3.28.3  Individual Income Tax Returns

Manual Transmittal

November 05, 2013

Purpose

(1) This transmits revised IRM 3.28.3, Special Processing Procedures - Individual Income Tax Returns.

Material Changes

(1) Minor editorial changes or updates throughout.

(2) IRM 3.28.3.2.1(4) - Removed the attention for the envelope.

Effect on Other Documents

IRM 3.28.3 ,dated October 30, 2012 ( effective January 1, 2013), is superseded.

Audience

Wage and Investment Submission Processing Campus personnel

Effective Date

(01-01-2014)

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

3.28.3.1  (01-01-2014)
Introduction

  1. This section of the Internal Revenue Manual (IRM) provides instructions for processing:

    • The tax returns and accounts of the President and Vice President of the United States of America

    • The tax returns of political appointees who have their assets placed in a trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code (or any successor provision of the United States Code).

  2. These procedures apply to all functions within the campuses.

  3. The tax returns of the President and Vice President will be mailed to the Field Director, Austin Submission Processing Campus.

  4. The Field Director of Austin can delegate the "walk through" processing of the President and Vice President's returns to a subordinate. This person should make sure that the original returns are not unnecessarily folded or bent, and the edit marks and stamps are neatly placed on the returns, because they will remain permanent documents in the National Archives.

  5. When filing a political appointee's tax return, the trustees of a trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code (“blind trust”) are to follow the “Where to File” Instructions for Form 1040 and file the tax return at the appropriate campus based on the appointee's address.

  6. The President, Vice President, or any political appointee who has placed his/her assets in a blind trust must request permission for the trustee to prepare and file their individual tax return. The request for permission must be in writing and will be submitted with the tax return and a properly executed Form 2848, power of attorney and Declaration of Representative. Permission for the trustee to prepare and file the return will be granted automatically on receipt of the required documents. The IRS does not send an approval letter to the President, Vice President, political appointee or trustee.

3.28.3.2  (01-01-2014)
Processing Returns and Accounts of the President and Vice President

  1. Follow the instructions in this subsection of the manual when processing the tax returns and accounts of the President and Vice President of the United States.

  2. The instructions include the following procedures:

    • Individual and Gift Tax Returns Processing

    • Account Data Storage and Access

    • Mandatory Examination

3.28.3.2.1  (01-01-2014)
Individual and Gift Tax Return Processing

  1. Follow the normal returns processing procedures for all tax returns of the President and Vice President of the United States.

  2. Monitor the location of the tax returns of the President and Vice President at all times during processing.

    • Ensure that the returns are not exposed to viewing by other employees in your immediate area;

    • Keep the returns locked in a secure drawer or cabinet while you are away from your work area and the returns are still under your control.

  3. Once the individual income tax return has posted, make a photocopy of the return and stamp "COPY" in the top margin. Route the copy to Files.

  4. The original processed individual income tax return will be forwarded in double-sealed envelopes to prevent any damage to the return to:


    Internal Revenue Service
    Deputy Commissioner for Services and Enforcement
    1111 Constitution Ave NW, Room 3000 IR
    Washington, DC 20224

  5. Gift tax returns will be processed in accordance with the same procedures relating to all taxpayers.

3.28.3.2.2  (01-01-2014)
Account Data Storage and Access

  1. Carry the account data of the President and Vice President on the appropriate Master File.

  2. Do not subject the accounts to restricted access procedures.

3.28.3.2.3  (01-01-2014)
Mandatory Examination

  1. Individual income tax returns for the President and Vice President are subject to mandatory examinations. See IRM 4.2.1.8, Processing Returns and Accounts of the President and Vice President.

  2. The Small Business/Self-Employed (SB/SE), Director of Examination, will determine the area office responsible for the examination of the return.

  3. Copies of the returns to be examined will be transmitted after the examining office with jurisdiction is selected. The transmittal memorandum will contain the following directions:

    1. Regardless of the Discriminant Index Function (DIF) score, the returns will be examined.

    2. IRS personnel, including specialists, will be assigned to the examination as appropriate.

    3. The Examination Area Director, or his/her designee, will arrange for contact with the authorized representatives of the President and Vice President for the beginning of the examination.

    4. All relevant IRM procedures will apply to these return examinations.

    5. The copies of the tax returns, any related examined returns, and the work papers and examination reports will be subject to regular filing and retention procedures.

3.28.3.3  (01-01-2014)
blind trust Form 1040 Returns

  1. Follow the instructions in this subsection of the IRM when processing blind trust individual income tax returns.

  2. The instructions included the following procedures:

    • General Information and Instructions

    • Blind Trust Tax Return Processing

    • Document Perfection Procedures

    • Accounts Management Centralized Authorization File (CAF) Procedures - Processing the Form 2848

3.28.3.3.1  (01-01-2014)
General Information and Instructions

  1. The President, Vice President, or a political appointee will be considered to have shown good cause for receiving permission and will automatically be granted permission to have their return filed by a trustee when both of the following conditions are met:

    1. The President, Vice President, or political appointee has an interest in a blind trust that meets the requirements of Section 102(f)(3) of the Appendix to the Title 5 of the United States Code (USC) or any successor provision of the USC and

    2. The President, Vice President, or political appointee in accordance with Rev. Proc. 2010–11 submits with the income tax return both a letter requesting permission for the trustee to prepare and file the income tax return on behalf of the eligible individual and a power of attorney.

    Note:

    A separate request must be made for each tax year (tax period).

  2. The trustee will attach both of the following to their filed return:

    • A letter requesting permission for the trustee to prepare and file the President's, Vice President's, or political appointee's return.

    • A valid power of attorney authorizing the trustee to represent the taxpayer that includes a statement specifically authorizing the trustee to prepare and file the taxpayer's return on behalf of the taxpayer.

  3. The IRS must use extreme caution not to violate a blind trust.

    1. All correspondence and refunds concerning the blind trust tax return will be addressed to the authorized trustee.

    2. No disclosure of any information regarding the source(s) or nature of the blind trust income will be made to the taxpayer.

  4. Generally, the taxpayer's name will be in the Entity, but the address will belong to the trustee to ensure that any correspondence and/or refund is mailed only to the trustee. Any attached Power of Attorney (POA) should be reviewed for completeness using the criteria in IRM 3.28.3.3.2.1 by the Code and Edit tax examiner, then faxed to the Ogden CAF Unit to be posted.

  5. Do not disclose information regarding the source of the blind trust income if contact with the taxpayer is ever required.

3.28.3.3.2  (01-01-2014)
Blind Trust Tax Return Processing

  1. Blind Trust returns can generally be identified by the presence of any of the following:

    • The notation "Blind Trust" in the signature area, or

    • An income statement or schedule indicating "Income from Blind Trust," or

    • A trust agreement which specifies "Blind Trust," or

    • A POA attached indicating "Blind Trust," or posted to the CAF with a Blind Trust Authorization Indicator, or

    • A letter requesting permission for the trustee to prepare and file the President's, Vice President's or political appointee's return.

  2. The letter requesting permission and the POA must be attached to the return. It is the responsibility of the Code and Edit tax examiner to determine that the POA is complete before routing it to the Ogden CAF Unit. If the POA is already posted, the Code and Edit tax examiner should ensure that the Blind Trust Authorization Indicator is posted on the account. See IRM 3.28.3.3.2.1.

  3. If the Form 2848 is an original, or the CAF needs to be updated with the Blind Trust Authorization Indicator, the Code and Edit tax examiner will:

    1. Perfect the Form 2848. See IRM 3.28.3.3.2.1(3) for specific procedures.

    2. Call the Ogden CAF Unit Manager to alert him/her that they are faxing a POA for a "Blind Trust" to the unit.

    3. Edit "Blind Trust" in the top margin of the Form 2848.

    4. Fax the original Form 2848 to the Ogden CAF Unit.

    5. Staple the Form 2848 to the back of the return.

    ,

  4. If the request letter is attached and the POA is posted correctly, continue processing the return. Leave the request letter (and any POA) attached to the return.

  5. If the POA is posted to the CAF, but the Blind Trust Authorization Indicator needs updating, refer to IRM 3.28.3.3.2.1(6) for instructions on how to contact the Ogden CAF Unit to update that field.

3.28.3.3.2.1  (01-01-2014)
Document Perfection Procedures

  1. Determine that the letter requesting permission for the trustee to prepare and file the President's, Vice President's, or political appointee's return is present and the POA is attached when "blind trust" is indicated on the return.

    Note:

    The POA authorization may be contained in the trust agreement when a blind trust agreement is attached. If all of the items, including the specific acts, are listed in the blind trust agreement, then it is acceptable. Edit the taxpayer's name and social security number (SSN), and "See Attached" on a Form 2848. Then, fax the "Form 2848" package to the Ogden CAF Unit for processing.

  2. If a Form 2848 is attached, check Command Code (CC) CFINK to determine if it is an original or copy of the POA. If the CAF is up to date (including the blind trust Authorization Indicator), then continue processing the return and leave the copy of the Form 2848 attached to the return.

  3. If an original Form 2848 is attached to the return, the Code and Edit tax examiner will edit "BLIND TRUST" in the top-center margin of the Form 2848 and ensure that the following applicable parts of the Form 2848 are completed.

    1. Line 1 - Taxpayer information: Taxpayer name(s) and address, SSN(s).

    2. Line 2 - Representative(s): Representative(s) name(s) and address, CAF No., Telephone No.

    3. Line 3 - Matters: Description of matter (type of Tax Form Number (e.g., Form 1040), tax period (must be only ONE tax period)

    4. Line 4 - Specific Uses Not Recorded on CAF: Box should be checked.

    5. Line 5 - Acts authorized - Signing a return box should be checked. A statement should be included granting the trustee permission to sign the tax return. "This power of attorney is being filed pursuant to Treasury Regulation section 1.6012-1(a)(5), which requires a power of attorney to be attached to a return if a return is signed by an agent by reason of specific permission granted by IRS" Line 5 may also include the following authorizations:

      • Waiver of restriction on assessment or collection.

      • Waiver of notice of disallowance.

      • Consent to extend the period for assessment or collection.

      • Closing agreement.

    6. Line 6 - Retention/revocation of prior power(s) of attorney: If the box is checked, research CC CFINK to determine if it should have been checked.

    7. Line 7 - Signature of taxpayer(s) and date: The signature of the taxpayer(s) and the date is required.

    8. Part II - Declaration of Representative: Designation, jurisdiction, signature, and date of agent is required. Correspond with the agent if this is missing.

  4. If the Form 2848 is complete:

    1. Detach the Form 2848 from the return and call the Ogden CAF Unit Manager to notify him/her that you are faxing a blind trust POA for "expedite" processing.

    2. Fax the original Form 2848 to the Ogden CAF unit.

    3. Upon acknowledgement of receipt from the Ogden CAF Unit Manager that the POA was input correctly to the CAF, staple the Form 2848 to the back of the return and continue processing.

  5. Correspond with the political appointee for the missing items, or authorizations when the POA does not grant the trustee authority to perform all of the specific acts (Line 5 on Form 2848) on behalf of the political appointee, or any other required items are missing, except Part II. If Part II is incomplete, correspond with the trustee.

  6. The request letter and POA must be present. If either one is missing or incomplete, use the table below to determine the proper action:

    If a POA is: and request letter is: Then:
    Attached, or already correctly posted on the CAF with the Blind Trust Authorization Indicator Attached Continue processing.
    On the CAF, but the Blind Trust Authorization Indicator is not present Attached Contact the Ogden CAF Unit Manager. Fax the request letter to them for verification to allow the update to the CAF with the Blind Trust Authorization Indicator.
    Not found on the CAF, or attached to the return Attached Correspond with the trustee for the missing POA.
    SSPND the return while corresponding for the missing POA.
    Attached, or already posted on the CAF Not attached Correspond with the trustee for a copy of the request letter. SSPND the return while corresponding for the missing request letter.
    Not found on the CAF, or attached to the return Not attached There is an indication of a "blind trust." Code and Edit should correspond with the "trustee" for the missing documents. SSPND the return while corresponding for the missing documents.

  7. If the request letter is attached, a valid POA has posted, and other correspondence conditions are present on the return, SSPND the return and correspond with the trustee.

3.28.3.3.2.2  (01-01-2014)
Accounts Management (CAF) Procedures - Processing the POA

  1. The Form 2848 (POA) for the "blind trust" can be mailed or faxed directly to any CAF unit by the agent or taxpayer. If any CAF Unit, other than Ogden, receives a Form 2848 (POA) with indication of "blind trust" , they should contact the Ogden CAF Unit Manager, and fax the Form 2848 directly to him/her for processing.

  2. When the Form 2848 (POA) is attached to a blind trust tax return, the Code and Edit tax examiner will review the Form 2848 for completeness, then phone the Ogden CAF Unit Manager and immediately fax the Form 2848 to him/her for input to the CAF. The CAF Unit Manager will acknowledge receipt and input the Form 2848. After input to the CAF, the Code and Edit tax examiner will continue processing the return.

  3. Ogden CAF Unit Only – Process the blind trust POA according to instructions. in IRM 21.3.7.8.9, blind trust Authorizations.


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