4.1.7  Assignment of Selected Returns

Manual Transmittal

June 17, 2014

Purpose

(1) This transmits revised IRM 4.1.7, Planning and Special Programs, Assignment of Selected Returns.

Material Changes

(1) Minor editorial changes have been made throughout this IRM. Form and IRM references were reviewed and updated as necessary.

(2) Replaced "Midwest Automated Compliance System (MACS)" with "Compliance Data Environment (CDE)." Replaced "Centralized Files and Scheduling Unit (CFSU)" with "Centralized Files and Scheduling (CF&S)" throughout this IRM.

(3) Edited IRM 4.1.7.1 to add and revise examples.

(4) Updated and added definitions to IRM Exhibit 4.1.7-1.

Effect on Other Documents

IRM 4.1.7, dated 10/24/2006 is superseded.

Audience

Planning and Special Programs (PSP)

Effective Date

(06-17-2014)

Mike Damasiewiczo
Director, Examination Planning & Delivery
Small Business/Self-Employed

4.1.7.1  (06-17-2014)
Overview

  1. This chapter discusses the assignment of selected returns.

  2. The SB/SE field examination plan is the blueprint for the allocation of staffing between the various activity codes and return categories. The PSP Territory Manager is responsible for ensuring returns are available for examination by the groups in a manner that accomplishes the plan. This must be balanced with program priorities and initiatives. Program priorities and initiatives in descending order of priority are as follows:

    1. Current headquarters studies—These studies usually involve a finite number of cases with specific completion goals. For example, National Research Project (NRP) and Compliance Data Environment, Release 3 (CDEr3)/Machine Learning, etc.

    2. Current priority program workload—See IRM 4.1.3.1, Priority Program Overview.

    3. Current headquarters initiatives—For example, Non-Filing Tax Gap, Under-Reporting Tax Gap, etc.

    4. Cases governed by the IRM requirements—Cases with input deadlines, mandatory subsequent/prior year follow-up examinations, or special processing. For example, claims; joint committee; bankruptcy; tax shelters; audit reconsiderations; locally initiated cases; direct referrals; TEFRA investors received from the campus TEFRA function for non-TEFRA issue development; inadequate records notice subsequent years; Form 906, Closing Agreement on Final Determination Covering Specific Matters, etc.

    5. Locally identified projects—For example, Compliance Initiative Project (CIP), and Program Action Cases/Return Preparer Projects (PAC), etc.

    6. DIF and DIF related returns—After available priority and initiative type returns are input, the line item accomplishment expectations and class of tax accomplishment expectations are used to guide the remaining return input. The return starts analysis in IRM 4.1.2.3, Return Starts Analysis, should also be used as a guide.

4.1.7.2  (06-17-2014)
Assignment of Returns From Central Storage and Centralized Files and Scheduling

  1. Returns are assigned from Central Storage and Centralized Files and Scheduling as outlined in IRM 4.1.6, Storage of Selected Returns.

  2. Field examination cases are generally assigned to the receiving group in Status 10 from Central Storage. Office examination cases are generally assigned to the receiving group from Centralized Files and Scheduling in Status 10 as "Pre-contact" cases.

4.1.7.3  (06-17-2014)
Control and Management of Tax Return and Return Information

  1. All tax return information, including compliance data environment (CDE), TRDBV, and RTVUE/BRTVU facsimiles, must be distributed to the offices outside PSP via a Form 3210, Document Transmittal. The sender must retain a copy of the Form 3210 for group control to monitor the transmittal of tax returns or return information via Form 3210. If acknowledgement is not received within 10 days, immediate follow-up should be made by phone, secured email, or mail.

  2. Those returns and facsimiles distributed for the purpose of making an audit determination must be returned to PSP within 30 calendar days. PSP staff will dispose of them as soon as it is determined they are no longer needed. If the audit determination is made within PSP, the AIMS controls should be perfected or updated if selected or disposed of as soon as it is determined it is no longer needed.

  3. The same level of security should be provided for any tax return information produced or received in connection with other source work as is given an actual tax return and all other confidential taxpayer information. Tax return information includes, but is not limited to CDE, TRDBV, and RTVUE/BRTVU prints and copies of taxpayer returns from external sources. Any documents containing taxpayer identifying information distributed outside the PSP office should be transmitted via Form 3210.

4.1.7.4  (06-17-2014)
Surveys from the Centralized Scheduling Database

  1. In order to ensure the survey of prior year returns, the PSP Territory Manager should submit a memorandum to the Chief, Classification at the campus with enough time to ensure office and field examination returns are surveyed by December 31. Refer to IRM 4.1.6.6.1, Surveys From the CSDB, for further information.

4.1.7.5  (06-17-2014)
Glossary

  1. Exhibit 4.1.7-1 is a glossary of terms used in IRM 4.1, Planning and Special Programs.

Exhibit 4.1.7-1 
Glossary of Terms

  Term Definition
(1) Accomplishments Closed inventory in Status 80 or higher.
(2) AIMS Assignee Code (AAC) Twelve digit code used to determine the location of tax return on AIMS. See IRM Exhibit 4.4.1-1, Reference Guide, for a full explanation.
(3) Amended Returns Inventory An inventory of Form 1040, U.S. Individual Income Tax Return, paid claims (Category B). See IRM Exhibit 4.1.3-4, Individual Amended Returns Inventory and Delivery Report 1040-5.
(4) Base inventory The optimal level of work-in-process necessary to accomplish the plan. See IRM 4.1.2.3, Returns Starts Analysis.
(5) BOD Business operating division.
(6) Centralized Files Computerized central storage of unassigned inventory. The returns are located in the Centralized Files and Scheduling (CF&S) at the campus. Included are unassigned field individual returns, corporate returns through Activity Code 217, and non-tax shelter partnership returns and Form 1120-S, U.S. Income Tax Return for an S Corporation, returns. Central storage of Form 1041, U.S. Income Tax Return for Estates and Trusts, is optional.
(7) Centralized Scheduling This is a system designed to store tax returns and schedule initial office examination appointments.
(8) Compliance Data Environment (CDE) An automated compliance tool available in areas and campuses. It contains three years of tax return data and other Master File data for all IMF and BMF income tax return filers in an area office.
(9) Compliance Initiative Project (CIP) Any projects designed to identify, measure, or analyze taxpayer noncompliance.
(10) Correspondence (CORR) Return Low and medium non-business individual returns (Examination Classes 270, 271, and 273 DIF returns) which have been computer identified as possibly having issues which may be suitable to correspondence-type examination by the campus.
(11) Current File Year The current file year is the posting year of returns which currently can be ordered for classification. For example, file year 2012 returns can be ordered for classification as of Cycle 13 in 2012. File year 2011 would be referred to as the prior file year and 2013 would be the subsequent file year.
(12) Delivered Returns sent to the campus for classification or screening and CDE returns sent to an exam group code (EGC).
(13) DIF A mathematical technique used to computer score income tax returns as to examination potential. Examination potential is indicated by a numeric score which is assigned to each return by examination class; the greater the score, the greater the examination potential within each examination class.
(14) DIF Regular Return A DIF return which receives a DIF score above the minimum cutoff score and is not a "DIF special" or "automatic" return.
(15) DIF Return An income tax return scored by DIF.
(16) DIF Score The score assigned to a return based on a mathematical technique.
(17) Employee Group Code Part of the AAC at the group level.
(18) Examination Class A method used to categorize returns by the amount of income or assets. For corporation returns, examination class is sometimes referred to as asset class.
(19) File Year A calendar year in which returns are filed; sometimes referred to as processing year, posting year, DIF file year. All returns when received are maintained, processed, posted, and filed on a calendar-year basis. For example, file year 2008 refers to all returns filed between 1/1/2012 and 12/31/2012.
(20) Inventory Returns available to be ordered for classification.
(21) Manual Screening The process of making judgment decisions to accept as filed or select for audit systemically identified DIF returns (otherwise known as "automatics" ).
(22) Master File A computer record containing all information with respect to taxpayers’ filing of returns and related documents, both individual and business. Individual return data is stored on the Individual Master File (IMF). Corporate, employment, estate, excise, partnership and fiduciary return data is stored on the Business Master File (BMF).
(23) MCC Processing Cycle The cycle in which the Martinsburg Computing Center (MCC) posts returns processed by campus and selects returns. The cycle is expressed by a six digit code. The first four digits represent the file year, the second two digits represent the week of that file year (e.g., Cycle 201204 is the fourth week of the 2012 file year).
(24) Minimum Cutoff Score The lowest DIF score necessary to secure the number of returns required for audit. See IRM 4.1.1.3.1, DIF Cutoff Score.
(25) Non-Business Total Positive Income (NBTPI) This includes all TPI items less:
(a) Schedule–C net profits
(b) Schedule–F net profits
(26) Primary Business Code The first three digits of the AAC. Identifies the BOD and the area office or campus controlling a return.
(27) PSP PSP refers to Planning and Special Programs.
(28) Secondary Business Code Digits 6, 7, and 8 in the AAC used to identify the territory or PSP office where a return is located.
(29) Special Return A return which contains one or more of the features, identified by audit codes.
(30) Total Gross Receipts (TGR) This includes the following:
(a) Schedule–C gross receipts and,
(b) Schedule–F gross receipts
(31) Total Positive Income (TPI) This includes only total positive values from the income fields listed are used. Losses are treated as a zero.
(a) Wages
(b) Interest
(c) Dividends
(d) Other income
(e) Distributions
(f) Schedule–C net profits
(g) Schedule–F net profits
(32) TPI Business Return Individual returns meeting at least one of the following conditions:
(a) TGR $100,000 or more; or
(b) TGR $25,000 under $100,000 and non-business TPI is under $50,000; or
(c) TGR is under $25,000 and TGR is greater than non-business TPI.
(33) TPI Non-Business Return Individual returns meeting one of the following conditions:
(a) No Schedule C or F; or
(b) TGR under $25,000 and non-business TPI exceeds TGR; or
(c) TGR is $25,000 under $100,000 and non-business TPI is at least $50,000.
(34) TPI Return An individual return filed after December 31, 1979, and DIF scored based on TPI (total positive income).
(35) Turnover Months The number of months it will take for a return to be closed from work-in-process.
(36) Turnover Rate The number of times in a one year period a return will be closed from work in process.
(37) Work-in-process Generally refers to returns in Statuses 12 through 59 excluding Status 57 and certain suspense statuses such as Status 30, 31, 35 through 39.

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