4.4.12  Examined Closings, Surveyed Claims, and Partial Assessments

4.4.12.1  (08-01-2003)
Introduction

  1. The following instructions are for the completion of Form 5344 which is used to close examined returns, surveyed and examined claims, and partial assessments.

  2. Following are the Form 5344 item numbers with the corresponding text.

    Item Number Title IRM Reference
    Item A: CC TSCLS IRM 4.4.12.4.3.
    P1–6: CC AMCLS IRM 4.4.12.4.4.
    P 49-50 Unpostable Indicator IRM 4.4.35
    P56 Separate Spousal Assessment See IRM 4.4.12.4.4.1.
    P57 Separate Spousal Name Control See IRM 4.4.12.4.4.2.
    P7–34: TIN, MFT, Tax Period, Name Control/Check Digit IRM 4.4.12.4.5.
    P36: Batch Position Indicator See IRM 4.4.12.4.6.
    P38–40: Block Number IRM 4.4.12.4.7.
    P45–47: Sequence Number IRM 4.4.12.4.8.
    Item 01: IRA IRM 4.4.12.4.9.
    Item 02: Penalty Reason Code IRM 4.4.12.4.10.
    Item 03: Letter Date IRM 4.4.12.4.11.
    Item 04: Letter Amount IRM 4.4.12.4.12.
    Item 05: 2% Interest Date IRM 4.4.12.4.13.
    Item 06A: Debit Interest IRM 4.4.12.4.14.
    Item 06B: Credit Interest "To" Date IRM 4.4.12.4.15.
    Item 06C: Compute Interest Amounts IRM 4.4.12.4.16.
    Item 07: Hold Code IRM 4.4.12.4.17.
    Item 08: Agreement Date IRM 4.4.12.4.18.
    Item 09: Priority Code IRM 4.4.12.4.19.
    Item 10: Settlement Amount IRM 4.4.12.4.20.
    Item 11: Interest Comp. Date IRM 4.4.12.4.21.
    Item 12: Tax Liability, Pen &Int Adj. IRM 4.4.12.4.22.
    Item 13: Disposal Code IRM 4.4.12.4.23.
    Item 14: Statute Extended to Date IRM 4.4.12.4.24.
    Item 15: Credit and Tax Comp. Adj. IRM 4.4.12.4.25.
    Item C: Operator No. IRM 4.4.12.4.26.
    Item D: Reject IRM 4.4.12.4.27.
    Item E: Document Locator Number IRM 4.4.12.4.28.
    Item F: Cor. IRM 4.4.12.4.29.
    Item 16: Appeals Office Code IRM 4.4.12.4.30.
    Item 18: Unagreed/Amount IRM 4.4.12.4.31.
    Item 19: AIMS/MF Update Data (NAICS) IRM 4.4.12.4.32.
    Item 20: Claim Rejection Date See IRM 4.4.12.4.33.
    Item 21: Amount Claimed IRM 4.4.12.4.34.
    RBP: Claim for Refund Section IRM 4.4.12.4.35.
    Item 22: Dollars Protected IRM 4.4.12.4.36.
    Item 23: RBP Hours IRM 4.4.12.4.37.
    Item 24: Claim Type IRM 4.4.12.4.39.
    Item 28: Examiner’s Time IRM 4.4.12.4.40.
    Item 30: Examination Technique Code IRM 4.4.12.4.40.
    Item 31: Examiner’s Grade IRM 4.4.12.4.41.
    Item 32: Grade of Case IRM 4.4.12.4.42.
    Item 33: Examiner’s Name IRM 4.4.12.4.43.
    Item 34: Adjustment Amt (Non-Taxable) IRM 4.4.12.4.44.
    Item 35: Manual Assessment Amount IRM 4.4.12.4.45.
    Item 36: Hash Total IRM 4.4.12.4.46.
    Item 37: Delinquent Return IRM 4.4.12.4.47.
    Item 38: Fraud Code IRM 4.4.12.4.48.
    Item 39: Disclosure Code IRM 4.4.12.4.49.
    Item 40: Project Code See IRM 4.4.12.4.50.
    Item 41: No Change Issue Codes (IMF) IRM 4.4.12.4.51.
    Item 43: Posting Delay Code IRM 4.4.12.4.52.
    Item I: Reviewer See IRM 4.4.12.4.53.
    Item J: CATP Case See IRM 4.4.12.4.54.
    Item K: Tax Examiner See IRM 4.4.12.4.55.
    Item 44: NOL C/F Amount Disallowed IRM 4.4.12.4.56.
    Item 45: NOL Indicator See IRM 4.4.12.4.57.
    Item 46: Credit C/F Amount See IRM 4.4.12.4.58.
    Item 47: Credit Type IRM 4.4.12.4.59.
    Item 49: Secondary Business Code See IRM 4.4.12.4.60.
    Item 50: Employee Group Code See IRM 4.4.12.4.61.
    Item 51: Net Rate MFT/Tax Period IRM 20.2
    Item 52: Net Rate Interest Amount IRM 20.2
    Item 53: Beginning Overlapping Period IRM 20.2
    Item 54: Ending Overlapping Period IRM 20.2
    Item 400: Coordinated Industry Case IRM 4.4.12.4.63.
    Item 401: Whipsaw Indicator IRM 4.4.12.4.64.
    Item 402: International Examiner's Time IRM 4.4.12.4.65.
    Item 403: International Exam Results IRM 4.4.12.4.66.
    Item 404: Form 720 IRM 4.4.12.4.67.
    Item 405 - 408 Related Return Section IRM 4.4.12.4.68.
    Item 410: Aging Reason Code IRM 4.4.12.4.69.
    Item 411: Payment Code IRM 4.4.12.4.70.
    Item 412: Installment Agreement Code IRM 4.4.12.4.71.
    Item 414: Delinquent Return Amount See IRM 4.4.12.4.72.
    Item 415: Amended Return Amount IRM 4.4.12.4.73.
    Item 416: Fax'd Agreement See IRM 4.4.12.4.74.

4.4.12.2  (06-01-2002)
Partial Assessments

  1. A partial assessment can be input using Form 5344 if the status code on AIMS is less than 80.

4.4.12.2.1  (08-01-2003)
Form to be Used

  1. Form 5344, Examination Closing Record. Attach copy to front page of tax return and forward original to the campus. The Form 5344 has indicators next to the item numbers that are required (*) and optional (&) when making a partial assessment.

4.4.12.2.2  (06-01-2002)
Valid Item Numbers

  1. 02–09, 11–15, 36 and 38. Instructions follow.

4.4.12.2.3  (06-01-2002)
Credit Balances

  1. Check tax module for credit balances. If a hold code is present, see the following instructions.

4.4.12.2.3.1  (06-01-2002)
Hold Credit Balance

  1. A Hold Code 1 is automatically generated to prevent the release of an advance payment pending the processing of the final adjustment action.

  2. When a partial assessment is processed as a quick assessment, after processing the quick via Form 2859, prepare Form 3177, Notice of Action for Entry on Master File, to input TC 570. The TC 570 will prevent the erroneous refund of a credit balance and advance/subsequent payment that may be on the tax module.

4.4.12.2.3.2  (06-01-2002)
Release Credit Balance

  1. If a partial overassessment is to be released and CC AMCLSF is used, input a Hold Code 3 on the Form 5344. Hold Code 3 will allow systemic release of the refund, eliminating the need for cycling and subsequent input of a TC 290 for zero to release the refund.

  2. If a partial overassessment is to be refunded using manual refund procedures, Form 5344 for the partial overassessment must be processed within four weeks from the schedule date of the manual refund to prevent the taxpayer from receiving a bill resulting from a debit balance when the manual refund posts to Master File.

4.4.12.2.4  (06-01-2002)
Amended Return Freeze

  1. When a partial assessment is necessary on a module with an amended return freeze, use Priority —Code 4. This will allow the partial to post without releasing the Master File freeze.

4.4.12.2.5  (06-01-2002)
TEFRA Linkages

  1. When a partial assessment has been input and there is open TEFRA linkages, an original and copy of the closing document must be included in the case file. The copy of the closing document will remain with the case file which will be forwarded to the ESU in the campus. The original Form 5344 must be forwarded to the campus files area as the source document after terminal input.

  2. Command Code TSCLS should not be input if only a partial assessment is appropriate, or the case is being transferred to the campus ESU.

4.4.12.2.6  (06-01-2002)
Exam Results

  1. Exam results are not calculated for partial assessments. The net amount of all partials are accumulated in the "Cum Assess Amt field" and included in Exam results at final closing.

4.4.12.2.7  (06-01-2002)
Final Disposition When a Partial Assessment was Input

  1. Another Form 5344 must be prepared following normal procedures with the following exceptions.

  2. During final closing, only the increase or decrease of the amount processed as a partial assessment is to be Input.

  3. If the final closing is to Appeals, Item 12 must be left blank and the amount in Item 18 must not include the amount which was previously assessed as a partial assessment.

  4. If a situation exists where the final closing is ready to be processed at the same time as the partial assessment, cycle the final closing using Item 43, Posting Delay Code of 1 so that the final closing will be delayed one cycle after input of the partial assessment.

4.4.12.2.8  (06-01-2002)
Exam Results

  1. All partial assessments processed through CC AMCLSF will be reflected in the EXAM-CUM-ASSMNT-AMT field found on Page 2, Line 4 of an AMDISA print. Upon the final closing, this field will be included in the Exam Results.

  2. If a partial was assessed as a manual assessment, be sure to enter the amount of the manual assessment in Item 35 of the Form 5344.

4.4.12.3  (06-01-2002)
Surveyed Claims

  1. Following are instructions in the preparation of the Form 5344 for closing surveyed cIaims.

4.4.12.3.1  (06-01-2002)
Form to be Used

  1. Form 5344, Examination Closing Record. The Form 5344 has indicators next to the item numbers to indicate required and optional item numbers.

4.4.12.3.2  (06-01-2002)
Valid Item Numbers

  1. Item numbers 12, 13 and 36 are required on Form 5344.

  2. Item numbers 6A, 6B, 6C, 07, 09, 10, 11, 15, 21, 29, 39 and 40 are optional on Form 5344.

4.4.12.4  (06-01-2002)
Examined Closings/Surveyed Claims

  1. Form 5344 is used to input the final closings of examined return or surveyed cIaims.

4.4.12.4.1  (06-01-2002)
Form to be Used

  1. Form 5344, Examination Closing Record is required when closing cases.

4.4.12.4.2  (06-01-2002)
Responsible Personnel

  1. The following entries must be completed before the form can be input for closing. The person responsible for completing the entries may vary depending on local procedures.

4.4.12.4.3  (06-01-2002)
Item A: CC TSCLS

  1. Place a check in the box if the Form 5344 is for a full closure of a TEFRA related return. CC TSCLS must be entered at the terminal before a final closure of a PCS (Partnership Control System) linked case. CC TSCLS releases a freeze on AIMS to allow input of CC AMCLS. PICF Codes 5 and 6 denote cases linked through PCS and prevent the premature closing of the investor return unless all necessary flow-through adjustments from the key-case(s) to the investor return have been resolved. CC TSCLS should not be input if only a partial assessment is appropriate, the case is being transferred to the campus ESU, or it is being closed to Appeals. When entered, the CC TSCLS will automatically check all of the investor’s linkages to see if they have been closed. If all linkages are closed then CC TSCLS will set the PN-SUM-CLOSED-IND on the partner record and the PICF-CD to a closed status on the PCS and AIMS data bases. When the "Request Completed" message is transmitted to the screen the operator can proceed to enter the CC AMCLS. Should all linkages not be properly closed upon input of the CC TSCLS, the error message "Cannot Close, PCS Control " will be displayed on the screen. ESP will input CC TSUMY, secure a print, attach it to the Form 5344, and route the case file back to the originator.

4.4.12.4.4  (08-01-2003)
P 1–6: CC AMCLS

  1. Add the definer to CC AMCLS depending on the type of closure. Definers are:

     A = Appeals
     E = Examination (Long Closure)
     F = Examination/Appeals (Partial Assessment)
     I = IRAF
     O = EO
     P = EP
     S = Separate Spousal Assessment
     U = UnpostabIes

4.4.12.4.4.1  (08-01-2003)
AMCLSS P-56:

  1. This command code is used when an assessment must be made against one of the taxpayer's that filed a joint return. An example of this is when one taxpayer petitions tax court and the other does not.

  2. Enter a "P" if the assessment is against the primary taxpayer, enter an "S" if the assessment is against the secondary taxpayer.

4.4.12.4.4.2  (08-01-2003)
AMCLSS P-57:

  1. If an S is entered in Item 56, the name control of the secondary spouse is required in Item 57. This is to prevent unpostables when the taxpayer's last names are not the same.

4.4.12.4.5  (06-01-2002)
P 7–34 TIN, MFT Tax Period, CD/NC

  1. Attach an Audit label. If an Audit label is not available, complete Positions 7–34 and Item B using the following instructions.

4.4.12.4.5.1  (06-01-2002)
P 7–18: TIN

  1. Enter either an EIN or SSN. The first digit of the number must be entered in the left most position,

    EIN format will be NN-NNNNNNN
    SSN format will be NNN-NN-NNNN

  2. Form 706, the SSN of the decedent must be used followed by the letter "V" or "W" .

  3. Form 709, the SSN of the donor must be used, following by the letter "V" or "W" .

  4. NMF, an "N" must be entered immediately after the EIN or SSN.

  5. Temporary SSN secured by use of the Command Code AMTIN7, the SSN will be entered followed by the letter "D" . An adjustment can be made against a temporary SSN. The Entity Function at the campus will attempt to secure the correct SSN from the taxpayer and perform the "merge" of the correct number is secured. In situations where a taxpayer does not have an EIN or refuses to file Form SS–4 to obtain one, the examining officer is required to secure a permanent EIN from the campus Entity Control function. The examining officer will have the return controlled Non-Master File until the permanent number is received.

  6. The Entity Function at the campus will attempt to secure the correct SSN from the taxpayer and perform the " merge" of the account to the correct number after the SSN is secured.

  7. If an asterisk (*) is present indicating an invalid SSN, correction may have been made since the original opening. Research both the correct number and the invalid number to determine whether the account has been corrected.

  8. If information has been secured to resolve the invalid SSN, contact should be made with the Entity Function at the campus.

  9. These cases may also involve a duplicate filing condition caused by returns of two different taxpayers trying to post to the same account.

  10. Do not attempt to correct this condition with Form 2363, Master File Entity Change. When an account number is changed, all data posted to the incorrect number is transferred to the correct number. Carefully study transcripts of all accounts involved before making any adjustments.

  11. When it is determined that a return has posted to a different taxpayer’s account, see the Reprocessing Return Chapter for closing instructions.

4.4.12.4.5.2  (06-01-2002)
Taxpayer’s with no TIN

  1. In situations where a taxpayer does not have an EIN or refuses to file Form SS–4 to obtain one, the examining officer is required to secure a permanent EIN from the Entity Function at the campus. The examining officer will have the return controlled Non-Master File AIMS until the permanent number is received. See Taxpayer Identification Exhibit.

4.4.12.4.5.3  (06-01-2002)
P21–22: MFT

  1. Enter the Master File Tax Code (MFT) or Non-Master Tax Code (NMFT) for the tax return.

4.4.12.4.5.4  (06-01-2002)
P24–29 Tax Period

  1. Enter tax period using YYYYMM format. Example: Enter 199712 for a 1997 calendar year return.

4.4.12.4.5.5  (06-01-2002)
Form 706

  1. For Form 706 enter all zeroes (000000).

4.4.12.4.5.6  (06-01-2002)
Forms 11, 11C, 730 or 2290

  1. For Forms 11, 11C, 730 or 2290 enter the beginning of the tax period.

4.4.12.4.5.7  (06-01-2002)
Different Tax Period

  1. A tax period on Form 5344 different from that of the Master File will result in an unpostable condition. It may be necessary to change the tax period as a result of the Examination determination or because of an error in the original processing of the return, see IRM 4.4.3.11, Reprocessing Returns.

4.4.12.4.5.8  (06-01-2002)
P31-34 Check Digit/Name Control

  1. Enter the check digit in positions 33 and 34. If the check digit is not available, the name control should be used. If there is no check digit or name control on the first print line of the Examination label, underline the name control on line two. If the check digit was used to establish the account, the check digit must be used at closing.

4.4.12.4.5.9  (06-01-2002)
Item B: Name

  1. Enter the name of taxpayer as shown on the tax return. If necessary, edit the name not to exceed 35 characters.

4.4.12.4.5.9.1  (06-01-2002)
IMF

  1. Enter the last name (comma), first name (comma), then the middle initial, if any.

4.4.12.4.5.9.2  (06-01-2002)
BMF

  1. Enter the name as it appears on the return.

4.4.12.4.6  (06-01-2002)
P36: Batch Position Indicator

  1. Only Non-Master File accounts require a batch position indicator. This field is used to indicate whether the record being processed is the first, last, continuation, addition to a block, or a single closing of a bIock.

  2. Valid indicators are as follows:
      — "F" first closing within a block. After this record is processed the computer will change the "F" to a " C" .
      — "C" continuation within a block as interrupted and left open.
      — "L" last closing within the block. If this is not entered with the last closing, it is not possible to begin a new block.
      — "R" reopen a previously closed block. After this record is processed the computer will change the "R" to a "C" .
      — "S" single closing (one case for the block). This indicator will open the block, process the account and close the block.

4.4.12.4.7  (06-01-2002)
P38–40: Block Number

  1. All closures require a blocking series. See Exhibit 4.4.1-11.

4.4.12.4.8  (06-01-2002)
P45–47: Sequence Number

  1. This field is used by the terminal operator to number the input documents.

4.4.12.4.9  (06-01-2002)
Item 01: Individual Retirement Arrangement

  1. Enter the SSN of the spouse when there is an adjustment to the spouse’s IRA account. See the IRA Chapter.

4.4.12.4.10  (08-01-2003)
Item 02: Penalty Reason Code

  1. See IRM 20.1 Penalty, for all procedures pertaining to penalties.

  2. The Penalty Reason Code is a two digit number ranging from 21-46 and a required entry if penalties are being abated.

4.4.12.4.11  (06-01-2002)
Item 03: Letter Date (BMF Only)

  1. Enter the latter of the trigger date (which is the earlier of the 30 or 90 day letter date), plus 30 days or January 1, 1991 (date of law enactment).

  2. See the Interest handbook for all procedures pertaining to interest.

4.4.12.4.12  (06-01-2002)
Item 04: Letter Amount

  1. Enter the amount shown on the 30/90 day letter whichever is used in Item 03 above.

  2. See IRM 20.2 Interest, for all procedures pertaining to interest.

4.4.12.4.13  (06-01-2002)
Item 05: 2% Int Date

  1. Enter the date that the 2% interest begins when interest is manually computed and input with TC 340 and two percent is applicable.

  2. See IRM 20.2 Interest, for all procedures pertaining to interest.

4.4.12.4.14  (06-01-2002)
Item 06A: Debit Interest

  1. See IRM 20.2 Interest, Handbook for all "To" Date procedures pertaining to interest.

4.4.12.4.15  (06-01-2002)
Item 06B: Credit Interest "To" Date

  1. See IRM 20.2 Interest, for all procedures pertaining to interest.

4.4.12.4.16  (06-01-2002)
Item 06C: Compute Interest Amounts

  1. See IRM 20.2 Interest, for all procedures pertaining to interest.

4.4.12.4.17  (06-01-2002)
Item 07: Hold Code

  1. Hold codes, ranging from 1 through 9, are used to restrict certain master file actions with the posting of adjustment transactions. Only use of one of the following apply.

4.4.12.4.17.1  (06-01-2002)
Hold Credits

  1. Hold Code 1 — If the net module balance after posting the adjustment is a credit, a refund will not be issued until one of the following occurs:

    1. A record with Document Code 24 or 34 posts.

    2. TC 29X, 30X, 820, or 830 posts.

4.4.12.4.17.2  (08-01-2003)
Hold Notices

  1. Hold Code 2 — Automatically generated if Disposal Code is 07 or 11. If the module balance after posting the adjustment is zero or debit, a notice is not issued and no credit freeze is set. If the module balance after posting the adjustment is a credit, neither a refund nor an overpayment notice will be issued until one of the following occurs:

    1. A record with Document Code 24 or 34 posts.

    2. TC 29X, 30X, 820, or 830 posts.

    3. The net module balance becomes zero or debit (releases notice freeze).

    4. Enter Hold Code 2 on all second adjustment Forms 5344 when a quick assessment is made unless a manual offset is involved or an overassessment was processed using quick assessment procedures.

  2. Hold Code 3 — A notice is not issued at any time for this adjustment.

  3. Hold Code 4 — If the module balance after posting the adjustment is a credit, a notice is not issued at any time, and a refund is not issued until one of the following occurs.

    1. A record with Document Code 24 or 34 posts.

    2. TC 29X, 30X, 820, or 830 posts.

    3. The new module balance becomes zero or debit.

4.4.12.4.17.3  (06-01-2002)
Partial Assessments

  1. Do not use Hold Code 2 on partial assessments unless it has been specifically requested that the taxpayer not receive a notice. An example of this is when an SFR has posted and the taxpayer files a return at the center. If the tax per return is assessed as a partial, we do not want a CP21E sent since it states that the assessment is due to an examination.

4.4.12.4.17.4  (08-01-2003)
Form 11 and 11C only

  1. CP 243 will be generated if the adjustment takes the module balance from debit to zero or credit. Hold Code 4 or 5 will suppress the CP 243. If both Hold Codes 4 and 5 are applicable, use Hold Code 4.

4.4.12.4.17.5  (06-01-2002)
TEFRA Assessments

  1. Hold Codes 5 through 9 were used to identify TEFRA assessments (partial assessments and final closures) on Master File through December 31, 1985 at which time the new blocking series became effective which identify the TEFRA assessments.
     —Hold Code 5 — TEFRA assessment but no hold action desired
     —Hold Code 6 — Acts same as Hold Code 1
     —Hold Code 7 — Acts same as Hold Code 2
     —Hold Code 8 — Acts same as Hold Code 3
     —HoId Code 9 — Acts same as Hold Code 4

4.4.12.4.17.6  (06-01-2002)
"Remarks" space:

  1. Provided to the right of the hold code field for a short explanation of why the hold code is necessary. The remarks will assist the unpostable examiner if the transaction unposts.

4.4.12.4.18  (06-01-2002)
Item 08: Agreement Date

  1. This date is used at Master File (870 date) in determining the interest free period.

  2. DO NOT enter an agreement date for MFT’s other than 02, 05, 30, 51 and 52. If entered, Master File will allow for an interest free period which is not correct. A computer block has been requested for January 1998 to prevent an agreement date is MFT is other than those noted.

  3. The date the agreement was received is required to be entered on agreed deficiency cases if the disposal code is 03, 04, 09 and Item 12 contains an increase in tax and the MFT is 02, 05, 30, 51 or 52.

4.4.12.4.18.1  (06-01-2002)
How to determine date

  1. The agreement date is generally considered to be the IRS received date. If the received date is missing or illegible, enter the postmark date (excluding metered mail) or the signature date, whichever is closer to the current date.

4.4.12.4.18.2  (06-01-2002)
Effective date

  1. When the agreement form contains instructions as to the effective date of the agreement, that effective date should be entered. This date cannot be greater than the current date.

4.4.12.4.18.3  (06-01-2002)
Payment in lieu

  1. When payment is accepted in lieu of a signed agreement, the payment received date may be entered in Item 8 to close the case.

4.4.12.4.18.3.1  (06-01-2002)
Cash Bonds

  1. Cash bonds do not constitute a payment in lieu of an agreement.


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