4.5.3  TE/GE AIMS Special Processing Procedures

4.5.3.1  (09-27-2006)
AIMS Special Processing Procedures

  1. Background and information about the Audit Information Management System (AIMS) as it relates to TE/GE and instructions on how to report AIMS problems are contained in this section. This section also provides instructions for the Closing Unit Tax Examiners in processing the more complex TE/GE examination and Appeals adjustments.

  2. AIMS is a computerized system used to secure returns, maintain inventory control of examinations, record examination results, and provide management with the statistical reports required under examination and compliance programs. Under AIMS, extensive use is made of the Integrated Data Retrieval System (IDRS) terminals located in each TEGE office. See IRM 4.4, AIMS/Processing, Exhibit 4.4-1, Reference Guide which has been developed to provide a quick explanation of AIMS terms.

  3. The AIMS data base was merged with the Taxpayer Information File (TIF) under the Service Center Replacement System (SCRS). The AIMS modules of the TIF are assessable to TE/GE in exactly the same manner as the AIMS data base. Under SCRS, AIMS became a two purpose data base:

    1. On-Line-Realtime - corrections/adjustments to the organizations’ status, tax and/or penalties

    2. On-Line-Realtime - input capabilities for various Management Information Reports (MIR’s).

  4. The Taxpayer Information File (TIF) is maintained in the Ogden Campus Center (OSC). The TIF contains an account for every examination charged to TE/GE.

    1. EP accounts originate from the Employee Plans Master File (EPMF) and the Business Master File (BMF) at the Martinsburg Computing Center (MCC) and Non-Master File (NMF) accounts that are not available from EPMF.

    2. EO and GE accounts originate from the Business Master File (BMF) and Individual Master File (IMF) at MCC and NMF accounts that are not available from BMF or IMF.

  5. The Enforcement Revenue Information System (ERIS) was implemented and includes data from existing AIMS, the BMF, the EPMF and the IMF. ERIS is designed to account for both revenues collected and costs incurred as a result of IRS enforcement activities. It is an external data base that extracts case information from AIMS and merges it with revenue information from the Business Master File (BMF), Employee Plans Master File (EPMF), and Individual Master File (IMF). The data is amassed over a number of years to provide information such as dollars actually collected, recovery rates and length of time from start of an enforcement action through collection. The reports generated from ERIS not only allow IRS executives to better manage their enforcement areas, but also allow them to provide more accurate measures of revenue for Treasury, Office of Management and Budget (OMB) and Congress, and for the Service’s planned budgeting/revenue forecasting model.

  6. Accounts are established on AIMS by individual, RICS (Returns Inventory and Classification System) or by direct intervention of the BMF, automatic and related return selections. Accounts on AIMS are updated and closed through the terminal. Updating of master files to reflect the results of examinations recorded on AIMS is done at MCC.

    1. BMF, EPMF and IMF are updated through direct interaction with AIMS

    2. NMF is updated manually at the local Campus Center

  7. AIMS provides automatic assessment verification of TE/GE accounts residing on the EPMF, BMF and IMF.

  8. Basic inventory and closing reports are generated at Ogden Campus Center for all TE/GE Primary Business Codes. Extensive Primary Business Codes, area offices, employee groups and national level summary reports (MIR’s) are generated at the Detroit Computing Center (DCC) from the data provided by the Ogden Campus.

4.5.3.1.1  (09-27-2006)
Employee Plans Returns

  1. Employee Benefit Plans must file one or more of the following returns, unless excused by statute:

    1. Form 5500, Annual Return/Report of Employee Benefit Plan (With 100 or more participants)

    2. Form 5500C/R, Return/Report of Employee Benefit Plan (With fewer than 100 participants)

    3. Form 5500EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan

    4. Form 5330, Return of Initial Excise Taxes Related to Employee Benefit Plans

    5. Form 990T, Exempt Organization Business Income Tax Return

  2. In addition to the above returns, EP may also examine the following returns as Discrepancy Adjustments:

    1. Form 940, Employer's Annual Federal Unemployment Tax Return

    2. Form 941, Employer's Quarterly Federal Tax Return

    3. Form 945, Annual Return of Withheld Federal Income Tax

    4. Form 1040, U.S. Individual Income Tax Return

    5. Form 1041, U.S. Fiduciary Income Tax Return (for Estates and Trusts)

    6. Form 1042, Annual Withholding Tax Return for US Source Income of Foreign Persons

    7. Form 1065, U.S. Partnership Return of Income

    8. Form 1120, U.S. Corporation Income Tax Return

4.5.3.1.2  (09-27-2006)
Exempt Organizations Returns

  1. Each Exempt Organization must file one or more of the following returns, unless excused by statute:

    1. Form 990, Return of Organization Exempt from Income Tax

    2. Form 990BL, Information and Initial Excise Tax Return for Black Lung Trusts and Certain Related Persons

    3. Form 990EZ, Short Form Return of Organization Exempt From Income Tax

    4. Form 990PF, Return of Private Foundation

    5. Form 990T, Exempt Organization Business Income Tax Return

    6. Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code

    7. Form 5227, Split-Interest Trust Information Return

    8. Form 940, Employer's Annual Federal Unemployment Tax

    9. Form 941, Employer's Quarterly Federal Tax Return

    10. Form 942, Employer's Quarterly Federal Tax Return for Household Employees

    11. Form 943, Employer's Annual Tax Return for Agricultural Employees

    12. Form 945, Annual Return of Withheld Federal Income Tax

    13. Form CT-1, Employer's Annual Railroad Retirement and Unemployment Return

    14. Form CT-2, Employee Representatives Quarterly Railroad Retirement Tax Return

    15. Form 1040PR, Self-Employment Tax Return-Puerto Rico

    16. Form 1041, U.S. Fiduciary Income Tax Return (for Estates and Trusts)

    17. Form 1042, Foreign US Source Income

    18. Form 1065, U.S. Partnership Return of Income for 501(d), Religious or Apostolic Associations

    19. Form 1041, U.S. Fiduciary Income Tax Return (for Estates and Trusts) and Standard Form 1041A

    20. Form 1120, Standard Form for a Private Foundation with a Revoked Exemption

    21. Form 1120-POL, U.S. Income Tax Return of Political Organization

    22. Form 1120-POL/Exempt, U.S. Income Tax Return of Political Organization w/ Exemption

    23. Form 8871, Political Organization Notice of Section 527 Status

    24. Form 8872, Political Organization Report of Contributions and Expenditures

  2. In addition to the above returns, EO may also examine the following returns as Discrepancy Adjustments:

    1. Form 11C, Wagering (Occupational Tax/Register)

    2. Form 730, Wagering (Excise Tax)

    3. Form 1040, U.S. Individual Income Tax Return

    4. Form 1041, Related 1041 (Other) Returns - Fiduciary Non-Automatic

    5. Form 1041, Related 1041 (Other) Returns - Fiduciary Automatic

    6. Form 1042, Foreign U.S. Income Source

    7. Form 1065, U.S. Partnership Return of Income

    8. Form 5330, Return of Initial Excise Taxes Related to Employee Benefit Plans

    9. Form 1120, U.S. Corporation Income Tax Return

    10. Form 1120F, U.S. Income Tax Return of Foreign Corporations

    11. Form 1120L, U.S. Life Insurance company Income Tax Return

    12. Form 1120PC, U.S. Property and Casualty Insurance Company Income Tax Return

    13. Form 1120S, U.S. Small Business Corporation income Tax Return

4.5.3.1.3  (09-27-2006)
Government Entities Returns

  1. Government Entities must file one or more if the following returns, unless excused by statute:

    1. Form CT-1, Employer's Annual Retirement Return

    2. Form CT-2, Employee Representatives Quarterly Railroad Retirement Return

    3. Form 11-C, Special Tax Return and Application for Registry-Wagering

    4. Form 720, Quarterly Federal Excise Tax Return

    5. Form 730, Tax on Wagering

    6. form 940, Employer's Annual Return Unemployment Tax Return

    7. Form 941, Employer's Quarterly Federal Tax Return

    8. For 943, Employer's annual Return for Agriculture Employees

    9. Form 945, Annual Federal Income Tax Withheld

    10. Form 1042, Foreign U.S. Income Source

    11. Form 2290, Heavy Highway Vehicle Use Tax Form

    12. Form 1040, U.S. Individual Income Tax Return

    13. Form 1040A, U.S. Individual Income Tax Return

    14. Form 1040 w/Form 2555, Foreign Earned Income

    15. Form 1040PC, U.S. Individual Tax Return (Personal Computer)

    16. Form 1040NR, U.S. Non-resident Alien Income Tax Return

    17. Form 1040SS, U.S. Self-Employment Tax Return-Virgin Islands, Guam, American Samoa

    18. Form 1120, Corporate Returns (Taxable) (Including 1120-POL and 1120-H)

    19. Form 1120S, Corporate Returns (Nontaxable)

    20. Form 990-T, 501 All Others

    21. Form 1065, Partnership Returns

    22. Form 8038, Information Return For Tax-Exempt Private Activity Bond Issues

    23. Form 8038-G, Information Return for Tax-Exempt Governmental Obligations

    24. Form 8038-GC, Consolidated Information Return for Small Tax-Exempt Governmental Bond Issues, Leases and Installment Sales

    25. Form 8038-T, Arbitrage Rebate or Penalty

    26. Form 8328, Carry Forward Election of Unused Private Activity Bond Volume CAP

    27. Form 8329, Lender's Information Return for Mortgage Credit Certificates (MCCs)

    28. Form 8330, Issuer's Quarterly Information Return for Mortgage Credit Certificate

    29. Form 8703, Annual Certification by Operator of a Residential Rental Project

4.5.3.2  (06-01-2003)
AIMS Quality Control Responsibilities

  1. Quality control responsibilities for AIMS include:

    1. Coordinating quality control procedures

    2. Ensuring accuracy and completeness of the AIMS data base

    3. Ensuring that technical and clerical members receive appropriate training in AIMS procedures

    4. Ensuring that AIMS procedures are timely followed in the group

    5. Analyzing AIMS monitoring reports to identify group problems

    6. Evaluating employees on their use of AIMS

    7. Ensuring the appropriate use of the AIMS Coordinator in solving non-routine problems

4.5.3.2.1  (06-01-2003)
Chief Compliance Officers

  1. For EP and EO - The Chief Compliance Officers are responsible for coordinating AIMS quality control procedures within their respective areas.

  2. For GE - The Managers of Outreach, Planning and Review are responsible for coordinating AIMS quality control procedures within their respective areas.

4.5.3.2.2  (06-01-2003)
TE/GE Managers and Campus Center Examination Branch Chiefs

  1. TE/GE Managers and Campus Center Branch Chiefs are responsible for the accuracy, completeness, and timely forwarding of AIMS documents for terminal input. Their responsibilities include coordination, as necessary, to ensure accurate and timely terminal input.

  2. In addition, TE/GE Managers and Campus Center Branch Chiefs are responsible for:

    1. Ensuring that AIMS manuals are available to all personnel

    2. Ensuring that both technical and clerical personnel receive appropriate training in AIMS procedures

    3. Ensuring that AIMS procedures are followed

    4. Initiating appropriate corrective action on inventory validations and all data errors identified by the AIMS system

    5. Initiating appropriate action whenever AIMS problems are encountered

4.5.3.3  (09-27-2006)
AIMS Problem Identification and Resolution

  1. While working with the AIMS/IDRS system, systemic or procedural problems may be identified. These should be reported on Form 5391, Procedures/Systems Change Request, or on Form 5715, System Production Evaluation report, through appropriate channels. The problem must be stated and outline the proposed manual text, if appropriate.

  2. When Form 5391 or Form 5715 is submitted to Headquarters to report problems or lack of instructions, the recommended solution should be specific and not merely state that clarification or instructions are needed. The recommended solution should be properly researched and documented with volume and cost/savings information included when applicable (such as computer programming changes).

4.5.3.3.1  (09-27-2006)
Reporting Problems and Requesting Improvements to the AIMS System

  1. All problem reports and improvement requests must have the approval of the TE/GE Manager or their designee.

  2. Form 5715, System Production Evaluation Report, is used to report systemic programming problems as well as operational problems. See IRM 2.3.2, Introduction to IDRS Terminal Responses, for procedures on preparing and routing Form 5715.

  3. Forward an information copy of each request directed to a function other than TE/GE to the:

    Internal Revenue Service
    Director, Business Systems Planning, SE:T:BSP:B, 1750-PA 6th Floor
    1111 Constitution Ave., N.W.
    Washington, D.C. 20224

4.5.3.3.2  (06-01-2003)
Reporting Systemic Problems of a Non-Urgent Nature

  1. Use Form 5391, Procedures/Systems Change Request, to report all AIMS problems of a non-urgent nature or to request improvements to the system.

  2. Prepare a separate Form 5391 for each problem identified or improvement requested. Retain a copy of each Form 5391 submitted. Forward the original and three copies of each Form 5391 to the TE/GE Manager, or Campus Center Branch Chief, for initial approval. Forward the approved Form 5391 to the Area Compliance Officer or their designee.

  3. After final approval, forward requests involving Campus Center AIMS computer programs to the Area Compliance Officer in accordance with Document 6209, ADP and IDRS Information. Forward requests involving procedural changes, Data Processing or Detroit Computing Center AIMS computer programs to Director, Business Systems Planning, T:BSP:B.

4.5.3.3.3  (06-01-2003)
Submitting Requests as a Result of an TIGTA Audit Report

  1. Identify all requests initiated as a result of an TIGTA Audit Report by adding the legend "TIGTA AUDIT RELATED" in Item 3 of Form 5391. Along with the legend, include the TIGTA Audit Report Number or, if unnumbered, the title.

  2. If available, attach a copy of the TIGTA Audit Report to the related Form 5391. Send the TIGTA Audit Report related to a facsimile separately in a sealed envelope. Annotate the envelope with the Field Control Number and the statement "TO BE OPENED BY ADDRESSEE ONLY."

4.5.3.3.4  (09-27-2006)
Response Change Requests

  1. Because Form 5391 is a turn-around document, the originating office will receive a response to each change request on the back of the original Form 5391 submitted.

  2. Forward an information copy of each response from a function other than TE/GE to the TE/GE Director, Business Systems Planning, SE:T:BSP:B.

4.5.3.4  (06-01-2003)
Master File and Non-Master File Processing

  1. The procedure for processing an adjustment depends upon whether the return is Master File (MF) or Non-Master File (NMF).

  2. MF is made up of the following files:

    1. Business Master File (BMF)

    2. Employee Plans Master File (EPMF)

    3. Individual Master File (IMF)

    4. Individual Retirement Account File (IRAF)

  3. NMF includes those returns that have not yet been programmed to the MF. Also, certain examination deficiencies that cannot be processed to the MF must be processed to the NMF:

    1. Form 990BL and Form 4720 for IRC 4912(b), IRC 4941(a), IRC 4944(a)(2), IRC 4945(a)(2), IRC 4955(a)(2) and Form 5330 (established on NMF prior to 01/01/2002)

    2. Form 1331, Notice of Adjustment

    3. Form 5734, Non-Master File Assessment Voucher

    4. Penalty assessments against Form 5500 Series Returns (IRC 6692, IRC 6652(e) and IRC 6652(d)(1) or (2). Refer to IRM 3.15.259, EPMF Data Processing Adjustments

    5. Form 2859, Request for Quick or Prompt Assessment

  4. Procedures for NMF code and edit, checking and numbering requirements, and researching NMF accounts are different from the procedures for MF. There is a manual system consisting of unit ledger cards (ULC) and an Automated Non-Master File System (ANMF).

  5. The following types of cases or adjustments always require manual adjustment procedures:

    1. Jeopardy, Bankruptcy, Quick and Prompt Assessments

    2. Transfer Assessment

    3. One Hundred Percent Penalty Cases

    4. Joint Return Adjustments Against One Spouse

    5. NMF Returns

4.5.3.4.1  (09-27-2006)
Statute of Limitation Date

  1. The statute of limitation date for Form 5500 Series Returns is based on the plan year ending date. The statute date is computed by adding 3 years to the due date or date filed, whichever is later. Since the statute date for the annual return and a Form 1120 or Form 1040 will be different, it will be necessary to coordinate with SB/SE, W&I or LMSB when a statute problem exists. The due date of the Form 5330 return varies depending on the type of excise tax.

  2. The statute of limitation date for the 990 Series Returns, 4720 and 5227 returns is 3 years from the due date of the return or 3 years from the date the return was actually filed, whichever is later. Returns due dates are as follows

    1. The due date for Form 990PF, 990EZ, 990BL ,990 and 990–T (501(c) returns is 41/2 months after the end of the taxable year.

    2. The Form 990–T Trust (IRC 401 and 408) return is due 31/2 after the end of the taxable year.

    3. The Form 4720 must be filed by the due date, not including extensions, for filing the organizations Form's 990–PF, 990, 990EZ or 5227.

  3. The 8038 series of returns do not have a Statute of Limitation Date. The returns are due by the 15th day of the 2nd calendar month after the close of the calendar quarter in which the bond was issued.

4.5.3.4.2  (06-01-2003)
Reference or Information Returns

  1. When a return is needed for reference or information purposes and a ERTVU/BRTVU/RTVUE print is not sufficient, it must be requisitioned using Source Code 45. The Examiner must enter a brief reason for the request on Form 5597, TE/GE IMF/BMF/EPMF Request or Form 5588, TE/GE NMF Request.

  2. Generally, a case should not remain in Source Code 45 for more than thirty days.

    Exception:

    Cases under jurisdiction of the Office of the Manager Counsel or the Department of Justice. Unless the subsequent period(s) involve issues that make an immediate examination compelling, the returns should be placed into Fraud Suspense.

4.5.3.4.2.1  (09-27-2006)
Requesting Permission to Examine

  1. Before examinations of returns requested for reference and information purposes may be initiated, the requisitioning Source Code 45 must be changed and management approval must be obtained. The Examiner should do this by using:

    • EP - Form 5598, TEGE Correction Request with the copy of Form 5597 or Form 5588.

    • EO, GE and EP 5330's - Form 5598, TE/GE Correction Request with the copy of Form 5597 or Form 5588.

  2. The Examiner must indicate the reason for examining the return by entering a new appropriate source code on Form 5598. The manager will indicate permission to initiate the examination by initialing and dating the copy of Form 5597 in Item 24 or Form 5588 in Item 31. Form 5598 will be returned to the Examiner for attaching to the return as a permanent record.

4.5.3.4.2.2  (06-01-2003)
Closing Reference Returns

  1. Use Disposal Code 45 to close reference returns that have not been started or examined.

  2. Disposal Code 33 may be used if the charge-out was received but not the return. Use of Disposal Code 33 must be approved by the AIMS Coordinator.

4.5.3.4.3  (09-27-2006)
TE/GE AIMS NMF Processing

  1. NMF involves a collection of revenue accounting and manually prepared and maintained account transactions for returns and account adjustments not reflected on the EPMF/BMF/IMF. NMF accounts are maintained on the Automated Non-Master File System (ANMF) at the Enterprise Computing Center (ECC) in Memphis Tennessee.. Prior to NMF automation, Unit Ledger Cards (ULC) were prepared only for returns which indicated a balance due. (ULC's are still maintained for old accounts, since not all of the data contained on the unit ledger cards was transferred to the ANMF system.) Full paid or non-taxable returns did not have a ULC prepared. Instead, a Form TY-32, Index Card is prepared.

  2. Index Cards contain the taxpayers name, TIN, MFT, tax period, plan number (if applicable), type of tax and DLN of the assessment or adjustment document.

  3. Index Cards are not prepared for subsequent transactions. These actions are posted on the ULC.

    1. The ULC’s are filed by DLN by the Accounting Branch in the Campus Center.

    2. To request a ULC, prepare Form 4338, Information or Certified Transcript and forward to the Campus Center.

  4. NMF automation provides the Campus Centers and the Area Offices the capability for nationwide on-line transcript research of NMF accounts. Index Cards are prepared for "Information Only" returns, Audit "no change" and NMF "No-Remit Extensions of Time to File" . These types of "returns" are not input to the automated ANMF system.

4.5.3.4.3.1  (09-27-2006)
Requesting NMF Returns

  1. For EP - AIMS control and original returns are requested simultaneously on Form 5588, TE/GE NMF Request and Form 55598, TEGE Correction Request. Form 5598 will include the DLN from the transcript in Item 58. The Terminal Operator or Group Secretary/Management Assistant must input Form 5598 immediately after input of Form 5588. If Form 5598 is not input timely, a follow-up request must be input via Form 5595, TE/GE Update, using CC AMSTU4.

  2. For EO/GE - AIMS control and original returns are requested simultaneously on Form 5588, TE/GE NMF Request and Form 5598, TE/GE Correction Request. Form 5598 will include the DLN from the transcript in Item 58. The Terminal Operator or Group Secretary/Management Assistant must input Form 5598 immediately after input of Form 5588. If Form 5598 is not input timely, a follow-up request must be input via Form 5595, TE/GE Update, using CC AMSTU4.

4.5.3.4.3.2  (09-27-2006)
NMF Research and Transcripts

  1. With the implementation of the ANMF, it is no longer necessary to submit requests to the Accounting Branch for most transcripts or copies of NMF accounts. All NMF accounts open in the local Campus Center, or that have been closed since the implementation of ANMF in the local Campus Center, are available for immediate research or transcript requests on an ANMF terminal.

  2. To request a LOGIN name and password for the ANMF system, an On-Line form 5081 should be completed. . .

  3. The ANMF database has the capability to "Switch" from between the Cincinatti NMF database to the Philadelphia NMF database.

    Note:

    At the bottom of the Research Menu a note displaying the Campus which you are researching will appear as follows: "Current Database is : psc."

  4. The ANMF system allows you to read any entity or transaction on the file by following the instructions displayed with the "Research NMF" option.

    1. With the "Query" command, you can search for a desired entity by entering the DLN or TIN, MFT, and plan period of the desired record. If you have only partial information, enter the data for any field(s) shown on the screen, then page for the record you need.

    2. Use the "NMF Transcript" option to request a printed transcript (not a certified transcript) that will be delivered from the NMF unit on the next day. The ANMF system does not provide the "print screen" capability that would allow you to copy what you see on the research screen.

  5. For complete instructions for researching NMF, refer to IRM 3.5, Automated Non-Master File Accounting, or contact the NMF unit in the Accounting Branch.

4.5.3.4.3.3  (09-27-2006)
Form 5330 and Form 990T Substitute and Delinquent Processing

  1. RICS is used to retrieve Form 5330 returns. Individual Form 5330’s must be requisitioned using Form 5597 or Form 5588. Refer to IRM 4.5.1.3.8 for the procedures to follow to request these forms individually.

  2. If, after the annual 5500 return is received, it is decided to control Form 5330 on AIMS because of an examination, use the BMF procedures because as of 01/01/2002 Forms 5330's will post to the Master. The returns should be established on EPIC and on AIMS.

  3. If a delinquent Form 5330 or Form 990T return is secured by a Examiner during the course of an examination of a Form 5500 Series Return, it will be dated with an official date stamp, or if a date stamp is not available, it will be necessary to notate in the upper left margin of the return the following information, "Received, the date received, the employee’s signature and title." The words "DELINQUENT RETURN SECURED BY TE/GE EMPLOYEE PLANS" should also be entered in the top margin of the return (room should be left in the upper right-hand corner for the DLN. The amount of the tax assessment must be shown on the face of the return. Form 990T should be clearly marked "Filed under 401(a)/For BMF Only" prior to transmitting the return to the Campus Center.

  4. If money is received with the delinquent return, the original return with remittance, should be express mailed within 24 hours of receipt to the Campus Center for processing. The remittance must be identified as to the tax and/or penalty to assess.

  5. If the secured delinquent return will not be examined and a payment was not received, the Examiner will transmit the original delinquent return with Form 3198–A, TEGE Special Handling Notice, to the Campus Center. The Examiner will note on Form 3198–A, "Do Not Assess Delinquency Penalty Reasonable Cause Established" or " Assess Delinquency Penalty," as applicable. In addition to Form 3198–A, a Document 13133, Expedite Processing Cycle, must be attached to the delinquent return.

  6. If the secured delinquent return is examined, a copy of the original return secured will be kept by the Examiner and marked in red " Copy of Delinquent Return Secured by TE/GE-Original Delinquent Return sent to SC (date)."

    1. Form 5330 and Form 990T returns can be established on AIMS using Form 5597. Research CC ENMOD, CC BMFOLE or CC INOLE to ensure that the EIN or SSN is on the entity.

    2. If the EIN or SSN is not on the entity, complete Form 2363. After the entity information has posted, use Form 5597 to establish the AIMS account. File Source Code V is used when researching or inputting BMF SSN for 5330's.

  7. When an examination of Form 990T is concluded under any procedures, it will be closed using Form 5599. Refer to IRM 4.5.2.2.3 for the procedures to follow for EP BMF Form 5330, using Form 5599. The following are the only items that will be completed:

    • P7-18

    • P21-22

    • P24-29

    • P31-34

    • P38-40

    • C, 12, 13, 16, 18-24, 28-29, 31-33, 35-36, 40 and 50.

  8. When a responsible person refuses to file a Form 990T or Form 5330 upon receiving a due notice from the Service, the Examiner must prepare a substitute for returnand place "Substitute for Return-Prepared by TE/GE Employee Plans" on the top margin on the face of the return. The Examiner will obtain a Charge-Out document and labels for the substitute for the return by the use of Form 5597.

    Note:

    Effective 01–06–2006 the submission of Substitute For Returns to Ogden is no longer a requirement when using Push Code 036.

    Internal Revenue Service
    1973 N. Rulon White Blvd.
    Mail Stop 6052
    Ogden, UT 84201

4.5.3.4.4  (09-27-2006)
Transfers

  1. When returns are transferred from one location to another, special care must be taken to ensure that the data base is transferred with the return. If an account is transferred from one Primary Business Code (PBC) to another and both are served by the same Campus Center, as soon as the first PBC takes transfer action on its data base the account is charged to the second.

  2. If the transfer is due to a permanent change of address, attach a Form 3198–A to the case file. Enter the new address under " Other" and identify the change as a permanent change. The address at the EPMF/BMF/IMF should be updated at the same time the data base is being transferred. Project codes remain on the data base when a case is transferred. Ensure that local definition project codes are updated when the case is received.

  3. TE/GE Headquarters issues a listing that contains the name of the transfer contact person in each Area Office and Campus Center, their telephone number and the addresses where returns should be sent. This listing is updated annually.

4.5.3.4.4.1  (06-01-2003)
Ensuring that the Return Follows the Data Base

  1. When a receiving Area Office or Campus Center is notified through the AIMS Weekly Update Report that a data base has been transferred to it, but the affected return is not in the suspense file, it is the receiver’s responsibility to locate the return using the following procedures.

    IF THEN
    1. The return has not been received within 21 days of the report notification, Contact the sender for the date of mailing and a photocopy of Form 3210, Document Transmittal, and/or Form 3185, Transfer of Returns, that were used to transfer the return. This can be used to determine if the return was sent directly to an Employee Group Code in the Primary Business Code or Campus Center or was misdirected or if the data base was changed to the receiving Campus Center in error.
    2. The return cannot be located using the data supplied by the sender, Follow missing return procedures in to dispose of the data base.
    3. The sender does not respond, Send a follow-up request and wait an additional 21 days.
    If the sender still does not respond, use DC 30 to transfer the data base back to the sending Employee Group Code or Campus Center.

4.5.3.4.4.2  (09-27-2006)
Transfer Procedures

  1. A transferred return should have a Form 3185, Transfer of Returns, prepared in triplicate by the Group Secretary/Management Assistant/Clerk. If the return is being sent from an area office to the Ogden Campus Center (OSC), a Form 3210, Document Transmittal is required. The original Examination Assembly available at the time of the transfer must be in the case file.

  2. The Area Office Clerk should never receive a case with less than 13 months remaining on the statute. The Campus Center Transfer-Out Clerk should never receive a case with less than seven months remaining on the statute. If such a case is received, contact the originator immediately to request that a consent to extend the statute be secured before the case is transferred.

  3. The Area Office Clerk should never receive a case from another area office with less than 13 months remaining on the statute or from the Campus Center with less than seven months remaining on the statute. If such a case is received, the receiving office should refer the case to their manager for immediate coordination with the Manager, Planning and Review.

4.5.3.4.4.3  (06-01-2003)
Transfers Between Area Office/Primary Business Code

  1. Transfers between Area Offices and Primary Business Codes are processed via terminal input by closing on Form 5596 or Form 5546 using DC 30 and the Primary Business Code of the transferee Area Office.

  2. Allow a full two weeks for the transfer to take place between Area Offices and Primary Business Codes.

4.5.3.4.4.4  (06-01-2003)
Transfers from Area Offices to Campus Center

  1. Transfers from an area office to OSC are made by inputting CC AMSOC using DC 30. Change the Employee Group Code to a valid Campus Center Employee Group Code.

4.5.3.4.4.5  (06-01-2003)
Control of Tax Return Case File Shipments Between PODs and Area Offices

  1. The sender prepares Form 3210, Document Transmittal, in triplicate, completes the "To" and "From" sections and enters the total return count. Employer/Organization identifying information should also be included to provide a tighter control of individual returns. Two copies of Form 3210 must be forwarded with the shipment of the return and the sender must retain the third copy as a record of shipping action.

  2. The receiver acknowledges delivery of the return on Form 3210 and returns one copy of Form 3210 to the sender.

  3. Upon receipt of the acknowledgment copy, the sender should destroy the retained copy.

4.5.3.4.4.6  (09-27-2006)
Transfers of Returns Before the Examination is Completed

  1. For cases transferred to Appeals, make the following entries on Form 5650/5599:

    Business Unit ITEM ENTER
    EP & EO/GE 13 DC 07 or 11
    EP & EO/GE 16 Appeals Office Code
    EO/GE 17 EO/GE Appeals Issue Code
    EO/GE 18 $1 in Unagreed Amount Appealed/Petitioned for non-taxable or monies for taxable returns

  2. For cases transferred to Criminal Investigation (CI):

    1. If a tax adjustment is being considered, TE/GE is responsible for controlling the return on AIMS until it is returned from Criminal Investigation (CI). AIso, when CI requests a cooperating agent, the case must be established on AIMS when time is first applied. The applicable AIMS status code must be used to reflect the location of the return.

      Status Code Use when
      38 referring a case to CI. Status Code 38 is used when CI reclassifies the case to criminal fraud.
      32, General Fraud Suspense, the case is suspended out of the group awaiting completion of the criminal case.
         

    2. If a tax adjustment is not being made, prepare survey report and close using DC 31 or 32. Attach Form 2275 (Records Request, Charge and Recharge) with recharge information to the return. Renumber Form 2275 and return, sending the original return to the requester and Form 2275 to the Campus Center in block.

  3. For cases transferred to Counsel, use the same procedures as referrals to CI, but use the locally defined status code for Counsel Suspense Referrals.

4.5.3.4.5  (06-01-2003)
Church Examinations

  1. Every church examination begins with a tax inquiry. To establish a tax inquiry account on AIMS, prepare a dummy Form 990, Return of Organization Exempt from Income Tax, using the current month and year to establish a tax period. Annotate, in red, at the top margin of Form 990, the phrase "DUMMY RETURN-OF A CHURCH."

  2. Prepare Document 13133, Expedite Processing Cycle, as follows:

    1. Check the last box on the form

    2. Line out the description to the right of the last box, replacing it with the phrase, "DUMMY RETURN-OF A CHURCH."

  3. Forward the dummy Form 990, along with the corresponding Document 13133, to the Campus Center for processing. Request research information to determine if the account is present on the BMF. If present, determine if the EO submodule is also present.

    1. If the research indicates that the account is present on the BMF and contains an EO submodule, prepare Form 5597, TE/GE IMF/BMF/EPMF Request, to establish the account on AIMS. Enter Push Code 041, Current Year Pick-Up, in Item 11. Use the tax period established for the dummy Form 990. Refer to IRM 4.5.1.3.8.1 and IRM 4.5.1.3.8.2 and Exhibits 4.5.1-8 and 4.5.1-9 for instructions on preparing Form 5597.

    2. If the research indicates that the account is not present on BMF or that it is present, the EO submodule is not, hold Form 5597 until further research indicates that both the account and the EO submodule have been posted, and then forward it for terminal input.

  4. Each church tax inquiry account will be established on AIMS with an Activity Code of 345, Church Tax Inquiries.

  5. To close a church tax inquiry account off of AIMS, follow the procedures outlined in IRM 4.75, EO Examination of Returns. When preparing Form 5599, enter a "49," Approved Church Examination, in Item 701, Principal Issue Codes. Refer to IRM 4.5.2.3 for instructions on preparing Form 5599.

  6. If, at the conclusion of a church tax inquiry, it is determined that a complete examination must be conducted, the church tax inquiry account must be updated. Using Form 5598, TE/GE Correction Request, update the Activity Code to 349, Approved Church Examination. The account need not be closed until the examination is completed. At the end of the examination, follow the procedures outlined in IRM 4.75, EO Examination of Returns for closing a church examination. Refer to IRM 4.5.1.3.9.4.2 and Exhibit 4.5.1-20 for instructions on preparing Form 5598.

4.5.3.4.6  (06-01-2003)
Future Year Examination

  1. When it is determined that a future examination should be made on an organization currently under examination, establish the future year account on AIMS using Form 5597, TE/GE IMF/BMF/EPMF Request, with the appropriate Push Code. For a listing of valid Push Codes for your functions, refer to:

    • Document 6476, Employee Plans Systems Codes

    • Document 6379, Exempt Organizations Management Information Systems Codes

    • Document 11308, Government Entities Computer Systems Codes

  2. For instructions on preparing Form 5597, refer to IRM 4.5.1.3.8.1 and Exhibit 4.5.1-8 .

  3. In addition to establishing the account on AIMS, prepare a Form 5666, TE/GE Information Report, for the administrative file. Refer to IRM 4.5.1.3.9.2 and Exhibit 4.5.1-16 for instructions on preparing Form 5666.

4.5.3.4.7  (09-27-2006)
Private School Examination

  1. When conducting a private school examination, record the appropriate project code on AIMS. The project code may be input at the time the account is being requested or after the account has been fully established on one of the following forms:

    1. Form 5597, TE/GE IMF/BMF/EPMF Request

    2. Form 5597B, TE/GE Multiple IMF/BMF/EPMF Request

    3. Form 5588, TE/GE NMF Request

    4. Form 5595, TE/GE Update

    5. Form 5598, TE/GE Correction Request

  2. If, during the course of a private school examination, it is necessary to refer certain returns not under EO jurisdiction to SB/SE, W&I or LMSB, update the project code to reflect the referral rather than the private school. This must be done at closing on Form 5599, TE/GE Examined Closing Record, and will result in the private school code being replaced by the referral code. for information regarding referrals to SB/SE, W&I or LMSB.

  3. If a private school examination is considered part of a Special Emphasis Program (SEP), the project code must identify that program. A SEP code always takes precedence over private school and referral codes. It must be recorded on AIMS at the time the account is established, using the appropriate form. If the appropriate project code has not been input on AIMS before closing, it must be included on the closing document, Form 5599.

4.5.3.4.8  (09-27-2006)
Referrals from SB/SE, W&I or LMSB

  1. A transfer of an IRC 4947 Trust by W&I, SB/SE or LMSB will be indicated on Form 3198–A which will be attached to the case file.

  2. The case file will be transferred via Form 5351, Examination Non-examined Closings, to the Area Office/Primary Business Code and will have a notation that the case is an IRC 4947 Trust. The case file should also contain a blank Form 5351 for use by TE/GE.

  3. When the case file is received in the TE/GE Area office, AIMS documents must be prepared either to close the case or to change the activity and employee group codes on AIMS. This is necessary to remove the account and employee group code from W&I, SB/SE or LMSB’s inventory.

4.5.3.4.9  (06-01-2003)
Referrals to SB/SE, W&I or LMSB Division

  1. When it is necessary to refer returns not under TE/GE jurisdiction to W&I, SB/SE, LMSB the Examiner must prepare Form 5666, TE/GE Information Report. Refer to IRM 4.5.1.3.9.2 and Exhibit 4.5.1-16 for instructions on completing this form. Use Form 5599, TE/GE Examined Closing Record to update the project code during the closing action.

  2. If the account under examination is considered part of a Special Emphasis Program, the project code must identify that program. A SEP code always takes precedence over a referral code and must be recorded on AIMS at the time the account is established using the appropriate form. Form 5666 must still be prepared.

4.5.3.5  (09-27-2006)
Processing Cases Without an Original Return

  1. In examination cases where the original return has been destroyed or a special search fails to locate the return, and we are unable to secure a copy of the return from the taxpayer, the following procedures will be used:

    1. The Examining Officer will prepare a "DUMMY RETURN" and annotate at the top of the return "ORIGINAL DESTROYED."

    2. The Closing Function will close the case using "COPY OF RETURN" procedures and number in the 900 DLN blocking series.

    3. The file must include documentation to support the preparation of the "DUMMY RETURN," specifically, Return Files Function information showing that the original return has been destroyed

    4. The file must also contain a transcript of the account, the report showing the tax increase/decrease and a current AIMS print.

  2. On examination cases where the initial request does not produce the return and the subsequent response shows "special search performed - unable to locate return" and four months have elapsed from the initial request, follow "DUMMY RETURN" procedures as outlined in (1) above. The "DUMMY RETURN" will be annotated "UNABLE TO LOCATE ORIGINAL RETURN."

  3. Use of this procedure will allow the Closing Function to make the adjustment using an existing blocking series. The proper annotation of the " DUMMY RETURN," "ORIGINAL DESTROYED," or " UNABLE TO LOCATE ORIGINAL RETURN" will enable the Campus Center Files Function to refile the return in the appropriate manner.

4.5.3.5.1  (09-27-2006)
Missing Return Closing Procedures

  1. On examination cases, in which the original return is missing, every attempt must be made to locate the return. If the return was never received, a follow-up request to the Campus Center should be performed if the examination cannot be conducted using an ERTVU/BRTVU/RTVUE print. If the return was received and subsequently lost, special searches must be performed.

  2. If it is determined that the return is not required and an examination is not to take place, the account can be approved for closing by the Director, EP, EO or GE (TEB, FSL or ITG) Examinations or their designee. DC 33, Error Accounts With No Returns, should be used and all supporting documentation must be forwarded to the Closing Function for closure.

  3. If it is determined that an examination is warranted or was already in progress, and if all attempts to locate the return are unsuccessful, and an ERTVU/BRTVU/RTVUE print is not sufficient, contact with the employer or organization should be made to secure the necessary information in order to complete the examination. This could be a copy of the return, claim, RAR, etc.

  4. If the original return was received and subsequently lost, the following procedures apply:

    1. The Examiner must prepare a "DUMMY RETURN" and annotate at the top of the return "ORIGINAL DESTROYED (MISSING/LOST). "

    2. The file must include documentation to support the preparation of the "DUMMY RETURN" , specifically information on the efforts made to locate the missing/lost return.

    3. The file must also contain a transcript of the account, the report showing the tax increase/decrease and a current AIMS print.

  5. If the examination is conducted using an ERTVU/BRTVU/RTVUE print, follow the original return procedures.

4.5.3.5.2  (09-27-2006)
Copy of Return Examination Procedures

  1. Examinations may be closed based on the employer’s/organization’s retained copy of a return or an ERTVU/BRTVU/RTVUE print.

  2. To avoid unnecessary delay in closing a case, prepare requisitions and forward for terminal input as soon as time is charged to that return or it is known that an examination will be made, whichever is earlier.

  3. A copy of a return cannot be surveyed, therefore, the case should not be established unless the return will be examined. If a copy is established on AIMS in error, use DC 33, Error Accounts With no Return, to remove the record from AIMS.

4.5.3.5.2.1  (09-27-2006)
Processing Cases Closed Based on Employer’s Retained Copy

  1. When a case is closed on the basis of an employer’s retained copy or an ERTVU print, the Examiner takes the following action.

    1. Secure an exact duplicate of the employer’s retained copy or an ERTVU print.

    2. Enter the words "Copy Secured by TE/GE" in bold print in the upper margin on the face of the copy. If an ERTVU print is used, annotate in red at the top of the print "ERTVU print used by TE/GE."

  2. Tax payments and credits claimed must be verified for examinations based on the employer’s/organization's copy. Verification may be possible from employer’s/organization's records. A transcript should be secured when doubt exists as to the true liability per the EPMF.

  3. A case closed on a retained copy of the return or an ERTVU print is identified by a Form 3198–A before it is sent to the closing function.

4.5.3.5.2.2  (09-27-2006)
Processing Cases Closed Based on Organization’s Retained Copy

  1. When a case is closed on the basis of organization’s retained copy or a BRTVU/RTVUE print, the Examiner takes the following action.

    1. Secure an exact duplicate of the organization’s retained copy or a BRTVU/RTVUE print.

    2. Enter the words "Copy Secured by TE/GE" in bold print in the upper margin on the face of the copy. If a BRTVU/RTVUE print is used, annotate in red at the top of the print "BRTVU/RTVUE print used by TE/GE."

  2. Tax payments and credits claimed must be verified for examinations based on the organization’s copy. Verification may be possible from the organization’s records. A transcript should be secured when doubt exists as the true liability per the BMF.

  3. A case closed on a retained copy of the return or a BRTVU/RTVUE print is identified by a Form 3198–A before it is sent to the closing function

4.5.3.5.2.3  (06-01-2003)
Closing Skeletal Accounts to Appeals

  1. When Appeals needs a return urgently and that return is still in skeletal status on AIMS, send the case with an AMDIS print which shows that the request to establish on AIMS is being processed.

  2. Monitor to determine when the full account establishes on AIMS. When it does, forward a print of the account or the closing action to the Appeals Office to which the case was closed.

  3. Appeals cannot accept a return without the AIMS print. However, if expedite processing is necessary, Appeals will copy the case information needed and return the administrative file to TE/GE. TE/GE should complete the establishment request and secure an AMDIS print and return the file to Appeals within five days.

4.5.3.6  (09-27-2006)
Procedures for Handling Short Closings or Non-Examined Closings

  1. "Short closings" or "non-examined cases" are processed as follows:

    Returns Disposal Codes other than Process on
    EP 01 - 15 and 34 Form 5596, TE/GE Non-Examined Closings or Form 5546, Examination Return Charge-Out
    EO and GE 01 - 19, 50, 51 (GE only), 52, 53 and 34 Form 5596, TE/GE Non-Examined Closings or Form 5546 Examination Return Charge-Out

4.5.3.6.1  (09-27-2006)
Non-Examined Closings

  1. Form 5596, TE/GE Non-Examined Closings or Form 5546, Examination Return Charge-Out, can be used for closing all non-examined returns except Surveyed Claims (DC 34).

    EP and EO DCs 20-22, 25, 29, 30-33, 35, 36
    EO DCs 40, 45 and 99
    GE DCs 20-21, 32—33, 35, 45 and 99

  2. Surveyed claims are closed on Form 5599, TE/GE Examined Closing Record.

  3. If Form 5546 is used:

    1. Enter the two-digit disposal code in the space on the second line of the form that follows the words "Non Examined Disposal Code."

    2. When the DC is 30, Transfer Out of Area, enter a dash and the two-digit code of the Primary Business Code to which the case is being transferred.

    3. Attach the prepared Form 5546 to the return, if a return is available.

  4. If Form 5596 is used:

    1. Only one type of tax (MFT) can be used on Form 5596. Each form can be used to transmit up to 20 labels when the MFT is the same. Additional pages can be attached so that up to 100 labels of the same MFT can be transmitted at the same time.

    2. More than one disposal code may be used on a Form 5596.

      Exception:

      DC 30 may not be used with any other disposal code.

    3. If more than one page is used, indicate the page number and total number of pages (maximum of five) in the upper right corner of the form.

    4. Enter the requestor’s initials, employee group code routing symbols, and date.

    5. Attach the Audit label(s) of the case(s) being closed.

    6. Enter the two-digit disposal code in the lower left of the label below "STATUS." Select the correct non-examined disposal code. Refer to the following for a list of the non-examined disposal codes.

      • Doc. 6476 Employee Plans Systems Codes
      • Doc. 6379 Exempt Organizations Management Information Systems Codes
      • Doc. 11308 Government Entities Computer System Codes

  5. Use of DC 29 is invalid if the current AIMS status code is above 06. If there is an amount claimed on the data base, only DCs 33 or 99 are valid.

  6. For EO/GE Cases - Records cannot be surveyed if an advanced payment, TC 640, is on the module. The TC 640 must be resolved before a record can be surveyed.

    1. Research IDRS and AMDIS to determine if posting errors, cycling problems, or examination errors, caused the advanced payment to post to an incorrect tax module.

    2. If necessary, secure the payment document to screen for use of the wrong EIN, tax period, or other data that caused the TC 640 to post incorrectly to the BMF.

    3. Contact with the organization may be necessary to determine why the payment was made.

    IF THEN
    The TC 640 was used in error, Reverse the TC 640 and post the correct transaction.
    The payment posted to the incorrect module, Determine the correct EIN or tax period and input a credit transfer.
    Research indicates that the TC 640 posted correctly and the assessment statute expiration date is imminent, Expedite the case to the initiator for determination as to whether a quick assessment should be made.
    Research indicates that the TC 640 posted correctly and the assessment statute expiration date is not imminent, Reject the case back to the initiator.

  7. Management approval is needed to use a non-examined disposal code at group level. The Group Manager’s signature and date is entered on Form 5596 or Form 5546.

    1. Closings at group level require approval by the Group Manager. Closings in the Classification Area require the approval of the Manager of Classification or their designee. Closings in the closing functions require approval by the Manager of that Function or their designee.

    2. Approval is required by the Director of the Business Unit, or their designee, to close an account using DC 33, Error Accounts With No Returns. Review by the AIMS Coordinator prior to submission to the Director for approval is required, to ensure all documentation is attached and correct procedures are followed.

  8. Special rules apply for DCs 29 and 33.

    1. Sufficient documentation must be attached to the closing document to permit the approving official to evaluate the closing request when applying the procedures given for , Missing Returns.

    2. When DCs 29 or 33 is used, the closing document is kept in searchable order for one year following terminal input. Unless area instructions provide otherwise, these forms are retained in the closing function. Arrangements may be made to have the forms numbered and closed to the Ogden Campus Center for retention.

      Note:

      DC 33 requires that the filed return has not been secured.

  9. Claims that are surveyed require the use of Form 5650 or Form 5599. Returns that are incorrectly assigned Source Code 30, Claim for Refund, may be surveyed without scheduling an overassessment by using CC AMAXUO or CC AMAXUP to correct the source code and to remove the amount claimed from the data base.

  10. Transfers Out of Area, DC 30. .

    1. All transfers use CC AMSOCP/AMSOC, even transfers of cases with PCS linkage.

      Reminder:

      Do not use CC TSCLS when an investor is being transferred.

    2. Enter the four-digit Employee Group Code of the Area in which the case is being transferred under the legend "EGC."

  11. Accounts closed with a non-examined disposal code remain on AIMS only until the end of the month that they are closed at the terminal. To allow time for reversal of the examination indicator on EPMF/BMF/IMF, a non-examined EPMF/BMF/IMF account cannot be re-established for one month following closing at the terminal.

  12. Disposition of Form 5596 - Unless local instructions provide otherwise, Form 5596 is retained by the closing function for thirty days after terminal input and then disposed of according to the Records Control Schedule 203.

4.5.3.6.2  (06-01-2003)
Non-Examined Closings With Partnership Linkages

  1. Non-examined closings containing partnership linkages will be closed with both a Form 5650 or Form 5599 and Form 5596 or Form 5546.

    1. The linkage freeze is released using CC TSCLS on Form 5650 or Form 5599. Enter TSCLS items only.

    2. After the linkage freeze is released, the Examiner will complete Form 5546 or Form 5596 for a non-examined closing by entering an " X" in the block opposite CC AMSOCP/AMSOC.

4.5.3.6.3  (06-01-2003)
Short Closings or Non-Examined Closings With Duplicate Filing Conditions

  1. If an original return is received with a duplicate or amended return which has no tax or refund due, and the case is to be surveyed, the TC 976/977 freeze code must be released on the AIMS section of the TIF. The reject message will consist of a TC 976/977 in the module.

  2. In order to release the freeze, a statement must be noted in the file by the Examiner that the amended/duplicate return was considered.

    1. Prepare Form 8485, Assessment Adjustment Case Record (refer to IRM 4.4, AIMS/Processing) to input a TC 290 with a -0- if the amended/duplicate return has been considered.

    2. If the amended/duplicate return has not been considered, return the case file to the originator for consideration.

4.5.3.7  (09-27-2006)
Expedite Processing of Large Deficiency or Overassessment Cases

  1. These instructions apply to income, estate, gift, and employment tax cases, including those that are subject to the "interest-free adjustment" procedures of IRC 6205.

  2. Unpaid, agreed deficiency cases of $10,000 or over, must receive expedite processing within twenty-two calendar days of the date IRS receives a signed waiver. Twenty-two calendar days equate to approximately sixteen actual workdays. To meet the sixteen workdays, the IRS functions must follow the following time frames:

    1. Actions by the group after receipt of a waiver - three days;

    2. The closing function for sample review cases transmitted to Technical Staff - one day;

    3. Technical Staff actions - five days; and

    4. The closing function closing actions - six days .

  3. In addition, quick assessment procedures will process unpaid, agreed deficiency cases of $50,000 or more. The use of Form 4760, Processing Record for Agreed Unpaid Deficiency Cases Requiring Prompt Assessment or Overassessment, is mandatory for agreed deficiencies or overassessments of $50,000 and over. Agreed deficiency cases of $50,000 and over must be manually assessed within twenty-two (22) calendar days of the received date of the signed agreement form.

  4. Tax Examiners must notify the immediate supervisor when a case involving a deficiency of $50,000 or over cannot be processed within the twenty-two (22) day period. Upon completion of the case file, the closing unit Terminal Function must forward Form 4760 for filing.

  5. The term "deficiency" pertains to a single deficiency or sum of deficiencies in the case file, without regard to any offsetting overassessment, for any one taxpayer.

  6. Overassessments of $10,000 or more, must receive expedite manual processing. However, an overassessment that results in a million dollars or more, including allowable interest, should be refunded using manual refund procedures.

  7. Tax Examiners must attach Form 4760, to all cases with agreed unpaid deficiencies or overassessments of $50,000 or more. At local option, these forms may be used for agreed unpaid deficiencies or overassessments of $10,000 or more. Each employee handling the case must initial Form 4760 and record the date they handled the case. If Tax Examiners encounter delays in transmitting the case to the next processing level, they must record the reason on Form 4760.

4.5.3.7.1  (09-27-2006)
Filing Form 4760

  1. Locally, the Area Office may appoint a coordinator to control Forms 4760 to track agreed unpaid deficiencies or overassessment of $50,000 and over. The closing function should forward Form 4760 to the Coordinator for control after terminal input of the audit adjustment.

  2. In Primary Business Codes where a Form 4760 is used to track assessments of $10,000 and over, Form 4760 should also be forwarded to the Coordinator after terminal input. The closing function must maintain Forms 4760 in searchable order.

  3. Forms 4760 must be disposed of after one year, following IRM 1.15.24, Records Control Schedule for TE/GE.

4.5.3.8  (06-01-2003)
Statute Expiration Within 60 or 90 Days

  1. IDRS terminals will not accept a deficiency case for closing if the statute of limitation has expired or will expire within 60 days, unless:

    1. Fraud is involved (entry in Item 38 of Form 5599, TE/GE Examined Closing Record)

    2. The case is closed to Appeals

    3. The statue of limitations has been extended and the Examiner has entered the extended statute date in Item 14 of Form 5599, or Form 5403, Appeals Closing Record. An entry in Item 14 will update the statute of limitation date on AIMS and on the MF.

  2. If the statute has not been extended, prepare Form 2859.

  3. IDRS terminals will not accept a transfer of a case, DC 30, if the statute of limitations has expired or will expire within 90 days, unless:

    1. Source Code is 30 (claim for refund)

    2. Fraud indicator is present on AIMS

    3. MFT Code is 06

    4. Alpha characters (AA–OO) have been used to update the AIMS statute date

  4. Terminal Operators must return rejected transfer closings to the Tax Examiner with an appropriate explanation.

4.5.3.9  (09-27-2006)
Processing Deficiencies After Statute Expiration

  1. Instances may occur when processing an examination closing is necessary after the statute of limitations has expired. Some examples and closing procedures appear below.

    1. If a payment was not received, do not make an assessment. Process Form 5599 with DC 01, enter TC 300 in Item 12 with a zero (0) amount, and a $1.00 in Item 35.

    2. If the taxpayer makes a voluntary payment after the statute has expired, do not make an assessment. Process Form 5599 as described in a) above. The taxpayer’s payment must be processed using Form 3244-A, Payment Posting Voucher-Examination.

    3. If an advance payment was processed before the statute expiration date, do not make an assessment. Form 5599 should be processed as described in a) above, entering a Hold Code 4 in Item 07. Prepare a 2-Way Memo requesting removal of the advance payment from MF to the Excess Collections File (XSF). Send the 2-Way Memo to the Ogden Campus Center Statute Unit. Include the taxpayer’s TIN, name and tax period involved. Attach a transcript of account showing the advance payment. Ensure that a letter was issued to the taxpayer, advising him or her of the barred deficiency.

4.5.3.10  (09-27-2006)
Prior Year Returns

  1. The Teller Function reviews all prior year returns received in the Area Office directly from taxpayers or taxpayers’ representatives to decide whether 90 days, or less, remain on the Assessment Statute Expiration Date (ASED) and to determine if the return is:

    1. A prior year amended return declaring additional tax.

    2. A possible duplicate return, i.e., no indication that it is an original delinquent return per the taxpayer’s correspondence or other information.

  2. Prior year returns meeting the criteria in a) or b) above should be forwarded to the closing function for a quick assessment, if required.

4.5.3.10.1  (06-01-2003)
Procedures for Handling Prior Year Returns

  1. Tax Examiners must process prior year returns as follows:

    1. Secure a MF transcript of the account to avoid duplicate assessments. After terminal research, if the tax period is currently under examination, coordinate with the function who has control of the return before making the quick assessment.

    2. Prepare Form 2859, Request for Quick or Prompt Assessment and attach it to the tax return and Form 3244, Payment Posting Voucher. Assess according to guidelines outlined in IRM 4.4, Manual Refunds, Quick and Jeopardy Assessments.

    3. If the taxpayer made a full payment with the return, (i.e., tax, delinquency penalty, and interest), notate in the "Remarks" section, "Withhold Collection/Do Not Bill Taxpayer."

    4. If the payment does not cover the full deficiency, do not notate to withhold collection.

    5. Compute interest using normal interest computation procedures. If restrictions appear on the MF transcript, use applicable restricted interest procedures.

    6. Tax Examiners should compute delinquency penalty TC 16X, unless prepayment credits exceed tax per return and a refund will be due to the taxpayer after assessment. In these cases, a delinquency penalty is not required.

    7. After the assessment has been made, forward the entire assessment package to the Ogden Campus Center Accounting Branch.

4.5.3.11  (09-27-2006)
Release of Backup Withholding Indicator-Form 8408

  1. Sometimes removing the backup withholding indicator, before the input of the TE/GE closing command codes, is necessary. Tax Examiners should receive these cases in the closing unit with Form 3198–A annotated " Delete BWH Indicator."

  2. The closing unit processing function is responsible for preparing Form 8408, as follows:

    1. Initiated by Employee Number/Organization - Enter the Tax Examiners eight-digit employee’s identification number without hyphens. For the organization, enter "TE/GE."

    2. Tax Period - Enter in YYYYMM format. (For example, for a calendar year 1998 return, enter 199812.)

    3. Action Code - Enter "7."

    4. Action Date - Enter the current date in MMDDYYYY format. (For example, enter September 17,1998 as "09171998." )

    5. Name Control - Enter the four-digit primary taxpayer name control from information in case file.

    6. Primary or Pay SS Number - Enter the primary taxpayer SSN from information in case file. Enter numerics only. Do not use hyphens.

  3. Notate in the case file that Form 8408 was prepared. Route completed forms to the Ogden Campus Center Receipt and Control Branch, so they can batch and number them for DIS input.

4.5.3.12  (06-01-2003)
Adjustments Involving Married Taxpayers

  1. This section provides instructions for the Tax Examiner on handling adjustments involving married taxpayers.

4.5.3.12.1  (09-27-2006)
Separate to Joint

  1. During an examination, a husband and wife who originally filed their returns on a separate basis, find that it would be to their advantage to use Joint Tax Computations. To have this advantage of filing a joint return the taxpayers are not required to actually file a joint return. Instead, execution of a joint agreement will be sufficient to make this election. To make this election the tax must be paid in full.

    Exception:

    IRC 6020(b) returns filed by the Secretary, do not preclude a taxpayer from obtaining the benefit of joint rates under IRC 6013, whether a Statutory Notice of Deficiency has been issued or not, even if the tax is not paid in full. This exception will not apply to taxpayers who have a petition in Tax Court or when one or both spouses previously filed a separate return.

  2. The following documents and returns should be present when both husband and wife filed a return.

    1. Form 3198–A, indicating "Separate Return Converted to Joint" and when applicable, credits for estimated tax payments are transferred to the joint account.

    2. The husband’s and wife’s separate returns. The Tax Examiner must prepare a Form 2363, to add the wife’s name to the account and to correct the filing status from "3" (married filing separately) to "2" (married filing joint return). The wife’s original separate return should be refiled under the refile DLN assigned to Form 5599 for that return.

    3. Form 5599, with the wife’s SSN, Item 12 reflecting the reduction of tax, penalties, and interest previously posted to her account to zero. Prepare Form 2424, to transfer cash credits to the joint account. Form 5599, Item 15, should reflect amount necessary to reduce the unrefunded prepayment credit. Also in Item 15 (decrease line), enter Reference Number 999 with a blank amount. This will indicate an adjustment to the primary account and "turn off" the multiple filer indicator. If the wife’s account shows zero tax and entire prepayment credit refunded, close the case as a "No Change" (DC 02). A closing letter is not prepared in this situation for the wife.

  3. Special entries on Form 5599 for the husband’s account are:

    1. The wife’s name entered in Item C.

    2. Tax and penalties for the joint account entered in Item 12.

    3. The wife’s unrefunded prepayments entered as an increase in Item 15.

  4. Special entries required on the wife’s account Form 5599 are:

    1. The appropriate TC’s and amounts in Item 12 to reduce all tax and penalties to zero.

    2. Reference Number 999, with a zero amount in Item 15.

    3. Necessary entries to reduce unrefunded prepayment credit by the same amount allowed as a credit on the joint return.

  5. The following documents should be present when only one spouse filed a return:

    1. Form 3198–A, indicating separate returns converted to joint return.

    2. Only one taxpayer’s return.

  6. The Closing Function Tax Examiners need to prepare a Form 2363 to change the filing status from "3" (married filing separate returns and the spouse is not required to file a return, spouse exemption is claimed) to "2" (married filing joint return) and add the name of the spouse who has not filed.

  7. When a delinquency penalty must be applied against a non-filing spouse, the penalty must be computed manually. Any delinquency penalty imposed on the spouse, who has previously filed, should not be duplicated in the computation. Form 3198 should show the amount of the penalty. The manually computed delinquency penalty should be entered in Item 12, using TC 160 on Form 5599.

  8. When cash payments such as estimated payments, remittances with return, etc., are shown on the account that is being reduced to zero:

    1. Enter Hold Code 2 in Item 7 of Form 5599.

    2. Prepare Form 2424, to transfer the cash credits to the joint account, using TC 570 to prevent a refund of any credits that post before Form 5599 is processed.

    3. Input Form 2424 in the same cycle as the wife’s Form 5599 is input.

    4. Then input the joint Form 5599.

4.5.3.12.2  (09-27-2006)
Joint to Separate Returns

  1. When it is determined during an examination that the taxpayers are not entitled to file a joint return, the case must be flagged with Form 3198–A noted "Joint to Separate." Prepare Form 2363 to remove one taxpayer’s name from the account (it should be lined through on Form 5599). Usually the account will be under the husband’s SSN and the wife’s name will be removed. If the spouse, whose name is removed from the account, is required to file a return, it must be included in the case file. If the return is in the case file, just forward the return for original processing. At the time Form 2363 is being prepared, also prepare Form 5598, TE/GE Correction Request, to correct the AIMS data base.

    Note:

    When preparing a Form 2363 that involves name changes, always enter the name control where required; NEVER enter a check digit.

4.5.3.12.3  (09-27-2006)
Joint Return Deficiency for One Spouse

  1. If one spouse files a petition with the United States Tax Court or otherwise avails himself/herself of appeal rights on a proposed joint return deficiency, and the other spouse agrees to a deficiency or does not take appeal action, Appeals must submit a request on Form 3198 and Form 5403 for a NMF assessment (do not input through terminal) for the non-petitioning spouse. The NMF account will be maintained in the name of the non-petitioning spouse concurrently with the account on the MF. Do not move the NMF account to the MF.

  2. For those cases suspended in the 90 day files, where the statute will expire within 120 days, and it appears that only one spouse has petitioned the Tax Court, the Review Staff must contact Appeals and ask them to review the petition since it appears from the docket list that only one taxpayer has petitioned.

    IF AND THEN
    Appeals determine there is a non-petitioning spouse the 90-day period has expired for the non-petitioning spouse Make a NMF assessment
    The 90-day period has not expired to the non-petitioning spouse Prepare a "dummy" case file and retain it in the 90-day suspense file. STATUTE CONTROL MUST BE MAINTAINED.
    An agreement is received for the non-petitioning spouse   Make a NMF assessment for that spouse.

  3. Review Staff must prepare Form 3210, Document Transmittal , to transmit the petitioned case and include the following information on a Routing Slip attached to the case file:

    1. "Non-Petitioning Spouse Case"

    2. Petitioning Spouse’s Name

    3. Non-Petitioning Spouse’s Name

    4. Statute Date

    5. Indicate whether an assessment has been made against the non-petitioning spouse

    6. Indicate who was contacted in Appeals for petition information and the date.

  4. Prepare Form 3210, to transmit the "dummy" case file after the non-petitioning spouse case has been assessed and include the following information on a Routing Slip attached to the file:

    1. "Non-Petitioning Spouse Case"

    2. Non-Petitioning Spouse’s Name

    3. Indicate that the assessment has been made against the Non-Petitioning Spouse.

  5. For those cases, suspended in the 90 day suspense files, where more than 120 days remain on the statute and it appears that one spouse has not petitioned, transmit the case to Appeals using Form 3210, noted " Possible Non-Petitioning Spouse Case."

4.5.3.12.4  (06-01-2003)
Multiple Filers

  1. Both spouses file a joint return and one spouse files a separate return for the same year.

    1. If TE/GE determines the joint return is valid and both taxpayers elect to file jointly, zero out the separate return. Reduce the tax and penalties on the separate return in Item 12, Form 5599, (TC 301 $); reduce the unrefunded prepayment credit in Item 15, Form 5599 (TC 807 $). Enter Reference Number 999 in Item 15, Form 5599 for the blank amount.

    2. If there is no tax liability on the separate return and the prepayment credit has been refunded, the case can be closed No Change (DC 02). A closing letter is not required.

  2. In the above situation, a Form 2363 is not required, since the MF shows joint names and joint filing status already.


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