4.4.7  Correspondence and Closing Letters

Manual Transmittal

September 22, 2014

Purpose

(1) This transmits a complete revision for IRM 4.4.7, AIMS Procedures and Processing Instructions, Correspondence and Closing Letters.

Material Changes

(1) IRM Section 4.4.7.2.1, Initiator's Responsibilities, now requires the group to prepare an envelope for mailing correspondence and closing letters.

(2) IRM Section 4.4.7.2.2, Centralized Case Processing Responsibilities, eliminated a review of the case file. Additional copies will not be made unless specifically requested by the field group.

(3) IRM Section 4.4.7.2.2.4, Letter 3535, Interest Computation Cover Letter, was added to CCP responsibilities.

(4) IRM Section 4.4.7.6, Undeliverable Letters, addresses new procedures for handling undeliverable letters.

Effect on Other Documents

This revision supersedes the previous IRM 4.4.7, Correspondence and Closing Letters, issued 2/01/2006.

Audience

This manual is to be used by employees processing correspondence and closing letters for Large Business and International (LB&I), Small Business/Self-Employed (SB/SE) and Wage and Investment (W&I) cases.

Effective Date

(09-22-2014)

Signed by Beth Haverly
Program Manager, Business Reengineering, Systems Operations Examination
Small Business/Self-Employed

4.4.7.1  (09-22-2014)
Introduction

  1. This section provides general instructions and guidelines for mailing and handling letters (including form, pattern and special letters), forms, reports, and other correspondence and materials.

4.4.7.2  (09-22-2014)
Preparing and Handling Correspondence

  1. The procedures and responsibilities for preparing correspondence are outlined below.

4.4.7.2.1  (09-22-2014)
Initiator’s Responsibilities

  1. The initiator must:

    1. Identify on Form 3198, Special Handling Notice for Examination Case Processing, the required letter, form, report or other material to be typed, photocopied, and enclosed in correspondence to the taxpayer.

    2. Ensure that Report Generated Software (RGS) generated letters are prepared by the examiner whenever RGS is available.

    3. Ensure the contact information on the letter contains the name, identification number, address, and contact telephone number of the examiner or manager of the case. The manager's name will also appear in the signature block at the bottom of the letter.

      Exception:

      Estate Tax closing letter, L-627, will contain the name of the Chief, Estate & Gift Tax Program, in the signature block at the bottom of the letter. Excise Tax closing letters will contain the name of the Chief, Excise Tax Program, in the signature block at the bottom of the letter. Employment Tax closing letters will contain the name of the Chief, Employment Tax Operations, in the signature block at the bottom of the letter.

      Note:

      Do not date the letter.

    4. Provide any special instructions for the typing, handling, or disposition of the correspondence. If there is a box on the letter that must be checked, the initiator will clearly identify the appropriate box to check.

    5. Provide material for typing that is written with correct grammatical structure, punctuation, and capitalization.

    6. Identify on the second page of Form 3198 under "Letter Instructions for CCP" if a copy of the letter is to be issued to a Power of Attorney (POA). Check the box "Copy to POA - Letter 937"

    7. Prepare an envelope to the taxpayer and, if applicable, to the POA. The social security number, employer identification number, and the like should not be visible when mailing correspondence to taxpayers.

4.4.7.2.2  (09-22-2014)
Centralized Case Processing (CCP) Responsibilities

  1. CCP is responsible for the following actions.

4.4.7.2.2.1  (09-22-2014)
Form 3198 Review

  1. Review Form 3198 for special mailing and handling instructions such as:

    1. Name changes

    2. Address changes

    3. Identification of a valid POA

  2. Review for other special requirements such as extra copies of the examination report and workpapers.

  3. Requests that do not provide sufficient instructions to mail the letter will be referred to the unit manager for additional instructions under CCP established procedures.

4.4.7.2.2.2  (09-22-2014)
Review of Correspondence

  1. The taxpayer’s name, address, SSN, return form number, and tax period information should be reviewed for accuracy and can be picked-up from the information contained on Form 3198.

  2. AIMS address labels (if the name and address are correct) may be used in the preparation of various letters and forms if there is no RGS-generated letter in the file.

  3. After reviewing the correspondence, date stamp and mail. SeeIRM 4.4.7.2.2.5 for mailing instructions.

4.4.7.2.2.3  (09-22-2014)
Power of Attorney

  1. Form letters, notices, correspondence, and other materials will only be sent to the taxpayer and an individual authorized by the taxpayer through a properly executed POA. Form 3198 should identify if there is a valid POA on file. If applicable, a valid POA form or a Centralized Authorization File (CAF) printout, should be included in the case file authorizing the taxpayer’s representative to receive letters, notices, and other written communications.

  2. Letter 937, Transmittal Letter for Power of Attorney will be mailed to the POA to transmit copies of correspondence addressed to the taxpayer.

    1. Pick up the name and address of the POA from the POA form or the CAF printout.

    2. The same Person to Contact and Contact Telephone Number that appears on the correspondence being transmitted to the taxpayer will be included on the letter to the POA.

    3. Ensure Letter 937 includes the taxpayer’s name.

4.4.7.2.2.4  (09-22-2014)
Letter 3535, Interest Computation Cover Letter, Requirements

  1. If interest is manually computed by a CCP tax examiner for an individual taxpayer account, Letter 3535 needs to be mailed to the taxpayer and POA (if applicable) along with the interest computation.

4.4.7.2.2.5  (09-22-2014)
Mailing

  1. Most case files will contain an examination report to be sent as an enclosure. If the initiator did not provide the necessary number of copies of the examination report, the tax examiner will need to make the additional photocopies. The basic examination report forms are as follows:

    1. Form 886-A, Explanation of Items;

    2. Form 1273, Report of Estate Tax Examination Changes;

    3. Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment;

    4. Form 4549, Income Tax Examination Changes—for agreed cases for individuals and corporations;

    5. Form 4549-A, Income Tax Examination Changes (Unagreed and Excepted Agreed), —for individual and corporation income tax cases. (NOTE: The form does not require the taxpayer's signature for consent to assessment and collection.);

    6. Form 4605, Examination Changes - Partnerships, Fiduciaries, S Corps., & Interest Charge Domestic International Sales Corporations— for reporting examination changes in partnerships, fiduciaries, small business corporations and domestic international corporations;

    7. Form 4605-A, Examination Changes - Partnerships, Fiduciaries, Small Business Corps. & Domestic Intl. Sales Corp.(Unagreed and Excepted Agreed)- for unagreed and excepted agreed cases for partnerships, fiduciaries, small business corporations and domestic international sales corporations;

    8. Form 4665, Report Transmittal—for unagreed employment tax cases only where confidential information is involved or where a summarization of unagreed issues is absolutely required. Never send the taxpayer or power of attorney copies of Form 4665;

    9. Form 4666, Summary of Employment Tax Examination- for reports covering more than one type of employment tax, or where claims are involved, or where its use is needed for the sake of clarity because of the size or content of the report;

    10. Form 4667, Examination Changes—Federal Unemployment Tax-a basic report for examinations of Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return;

    11. Form 4668, Employment Tax Examination Changes Report, - a basic report for Employment Tax Examination of FICA and Income Tax;

    12. Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection-used as an Excise Tax report form for regular agreed, no-change, and claim cases.

  2. When the letter is ready to be mailed, the tax examiner will annotate on Form 9984, Examining Officer's Activity Record (which should be in the case file) the number of the letter issued, any enclosures sent with the letter, the date the letter was issued and the initials of the tax examiner who mailed the letter, for example, "Letter 987 w/copy of RAR mailed 7/1/14 by a.c." Make the same annotation on Form 9984 for letters mailed to the POA. If Form 9984 is not in the case file, the form can be located at: Form 9984. The tax examiner can download the form and complete the required information. Form 9984 remains in the case file.

4.4.7.3  (09-22-2014)
Types of Letters

  1. Various types of letters can be required. Below is a breakdown of the type of letters to be sent by category.

4.4.7.3.1  (09-22-2014)
No Change or No Liability Notification Letters

  1. For examined no change cases in which the taxpayer or taxpayer’s representative was contacted, the taxpayer will be notified by letter that the reported tax liability is accepted without change. Copies of notification letters are not necessary for administrative files. The report (return or claim, if no report) can be stamped to show the letter used and the date mailed; For example, "Letter 590 mailed –––– " . The date of mailing will be entered. The same information may be included on Form 9984 instead of annotating on the report, return or claim.

4.4.7.3.2  (09-22-2014)
No Change Letters for TEFRA Partnership or S Corporations

  1. These cases will be forwarded to Technical Services and updated to Status Code 21. The TEFRA Coordinator in Technical Services will issue the no-change letter, place a copy of the letter in the file, and if applicable, send the case to CCP for final closure. CCP should not issue the no change letter.

4.4.7.3.3  (09-22-2014)
No Change Letter for Nonfiler Cases

  1. The following letters are issued when a nonfiler case is closed without an examination report:

    1. Letter 2769, No Change Letter, is to be issued when the examination results in a delinquent return being accepted as filed and the taxpayer did not have reasonable cause for his/her failure to file.

    2. Letter 2778, Non-filer No change letter--Penalty Waived, is to be issued when the examination results in a delinquent return being accepted as filed and no penalty is being asserted.

  2. When instructed, a special notification letter may be used instead of a form letter and will be worded "Upon further consideration, your return(s) for the year(s) –––– has (have) been accepted as filed." The notification will specify all years investigated even though some years may be beyond the statutory period of limitations.

4.4.7.3.4  (09-22-2014)
Closing Letters for Agreed Income Tax Cases

  1. The examiner will inform the taxpayer that the agreed case is subject to review and once it is accepted, they will receive Letter 987,Agreed Income Tax Change Letter, stating the case is closed. Examiners will prepare Letter 987, which is signed by the group manager, and leave it in the case file undated.

  2. Letter 987 contact information can be completed with either the examiner's name or the group manager's name.

  3. Check the box on the second page of Form 3198, under the "Letter Instructions for CCP" "Agreed - Letter 987" .

  4. CCP will be responsible for dating and mailing the letter.

4.4.7.3.5  (09-22-2014)
Closing Letters for Agreed Excise Tax Cases

  1. Letter 987-X, Agreed Excise Tax Change Letter, notifies the taxpayer and/or representative that the Excise Tax Audit report has been reviewed and accepted by the Chief, Excise Tax Program, and the examination is officially closed.

  2. The examiner will prepare Letter 987-X, by inserting their contact information in the contact section. The Group Manager will sign the letter on behalf of the Chief, Excise Tax Program. The letter will be left in the case file undated.

  3. CCP will be responsible for dating and mailing the letter.

4.4.7.3.6  (09-22-2014)
Closing Letters for Agreed Employment Tax Cases

  1. Letter 3382, Agreed Employment Tax Change Cases Notification, will be prepared in duplicate by the employment tax examiner. List either the examiner or the group manager as the contact person in the contact section of the letter.

  2. The group manager will sign both copies of Letter 3382 and leave them in the case file undated.

  3. The examiner will mark the appropriate box on the second page of Form 3198 for letter instructions to Centralized Case Processing (CCP).

  4. CCP will be responsible for dating and mailing the letter.

4.4.7.3.7  (09-22-2014)
Estate Tax Closing Letters

  1. In all no change and agreed estate tax cases (including those accepted as filed on classification and those closed by survey procedures), a Letter 627, Estate Tax Closing Letter, will be issued. The estate tax group/classification will check the box on Form 3198 in the "Letter Instructions" section to indicate Letter 627 is to be mailed to a specific individual.

  2. The examiner must clearly indicate any necessary fill-in information to be included on the letter by either including the information on Form 3198 or a completed pencil copy of Letter 627.

  3. CCP will be responsible for the preparation of the letter.

  4. CCP will be responsible for dating and mailing the letter.

4.4.7.3.8  (09-22-2014)
Claim Disallowance Letters

  1. In all cases involving the disallowance of a claim for refund in whole or in part, a notification letter will be issued to the taxpayer. Certified notices of disallowance are issued by Technical Services when required under the Internal Revenue Code.

  2. If a certified notice of disallowance is to be issued, this will be indicated on Form 3198 in the "Forward to Technical Services " section. The case will then be updated to Status Code 21. The following form letters are generally used as certified notices of disallowance:

    1. Letter 905, Final Partial Claim Disallowance Letter, for claims partially disallowed

    2. Letter 906, Final Full Claim Disallowance Letter, for claims disallowed in full

4.4.7.4  (09-22-2014)
Undeliverable Mail

  1. When mail is returned from the Post Office as undeliverable, the following steps should be taken by the field examiner or other field group designee:

    1. If a new address is indicated on the returned letter, remail the letter to the new address.

    2. If no new address is indicated on the returned letter, attach a completed Form 9856, Attachment Alert, and forward the letter to be associated with the closed case. Form 9856 can be located at : Form 9856. Complete the form as follows:

    Controlling Document Locator Number (DLN): Enter the DLN to which the documents should be associated. The controlling DLN is displayed at the top of most Integrated Data Retrieval System (IDRS) command codes .

    Employee IDRS Number: Enter the Employee IDRS number. If not an IDRS user, enter the full name. Include a telephone number in this box.

    Date Prepared: Enter the date the form is prepared.

    Stop Number and Alpha: Enter the complete address with Stop Number and Alpha. This will ensure timely routing back to the originating office, if needed.

  2. If the return was electronically filed, you cannot associate documents under an Electronic Filing (ELF) DLN because there is no paper document with which to attach the undeliverable mail. For a list of ELF DLNs see Document 6209, IRS Processing Codes and Information, Section 4, at: Document 6209. Follow the procedures below:

    1. If no new address is indicated on the returned letter and the case is still on AIMS, request the document be filed under the TC 421 DLN. Send the document via Form 9856 completed as outlined above .

    2. If no new address is indicated on the returned letter and the case is no longer on AIMS, take the following actions:
      Complete Form 3870, Request for Adjustment, requesting input of a TC 290 for $0. This will provide a non-ELF DLN the undeliverable mail can be filed under.
      Fax Form 3870 to CCP for input of the TC 290 for $0.
      Once the TC 290 has posted, send Form 9856 with the undeliverable mail to be associated with the TC 290 DLN.


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