Refund function when TIGTA provides a memorandum indicating employee fraud (disbursement losses – refunds).

      Note:

      All correspondence must be stamped with the correct received date.

3.0.167.4.3.2  (10-01-2013)
Losses and Shortages Analyst

  1. The Remittance Security Coordinator is the Losses and Shortages Analyst contact.

  2. The Remittance Security Coordinator:

    1. Forwards SAMC Incident Reports.

    2. Forwards Remittance Security Coordinator changes for updates to the Remittance Security Coordinator website.

    3. Forwards the Monthly Remittance Security Report.

3.0.167.4.3.3  (10-01-2012)
Receipt Loss Coordinator

  1. Credit from the 7600 Account (Receipt Loss Coordinator):

    1. Verify the Form 2424, Account Adjustment Voucher, has the correct account, money amount and payment date.

    2. Hand deliver Form 2424 to expedite processing.

    3. Once the account has been properly credited, close the control base.

3.0.167.4.3.4  (10-01-2012)
Lockbox Coordinator

  1. Credit from the Lockbox Bank (Lockbox Field Coordinator):

    1. Verify that the report to the Headquarters Lockbox Coordinator is accurate and complete.

    2. After 10 days, contact the Headquarters Lockbox Coordinator for the date Financial Management Service (FMS) was contacted.

      Note:

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    3. Once the account has been properly credited, close the control base.

3.0.167.4.4  (10-01-2011)
Protection

  1. The Remittance Security Coordinator will ensure that taxpayers are protected while potential embezzlement/theft cases are investigated.

  2. In an effort to protect taxpayers from incorrect notices, the Remittance Security Coordinator will:

    1. Ensure that the Hardcore Payment Tracer function inputs the proper STAUP to stop incorrect notices.

    2. Ensure that any installment agreements do not default.

    3. If necessary prepare manual billing for accounts where, if the potential loss was applied to the account, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.0.167.4.5  (10-01-2012)
Reports

  1. Losses that are the responsibility of the Receipt Loss Coordinator (formerly the 7600 Coordinator) require a Preliminary Report of Loss from the Field Director, Submission Processing. The report is due within 10 days of receipt of the memorandum from TIGTA.

  2. Preliminary Report information can be found in IRM 3.0.167.5.8, Preliminary Reports.

  3. When TIGTA discovers additional embezzlements or perpetrators and when full employee restitution is received after the Preliminary Report has been forwarded, a Supplemental Report is submitted by the Field Director, Submission Processing to the Director, Submission Processing W&I.

  4. Supplemental Report information can be found in IRM 3.0.167.5.9, Supplemental Report.

  5. The Remittance Security Coordinator will provide the Headquarters Losses and Shortages Analyst an immediate e-mail report of all lockbox or direct deposit refund (employee fraud) losses and Campus or Field Office losses of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  6. The Remittance Security Coordinator will provide the Headquarters Losses and Shortages Analyst a monthly report by the 5th work day of the next month. See Exhibit 3.0.167-18, Remittance Security Coordinator (RSC) Report.

3.0.167.5  (10-01-2011)
Receipt Loss Requirements

  1. This section establishes procedures for handling tax receipt losses in the 7610 Account that are the result of embezzlement, theft, shortage or counterfeit bills.

3.0.167.5.1  (10-01-2012)
General Ledger Accounts for Receipt Losses

  1. Receipt losses are controlled in the following general ledger accounts:

    1. 7610 Account, Embezzlement and Theft

3.0.167.5.1.1  (10-01-2012)
7610 Account - Embezzlement and Thefts

  1. 7610 Account, Embezzlement and Thefts, is used to record cash shortages of collections, losses from robbery or theft, embezzlement of collections, and counterfeit bills. The balance in this account represents the total amount of such losses or shortages for which restitution or reimbursement may be obtained, or for which relief may be granted.

  2. This account is supported by reports and case history files covering the details of each recorded collection loss or shortage. Case history files will include complete documentation.

  3. This account is included in the accountability of the Accountable Officer.

3.0.167.5.2  (10-01-2011)
Receipt Loss Reporting Requirements

  1. Employees identifying a revenue receipt shortage must immediately notify their supervisor of the shortage.

  2. Supervisors upon receiving notification of a revenue receipt shortage, must immediately contact their Manager, Department Manager, TIGTA and the local Remittance Security Coordinator.

  3. Losses of tax collections involving these specific circumstances must also be reported in writing immediately:

    • Losses involving suspected thefts or embezzlements by employees.

    • Losses caused by robbery, burglary or natural disaster, i.e., fire, flood, etc.

    • Losses involving acceptance of counterfeit bills or raised notes.

    • Losses where the cash is less than the receipts.

    • Checks lost during processing.

    • Lost 809 receipt books or blank 809 receipts. (If any 809 receipts are recovered, this must also be reported to TIGTA)

    • Losses caused by non-receipt of a UPS package.

      Note:

      Revenue receipts lost/misplaced in the Receipt and Control area during processing must be reported.

  4. The supervisor must record differences, overages and shortages of each employee engaged in handling currency dealing with collections. He/she must report the shortages to the Submission Processing Campus Receipt and Control function by memorandum with the daily deposit. The memorandum includes the amount of the loss and identifies the type of tax (Tax Class) and injured taxpayer, if known, and where the loss appears to have occurred. When the TIGTA memorandum identifies an injured taxpayer or requests the transfer, the Manager, Accounting Control/Services Operation will satisfy the injured taxpayer's loss using the 7610 Account.

    Reminder:

    If a cash deposit was made by a Field Office, the memorandum should be sent to the Submission Processing Campus Accounting Operation with the daily Accounting package.

    Exception:

    Overages will be deposited as unidentified remittances.

  5. Supervisors must require the responsible employee(s) to write a detailed report within 5 days after the loss occurred. The report must contain the office location, functional area, date occurred or discovered, the name(s) and position title(s), amount, kind of tax or fund, circumstances and appropriate documents.

  6. The supervisor will determine if there was negligence on the part of any employee in regard to the loss or shortage. If the employee was negligent, he/she will be requested to make restitution. Supervisors must forward their employee's loss report with their own report, within 10 workdays to the Field Director, Submission Processing through the Remittance Security Coordinator. The report will include a summary of internal controls, procedures and supervisory responsibilities in effect at the time the loss occurred.

  7. Submission Processing Field Directors are responsible for reporting employee embezzlement losses to required officials and other agencies. All lost cash receipts will be referred to TIGTA regardless of the dollar amount. Forward preliminary reports of losses, within 10 days of the receipt of TIGTA's memorandum, as well as subsequent follow-up reports to the Director, Submission Processing W&I. See Exhibit 3.0.167-2, Sample Receipt Loss Preliminary Report.

3.0.167.5.2.1  (10-01-2012)
Counterfeit Currency Reporting Requirements

  1. Employees identifying counterfeit currency must immediately notify their supervisor of the shortage.

  2. Supervisors upon receiving notification of counterfeit currency, must immediately contact their Manager, Department Manager and the local Remittance Security Coordinator.

  3. If a counterfeit bill is discovered, this must also be reported to the Secret Service. Contact phone numbers for your local Secret Service can be found at http://www.secretservice.gov/field_offices.shtml.

  4. When the counterfeit currency is discovered by the bank, the debit is handled by Campus Accounting. No further action is required by the field office. Accounting should not contact the field office.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. When the debit voucher and Secret Service Report (SSF 1604) are received, the Manager, Accounting Control/Services Operation will satisfy the injured taxpayer's loss using the 7610 Account.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.0.167.5.3  (10-01-2012)
Altered Remittances

  1. A taxpayer complains that a remittance, sent or given to the IRS has been altered. The matter is referred to TIGTA when a photocopy of both sides of the original negotiating instrument was endorsed and/or made payable to someone other than the IRS. In the case of money orders, cashier's checks, etc. the taxpayer provides a photocopy of the customer's receipt and a written statement that the original instrument was payable to the Treasury and/or sent to the IRS. The taxpayer is encouraged to provide sufficient identifying data, including a telephone number where they may be contacted at home and work.

  2. In these cases the employee/unit handling the complaint should input Transaction Code (TC) 470 with no closing code, and forward the taxpayer's correspondence to the nearest TIGTA Special Agent.

  3. If the remittance was mailed to the IRS but is taken by a Postal or other government employee, the Service is not legally obligated to credit a taxpayer's account under such circumstances. Therefore, the 7610 account is not used. The taxpayer's recourse is against the payor bank as it is held strictly liable to the true owner if it pays on a forged instrument.

  4. Do not use the 7610 account if the remittance was processed through a lockbox bank. Contact the Lockbox Field Coordinator.

3.0.167.5.4  (10-01-2011)
Negligence

  1. Supervisors, based on the TIGTA Report of Investigation (ROI), will determine if there was negligence on the part of the employee in regard to the loss or shortage. If the employee was negligent, the supervisor must request the employee make restitution. Supervisors must forward their employees' loss report with their own report about their knowledge of the loss and determination regarding negligence to the Department Manager and Operation Manager. The report will include a summary of internal controls, procedures and supervisory responsibilities in effect at the time the loss occurred. Management is held accountable for internal controls. Management is liable for losses where they failed to provide or enforce proper internal controls.

  2. The Field Director, Submission Processing, based on the TIGTA ROI and the case file, will determine whether the loss was a result of negligence on the part of the accountable officer. Although the principles of law involved are simply stated, their application to a given case requires a careful analysis of the particular facts. A number of factors may bear on the conclusion in any given case, and the results will be determined by the interrelationship of these factors. The Field Director, Submission Processing and the Director, Submission Processing W&I ensure that the appropriate factors have been considered.

  3. In evaluating the facts to determine whether or not the accountable officer was negligent for purposes of applying the relief statute, apply the standard of "reasonable care" . This is the standard of simple or ordinary negligence, not gross negligence. This standard has been stated as what the reasonable, prudent and careful person would have done to take care of his or her own property of like description under like circumstances. This is an objective standard, that is, it does not vary with such factors as the age and experience of the particular accountable officer.

  4. If the facts indicate negligence on the part of an employee then the employee is ordered to make restitution. If the negligent employee does not make restitution or a court case against the employee is not pursued, the employee is assessed using IRC Section 7804(c) procedures. See IRM 3.0.167.5.6, IRC Section 7804(c).

3.0.167.5.5  (10-01-2011)
Embezzlement

  1. Embezzlement of tax collections can occur at any point within the Service. Caution must be taken to ensure that adequate internal controls exist to minimize or prevent instances of embezzlement. Adequate security, equipment, and facilities must be provided for the safeguarding of money, securities, etc. handled in the Deposit Function.

  2. Local TIGTA controls and coordinates embezzlement cases. The Special Agents Handbook contains detailed instructions for "Recovering Unjust Enrichments" and for "Coordination with the Service in Theft or Embezzlement Cases." TIGTA sends a memorandum to the Campus Field Director, Submission Processing on embezzlement cases, involving both Field Office and Campus employees. Injured taxpayer's account(s) are credited from the 7610 account. The 7610 account is debited for the loss amount. If the "injured" taxpayer is not identified, credit the Unidentified Account. The TIGTA "memorandum" provides the assigned case number, taxpayer's name, identification number, type of tax, period ending, amount and date of payment and the name and telephone number of the Special Agent conducting the investigation.

  3. At the appropriate time when an employee has been identified as having embezzled government funds, and in concurrence with the Department of Justice/Assistant United States Attorney (DOJ/AUSA), TIGTA sends a memorandum to flag the employee's retirement. TIGTA keeps the U.S. Attorney's office informed so that criminal prosecution is not impacted.

  4. TIGTA sends the Final Case Information Report of Investigation (ROI) to the Field Director, Submission Processing. TIGTA will provide the U.S. Attorney's office the Submission Processing Campus Accounting addresses for application of restitution payments. Mailing labels will be provided. These addresses are in the Special Agent's Handbook.

  5. The Field Director, Submission Processing is authorized by the TIGTA memorandum to debit Account 7610 and credit the injured taxpayer's account(s). The case number provided on the memorandum should be used on the case file and as the Document Identification (ID) when opening the case on the Redesign Revenue Accounting Control System (RRACS). See IRM 3.17.64, Accounting Control General Ledger Policies and Procedures, for the specific journal instructions. The Field Director, Submission Processing forwards a copy of the memorandum to the Director, Submission Processing Wage and Investment (W&I) as part of the preliminary notification. The case is suspended until the ROI is received. The case is reviewed monthly by the Receipt Loss Coordinator and followed-up as appropriate with TIGTA.

    1. A TIGTA memo will not be received for counterfeit bill cases. Instead, a Secret Service Counterfeit Report (SSF 1604) is needed to establish the case in the 7610 account. This report should be sent to the campus by the depository when the debit voucher is received. If this report is not received, Accounting must contact the depository and get a copy of this report prior to opening the case in the 7610 account.

      Note:

      When opening the counterfeit case on the RRACS system in to the 7610 account, use the TRACE ID number (located on the debit voucher) plus the letter "C" . If no debit voucher is received, use the TRACE ID on the original deposit ticket plus the letter "C" . Example: 89252009292001C.

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. Upon receipt of the TIGTA Final Case Information Report, the Receipt Loss Coordinator will initiate recovery.

  8. The Receipt Loss Coordinator sends a memorandum from the Field Director, Submission Processing to the area that has the loss requesting a copy of the internal controls in place when the loss occurred. See ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , for a sample memo. The response must include deficiencies or changes made and copies of the controls in place.

    Note:

    Internal controls include but are not limited to IRM procedures, desk procedures and managerial review requirements.

3.0.167.5.6  (10-01-2011)
IRC Section 7804(c)

  1. IRC Section 7804(c) assessment is for a case that does NOT go to trial and court cases where the court sentence orders restitution by 7804(c) assessment. IRC Section 7804(c) imposes liability against any officer or employee of the Department of Treasury who fails to account for and pay over any amount of money or property collected or received by him/her in connection with the Internal Revenue laws. Management is held liable for lack of proper internal controls. The statute does not require any specific intent or intentional misconduct such as willfulness. Thus, the Service may issue a notice and demand and a resulting assessment as soon as there is evidence of loss of money or property and evidence that the employee had a duty to account and pay over such money or property. If the employee fails to make payment, the Service can exercise its broad administrative powers to collect the amount owed as if it were a tax.

  2. The rights of the employee are not violated by such summary collection action since he can challenge the assessment by filing a claim and suit for refund of any amount collected under Section 7804(c).

3.0.167.5.6.1  (10-01-2011)
IRC Section 7804(c) Procedures

  1. Delegation Order 1–20 (formerly DO-152, Rev. 4), IRM 1.2.40.18 determines who can order a 7804(c) assessment.

    Note:

    If the current Field Director, Submission Processing is an Accountable Officer for the loss, the assessment must be approved by the Director, Submission Processing W&I; contact the Losses and Shortages Analyst.

  2. If authorized and there is not a court case, the Receipt Loss Coordinator will prepare a notice and demand as shown in Exhibit 3.0.167–3, Sample Correspondence 7804(c) Assessment. A return envelope addressed to the Accounting Operation is provided for payments or response. The notice and demand is issued prior to 7804(c) assessment to afford the employee the opportunity to pay the liability before the assessment billing. The amount of the notice is the full amount of the loss. The amount of the notice should also include any charges that are the result of any offset. The amount offset will be short by that amount. As every case is unique, the notice and demand letter is tailored to suit the case. The notice reflects interest from the loss date to the notice date. The notice indicates the year of loss as a tax year. A separate 7804(c) is issued for each tax year. If full payment is received, it clears the 7610 Account loss and will not be assessed. The interest is deposited as General Fund Receipts.

    1. After 30 days from the date of the notice and no response, a copy of the notice will be sent to Redesign Revenue Accounting Control System (RRACS) to journal the assessment. The notice is the assessment document. The notice will be coded to reflect a Transaction Code (TC) 290 for the entire amount of the loss and a TC 340 for interest computed from the loss date to the 23c date.

    2. A partial payment is used to reduce the 7610 Account loss. The notice is coded to reflect the balance. A TC 290 is input for the amount due and TC 340 for the interest computed from the loss date to the 23c date.

  3. 7804(c) assessment is Non-Master File. Letters will be numbered as Tax Class 6, Document Code 54, Blocking Series is designated by tax class with 200 series for individual and MFT 20 Abstract 004.

  4. The Non-Master File assessment is mailed to:

    Internal Revenue Service
    Cincinnati Submission Processing Campus
    P. O. Box 12267
    Covington, KY 41012

  5. The employee is sent the final notice of intent to levy. The Taxpayer Delinquent Account (TDA) will then be accelerated to Collection. The employee is not sent the notices as with normal TDA's. At the time of the TDA preparation, the Cincinnati Non-Master File (NMF) unit contacts the Receipt Loss Coordinator at the Campus requesting the assessment and a memorandum to accompany the TDA.

    • The memorandum explains the circumstances surrounding the case.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • The normal levy source information is not secured.

    • The case is established on the Integrated Data Retrieval System (IDRS) and should be controlled.

    • Collection sends the Manager, Accounting Control/Services Operation, Attention: Receipt Loss Coordinator, a copy of the collection actions taken.

3.0.167.5.6.2  (10-01-2011)
IRC Section 7804(c) Assessment Payments

  1. A TC 130 is input on the perpetrator's account to offset any future Master File refund. Payments received by Receipt and Control are numbered with a 6 [27] Document Locator Number (DLN); 200 blocking series and controlled on a separate 813. Form 3244 , Payment Posting Voucher, is prepared if copy of letter is not attached and deposited as individual income tax 20–0110. The deposit package is forwarded to Accounting.

    Note:

    7804(c) assessments are on the Automated Non-Master File (ANMF) System.

  2. The NMF Unit contacts the Receipt Loss Coordinator (formerly the 7600 Coordinator) for each payment posted to the NMF account and the coordinator works with RRACS to journal the transaction.

    1. Debit Account 2120, Individual Income, Revenue Receipts, Direct; Credit Account 4440, Assessment and Abatement Suspense NMF

    2. Debit Account 4440, Assessment and Abatement Suspense NMF; Credit Account 1324, NMF Taxpayer Delinquent Accounts Deferral Under Tolerance ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or Credit Account 1322 NMF Taxpayer Delinquent Accounts Deferral ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Debit Account 6900, Adjustment to Revenue Receipts: Credit Account 7610, Embezzlement and Thefts.

3.0.167.5.7  (10-01-2011)
Court Case

  1. Where a court has ordered restitution on an employee embezzlement case (7610 Account ), a memorandum is sent to the Kansas City Department of Justice Lockbox Coordinator at:

    IRS-RACS
    Attn: Mail Stop 6261
    333 W. Pershing Road
    Kansas City, MO 64108

  2. The memorandum provides the name and social security number (SSN) of all persons ordered to make restitution, amount of restitution payments and the case number. Employee embezzlement cases are monitored monthly by the Receipt Loss Coordinator to insure that payments are made. If payments are not received, contact TIGTA Special Agent in Charge (SAC). If payments are made but not transferred from Kansas City Department of Justice Lockbox, secure the payment information from the probation officer (use the TIGTA SAC) and contact the Kansas City Department of Justice Lockbox Coordinator at 816–325–3805.

    Note:

    All court ordered restitution payments for employee embezzlement cases will be sent to the Kansas City Department of Justice Lockbox and routed to the campus monitoring the case via Form 2158, Credit Transfer Voucher.

  3. When the court does not order restitution, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. When the court orders administrative recovery, IRC Section 7804(c) assessment procedures are followed. See IRM 3.0.167.5.6.2, IRC Section 7804(c) Assessment Payments.

3.0.167.5.8  (10-01-2012)
Preliminary Reports

  1. Preliminary reports are sent from the Field Director, Submission Processing to the Director, Submission Processing W&I. See Exhibit 3.0.167-2, Sample Receipt Loss Preliminary Report.

    Note:

    The Planning and Analysis Remittance Security Monthly Report is managements notification of the loss. See Exhibit 3.0.167-18, Remittance Security Coordinator (RSC) Report.

  2. Preliminary reports require documentation that all injured taxpayers accounts were corrected. A managerial review is required 120 days after the credit is transferred from the 7610 account to insure that injured taxpayer's accounts are properly corrected.

    Exception:

    Preliminary reports are not required for counterfeit bill cases.

  3. Include documentation showing correction of all identified "injured" taxpayers accounts.

  4. The signed Preliminary Report may be sent via e-mail to Susan.Hankerson@irs.gov, faxed to 267–941–1008 or mailed to:

    Internal Revenue Service
    Attention: Susan N. Hankerson, Losses & Shortages Analyst
    2970 Market Street (3B.G04.144)
    Philadelphia, PA 19104

  5. The Losses and Shortages Analyst will open a case file for the preliminary report.

3.0.167.5.9  (10-18-2011)
Supplemental Reports

  1. Supplemental reports are submitted by the Field Director, Submission Processing to the Director, Submission Processing W&I when TIGTA discovers additional embezzlements or perpetrators and when full employee restitution is received after the Preliminary Report has been forwarded. If TIGTA issues another memorandum, this information is sent forward. See Exhibit 3.0.167-5, Sample Receipt Loss Supplemental Report.

  2. The signed Supplemental Report may be sent via e-mail to Susan.Hankerson@irs.gov, faxed to 267–941–1008 or mailed to:

    Internal Revenue Service
    Attention: Susan N. Hankerson, Losses & Shortages Analyst
    2970 Market Street (3B.G04.144)
    Philadelphia, PA 19104

3.0.167.5.10  (03-06-2012)
Case File

  1. It is the responsibility of the Receipt Loss Coordinator to obtain all documents required for the case file, as applicable. The case file documents the case and attempts to collect the loss. Documents include:

    • TIGTA Memorandum.

    • TIGTA Report of Investigation (ROI).

    • Secret Service Report (SSF 1604) for counterfeit bill cases.

    • Copy of document transferring credit to the injured taxpayer's account.

    • Transcript of injured taxpayer's account showing the credit from the 7610 Account .

    • Copy of the Preliminary Report and any Supplemental Reports.

    • Copy of the internal controls in place at the time of the loss.

    • Any internal control changes made.

    • Copy of court documents.

    • A list of any payments made or offsets.

    • History of contacts with TIGTA, Court, DOJ, Kansas City DOJ lockbox and any other areas/agencies.

    • 7804(c) assessment documents (non-court case).

    Note:

    TIGTA will assist in getting court documents or contacting DOJ.

3.0.167.5.11  (03-06-2012)
Relief - Receipt Losses

  1. Relief is requested upon determination that the loss amount is not collectible. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Relief is granted to a present or former accountable officer for the physical loss or deficiency of public money (or securities) when the head of the agency (or his/her designee) determines: the accountable officer was carrying out official duties when the loss or deficiency occurred, or the loss or deficiency occurred because of an act or failure to act by a subordinate of the accountable officer; the loss or deficiency was not the result of fault or negligence by the accountable officer; and the loss or deficiency was not the result an illegal or incorrect payment.

  3. Within the scope of jurisdiction, the Director, Submission Processing W&I is authorized by Delegation Order 1-17, IRM 1.2.40.17, and Treasury Directive 32–04 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx to administratively resolve irregularities (including embezzlements) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Note:

    Cases ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ are sent to the Department of Treasury for resolution.

  4. The 7610 Account is monitored to ensure timeliness of relief requests.

3.0.167.5.11.1  (10-01-2012)
Relief Request

  1. Review relief requests to ensure that appropriate documents support the type of loss incurred and are attached. See Exhibit 3.0.167-7, Sample Relief Request Documentation. Incomplete case files will be returned for further development. The Accountable Officer is determined by when the loss occurred. Determine if negligence is involved, proper collection action taken, and include the TIGTA ROI or the Secret Service Report for counterfeit bill cases. Include a copy of internal controls that were in place when the loss occurred and identify any deficiencies or changes made.

    Note:

    Accountability Periods before 9/30/99 the Accountable Officer was the Service Center Director. After 10/1/99 the Field Director, Submission Processing is the Accountable Officer.

    Note:

    Copies of the controls include but are not limited to IRM procedures, desk procedures and managerial review requirements.

  2. Relief requests require documentation that all injured taxpayers accounts were corrected. A managerial review is required 120 days after the credit is transferred from the 7610 account to insure that injured taxpayers accounts are properly corrected. The results of this review are part of the relief request.

  3. The memorandum to the Director, Submission Processing Wage and Investment (W&I) contains a complete explanation of how the loss occurred, the circumstances surrounding it, when it was discovered, internal controls in place, changes to internal controls, court information, efforts taken to collect and why the loss is uncollectible. Complete the Losses and Shortages Documentation Check Sheet, Exhibit 3.0.167-7, Sample Relief Request Documentation, to ensure the case file is complete. The memorandum for cases administratively resolved will contain the statement authorizing the resolution and a signature block for the Director, Submission Processing W&I. See ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Note:

    The amount of the loss is charged to the appropriation fund of where the loss occurred and relief is granted to the Field Director, Submission Processing.

3.0.167.5.11.2  (10-01-2011)
Clearing the 7610 Account - Embezzlements and Thefts

  1. Clearing the 7610 Account, Embezzlements and Thefts, when the amount of the loss is charged to the appropriation or fund available for the expenses of the accountable function at the time of the restoration or adjustment.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. The Headquarters Losses and Shortages Analyst will request the funds from the Beckley Finance Center.

    Note:

    The Receipt Loss Coordinator contacts the Losses and Shortages Analyst 21 calendar days after the request if funds have not been transferred.

  4. The Beckley Finance Center will utilize the Intra-Governmental Payment and Collection System (IPAC) to send the credit to the appropriate Submission Processing Campus.

  5. When the credit is received, the following journal actions are required to clear the 7610 account:

    1. Debit RRACS Account 2910 (IPAC Receipts); Credit RRACS Account 4985 (IPACR Suspense)

    2. Debit RRACS Account 4985 (IPACR Suspense); Credit RRACS Account 4420 (SC Suspense for NMF), 4620 (Unidentified Remittances) or 6800 (Excess Collection)

    3. Debit RRACS Account 4420 (SC Suspense for NMF), 4620 (Unidentified Remittances) or 6800 (Excess Collection); Credit Account 7610, Embezzlements and Thefts

    4. Debit 21XX (Revenue Receipts); Credit Account 2910 (IPAC Receipts)

3.0.167.5.12  (10-01-2011)
Claim for Repaid Losses or Embezzlement

  1. A Form 843, Claim for Refund and Request for Abatement, for repaid loss or embezzlement is coordinated with TIGTA on a case by case basis for processing. These claims are not processed without authorization from Office of Chief Counsel.

  2. When a claim is received for a repaid loss or embezzlement, prepare a memorandum to counsel requesting an opinion be rendered concerning the individual claim.

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If counsels response is to deny the claim, a Letter 105C, Claim Disallowed, must be sent to inform the individual that the claim is denied.

3.0.167.6  (10-01-2011)
Unexplained Losses or Shortages

  1. An example of an "unexplained loss" is where there is an apparent deposit discrepancy; however, collection under the Federal Claims Collection Act (FCCA) is inappropriate. For instance, where items were missing from the Form 813, Document Register, and could not be reconstructed or traced to individual taxpayer accounts, the deposit could not be reconciled with the bank. Another example is, one hundred items went to good tape; however, only 93 were deposited. We cannot establish the bank's liability; the loss is "unexplained" and requires approval by Treasury if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Unexplained losses are controlled in 7620 Account.

3.0.167.6.1  (10-01-2012)
General Ledger Accounts for Unexplained Losses or Shortages

  1. Unexplained losses or shortages are controlled in the following general ledger accounts:

    1. 7620 Account, Unexplained Losses

    2. 6900 Account, Adjustments or Corrections of Revenue Receipts

3.0.167.6.1.1  (10-01-2012)
7620 Account, Unexplained Losses

  1. Account 7620, Unexplained Losses, is used to record unexplained losses. An unexplained loss includes deposit discrepancies that cannot be collected under the Federal Claims Collection Act. When the Service cannot establish the bank's liability for a deposit discrepancy, the loss is considered unexplained.

    Note:

    Unexplained losses of $10,000 or more require Treasury's approval.

  2. This account is supported by reports and case history files covering the details of each recorded collection loss or shortage. Case history files will include complete documentation.

  3. This account is included in the accountability of the Accountable Officer.

3.0.167.6.1.2  (10-01-2012)
6900 Account, Adjustments or Corrections of Revenue Receipts

  1. Account 6900, Adjustment to Revenue Receipts, is for adjustments or corrections of revenue receipts, and for reclassification of revenue receipts to and from other general ledger accounts. This account records relief granted by the Service or Treasury for losses and shortages of collections without reimbursement (See 31 U.S.C. Section 3527 and 31 U.S.C Section 3528).

  2. This account also covers special cases for adjustments or corrections in revenue receipts. These would include shortages that have been assessed against an employee or former employee, under Section 7804(c) of the Code, and payment was reported as tax instead of relief from shortages.

  3. This account may also be used for other items authorized by Treasury or CFO, such as reclassification of funds between the revenue receipt accounts, and the Anti-Drug Special Fund, and the Informant Reward Special Fund.

    Note:

    No external subsidiary record is maintained, however, documentation supporting each entry must be on file.

3.0.167.6.2  (10-01-2012)
Relief - Unexplained Losses

  1. Relief is requested upon determination that the loss amount is not collectible. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Relief is granted to a present or former accountable officer for the physical loss or deficiency of public money (or securities) when the head of the agency (or his/her designee) determines: the accountable officer was carrying out official duties when the loss or deficiency occurred, or the loss or deficiency occurred because of an act or failure to act by a subordinate of the accountable officer; the loss or deficiency was not the result of fault or negligence by the accountable officer; and the loss or deficiency was not the result an illegal or incorrect payment.

  3. Within the scope of jurisdiction, the Director, Submission Processing W&I is authorized by Delegation Order 1-17, IRM 1.2.40.17, and Treasury Directive 32–04 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx to administratively resolve irregularities (including embezzlements) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Note:

    Cases ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ are sent to the Department of Treasury for resolution.

  4. The 7620 Account is monitored to ensure timeliness of relief requests.

3.0.167.6.2.1  (10-01-2012)
Relief Request

  1. Review relief requests to ensure that appropriate documents support the type of loss incurred and are attached. Incomplete case files will be returned for further development. The Accountable Officer is determined by when the loss occurred. Determine if negligence is involved, proper collection action taken, and include the TIGTA ROI. Include a copy of internal controls that were in place when the loss occurred and identify any deficiencies or changes made.

    Note:

    Accountability Periods before 9/30/99 the Accountable Officer was the Service Center Director. After 10/1/99 the Field Director, Submission Processing is the Accountable Officer.

    Note:

    Copies of the controls include but are not limited to IRM procedures, desk procedures and managerial review requirements.

  2. Relief requests require documentation that all injured taxpayers accounts were corrected. A managerial review is required 120 days after the credit is transferred from the 7620 account to insure that injured taxpayer's accounts are properly corrected. The results of this review are part of the relief request.

  3. The memorandum to the Director, Submission Processing Wage and Investment (W&I) contains a complete explanation of how the loss occurred, the circumstances surrounding it, when it was discovered, internal controls in place, changes to internal controls, court information, efforts taken to collect and why the loss is uncollectible. The memorandum for cases resolved by the Director, Submission Processing W&I contains a statement authorizing resolution and a signature block.

3.0.167.6.2.2  (10-01-2012)
Clearing the 7620 Account - Unexplained Losses

  1. Clear the 7620 Account, Unexplained Losses, when relief is granted. An adjustment is made to revenue receipts.

    1. Debit RRACS Account 6900, Adjustments or Corrections of Revenue Receipts.

    2. Credit RRACS Account 7620, Unexplained Losses.

3.0.167.7  (10-01-2012)
Deposit Discrepancies

  1. Depository banks forward SF 215-A because of errors made in original deposit tickets. Unresolved Debit Vouchers (SF 5515) received from depository banks may indicate discrepancies (other than checks on which payment has been refused) between the Deposit Ticket (SF 215-A) and the supporting checks such as:

    • Encoding errors

    • Slipped blocks

    • Piggy backs

    • Improper SF 5515 charge backs

    Note:

    Lockbox banks implemented Electronic Check Processing (ECP), which converts the check image and corresponding data to generate an electronic transfer of funds. Lockbox sites send electronic check images through the ECP system to the Federal Reserve Bank of Cleveland (FRB-C). The Federal Reserve Bank of Cleveland will be the bank of first deposit for all lockbox payments.

    Reminder:

    The Federal Reserve Bank of Cleveland will only maintain remittance records for one (1) year, instead of the six (6) years and six (6) months previously negotiated with lockbox financial institutions.

  2. In order to resolve discrepancies with the depository banks, a general knowledge of the banking system and the contractual requirements of the depositaries is necessary. Therefore, the Treasury Financial Manual (TFM) should be available to the Accounting Operation.

  3. IRM 3.8.44, Campus Deposit Activity, IRM 3.8.45 Manual Deposit Process, IRM 3.8.47, Manual Deposit Process for Field Offices and IRM 21.3.4, Field Assistance, contains various quality checks to ensure a quality deposit to reduce the number of deposit discrepancies. Receipt and Control managers are responsible for deposit preparation, reconciliation and release as balanced. Out of balance conditions are not released to the depositaries. Management performs regular reviews of reconciled work accumulated in the staging areas. Managers conduct 100% review of a deposit, prior to its release. Meetings are held between Receipt and Control and the Accounting function to discuss any discrepancies that occur for the 100% review dates.


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