4.9.1  Outline of System

Manual Transmittal

May 23, 2014

Purpose

(1) This transmits a complete revision of IRM 4.9.1, Examination Technical Time Reporting System, Outline of System.

Material Changes

(1) This IRM was revised throughout to provide clarifications and more in-depth discussions in all areas. Also, editorial changes, website addresses, and IRM references were reviewed and updated as necessary.

(2) A listing of significant changes to this IRM are reflected in the table below:

IRM Description
IRM 4.9.1.1 Reworded for clarity and updated procedures.
IRM 4.9.1.2 Reworded for clarity and updated procedures.
IRM 4.9.1.3 Added new section regarding Table 37 and moved old information on examiner's time documents to IRM 4.9.1.6.1 and revised.
IRM 4.9.1.4 through IRM 4.9.1.4.2 Revised to update and describe the layout of the SETTS file.
IRM 4.9.1.5 through IRM 4.9.1.5.12 Update the description of data fields used in SETTS.
IRM 4.9.1.6 through IRM 4.9.1.6.4 Deleted the overview and added detailed instruction on how to input time through Examination Returns Control System (ERCS) and Issue Management System (IMS); provided direction when two time reports are required; incorporate content from old IRM 4.9.1.7 concerning ERCS time reporting.
IRM 4.9.1.7 Updated and moved information from IRM 4.9.2.2, Agent Analysis, into this section
IRM 4.9.1.8 Added this new section to advise that time on ERCS should agree with the time reflected on Form 5344, Examination Closing Record.
IRM 4.9.1.9 Updated and consolidated information from IRM 4.9.1.8, Transmission of SETTS Data, and IRM 4.9.1.9, Correction of Data Transmitted, into this section.
Exhibit 4.9.1-1 Deleted Exhibit 4.9.1-1 because this information is available in Document 6036, Examination Division Reporting System Codes Booklet, and renumber Exhibit 4.9.1-2.
Exhibit 4.9.1-2 Renumbered from Exhibit 4.9.1-3, Direct Examination/Compliance Activity Codes—Second Segment Codes.

(3) IRM 4.9.2, Description and Use of Examination Technical Time Report—Form 4502, was made obsolete and its content was incorporated into this IRM. The content was incorporated in the following sections:

Crosswalk From IRM 4.9.2 to IRM 4.9.1

From To
IRM 4.9.2.1, Overview Incorporated in IRM 4.9.1.1, IRM 4.9.1.5.7.1, and IRM 4.9.1.6
IRM 4.9.2.2, Agent Analysis Incorporated in IRM 4.9.1.6.1 and IRM 4.9.1.7.
IRM 4.9.2.3, Tax Compliance Offices Incorporated in IRM 4.9.1.6.1.
IRM 4.9.2.4, Form 4502 Instructions Replaced by IRM 4.9.1.4.1.

Note:

Form 4502, Exam Technical Time Report, is obsolete and replaced by the Agent Input Document discussed in IRM 4.9.1.7. Data is not input on the form; it is pulled from ERCS employee records.

IRM 4.9.2.4.1, Name, Item 1 Removed because it is obsolete.
IRM 4.9.2.4.2 , Area Code/Control Number Item 2 Incorporated into IRM 4.9.1.4.1 and IRM 4.9.1.5.1.
IRM 4.9.2.4.3, Year/Month, Item 3 Incorporated into IRM 4.9.1.4.1 and IRM 4.9.1.4.2.
IRM 4.9.2.4.4, Grade, Item 4 Incorporated into IRM 4.9.1.4.1 and IRM 4.9.1.4.2.
IRM 4.9.2.4.5, Examination AIMS Assignee Code, Item 5 Incorporated in IRM 4.9.1.4.1 and IRM 4.9.1.4.2.
IRM 4.9.2.4.5.1, Employee Type (First Digit) Was not incorporated into this IRM because this information is available in Document 6036.
IRM 4.9.2.4.5.2, Group (2nd – 4th Digits) Was not incorporated into this IRM because this information is available in Document 6036.
IRM 4.9.2.4.6, Position Code, Item 6 Incorporated in IRM 4.9.1.4.1 and IRM 4.9.1.5.2.
IRM 4.9.2.4.7, Employees Status, Item 7 Incorporated in IRM 4.9.1.4.1 and IRM 4.9.1.5.3.
IRM 4.9.2.4.8, Duplicate Employee Item 8 Incorporated in IRM 4.9.1.5.4.
IRM 4.9.2.4.9, Page Was not incorporated because this content is obsolete.
IRM 4.9.2.4.10 , Column (a), TIN, Name of Taxpayer or Activity and Months in Process Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.11 , Column (b), Tax Direct Tax Year or Period (Part I Only) Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.12, Column (c), Opening Inventory Hours (Part I Only) Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.13, Column (d), Day of Month (Parts I and II) Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.14, Column (e), Total Hours This Month (Parts I and II)/Protection of Revenue Base, Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.14.1, Protection of Revenue Base Was incorporated in IRM 4.9.1.5.6 and revised.
IRM 4.9.2.4.15, Column (f), Activity Codes (Parts I and II) General Was incorporate into IRM 4.9.1.5.7 and revised.
IRM 4.9.2.4.16, Column (g) DET Other PBC Was incorporated into IRM 4.9.1.5.8 and revised.
IRM 4.9.2.4.17, Column (h) Cumulative Hours (Part 1 Only) Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.4.18, Column (i) Closed Returns Cumulative Hours (Part 1 Only) Was not incorporated because this information is no longer input. It is generated through ERCS.
IRM 4.9.2.5, Reconciliation (Revenue Agents Only) Part III Was not incorporated because this content is obsolete.
IRM Exhibit 4.9.2-1, Primary Business Codes Was not incorporated into this IRM because this information is available in Document 6036.
IRM Exhibit 4.9.2-2, Position Codes Was not incorporated into this IRM because this information is available in Document 6036.

Effect on Other Documents

IRM 4.9.1 dated April 1, 2004 is superseded. The content of IRM 4.9.2 dated April 1, 2004 was incorporated into this document except for the parts listed in the Material Changes section which are obsolete.

Audience

Small Business and Self Employed (SB/SE), Large Business & International (LB&I), Return Preparer Office (RPO), and other staff accounting for technical time.

Effective Date

(05-23-2014)

Michael W. Damasiewicz
Director, Examination Planning and Delivery
Small Business/Self-Employed

4.9.1.1  (05-23-2014)
Overview

  1. This section discusses the Summary Examination Time Transmission System (SETTS) and the procedures for inputting technical time.

  2. Technical time applied by employees is used in planning and creation of the examination plan and for monitoring each area/industry to ensure the plan will be met. Fiscal year plans are developed by headquarters (HQ) using time data and input from areas or industries. After final approval, plans are incorporated in the Internal Revenue Service (IRS) operating financial plan.

  3. The discussions covered in this handbook constitute the requirements and records needed for reporting time by technical employees. This also covers time reporting under the Examination Returns Control System (ERCS) whether input into ERCS or transferred to ERCS by the Information Management System (IMS).

  4. Everyone, including the examiner applying time, the secretary inputting the time in ERCS, the manager approving the time, and the AIMS/ERCS personnel extracting the time for roll-up plays a vital role in ensuring the SETTS data is accurate and timely. The need to complete the agent input document accurately, legibly, and timely cannot be overemphasized. Managers must also review and approve the time sheets prior to SETTS transmission.

  5. Time is captured for technical employees by the activities an employee performs each day. Employees must account for the daily number of hours matching the employee's work schedule. Refer to IRM 4.7.5, Group and Territory, for more information about charging time in the group. Refer to the Employee chapter of the ERCS Group Handbook for more information about setting up the employee's work schedule.

  6. At the end of each reporting cycle, the time is extracted from ERCS, validated, and transmitted to the Martinsburg Computing Center (MCC). There the data is validated again and extracted for inclusion on Table 37, Examination Program Monitoring. The data is also sent to the Audit Information Management System (AIMS) Computer Information System (A-CIS). A-CIS data is available to HQ analysts and upper level management for their specific area or industry to create reports and to monitor time data against the examination plan.

4.9.1.2  (05-23-2014)
Examination Plan

  1. The annual examination plan is developed and approved as a corollary to the Operating Financial Plan. Most information necessary for formulating the areas' or the industries' plans is available in the headquarters office. The headquarters office will request additional information from the areas or the industries and combine it with historical data available in the headquarters office. Headquarters employees prepare an examination plan for each SB/SE area, LB&I Industry, and Director of Field Operations as well as area, industry, and national summaries. Plans are reviewed and if necessary, adjustments are made based upon input from the area or industry. The SB/SE area and the LB&I Directors of Field Operations will coordinate with headquarters to ensure that financial plans and work plans are in agreement. Plans will not be allocated below the area level for SB/SE or the Director of Field Operations level for LB&I.

  2. After approval by the headquarters office, the area plan is transmitted to the Martinsburg Computing Center for inclusion to Table 37. Monthly comparison of pan versus accomplishments is provided to headquarters, SB/SE areas, and LB&I industries for monitoring purposes.

4.9.1.3  (05-23-2014)
Table 37

  1. Table 37 is a summary report of AIMS and SETTS information. Table 37 is generated by MCC at the conclusion of each AIMS/SETTS reporting cycle. Refer to IRM 4.4.27, Reports, for inventory and accomplishments. The information on Table 37 reflects three basic themes:

    • Inventory (AIMS)

    • Accomplishment of units/returns (AIMS)

    • Direct examination staff year (DESY)

    The direct examination staff year data on Table 37 is broken down by the following categories as shown in the table below:

    Table 37 Groupings by Activity Code

    Business Operating Division (BOD) Table 37 Groupings Category Equals the Sum of the Following:
    SB/SE and RPO Total Staff Years Direct Compliance Exam and Total Non-Compliance Overhead
    SB/SE and RPO Direct Compliance Exam Total Return Exam Activities, Other Compliance Activities, and Direct Operational Support Activities
    SB/SE and RPO Total Return Exam Activities 001-499
    SB/SE and RPO Other Compliance Activities 501-514, 519-529, 544-574, 576-586, 588, 592-599, 646, 720, 733-735, 812-819, 821-822 and 828
    SB/SE and RPO Direct Operational Support Activities 617, 621-623, 625, 631-632, 641, 643, 644, 648, 740
    SB/SE and RPO Total Non-Compliance Overhead Non-Compliance Support Activities and Overhead
    SB/SE and RPO Non-Compliance Support Activities 609, 614, 670, 671, 690, 731, 732, 741, 743, 811, 820, 823, 826, 827
    SB/SE and RPO Overhead 575, 610-613, 615, 616, 618-620, 624, 649, 660, 675, 695, 697-699, 730, 736-739, 744-750, Training, and Leave
    SB/SE and RPO Training 681-684
    SB/SE and RPO Leave 830
    LB&I Direct Examine—(Direct Exam) 001-599
    LB&I Non-direct Examine—(Non Direct Exam) 600-830
  2. SB/SE and RPO classify time as either direct compliance exam or non-compliance overhead. Direct compliance exam is the sum of total return exam activities, other compliance activities, and direct operational support. The codes associated with each of these categories are shown in the table above. Total return exam activities is time applied to all returns examined, regardless of the method used in contacting the taxpayer or the place of examination. This time includes time actually spent examining a taxpayer's records and returns, time on research or dealing with issues involved in the return being examined, travel time incident to the examination, and time devoted to writing the report. Time spent by examiners preparing the evaluation report on informants' claims is also reported as return exam activity. Most return exam activity is self-explanatory and return related. Other compliance activities include activities related to compliance with tax laws but not directly related to a specific return, such as return preparer and other penalty cases, fuel inspections, and details to other divisions. Direct operational support activities include time on classifying returns, reviewing returns, and coordinating these activities.

  3. SB/SE and RPO define total non-compliance overhead as the sum of non-compliance support and overhead. These are normally activities not associated with examining a return; for example, management and training. These codes do not require a second segment code.

  4. LB&I classifies its data as direct examine and non-direct examine. Direct examine time applies to time spent on all returns examined, regardless of method used in contacting the taxpayer or the place of examination. Direct examination time includes time actually spent examining a taxpayer's records and returns, time on research or reading issuances dealing with issues involved in the return being examined, travel time incident to the examination, and time devoted to writing the report. Time spent by examiners preparing the evaluation report on informants' claims is also reported as direct examination time. Most of the first segment direct examination codes are self explanatory and are return related. Direct examination time includes time spent inspecting and identifying the audit potential of related employment and excise tax returns in connection with the examination of another return.

    1. If these related employment or excise tax returns are examined and a report of adjustments or no-change report is prepared, time allocated to identification and examination of the employment or excise tax return is charged to the appropriate activity code of the employment or excise tax return. This time should not be reported with the activity code of the principle return with which this examination was associated.

    2. If the related employment or excise tax return is not identified for examination or if no report of examination is written, time spent in conjunction with the employment or excise tax return(s) should all be reported with the time charged to the principle return under its appropriate activity code.

  5. LB&I classifies non-direct examine activity as sum of direct support and non-examine. These are normally activities not associated with examining a return. For example: management, training, and classification. These codes do not require a second segment code.

  6. See Exhibit 4.9.1-1 for a list of activity codes greater than 499 and their definitions. See Exhibit 4.9.1-2 for a list of second segment codes and their definitions.

4.9.1.4  (05-23-2014)
Summary Examination Time Transmission System (SETTS)

  1. SETTS is the only system used to electronically transmit validated (error free) technical time data from SB/SE area offices, SB/SE Specialty, Technical Services within the SB/SE, Fraud/Bank Secrecy Act (BSA), Return Preparer Office, and LB&I Operating Division (including International). The data is transmitted to MCC for inclusion on Table 37.

  2. This section discusses the processes and requirements for the following:

    • Data required for Time Input

    • SETTS file Layout

4.9.1.4.1  (05-23-2014)
Data Required for Time Input

  1. Information from the ERCS employee record is used for time reporting and included in the SETTS file. The items with asterisks below are pulled from the employee record and cannot be changed by the user. It is essential to update the employee record as soon as changes are known and prior to the last day of the reporting cycle. In particular the following unmarked items must be keep current. Refer to Document 6036, Examination Division Reporting System Codes Booklet, for information on the position code, employee status, and AIMS assignee code (AAC):

    • Employee identification number (ID)*

    • Grade

    • Position code

    • Employee status*

    • AAC

    • Post of duty

  2. When time applied to returns or no-return direct examination time (DET) activities (activity codes between 001 and 599) is extracted from ERCS for SETTS, the time is grouped by the codes listed below. Some of the codes come from the return record on ERCS or IMS, some come from the time charge records, and some are set by the ERCS program. To ensure the time is recorded with the correct codes for SETTS, the group should verify the codes listed below prior to applying the first time charge to the return. In addition, it is essential to update these codes as soon as changes are known. The item with an asterisk below is set by the ERCS program and cannot be changed by the user.

    • Activity code

    • Second segment code*

    • Protection of revenue base code

    • DET other PBC

    • Source code

    • Project code

    • Tracking code

    • Aging Reason

  3. When time applied to non-return activities is extracted from ERCS for SETTS, it is grouped by activity code. This data comes from the time charge record. Time should never be applied to a non-return activity code to fill in missing time for an employee. Doing so will make it appear the employee's time is complete for the reporting cycle and may result in the SETTS data being extracted before the group has a chance to correct the time.

4.9.1.4.2  (05-23-2014)
SETTS File Layout

  1. The SETTS file consists of four line types:

    • Header line (zero line)

    • One line

    • Two line

    • Total line (three line)

  2. The header line is a single line of data containing information about the employee. Data in the header line includes the following:

    • Line type—always set to 0

    • Employee ID/DCN—document control number (DCN)

    • Time cycle—YYYYMM

    • Grade—employee's grade

    • Position code—employee's position code*

    • Employee status*

    • Duplicate employee indicator—01 to count the employee, 00 when a duplicate time report is needed for an employee

    • AAC—consists of the primary business code (PBC), secondary business code (SBC) and employee group code (EGC)*

    • Post of duty—the employee's post of duty

    Note:

    *For lists of valid codes for items marked with an "*" above, refer to Document 6036.

  3. The one line consists of all time charges to Activity Codes 001 to 599. These consist of time charges to returns, penalty records, and DET activities that may or may not be associated with an ERCS record. Data in the one line includes the following:

    • Line type—always set to 1

    • Line number—beginning with 001, the lines are numbered consecutively for all DET lines. A separate line is created for each different combination of P of RB code, activity code, second segment code, DET other PBC, source code, project code, aging reason, and tracking code

    • Current month hours—time applied by the employee to returns and DET activities

    • P of RB code—may be P, R, N, S, C, or Q

    • Activity code*

    • Second segment code*

    • DET other PBC

    • Source code*

    • Project code**

    • Tracking code**

    • Aging reason**

    • Open hours—cumulative return time

      Note:

      *For lists of valid codes for items marked with an "*" above, refer to Document 6036. **For a list of valid codes for items marked with "**" above, refer the Codes and Procedures section of the AIMS/ERCS/SETTS website.

  4. The two line consists of all time charges to activity codes above 600. These mainly consists of time charges to overhead types of activities and leave.

    • Line type—always set to 2.

    • Line number—beginning with 001, the lines are numbered consecutively for each activity code.

    • Current month hours—total number of hours charged by the employee for the activity code. A separate line is created for each activity code.

    • Activity code—non-DET activity code. Refer to Exhibit 4.9.1-1 for definitions of non-DET activity codes.

  5. The three line is a single line consisting of totals for lines one and two.

4.9.1.5  (05-23-2014)
Description of Data Fields

  1. The following sections describe the data fields that are captured and transmitted to MCC.

4.9.1.5.1  (05-23-2014)
Employee Identification/Document Control Number (ID/DCN)

  1. This is a five digit DCN which is pulled from the ERCS employee record.

  2. If appending an employee's time information from a prior cycle, the DCN must be changed on the appended time data to avoid a duplicate DCN error during validation. It is recommended the first digit be changed to a nine. Leaving the last four digits unchanged aids in linking it back the original employee.

4.9.1.5.2  (05-23-2014)
Position Code

  1. The position code is a three digit number pulled from the ERCS employee record.

  2. Position codes which correspond to "management" are restricted from applying time on cases. Valid activity codes for managers are activity codes greater than 600.

  3. The table below reflects some miscellaneous position codes. Refer to Document 6036 for a complete listing.

    Position Position Code Description
    Audit Accounting Aide 301 Assist revenue agents/specialty examiners by performing technical support work in connection with all levels of individual, estate tax and corporate income tax audits.
    Co-ops 199 and 299 Assist the group in which they are assigned.
    Dyed Diesel Fuel Inspectors 180 Conducts work associated with the laws and regulations regarding dyed diesel fuel and its inspection.
    Para-professional 316 Provides paralegal work in the Estate and Gift Tax Program in SB/SE Specialty Program.
    Revenue Officer Examiners 213 Serves as an employment tax specialist in the employment tax program in SB/SE Specialty Programs. In this capacity, the employee plans, coordinates, and conducts employment tax examinations of employment tax returns filed by businesses.
    Tax Examiners 327 Conducts examinations, usually through correspondence audits.

4.9.1.5.3  (05-23-2014)
Employee Status

  1. The employee status is a two digit number set by the ERCS program. It is used to reflect the employee's current status or a change in status during a given reporting cycle; such as promotion to management, grade changes, position code changes, etc. Refer to Document 6036 for information on employee statuses.

4.9.1.5.4  (05-23-2014)
Duplicate Employee Code

  1. The duplicate employee code is a two digit number used to identify a duplicate time report for an individual. Duplicate Employee Codes 00 and 01 are valid. Duplicate Employee Code 00 is used when an employee files two time reports in one reporting cycle within the same area. For example, when a time report from a prior cycle is appended to the current cycle because it was not included in the prior cycle, a Duplicate Employee Code 00 is used on the appended time report. It is used on the appended time report, so the employee will not be counted twice.

  2. When an employee moves to another area or industry during a reporting cycle, the time report for the losing area or industry should have a Duplicate Employee Code 00. The receiving area or industry should have a Duplicate Employee Code 01.

4.9.1.5.5  (05-23-2014)
Hours

  1. Time is entered in ERCS or IMS in whole hours, partial hours, or a combination of whole and partial hours. Partial hours are entered for 15 minute intervals as shown in the chart below:

    Minute Conversion Chart

    If Minutes to Be Charged Are... Then Entry Would Be...
    15 .3
    30 .5
    45 .7
  2. The SETTS file has several hours fields. The one line contains the current month hours and the cumulative hours for each unique combination of P of RB code, activity code, second segment code, DET other PBC, source code, project code, aging reason, and tracking code. The two line contains the current month hours for each unique activity code. The three line contains various total hours fields including the total time applied by the employee during the cycle. This final total must be within the maximum number of hours allowed for the cycle.

    Note:

    When hours are summed, they are first converted to quarter hours. For example: ".3" is converted to ".25" , so the result of adding ".3" plus ".3" is ".5" and not ".6" .

  3. When appending time reports from a prior cycle to the SETTS file, the cumulative hours must be zeroed out.

4.9.1.5.6  (05-23-2014)
Protection of Revenue Base (P of RB)

  1. Examination employees throughout the IRS spend a considerable amount of time attempting to prevent the erroneous release of money back to a taxpayer. As such, it is very important for the IRS to capture time spent on these activities, as well as any results associated with them. We refer to this as "Protection of Revenue Base (P of RB)," or "Revenue Base Protection (RBP)." The most common example of this would be time spent working a "claim for refund."

  2. The P of RB field also identifies time charges to shelter returns, nonfiler returns, and applied review time. Valid codes include the following:

    • N—used when no other P of RB codes apply.

    • P—used to record time spent protecting the revenue base (i.e. working the claim issue).

    • R—used to record time spent examining regular (non P of RB) issues on returns where a request for refund has been filed.

    • S—used to record time applied examining shelter returns.

    • Q—used to record direct review time.

    • C—used when a nonfiler examination is completed and a return is not secured.

  3. An "N" is used to record applied time to returns when no other P of RB codes apply and when time is applied to Activity Codes 501–599.

  4. Generally, "P" time must be reported if all of the following are true:

    • Previous assessments were paid by the taxpayer.

    • The taxpayer has taken an action requesting the IRS to release money from the Treasury.

    • The money has not been released to the taxpayer.

    • The applied time is applicable to the taxpayer’s request for the release of money.

      Note:

      A claim amount is required prior to applying "P" or "R" time on ERCS. It is possible in net operating loss (NOL) and carryback cases that the claim may be on a different year than the return being examined for the NOL. "P" time would be applicable for the NOL year. If the claim amount is present on the carryback year, enter a $1 in the claim amount on the NOL year.

  5. An "R" is used to record applied time examining non-P of RB issues for the same tax year when the following is applicable:

    • Previous assessments were paid by the taxpayer.

    • The taxpayer has taken an action requesting the IRS to release money from the Treasury.

    • The money has not been released to the taxpayer.

    • The applied time is not applicable to the taxpayer’s request for the release of money.

  6. Time charges may be applied to both "P" and "R" on the same return on the same day and should be recorded on separate lines on the time input document. Refer to Protection of Revenue Base on the AIMS/ERCS website for detailed instructions concerning P of RB time for SB/SE. Refer to Protection of Revenue Base on the LB&I website for detailed instructions concerning P of RB time for LB&I.

  7. An "S" is used to record applied time examining shelter issues. It should never be used when there is a data inconsistency blocking the correct P of RB code "P," "R," or "N" from being used. If a data issue exists and cannot be resolved by the user, the user should contact his or her AIMS/ERCS staff for assistance.

  8. A "Q" is used by technical services along with a specific second segment code to record review activities associated with returns. Refer to IRM 4.7.7, Technical Services, for specific instructions on time reporting for technical services. The second segment codes available for use are listed in the sub-category Quality Assurance under Non-examination Activity Codes in Document 6036.

  9. A "C" is set by the ERCS program when a nonfiler examination is completed and a return has not been secured.

4.9.1.5.7  (05-23-2014)
Activity Code

  1. The activity code is a six digit number consisting of a three digit first segment code and a three digit second segment code.

  2. The first segment code consists of codes 001–905. Activity Codes 001—599 require a second segment code.

  3. The second segment code provides detail management data. The first digit of the second segment code indicates program monitoring, the second digit indicates category, and the third digit indicates special feature. Second segment codes are not used for Activity Codes 600-905.

  4. Second segment codes for Activity Codes 501-599 are set by the ERCS program to 000, with the exception of Activity Codes 521, 575, and 588. Activity Codes 521 and 588 can have a second segment code of 000 or 040. Activity Code 575 requires special handling for the second segment code. The second segment code for these exceptions must be input by the user when applying time. See Exhibit 4.9.1-2 for a list of second segment codes and their definitions.

4.9.1.5.7.1  (05-23-2014)
Special Handling of Specific Activity Codes (Overtime, Holiday, Leave, and Details)

  1. The number of workdays in a reporting cycle is determined by deducting Saturdays, Sundays, national holidays, and any day declared a non-work day by the President (e.g. day before or after Christmas) from the number of days in the reporting cycle. The number of work days in each reporting cycle are listed in Document 6036.

  2. When employees work over their scheduled number of hours for the day, they must record how they are to be compensated for the time. Authorized overtime and compensatory time (including religious compensatory time) are accrued under the appropriate activity code with an offsetting adjustment to Activity Code 840, "Hours Worked for Overtime, Credit Hours, and Comp Time," with the appropriate leave code. Refer to IRM Exhibit 4.9.1-1 for the leave codes associated with Activity Code 840.

  3. Employees on leave without pay should charge their time to Activity Code 831 with the appropriate leave code. Time will be applied to this code for as long as the employee is on LWOP. Refer to IRM Exhibit 4.9.1-1

  4. Employees must account for their holiday time on ERCS using Activity Code 830 and Leave Code "H," holiday. The number of hours a full time employee should apply to holiday time depends on their tour of duty as shown in the chart below:

    If the employee's tour of duty is ... Then the employee is entitled to ...
    Regular, flexitour, or gliding 8 hours of holiday time.
    4-10 10 hours of holiday time.
    5-4-9 8 or 9 of holiday time (depending on how many hours the employee is scheduled to work on the holiday or the employee's in lieu of holiday date).
    Maxiflex 8 hours of holiday time.
    Part time 0—8 of holiday time (depending on how many hours the employee is scheduled to work on the holiday).
  5. When a full time employee is not scheduled to work on a federal holiday, the program will determine the employee’s in lieu of holiday (ILOH) date using the table below:

    A. Federal Holiday B. Employee’s Holiday if Scheduled to Work C. Employee’s Holiday if Not Scheduled to Work on Day in Column B
    Sunday Monday Tuesday
    Monday Monday Friday
    Tuesday Tuesday Monday
    Wednesday Wednesday Tuesday
    Thursday Thursday Wednesday
    Friday Friday Thursday
    Saturday Friday Thursday

    Note:

    Because maxiflex and 4-10 tour of duty (TOD) employees can have two scheduled days off in a row, if the employee is not scheduled to work either of the days in Columns B or C, the employee’s holiday will move an additional day backward (or forward if the federal holiday falls on Sunday). Part time employees are eligible to take holiday leave if they are scheduled to work on the day in Column B in the chart above.

  6. Employees in the Washington, D.C. area will consider Inauguration Day as administrative leave and count it as a workday. The time should be charged to Activity Code 830 with Leave Code "O" , Other/Admin Leave Miscellaneous.

  7. When the IRS has an unscheduled closing, the leave code used with Activity Code 830 depends on how the closing was declared by the President, the Commissioner, etc. Examples: Weather related closings use Leave Code "BCW" —building closing weather, 59 minutes of leave granted by a manager use Leave Code "O," and time granted by the Commissioner during the holidays use Leave Code "O." If the President grants leave and declares it a holiday use Leave Code "H."

    Note:

    Holiday time and leave codes are not included in the SETTS extraction.

  8. Activity Code 733 is used to record time for employees in SB/SE and RPO who are detailed to LB&I and for employees in LB&I who are detailed to another LB&I industry. These employees are only required to input one time sheet. All time working should be reflected under Activity Code 733.

  9. Activity Code 734 is used to record time for employees in SB/SE who are detailed to another area in SB/SE and for employees in LB&I or RPO who are detailed to SB/SE. These employees are only required to input one time sheet. All time working should be reflected under Activity Code 734.

  10. Activity Codes 811—828 are used to record time for employees in SB/SE or LB&I who are detailed to another business operating division or function not covered by Activity Codes 733 or 734. These employees are only required to input one time sheet. All time working should be reflected under the applicable activity code.

  11. The time sheet for employees detailed outside of their area, industry, or business operating division, should be submitted for the home area or industry using the AAC, position code, grade, etc. from the employee's permanent assignment. The ERCS employee record should not be updated for this type of detail.

4.9.1.5.8  (05-23-2014)
Direct Examination Time (DET) Other Primary Business Code (PBC)

  1. The DET other PBC is a three digit code used to identify coordinated industry case (CIC) and non-CIC work performed for other BODs, areas, or industries. This code will reflect the PBC that is being supported and is set by ERCS. All SB/SE and LB&I PBCs are valid.

    If ... Then DET other PBC is set to ...
    LB&I Industry 4 is supporting SB/SE Area 1 201
    SB/SE Area 3 is supporting SB/SE Area 5 205
    LB&I Industry 4 is supporting LB&I Industry 3 303
  2. Support work is work performed by another area or industry to assist in an examination, regardless if the case is CIC or not. Examples include collateral reports, engineer valuations, computer audit specialist reviews, etc. The time applied to the support work is charged to the return on ERCS and IMS. This does not include work performed by employees detailed to the SB/SE area, LB&I industry or Technical Services (TS).

4.9.1.5.9  (05-23-2014)
Source Code

  1. The source code is pulled from the ERCS or IMS record if there is an associated return. Otherwise, for time charges to Activity Codes 500—599, the source code is set to 99.

4.9.1.5.10  (05-23-2014)
Project Code

  1. The project code is pulled from the ERCS or IMS record if there is an associated return. Otherwise, for time charges to Activity Codes 500—599, the project code is set to 0000.

4.9.1.5.11  (05-23-2014)
Tracking Code

  1. The tracking code is pulled from the ERCS or IMS record if there is an associated return. Otherwise, for time charges to Activity Codes 500—599, the tracking code is set to 0000.

4.9.1.5.12  (05-23-2014)
Aging Reason Code

  1. The aging reason code is pulled from the ERCS or IMS record if there is an associated return. For time charges to Activity Codes 500—599 not associated with returns the aging reason code is set to the following:

    • 99 if the employee is a tax examiner, excluding TS (Position Code 327).

    • 50 if the employee is a revenue officer examiner (Position Code 213).

    • 00 for all other employees.

4.9.1.6  (05-23-2014)
Inputting Data

  1. This section includes the following:

    • Time input documents generated by ERCS

    • How to Input time on ERCS and IMS

    • Time corrections on ERCS and IMS

    • When two time reports are required

4.9.1.6.1  (05-23-2014)
Time Input Documents Generated by Examination Returns Control System (ERCS)

  1. ERCS creates two time input documents:

    1. The Agent Input Document is used primarily by revenue agent groups. It lists the cumulative hours at the beginning of the cycle for each case assigned to the examiner and also includes the cases in which the examiner is assisting. Daily entries are made by each examiner and the time input document is retained in the examiner's possession throughout the cycle. Employees are required to give their managers the final copy of their completed time reports for approval. In order to avoid delays at the end of the cycle, it is suggested a copy of this time input document be given to the manager weekly for approval.

    2. The Tax Auditor Daily Report is used by office audit groups. It lists the examiner's scheduled work for the day. In order to utilize all of the capabilities of this report, the examiner must return the completed report to the group secretary at the end of each work day for input into ERCS. Refer to the Tax Auditor Menu chapter of the ERCS Group Handbook for more information about this report. In order to avoid delays at the end of the cycle, it is suggested copies of these time input documents be given to the manager weekly for approval.

  2. The manager, or someone designated by the manager, will review the time input documents for accuracy. The input documents should be compared to the Agent Analysis Document to ensure the agent's time was entered into ERCS accurately. The Agent Analysis Document must be signed by both the examiner and the manager indicating the validity of the report. The signed Agent Analysis Document should be retained in the group for three years. If there is a continuous problem where the input document does not match the Agent Analysis Document, the manager should resolve the issue.

  3. Managers will ensure that time reports are prepared for employees unavailable to input their own time (on leave, other absences, leave without pay, etc.) for as long as the employee is unavailable.

4.9.1.6.2  (05-23-2014)
How to Input Time on ERCS and Issue Management System (IMS)

  1. Employees must account for their time by each return or non-return activity they perform on a daily basis. The time for all technical employees is required to be input into ERCS or IMS each reporting cycle. It is strongly recommended the time be input weekly to avoid unexpected delays at the end of the cycle. At a minimum, the time must be input by the following:

    1. On ERCS no later than the close of business on the last day of each reporting cycle.

    2. On IMS no later than the close of business on the last Thursday of each reporting cycle.

  2. Managers and/or secretaries in each group should run the ERCS Check Employees with Uncharged Time Report periodically within each cycle to ensure all the time for their employees has been entered into ERCS. This report lists each employee in the group with incomplete time for the reporting cycle and the last time charge date for the employee. It is an excellent tool to monitor each employee's time input. This report is also available at the territory level.

    Note:

    It only takes one day of unreported time to exclude all of the employee's time charges from the SETTS data.

  3. If an employee is listed on the report with an in lieu of holiday (ILOH) error, it means the employee was not scheduled to work on the holiday and the employee does not have time charged on the alternate date the program expected the holiday time to be charged. For example: If a holiday falls on a Tuesday, but it is the employee's scheduled day off, the program expects the employee to charge holiday time for Monday. If the employee does not charge holiday time on the Monday, an ILOH error will appear on the report. These errors should be researched to see if holiday time was charged on another day. Errors should be corrected. If this is the only error for the employee on the report, the employee's time will still be included in the SETTS roll-up.

  4. It is the manager's responsibility to ensure all time for each employee in his or her group has been input into ERCS and is correct by the end of the cycle.

  5. The need for accuracy, legibility, and timely input of technical time into ERCS cannot be overemphasized.

4.9.1.6.2.1  (05-23-2014)
Inputting Time Into ERCS

  1. The Input Time and Leave Program may be accessed through the Examination Main Menu by the clerical staff supporting the employees required to input technical time. Options are available to input time for an entire group or to input time for a single employee. Refer to the Input Time and Leave chapter of the ERCS Technical Reference Manual or the Input Time and Leave chapters of each of the ERCS user handbooks for more information.

  2. Users must have write permission for the AAC of the group or employee in order to input time.

  3. The user enters time for returns by entering the TIN, MFT, and tax period of the return. Other information from the return is displayed. The 6 digit activity code is displayed in two fields:

    • A 3 digit activity (first segment) code

    • A 3 digit second segment code

  4. If the time charge is not associated with a TIN, MFT, and tax period on ERCS, the user enters the activity code. Generally, this includes activity codes greater than 499, except for activity codes associated with the penalty activity codes listed below which must be set up as an inventory record:

    • 501—506

    • 549

    • 552—555

    • 585—586

    • 593—595

  5. Most of the activity codes in the 500—599 range can be set up as inventory control records on ERCS. Users may charge time to the inventory record (by entering the TIN, MFT, and tax period) or they can enter time to the activity code.

  6. The activity code may only be changed for excise returns, because excise returns can have multiple abstract codes. Please refer to Document 6036 for a valid list of first and second segment codes.

  7. The second segment code is set by the ERCS program for all groups, excluding TS, and cannot be changed. Special handling is required by TS for input of the second segment code. The second segment code must be entered by TS employees. It is used to further classify the type of review performed on the return by TS. The second segment code is not required for activity codes greater than 599.

  8. For time applied to returns, the user enters an alpha code under the Protection of Revenue Base (P of RB) field. This field is used for P of RB codes and also identifies time charges to shelter returns, nonfiler returns, and applied review time.

  9. For time applied to Activity Codes 830, 831, and 840 an alpha character leave code must be entered. Refer to IRM Exhibit 4.9.1-1 for a list valid leave codes and their definitions.

4.9.1.6.2.2  (05-23-2014)
Inputting Time into IMS

  1. Employees in LB&I, Estate and Gift, and Excise required to input technical time use IMS for time input. Refer to the Time and Timekeeping Related Topics section of the LB&I BSP—Issue Management System (IMS) User Guide for more information about using IMS to input technical time.

  2. Each Thursday evening the technical time from IMS that has been sent to the IMS server from the employees' personal computers (synchronized to the IMS server) is sent to the ERCS server and validated. If the time charges pass validation, the time is added to ERCS.

  3. Each Friday an ERCS user in each group should run the ERCS option "Verify Imported Time" to check for any errors, make the necessary corrections, and ensure all time for the group is up to date.

  4. If the above steps are not completed by the last day of the reporting cycle, the time must be manually input into ERCS by close of business (COB) on the last day of the cycle.

  5. The IMS agent is required to give a printed time sheet, generated from IMS, to the group secretary by COB on the day prior to the last day of the cycle in case the IMS time has to be manually entered into ERCS.

4.9.1.6.3  (05-23-2014)
Time Corrections on ERCS and IMS

  1. In order to allow time for the groups to make corrections, it is recommended that the extraction from ERCS not be done until noon on the day of transmission.

  2. Changes to time data for the current cycle on IMS after the agent synchronizes the time data to the IMS server and the data has been sent to ERCS is not forwarded to ERCS. These time changes should be given to the clerical staff in the group to manually correct on ERCS by COB on the last day of the cycle.

  3. Corrections to time data on ERCS after the data has been extracted for SETTS does not go forward to SETTS. If corrections need to be made on the day the SETTS data is transmitted, the group should alert the AIMS/ERCS staff to wait for the corrections before extracting the SETTS data. All corrections should be made by noon local time.

  4. Time is validated when input on ERCS and again when the SETTS data is extracted from ERCS and again after it is transmitted to MCC. It only takes one day of unreported time or one validation error, either on ERCS or at MCC, to exclude all of the employee's time charges for the cycle. Validation errors should be corrected as soon as possible. The AIMS/ERCS personnel responsible for extracting the SETTS data from ERCS should ensure there are no validation errors from the MCC validation. If there are, the data should be corrected, re-validated on ERCS, and re-transmitted to MCC before the 10 PM EST cutoff on the day of transmission. If there is an issue or an error that cannot be resolved by the final MCC validation, it is possible to append the employee's time to the following cycle's SETTS file. There is one exception: Time from a prior fiscal year cannot be appended. Refer to the SETTS chapter of the ERCS TRM for information about appending an employee's time charges from a prior cycle to the SETTS file.

4.9.1.6.4  (05-23-2014)
When Two Time Reports Are Required

  1. An employee must complete two time input documents if he or she transfers or is detailed to a new group during the cycle, one for each group. The employee's total time for both groups should not exceed the total time for the cycle. If an employee is on detail for the entire cycle, he or she should only complete one time input document; however, two input documents are required when a detail ends during the cycle.

  2. If an employee transfers or is detailed to another group or function within the same area or within LB&I only one time report is included in the SETTS data. It will contain all of the employee's time for the cycle and the employee's AAC, position code, etc. from the employee's last assignment.

  3. If an employee transfers or is detailed to another group or function outside the area or outside of LB&I, two time reports are included in the SETTS data. Each time report will contain the employee's time while assigned to the area or to LB&I. The employee's total time for both assignments should not exceed the total time for the cycle. Two time reports are required for SETTS if an employee transfers or is detailed during a cycle:

    • Between SB/SE areas

    • Between LB&I industries

    • Between SB/SE and LB&I

    • Between RPO and either SB/SE or LB&I

    Note:

    ERCS creates two time reports in all of the above situations except when an employee transfers or is detailed between LB&I industries. Until the ERCS program can be modified, only one time report will be included in the SETTS file when employees move between LB&I industries. The time report will be created using the information from the employee's last assignment and will include all the time charged in the cycle for both groups.

  4. When an employee is on detail from one exam group to another exam group and the employee's position code remains the same during the detail, an ERCS detail record should be created. If an employee is on detail within ERCS control and the employee's position code changes during the detail, the employee's AAC, position code, grade, etc. should be changed on the ERCS employee record.

  5. If an employee is on detail outside of ERCS control, the ERCS employee record should not be changed. All the employee's time spent working for another business operating division should be applied to the appropriate "details out of division or area" activity code. Any time spent working for the home group should be charged to the appropriate activity codes or returns. Only one time report is included in the SETTS data for these employees. The time is reported for SETTS under the employee's home group.

4.9.1.7  (05-23-2014)
Agent Analysis Document

  1. The Agent Analysis Document is generated through ERCS and shows an examiner’s activity during a cycle along with other cumulative data. It is generated after all the time for the cycle has been entered in ERCS. It can be re-generated up to one year after the end of a cycle.

  2. The Agent Analysis Document shows the number of cases the agent has in process, the time devoted to each case, the cumulative time, and the number of days in process. The report reveals any unusually large inventory of open cases to which time has been charged, any cases where time is being charged beyond a reasonable amount, and any instances where difficult cases are being neglected in favor of simpler returns.

4.9.1.8  (05-23-2014)
Closing Hours on Audit Information Management System (AIMS) and ERCS

  1. On completion of an examination, the total time applied to the return on ERCS should agree with the time entered on Form 5344, Examination Closing Record.

  2. The ERCS Status 90 Hours Report can be used to monitor time differences between ERCS and AIMS after the return is closed.

4.9.1.9  (05-23-2014)
Extraction, Transmission, Validation, and Correction of SETTS Data

  1. At the end of each reporting cycle, time reports for each technical employee is extracted from ERCS, validated, and transmitted to MCC. At MCC, the data goes through a second validation. Errors from the MCC validation are sent back to the ERCS server 30 minutes after each validation run. If there are errors from the MCC validation, they are corrected by the AIMS/ERCS staff and the corrected data is re-transmitted to MCC. Once all the data has passed validation it is used in the creation of national reports and tables.

  2. The reporting cycles for technical time can be at four, five, or six week intervals with the cutoff day for a reporting cycle on a Friday. The transmission of SETTS data is to be completed by close of business the Monday following the end of the cycle or the following business day if the Monday falls on a holiday. The last day of each reporting cycle and the corresponding transmission dates are listed in Document 6036.

  3. Table 37 only reflects data that passed all validations. If data is not transmitted for a particular cycle or was transmitted but had uncorrected validation errors, Table 37 will not contain complete information for the corresponding area or industry for that cycle. Data missing from a prior cycle can be merged with the following months data for inclusion to reports unless the missing data is from the last cycle in the fiscal year.

4.9.1.9.1  (05-23-2014)
Extraction and Transmission of SETTS Data

  1. On the day of SETTS transmission, the AIMS/ERCS personnel in each area responsible for extracting and transmitting the SETTS data must run the ERCS Check Employees with Uncharged Time Report to ensure time has been input for all employees through the end of the cycle. Once it is determined all time has been charged and the groups have been given sufficient time to make any corrections, the following steps must be run:

    1. Finish for the Month. This program saves the validated data from the previous cycle and removes temporary processing files to get ready for the current cycle extraction. The "forms.txt" file is also deleted.

    2. Display or Print Time Error Flags. This program lists employees whose time was not included in the SETTS data for the prior cycle. Prior time reports for these employees may need to be appended to the current SETTS data. Refer to the SETTS chapter of the ERCS TRM for information about appending an employee's time charges from a prior cycle to the SETTS file.

    3. Create the SETTS_FILE. This program creates time reports for each employee with time completed for the cycle. If an employee's time is not complete for the cycle the employee record is flagged with a "time error." When the user runs this program and indicates it is the initial run, the SETTS_FILE is created. If the user indicates it is not the initial run, the program appends completed time reports to the SETTS_FILE for employees flagged with a time error. When the employee's time is appended to the SETTS_FILE, the time error flag is removed. If the employee's time is still incomplete, the time is not appended and the time error flag is left on.

    4. Merge SETTS_FILE with forms.txt. This option appends the data from the SETTS_FILE to the forms.txt file.

    5. Validate Forms. This program validates the time reports in the forms.txt file. Valid time reports are written to the valid.txt file and errors are written to the errors.txt file.

    6. Display Error File. This program displays the errors.txt file and gives the user the option to correct the errors. The corrections are written to the forms.txt file, but the valid.txt and the error.txt files are not updated in this option. When all the corrections are completed, the user must run Validate Forms again to recreate the error.txt file and the valid.txt file.

    7. Transfer/Retrieve Valid Forms. This option copies the valid.txt file over to a temporary directory where a program runs every 15 minutes to look for new files and transfer them to MCC. Once files are transmitted they are deleted from the temporary directory.

  2. Refer to the following sites for additional information for the AIMS/ERCS support staff in running SETTS:

    • AIMS/ERCS/SETTS SharePoint—The SETTS folder contains training materials for the AIMS/ERCS support staff.

    • SETTS and National Office SETTS Menu chapters of the ERCS TRM.

    • IRM 4.7.10.3.2.5, Process the SETTS Data.

4.9.1.9.2  (05-23-2014)
Validation at Martinsburg Computing Center (MCC)

  1. Once the SETTS data is received at MCC, it is validated. The MCC validation times and the times when the validation results are sent back to the ERCS server are in the table below listed in eastern standard time (EST):

    Validation Times (EST) Results Returned Times (EST)
    2:30 PM 3:00 PM
    3:30 PM 4:00 PM
    4:30 PM 5:00 PM
    5:30 PM 6:00 PM
    7:00 PM 7:30 PM
    8.00 PM 8:30 PM
    10:00 PM 10:30 PM
  2. The results file must be checked by the AIMS/ERCS personnel by running the option Display/Print Most Recent Validation Results to verify there are no errors. If errors are present, they should be corrected using the Edit Forms option from the ERCS National Office SETTS Menu. Once the errors are corrected, the options Validate Forms and Transmit Valid SETTS File must be re-run.

  3. An unusual error or an increase in errors during the validation process should be reported to the HQ SETTS or the HQ ERCS analysts by the AIMS/ERCS staff responsible for SETTS processing. Refer to the AIMS, ERCS SETTS, and Discoverer Contact Listing for Headquarters for contact information.

  4. When an error occurs, the employee's time for the entire cycle is not included in Table 37. Errors not corrected by the final validation must be corrected and appended to the SETTS data in the following cycle with one exception. Validation errors received the last cycle of the fiscal year cannot be corrected and appended to the following cycle.

4.9.1.9.3  (05-23-2014)
Making Corrections After Transmission

  1. Corrections on ERCS after transmission of the SETTS data has no impact on the reports and tables. Significant errors which need to be corrected after the SETTS data has been extracted which would erroneously reflect time for a particular activity code or other elements should be reported immediately to the local AIMS/ERCS analyst or assistant who should report it to the Headquarters SETTS analyst. The HQ SETTS analyst will determine the feasibility of error corrections on a case by case basis.

  2. If the HQ SETTS analyst determines corrections need to be made to the data at MCC for a prior cycle, the following information needs to be supplied by the AIMS/ERCS personnel:

    • Cycle (YYYYMM)

    • Position Code

    • Grade

    • Employee Status

    • Activity Code

    • Second Segment Code

    • AIMS Assignee Code

    • POD

    • DET Other PBC if work is support for another area

    • Source Code

    • Project Code

    • Aging Reason Code

    • Tracking Code

    • Current Hours (increase, decrease, total)

    • Open Hours (increase, decrease, total)

    • P of RB Code (P, R, N, C, S or Q)

Exhibit 4.9.1-1 
Definitions of Miscellaneous Examination Activity Codes

The following list of activity codes are used to report non-return related activity.

Activity Code Title Definition and or Use
501 Return Preparer—Negligent Preparation Penalty—IRC 6694(a) Understatement due to unrealistic position for income tax returns prepared on or prior to May 25, 2007. Understatement due to unreasonable position for tax returns prepared on or after May 26, 2007. This activity code must be established on ERCS using penalty Masterfile tax (MFT) code P1.
502 Return Preparer—Willful Attempt to Understate Tax Penalty—IRC 6694(b) Willful or reckless conduct for income tax returns prepared on or prior to May 25, 2007. Willful or reckless conduct for income tax returns prepared after May 26, 2007. This activity code must be established on ERCS using penalty MFT P2.
503 Return Preparer—Endorsing or Negotiating Tax Refund—IRC 6695(f) See Form 5816, Report of Tax Return Preparer Penalty Case. This activity code must be established on ERCS using penalty MFT P3.
504 Return Preparer—Disclosure Penalties—IRC 6695(a) through IRC 6695(e) and IRC 6713 See Form 5816, Report of Tax Return Preparer Penalty Case. This activity code must be established on ERCS using penalty MFT P4.
505 Penalty for Failing to Disclose Reportable Transactions—IRC 6707A IRC 6707A is a penalty imposed for failure to disclose reportable (listed and non listed) transactions as required under IRC 6011 and associated regulations. This activity code must be established on ERCS using penalty MFT P5.
506 Information Return Penalty Case—IRC 6721, IRC 6721(e), IRC 6722, and IRC 6723 Used for information return penalty cases. This activity code must be established on ERCS using penalty MFT P9.
507 Pricing Issues Time applied by revenue agents and specialists while considering IRC 482 pricing advance determination ruling (ADR) requests received from headquarters office. This time will not be allocated to the examination of the taxpayer’s tax return, whether or not such return is concurrently under examination. This activity code may be established on ERCS as an inventory record using ERCS MFT A0.
508 Economist Studies Time applied while working on management directed studies, of particular industries, other than those conducted under the direction of an industry specialist on matters related to the Industry Specialist Program. Time charged to this code will require that the economist prepare an industry study report, that will be separate from any case. This activity code may be established on ERCS as an inventory record using ERCS MFT A1.
509 Form 8300 Compliance Time expended in performing Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, program activities, including Form 8300 compliance reviews. Primarily used by SB/SE anti-money laundering activities. This activity code is not to be used for time expended as part of required filing (package audits) checks during an income tax examination. This activity code may be established on ERCS as an inventory record using ERCS MFT A2; however, it is recommended it be established using MFT PX to allow for statute control.
510 Form SS-8 (Information to determine whether a worker is an employee for federal employment tax and income tax withholding) This activity code is used to apply time by the SS-8 coordinator to Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. activities. This activity code may be established on ERCS as an inventory record using ERCS MFT A3.
511 Technical Guidance Support time provided to examiners by industry facilitators/experts not charged to a specific return. This activity code may be established on ERCS as an inventory record using ERCS MFT A4.
512 COBRA Consolidated Omnibus Budget Reconciliation Act (COBRA) provides that employers shall offer continuing health care coverage to employees and their dependents when the employee leaves the job, except when an employee is discharged for gross misconduct. Employees denied coverage may file a complaint with the IRS. In response to these complaints, the Service conducts an examination of employer to determine compliance. The Service may also examine employers who claim a credit on employment tax returns for COBRA continuation health coverage payments made for assistance eligible individuals of the employer. This activity code may be established on ERCS as an inventory record using ERCS MFT A5.
513 CIC–EO Used by Examination employees that are requested to assist the Tax Exempt/Government Entities (TE/GE) in the conduct of an Employee Plans or Exempt Organization (EO) taxpayer examination. This activity code may be established on ERCS as an inventory record using ERCS MFT A6.
514 Specialist Consultations or Informal Assistance This activity code is to be used by specialists to reflect limited amounts of time expended on consultations or informal assistance with open, active cases in any business operating division. This would include time spent determining whether or not formal referral is warranted on a specific case as well as time spent on special projects related to a group of cases. Once it has been determined that a significant amount of time will be expended, time should be charged to the specific case(s). This activity code may be established on ERCS as an inventory record using ERCS MFT A7.
515 Diesel Terminal Inspections Time charged to inspections of fuel terminals. This activity code may be established on ERCS as an inventory record using ERCS MFT D5.
516 Diesel Fleets and Truck Stop Inspection Time charged to inspections of fleets, truck stops, fuel wholesale distributors, and fuel retail establishments. This activity code may be established on ERCS as an inventory record using ERCS MFT D6.
517 Diesel on Road Inspections Time charged to on-road inspections. This activity code may be established on ERCS as an inventory record using ERCS MFT D7.
518 Diesel All Other Dyed Fuel Inspections Time charged to all other types of fuel inspections (end users of fuel). This activity code may be established on ERCS as an inventory record using ERCS MFT D8.
519 Information Returns Processing (IRP) Compliance Check This initiative includes backup withholding compliance checks as well as other information reporting compliance checks including; state and federal agency compliance and locally developed compliance projects. This activity code may be established on ERCS as an inventory record using ERCS MFT A8.
520 Unmatchable Information Return Follow-Up (UIRF) Information returns that have dropped out of the IRP pipeline because they were unmatchable to Social Security or IRS taxpayer identification number (TIN) records and could not be perfected by IRS. Use UIRF data to make payor and payee contacts to decrease the number of unmatchable documents. This activity code may be established on ERCS as an inventory record using ERCS MFT A9.
521 Excise Compliance Used by excise tax analysts and dyed fuel compliance officers to identify compliance activities which are not return related, such as meetings with industry representatives, Industry Specialization Program (ISP) meetings and outreach and education programs in the excise tax area. This activity code may be established on ERCS as an inventory record using ERCS MFT B7.
523 CIC Chief Counsel Used by Coordinated Industry Case (CIC) program examiners to assist Chief Counsel, and attorneys on cases under Counsel's jurisdiction. Generally these are cases that had previously been closed out of Examination and are being prepared for litigation or trail or are being litigated or tried. This activity code may be established on ERCS as an inventory record using ERCS MFT B8.
524 Earned Income Tax Credit (EITC) Return Preparer Time applied in developing penalty cases against a return preparer involved in preparing fraudulent or negligent EITC returns. This activity code may be established on ERCS as an inventory record using ERCS MFT B9.
525 Pre-filing Agreement Time applied by revenue agents and specialists in obtaining agreements on cases accepted in the Pre-filing Agreement Program. This includes time spent on reviewing the requests, developing the facts and issues, coordinating with other functions, attending conferences, preparing the closing agreement, and evaluating the program. Time will be charged to this activity code, but it will be linked to the case in ERCS. These activities should not be charged to the case currently under examination. This activity code may be established on ERCS as an inventory record using ERCS MFT C1.
526 Pre-filing Technical Guidance Time spent by revenue agents and specialist in providing pre-filing technical guidance to taxpayers not part of the Pre-filing Program. Time will be charged to this activity code, but it will be linked to the case on ERCS. Time is not charged to the case currently under examination. This activity code should be established on ERCS as an inventory record using ERCS MFT C2.
527 Industry Issue Resolution Time spent by revenue agents and specialists in finding solutions to issues under the Industry Issue Resolution Program. This includes time spent on reviewing industry requests, developing the facts and issues, drafting and clearing the resolution and evaluating the program. This activity code may be established on ERCS as an inventory record using ERCS MFT C3.
528 Comprehensive Case Resolution Time applied by revenue agents and specialists to resolve all open issues on all open years under the Comprehensive Case Resolution Program. This includes time spent reviewing the request, planning, developing the facts and issues, drafting reports and closing agreements, and evaluating the program. Once the taxpayer's request has been approved time should be charged to the taxpayer's return currently under examination. Time to other cycles should be charged to this activity code that will be linked to the ERCS case. This activity code may be established on ERCS as an inventory record using ERCS MFT C4.
529 Corporate Tax Shelters Time applied by revenue agents and specialists in developing information with respect to a tax shelter promotion or an investigation. This does not include time spent on the examination of corporations and individuals that participate in the corporate tax shelter transactions and the promoters of those transactions. Time related to the examination of a return containing a tax shelter issue should be charged to the case, and not this activity code. This code is exclusively for developing information from leads. This activity code may be established on ERCS as an inventory record using ERCS MFT C5.
544 Global High Wealth This code is used by the field for detailed inspection or review of returns that may subsequently be put in process or closed using disposal code 43.
545 Report of Foreign bank and Financial Accounts (FBAR) and Compliance Activity Time applied to the examination of Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts. These examinations are conducted to determine compliance with the reporting and record keeping requirements found in 31 Code of Federal Regulations (CFR) 103.24. FBAR examinations are conducted by LB&I, SB/SE, and TE/GE (including Bank Secrecy Act, Abusive Tax Avoidance Transactions (ATAT)) income tax examiners. Instructions for FBAR examinations are found in IRM 4.26.16, Report of Foreign Bank and Financial Accounts (FBAR), and IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures. This activity code may be established on ERCS as an inventory record using ERCS MFT C6.
546 Fraud Development Used when fraud technical advisor (FTA) or field examiners provide assistance in developing Fraud Potential. This activity code may be established on ERCS as an inventory record using ERCS MFT C7.
547 Form 720-TO, Terminal Operator Report/Form 720-CS, Carrier Summary Report Used to report time spent on Form 720-TO and Form 720-CS compliance reviews. This activity code may be established on ERCS as an inventory record using ERCS MFT B1.
548 Certified Profession Employer Organization (CPEO) Used to account for time spent conducting field follow-up on CPEO. Specific activities include: bond verification, financial review, verification of appliance enrollment in Electronic Federal Tax Payment System (EFTPS), review of service contracts, review of client lists, discussions with applicant, corresponding with applicants, documenting case file, and making determination.
549 Promoter Penalty—IRC 6707, Failure to Register Tax Shelter Transaction Penalty cases regarding IRC 6707 should be charged to Activity Code 549 and established as a penalty case on ERCS using penalty MFT P0. IRC 6707 imposes a penalty of $10,000 per day on any person required to maintain an investor list who fails to make such lists available within 20 business days after receiving a written request from the IRS. The penalty also applies to persons who maintain incomplete lists. If statute control is required, this activity code must be established on ERCS using penalty MFT PI; otherwise, use MFT P0.
550 Foreign Initiated Adjustments Use to apply support time applied and not charged to a specific return by examiners on competent authority requests for evaluation of positions and/or more detail information on foreign initiated adjustments.
551 TIP Reporting Compliance Used to track the time invested instituting and enforcing the IRS' Voluntary Tip Agreement Program. This includes contacts with the taxpayer about a new tip agreement, updating an existing agreement, responding to a taxpayer inquiry related to questions or issues with a tip agreement, performing a rate review for a new or existing agreement, or performing a compliance review on an existing agreement. The activity code should be used for gaming industry tip compliance agreements (GITCA), tip rate determination agreements (TRDA), tip reporting alternative agreements (TRAC), employer tip reporting alternative agreements (EMTRAC), or voluntary tip reporting agreements from the past/designed in the future. This activity code may be established on ERCS using ERCS MFT C0.
552 Substantial and Gross Valuation Misstatement Attributable to Incorrect Appraisals—IRC 6695A A person prepares an appraisal of the value of property and such person knows, or reasonably should have known, that the appraisal would be used in connection with a return or a claim for refund, and the claimed value of the property on a return or claim for refund which is based on such appraisal results in a substantial valuation misstatement. This activity code may be established on ERCS using ERCS MFT PB.
553 Failure to Exercise Due Diligence—IRC 6695(g) Used to apply time working cases where an income tax preparer fails to comply with due diligence requirements for determining eligibility for, or the amount of, the earned income tax credit (EITC). This activity code may be established on ERCS using ERCS MFT PC.
554 Penalty for Erroneous Claim for Refund or Credit—IRC 6676 The IRC 6676 penalty applies when a taxpayer submits a claim for refund or credit of income tax that is an "excessive amount" and that has no reasonable basis. May be established on ERCS using ERCS MFT PD.
555 Other Penalties This code is used to charge time spent on penalties not specifically listed within this section and are on Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties. This activity code must be established on ERCS using penalty MFT PE or MFT PH. The MFT used is dependant on the penalty section under examination. See Penalty Codes for ERCS for more information.
556 Return Preparer Visitation Program This code is used by revenue agents and tax compliance officers on education/outreach and compliance/enforcement activities pertaining to the RPO Return Preparer Visitation Program (education visits). Use this code for planning, meetings, visitations and other activities for the visits. This activity code may be established on ERCS using ERCS MFT AC.
557 Identify Theft Used to apply time spent on the identity theft aspect of an examination :
  • when there is an open examination on AIMS and ERCS for a tax period where the taxpayer has documented the identity theft and

  • when there is no open examination on AIMS and ERCS and the field receives a referral from the identity protection specialized unit (IPSU) pertaining to a taxpayer who has claimed identity theft.

If there is an open examination controlled on AIMS and ERCS for a taxpayer upon which identity theft work is being performed, an inventory control record for this activity code also needs to be established on ERCS using ERCS MFT AD.
558 Form 8939, Allocation of Increase in Basis for Property Acquired From a Decedent Use this code to apply time when reviewing Form 8939 for accuracy of value and basis adjustment. This activity code may be established on ERCS using ERCS MFT AE.
559 PTIN Compliance Visits Visits conducted with tax return preparers to educate them on their responsibility to identify themselves with a Preparer Tax Identification Number (PTIN) as required under IRC 6109. This activity code may be established on ERCS using ERCS MFT AF.
575 Compliance Outreach Used by technical personnel on outreach activities which promote compliance. This activity code requires a specific entry for the fourth digit which will identify specific type of tax entity or activity. The fifth and sixth digits will define the specific market segment impacted.
    Valid entries for the forth digit and then fifth and sixth digits follow:
Fourth Digit Definition
1 Wage & Investment
2 Small Business Self Employed
3 Large Business & International
4 Tax Exempt
5 Employment
6 Estate and Gift
7 Trust
8 World Class Customer Service
9 Alternative Treatment Revenue (ATR) Projects
0 Audit Techniques Guide (ATG) Writing and Coordination
Fifth and Sixth Digits Definition
08 Farm Business
09 Construction (Building Trade Contractors)
10 Construction (All Other)
11 Manufacturing
12 Mining and Minerals
13 Agricultural Services (Forestry)
15 Wholesale Trade
16 Retail Trade (Direct Sales to Households, Individuals, etc.)
17 Retail Trade (Auto Dealers, Service Stations, Boat Dealers)
18 Retail Trade (Food, Beverage, Eating, Drinking Places)
19 Retail Trade (Apparel, Accessories, Furniture, General Merchandise)
20 Retail Trade (All Other)
21 Fire (Real Estate)
22 Fire (All Other)
23 Transportation and Utilities (Air, Bus, Taxi, Passenger)
24 Transportation and Utilities (All other)
25 Services (Amusement, Recreation)
26 Services (Medical, Health)
28 Services (Business, Personal)
29 Services (Other)
89 Services (Miscellaneous)
99 Non Market Segment
Activity Code Title Definition and or Use
586 International Penalties—Form 8278 Used to apply time spent investigating various International penalties. This activity code must be established on ERCS using one of the following penalty MFTs: PG, PQ, PR, PS, PT, PU, PV, or PW. The MFT used is dependant on the penalty section under examination. See Penalty Codes for ERCS for more information.
587 Coordinator Activity Used by Technical Services when performing coordinator activities other than those of TEFRA. A review second segment code must be input with this activity code to correspond to the type of activity performed. The second segment code must be a review type preceded by a single zero (ex. 011). See the Codes chapter of the ERCS Review Handbook for a list of second segment codes.

Note:

The second segment code will be set to 000 for SETTS. The ERCS database will maintain the review type second segment code.

588 Registry with Exemptions Time spent on coordination and follow-ups conducted in relation to the registration program (Form 637, Application for Registration (For Certain Excise Tax Activities)). This activity code may be established on ERCS using ERCS MFT B0.
589 Offer-In-Compromise Used by Technical Services to further classify the type of review performed on a return. This code is entered as the second segment code when applying time to a return. This activity code may be established on ERCS using ERCS MFT C8.
590 Abatement of Interest Used by Technical Services to further classify the type of review performed on a return. This code is entered as the second segment code when applying time to a return. This activity code may be established on ERCS using ERCS MFT C9.
591 Title 31 Compliance Checks Time expended in performing Title 31 Bank Secrecy Act (BSA) program activities including Title 31 (BSA) Compliance examinations. Primarily used by SB/SE anti-money laundering examiners. This code is not to be used for time expended as part of the required filing package audit checks during an income tax examination.
592 Narcotics, Information Gathering Projects—No Return Examined Time spent on an approved information gathering or narcotic project where there is no tax return. This activity code may be established on ERCS using ERCS MFT B2.
593 TEFRA—Promoter Penalty Time spent by examiners for researching and developing leads or conducting investigations for activities which warrant sanctions under IRC 6700, Promoting Abusive Tax Shelters, or IRC 7408, Action to Enjoin Promoters of Abusive Tax Shelters. Time charged to this activity code will be non-case specific until the LDC has formally approved an investigation. Once the LDC has authorized the investigation, time should be charged directly to the case. Upon receipt of the case file by the area PSP, the ATAT coordinator will establish an investigation penalty case on ERCS with the appropriate TIN and tax period using this activity code and MFT Code P6.
594 TEFRA—Aiding and Abetting Penalty Used for reporting time researching and developing leads or conducting investigations for activities which may warrant sanctions attributed to IRC 6701, Penalties for Aiding and Abetting Understatement of Tax Liability, or IRC 7407, Action to Enjoin Income Tax Return Preparer, resulting from an IRC 6701 investigation. Time charged to this activity code will be non- case specific until the LDC has formally approved an investigation. Once the LDC has authorized the investigation, time should be charged directly to the case. Upon receipt of the case file by the area PSP, the ATAT coordinator will establish an investigation penalty case on ERCS with the appropriate TIN and tax period using this activity code and MFT Code P7.
595 Promoter Penalty—IRC 6708, Failure to Maintain List of Investors/Advisees with Respect to Reportable Transactions Time spent working issues where the promoter fails to make lists available within 20 business days after written request. This activity code must be established on ERCS using ERCS MFT P8.
596 Joint Committee Survey Time spent for the survey of all Joint Committee cases. A Joint Committee case is identified on AIMS with Project Code 0077. This activity code may be established on ERCS using ERCS MFT B3.
597 SEP—Non Case Time spent on a specific special enforcement program (SEP) or project other than time directly applicable to assigned returns. It includes time spent by project coordinators, group managers and examiners on such matters as: advising United States attorneys, Strike Force attorneys and others regarding the civil tax potential of proposed projects or investigations; evaluating civil tax potential of information obtained by Criminal Investigation from grand jury actions and other sources; developing the examination portion of project plans, and attending IRS Strike Force or other meetings concerning program priorities, progress of objectives. This activity code may be established on ERCS using ERCS MFT B4.
598 CIC Pre and Post Conference Meetings Time applied while holding pre and post conference discussions with Appeals with respect to an examination cycle previously closed by examination and now controlled by Appeals. The pre-conference serves as a form for discussing issues, the taxpayer's protest, the Examination team's written rebuttal to the protest, and the anticipation of problems and concerns. The post-conference is to discuss the settlement reached in Appeals and its impact on the subsequent examinations as well as to identify issues susceptible to Examination settlement authority. This activity code may be established on ERCS MFT B5.
599 Industry Specialist Program Time applied by the industry specialization program coordinators (ISPC) while working on matters identified as pertaining to the Industry Specialization Program (ISP). This includes time spent working with area revenue agents on industry cases and issues involving the National Industry Specialist, National Issue Specialist or other area coordinators. This activity code may be established on ERCS using ERCS MFT B6.
609 General—Compliance 2000 Time spent on non-examination work performed on an approved Compliance 2000 Prototype.
610 General—Indirect Time spent on technical duties that cannot be charged to a specific case or activity. Generally, this includes attending group meetings, reading procedural/technical material, preparing and attending technical/procedural conferences, completing forms, working on committees, managing records, preparing time reports/travel vouchers, general housekeeping (e.g., moving, ordering supplies and surveying space) and answering e-mail/VMS. Group managers will not charge time to the code.
611 General—Automated Data Processing (ADP) Coordination Time devoted to liaison and coordination or procedures involving flow of work between area and campus. This item includes "trouble shooting" activities for Examination functions. Other trouble shooting activities are reported under Activity Code 826. Coordination of classification matters are reported under Activity Code 624.
612 General—Inventory on AIMS Time spent taking physical inventory of returns on hand or supplying necessary data to convert manual inventories to computerized perpetual inventories.
613 General—Report Generation Software (RGS) Coordination Time spent on RGS coordination and non-case related usage of the system by RGS coordinators, RGS support technicians or their designated representatives. This includes trouble shooting activities for Examination personnel. Any application development which is not related to a current case must be approved by the group manager:
  1. All cases related RGS time spent by examiners will be charged to the activity code of the specific return.

  2. All RGS training as specified in the course instructions will be charged to Training—Other, Activity Code 683.

614 General—Freedom of Information Act and Privacy Act Time spent processing requests under Freedom of Information Act (FOIA) and the Federal Order Information and Privacy Act (FOIPA).
615 Survey Time devoted to survey of returns after assignment and claims for refund in which no contact has been made with the taxpayer. This includes time spent in processing (screening) questionnaires, inquiry letters, etc., related to Form 990, Return of Organization Exempt from Income Tax. Time spent on claims surveyed at campuses is reported using Activity Code 622, Classification—Adjustments.
617 General—Project Coordination Used by project coordinators to coordinate their specific projects. These include national research program (NRP), tax shelter, deferred adverse tax consequences (DATC) and other coordinators. This code is not be used for RGS coordination. Also included in this activity code is time spent by Voluntary Disclosure Program (VDP) coordinators not working their cases or assisting other examiners with their cases.
618 CIC Case Management Time spent by managers overseeing CIC cases in planning, developing and supervising the Examination of a CIC case.
619 General—Group Management Time devoted to management duties by group managers or persons acting in such capacity. This includes time devoted to surveys before assignment, attending meetings (except training) at territory and area levels, preparation and analysis of statistical reports, etc. Members of cadres under the Management Careers Program assigned as assistant to group managers will also charge their time to this code in a similar manner.
620 General—Quality Initiative Project Used to report time expended by managers and examiners on all quality improvement projects and related activities.
621 Classification—Returns Time spent on classification of returns. This includes time spent on screening DIF returns, time spent by engineering and valuation revenue agents classifying returns involving engineering issues, and orientation sessions for classifiers.
622 Classification—Adjustments Time devoted to classification of taxpayers requests for adjustments (both formal and informal) and related returns. Included in this item are classification of claims for refund, amended taxable returns, applications for tentative refunds, and other items showing an adjustment (increase or decrease) in tax liability. Form requests for adjustments include Form 843, Claim For Refund and Request for Abatement; Form 1040-X, Amended U.S. Individual Income Tax Return; Form 1120-X, Amended U.S. Corporation Income Tax Return; Form 1045, Application for Tentative Refund; and Form 1139, Corporation Application for Tentative Refund.
623 Classification—Other Time expended on all other classification activities such as processing and reviewing Form 3449, Referral Report, and Form 996, Corporate Dissolution or Liquidation, and similar items.
624 Classification—Management Time devoted by classification personnel devoted to management functions such as planning, programming, and supervising the classification activity at areas and campuses. This includes conducting orientation sessions for classifiers, reviews of returns classified, closed case reviews and evaluation of classifiers. The Chief, Classification Section PSP and the PSP support manager will use this code except for staff assignments other than classification.
625 Classification Compliance Data Environment (CDE) Used to apply time when classifying returns on the CDE System.
631 Examination Support Staff (ESS/ESU)—Tax Shelter Time expended on tax shelter cases by ESS personnel.
632 Examination Support Staff (ESS)/Examination Support Unit (ESU)—Other Time expended on cases other than tax shelter cases by ESS personnel.
641 Quality Assurance—Case Review Time expended by reviewers reviewing reports of examination for compliance with the auditing standards. Includes time spent determining the accuracy of procedural and case management practices of an examination, and time expended by reviewers preparing, completing, reviewing, controlling or processing special reports, forms or the functions associated with a return under review. Examples include jeopardy assessments, NRP and deferred adverse tax consequences (DATC) check sheets, approval of language for restricted consent, closing agreements, inadequate records, joint committee reports, reopening requests, and restricted interest computations. Also included is time spent on research and preparation of the reviewer's reports.
643 Quality Assurance—Notice of Deficiency (90 Day) Time expended by reviewers in preparing, reviewing and signing notices of deficiency. This includes coordination of the 90 day letters with other Service functions, such as case processing and Counsel, and time spent by reviewers answering telephone and letter inquiries from taxpayers regarding 90 day letters.
644 Quality Assurance—Coordinator Activity Time spent by reviewers interrelating with examination activities effecting a particular program for which Technical Services has primary program responsibility. Examples include fraud, informants communications and rewards, and technical coordination and suspense. This item includes coordination, control, reporting and management of the program. Also included is time expended by reviewers in furnishing formal and informal technical advice and assistance to Service personnel; gathering, processing, writing, reviewing, coordinating, and otherwise preparing material for technical or procedural publication or issuance; researching, gathering, processing, meeting, discussing, organizing, writing, reviewing, or otherwise assisting management with management studies and assignments. Examples include review digests, analysis of reviewers reports, internal management documents, and territory, area, or national publication. Time expended by reviewers furnishing information to, corresponding, working, or coordinating with other divisions, areas, headquarters office or other agencies on projects, programs, assignments, returns, reports or requests for information.
646 Other—30 Day Letter Activities Time spent by reviewers preparing, reviewing, and following up on 30 day letters. This includes time spent screening protests for adequacy. Technical Services in prime areas will perform the protest screening for streamlined areas.
648 Quality Assurance—Abatement of Interest Time expended by reviewers to coordinate or work claims with respect to IRC 6404, Abatements.
649 Quality Assurance—Review Management Time devoted to management duties as a Technical Services manager including persons acting in such capacity.
650 Other—Tax Examiner Time applied by tax examiners on non return related work.
660 Other—General Management Time applied to management by technical personnel assigned permanently or acting in the following positions:
  • Territory Manager (LB&I only)

  • Technical Services Management

  • Chief, Technical Support

  • Chief, PSP (Classification)

  • Other supervisory or staff personnel who cannot be identified with a specific group

This item also includes time spent by non-supervisory personnel and group managers participating with field territory manager in team meetings to resolve management problems. For example, members of a task force appointed to consider solutions to problems identified by an attitude survey would charge their time in this item. Also to be included in this item are members of cadres under the Management Careers Program who are assigned to assist any of the positions listed above.
670 Other—Technical Referrals Time spent by Examination technical personnel servicing taxpayers by participating in and preparing material for radio, television and other public appearances. Compliance technical employees working technical paper referrals from the Wage and Investment functions which require special expertise, outside the scope of the wage and investment programs (e.g., such as estate and gift taxes). Please note that calls from taxpayers or representatives on filed returns not being examined must be referred to the campus for all account information, including status of closing letters.
671 Other—Taxpayer Advocate Used by full or part time Taxpayer Advocate Service (TAS) liaisons for time spent controlling cases, making assignments, analyzing trends, reviewing cases, or coordinating cases referred by TAS. See IRM 13.1, Taxpayer Advocate Case Procedures. Also applies to case work time spent on Form 12412, Operations Assistance Request (OAR), when a return is not presently open to examination. If the return is open, charge time spent examining a return which was referred by TAS on Form 12412 to the activity code of the specific return. Charge formal details to TAS to Activity Code 826, Details Out - All Other.
675 Other—Compliance Outreach This code is used primarily by management, but can also be used by technical personnel, who are engaged in outreach activities. See definition for Activity Code 575.
681 Training—Recruit—Classroom Classroom time (including pre-classroom and related travel time) applied by instructors and students needed to get examiners up to the working level for that position (e.g., Revenue Agent Phases I, II, III, IV; Tax Compliance Officers Phases I, II, III; Engineer Revenue Agent Training; Estate and Gift Tax Law for Attorneys; Income Tax Law for Estate Tax Attorneys).
682 Training—Recruit—On The Job (OJT) On the job time (including related travel time) is time applied to courses referred to in Activity Code 681 above. Includes all instructor OJT time for these courses and student OJT time for these courses during formal OJT workshops. Examination time (including related travel time) applied by students during OJT is charged to cases using direct examination activity codes.
683 Training—Other Time (including related travel time) applied by instructors and students to approved training, except recruit training reported under Activity Codes 681 and 682, continuing professional education (CPE) training reported under Activity Code 684; and training for details to Taxpayer Service reported under Activity Code 811.
684 Training—Continuing Professional Education (CPE) Time (including related travel time) applied by instructors and students for CPE training.
690 Other—Engineering and Valuation Used by engineering revenue agents to apply time to engineering and valuation work not in connection with the examination of a specific tax return. Engineering and valuation time devoted to a specific return charged to the agents own area will be entered as direct examination time.
695 Other—Information and Collateral Reports Used by technical personnel to apply time devoted to information reports which do not involve a specific tax return. It also applies to time spent by revenue agents protecting the government's interest in tax liabilities arising from special events such as rock music festivals, championship boxing promotions, and other entertainment or sports events. Only time which cannot be charged to a specific return is reported under this code.
697 Other—System Administration Computer audit specialists and computer systems analysts designated as systems administrators will use this code to report time spent on the following duties; installing system software, providing user assistance or technical support, performing security related tasks, resolving equipment problems and troubleshooting.
698 Other—Computer Audit Specialists (CAS) Automatic Data Processing (ADP) Projects Time of computer audit specialists revenue agents, and computer systems analysts devoted to computer application work that is not in connection with the examination of a specific return. Computer audit specialists will also use this code for time spent on all area office approved ADP projects which are not case related.
699 Other—CAS ADP Evaluations Computer audit specialists will use this code to report time spent on all ADP evaluations performed when the taxpayer's return is not currently under examination.
720 Other—Offers in Compromise Time spent by technical personnel in the examination, quality assurance and disposition of offers in compromise.
730 Other—Administrative Duties The time reported in this item pertains to duties such as:
  • Combined Federal Campaign

  • Participation in attitude surveys (survey and meetings)

  • Commissioner representative duties

  • National Treasury Employees Union (NTEU) (bank and official, which includes time spent by designated union representatives as provided for in the union contract)

  • Special emphasis program time

  • Computer breakdowns and refresh

  • Mandatory briefings (e.g. Unauthorized Access (UNAX), Privacy, Information Protection and Disclosure, etc.)

  • Performance discussions with managers (e.g. revenue agent/tax compliance officer time input workload reviews, etc.)

  • Report time of technical personnel engaged in personnel investigations and interviewing applicants

  • Time expended on assignments for the Office of Personnel Management or the Resources Management Division

The time of technical personnel acting as:
  • Executive Secretary or as a member of the Office of Personnel Management Panel

  • Secretary or as a member of the Incentive Awards Committee and Performance Rating Committee

731 Other Recruit New Hires Examination employees who participate in recruiting new hires should charge time to this activity code. This code is also used when visiting college campuses, preparing for visits, and any activity directly related to the recruitment of new hires.
732 Other—Innocent Spouse Time charged by reviewers (revenue agents and tax compliance officers) located in Technical Services in the SB/SE area should charge time to this activity code when performing the streamline review process for innocent spouse cases. The term reviewing is used in the traditional sense i.e., reviews that take place outside the group.
733 Details Out of Division or Area to: Large Business & International Time applied by technicians detailed to assist or management assigned to act for the LB&I operating division.
734 Details Out of Division or Area to: Small Business Self Employed Time applied by technicians detailed to assist or management assigned to act for the SB/SE operating division.
735 Other—Individual Taxpayer Identification Number (ITIN)/Certifying Acceptance Agent (CAA) Compliance Program SB/SE examiners conducting compliance checks with CAAs must charge their time to this activity code. A certified acceptance agent (CAA) is an individual, business or organization authorized by the IRS to assist alien individuals and other foreign persons in obtaining ITINs. They are subject to suitability checks (Federal Bureau of Investigation and tax compliance) and must renew their agreement every four years. A CAA has added responsibilities, including: certain records retention and being subject to IRS compliance checks.
740 General—Group Management Case Review Used by managers for activities directly related to taxpayers' cases. Activity Code 619 will continue to be used for the traditional management activities within the group. This code will not include activities already chargeable to other current time codes such as Compliance Outreach, Leave, etc. Activity Code 740 time shall not be included as part of time charged by examiners to a case. Examples of where managers would charge time to this activity code include; pre-assignment case reviews and case surveys, (meeting, discussing, and reviewing) cases with revenue agents, tax compliance officers, tax examiners; meeting/discussing cases with other IRS representatives (appeals officer, special agent), and other governmental or third party representatives; meeting/discussing cases with taxpayers or their representatives, on-site visits with taxpayers and examiners, post closing case review and researching issues on taxpayers cases.
741 General—referral mail (R-mail) Technical employees temporarily assigned or formally detailed to work R-mail.
742 General—Electronic Tax Law Administration (ETLA) Technical employees temporarily assigned or formally detailed to ETLA.
743 General—Volunteer Income Tax Assistance (VITA ) Technical employees providing support on Taxpayer Education Programs such as VITA, Tax Counseling for the Elderly (TCE), Small Business Programs; Workshops, Your Business Tax Kit (YBTK), Individual Tax education; workshops, practitioners institutes, school programs, and fundamentals of tax preparation and understanding taxes.
744 General—Disaster Assistance Program Time devoted to Disaster Assistance and Emergency Relief Programs such as assisting taxpayers at Federal Emergency Management Agency (FEMA) Disaster Recovery Centers assisting affected taxpayers with the preparation of amended returns, etc.
750 Other—Furlough Used to apply time during a furlough for employees who apply time in ERCS and IMS.
811 Details Out of Industry or Area to: Wage & Investment (W&I)—Taxpayer Service / Taxpayer Assistance Examination technical personnel assigned or formally detailed to W&I who are required to complete a Form 5311, Taxpayer Service Activity Report, will also report time under this code. An assignment or formal detail to W&I includes:
  1. Examination employees formally detailed to W&I and performing taxpayer service assistance duties. This may include assisting walk-in taxpayers or taxpayer telephone inquiries.

  2. Examination employees in small posts of duty who perform duties, such as walk-in or telephone, when the W&I employee is not available.

  3. Employees specifically assigned to be technical backup employees for W&I, located within the taxpayer assistance area or in the Examination area. This includes responding to taxpayers who have been referred from the taxpayer assistance area (either walk-ins or telephone calls). These referrals are technical in nature on subject clearly within the scope of the Taxpayer Assistance Program but which cannot be responded to by front-line W&I employees because of lack of expertise.

  4. Formal field assistance training time for instructor and participating technical personnel.

812 Details Out of Industry or Area to: Collection Division Time of technical personnel detailed to Collection for activities including participating in the primary area's actions to protect the Government's interest in tax liabilities arising from special events such as rock music festivals, championship boxing promotions, and other entertainment or sports events.
814 Details Out of Industry or Area to: Tax Exempt Government Entity (TEGE) Time of technical personnel detailed to assist Employee Plan or Exempt Organizations.
815 Details Out of Industry or Area to: Grand Jury—Non Narcotics Related Time of technical personnel detailed to the Criminal Investigation who are assigned to a grand jury investigation which does not involve narcotics related activities or participation in the Drug Enforcement Task Force Program.
816 Details Out of Industry or Area to: Grand Jury—Drug Enforcement Task Force Time of technical personnel detailed to the Criminal Investigation who are assigned to a grand jury initiated under the Drug Enforcement Task Force Program.
817 Details Out of Industry or Area to: Grand Jury—Narcotics Related Time of technical personnel detailed to the Criminal Investigation who are assigned to a grand jury investigation which involves narcotics related activities but does not involve participation in the Drug Enforcement Task Force Program.
818 Details Out of Division or Area to: Criminal Investigation Division (CID)/CAS Time of technical personnel detailed to the Criminal Investigation not included in Activity Codes 815—817.
820 Details Out of Industry or Area to: Exam Campus Time of technical personnel while assisting Campus Examination on classification or other aspects of campus programs. Time applied to classification of area office programs is to be charged to Activity Codes 621–624.
821 Details out of Industry or Area to: Trial Assistance Time applied to the preparation of cases for trial, including expert witness time and time applied to cases located in fraud suspense; applies only when the return is not assigned to an Examination group. Time spent on trial assistance on a return charged to an Examination group is charged to the activity code of the return.
822 Details out of Industry or Area to: Appeals Time of technical personnel detailed to assist Appeals. If additional information is requested from Appeals and the case is not returned, time is to be charged to this activity code.
823 Details out of Industry or Area to: Headquarters Office Time of technical personnel detailed to assist headquarters office.
826 Details out of Industry or Area to: All Other Time of technical personnel assigned to details other than time applied to Activity Codes 811–823 and 827–828.
827 Details out of Industry or Area to: Disclosure Time applied by employees assisting the Disclosure Officer. Employees who are appointed as part time Disclosure Officers or who are assigned on a part time basis to assist a full time Disclosure Officer will use this code. Full time Disclosure Officers will not prepare a daily time sheet. Examination personnel not detailed as a part time Disclosure Officer or not detailed to assist a full time Disclosure Officer will not use this code. Any time applications by non-detailed technical personnel will use Activity Codes 613-614.
828 Details out of Industry or Area to: Tax Return Preparer Program Time spent prior to assignment of returns for examination, such as activity in obtaining list of preparer's clients returns, assisting Criminal Investigation in identifying suspect preparers, time spent with special agents during interviews and obtaining witness affidavits, and Examination coordinator's time spent managing the program. Time spent on classification is not to be charged to this activity code.
830 General—Leave All leave granted to technical personnel. Employees in the Washington DC area will consider Inauguration Day as administrative leave and accordingly count it a workday. Valid leave codes are as follows:
  • A—annual leave

  • AA—advanced annual leave

  • ADE—administration/employee relations (disciplinary)

  • AS—advance sick leave

  • BCO—building closure (other)

  • BCW—building closure (weather)

  • BD—blood donation

  • BEN—benefits

  • C—court/jury duty

  • CA—comp (not religious)

  • CAR—comp religious

  • CAT—comp in lieu of overtime (OT)

  • CRT—credit hours taken

  • D—bone marrow, organ donor

  • EL—emergency leave

  • F—Federal Employees' Compensation Act (FECA) (on the job injury)

  • FEA—FECA annual leave

  • FER—FECA restored annual leave

  • FLB—Family and Medical Leave Act (FMLA) leave bank hours

  • FLT—FMLA leave transfer hours

  • FES—FECA sick leave

  • FMA—FMLA annual leave

  • FMR—FMLA restored annual leave

  • FMS—FMLA sick leave

  • H—holiday

  • HL—home leave earned overseas

  • LB—use of leave share/leave bank

  • LH—local holiday

  • LT—leave share

  • M—military

  • ME—emergency military leave

  • O—Other/administration leave Miscellaneous

  • OPM—Office of Personnel Management

  • R—Restored annual leave

  • RL—relocation

  • S—sick leave

  • SAP—sick leave for adoption purposes

  • SDT—self directed training

  • SFB—sick leave general family bereavement

  • SFM—sick leave general family medical

  • SSH—sick leave family serious health

  • TOA—time off for award

  • V—voting

  • VOT—volunteer activities

831 General—Leave without Pay (LWOP) Valid leave codes for LWOP are as follows:
  • AW—unapproved leave

  • L—LWOP, on board employee only

  • LC—Office of Workers' Compensation Programs (OWCP) LWOP

  • LFM—LWOP FMLA

  • LS—AWOL suspension action

  • LSF—LWOP seasonal furlough

840 Hours worked for Overtime, Credit Hours and Comp Time Used to account for how an employee's time will be applied when working over the employee's scheduled work hours. Valid codes are as follows:
  • CRW—credit hours worked

  • CW—comp hours worked

  • CWR—religious comp

  • CWT—comp for travel

  • FL—FLSA law enforcement

  • FS—FLSA overtime

  • FT—FLSA travel overtime

  • OT—overtime

901 Total Direct Examination Time This time is the sum of time charged to Activity Codes less than 600.
903 Total Time This time is the sum of Activity Code 901 time plus the sum of time charged to Activity Codes 600 to 831.
905 Total Time Accounted For This time is the sum of Activity Code 903 less the time charged to Activity Code 840 (Hours worked for Overtime, Credit Hours and Comp Time).

Exhibit 4.9.1-2 
Direct Examination/ Compliance Activity Codes—Second Segment Codes

Second Segment Codes

Fourth Digit Program Monitoring Code Definition
0 Activity Codes 501–599 are the only activity codes that will accept "0" in the fourth position of the activity code.
1 Frivolous Filer/Nonfiler Program. Project Codes 0301–0350.
2 CIC and CIC Support. Used with Special Feature Codes 1 (CIC case—primary area examination) or 3 (CIC case—support area examination) to identify time expended for CIC.
3 DIF/DIF Related. Identifies direct examination time spent on returns with Source Codes 02, 05, 10, or Source Code 20 with Project Code 0158.
4 Identifies direct examination time spent on returns identified as fraud or SEP. Category Code "0" cannot be used with the this program monitoring code. These returns are identified on AIMS with Source Codes 88, 89, or 90 or Project Codes 0001—0006, 0095, 0096, 0135, 0146, 0147, or 0149.
5 Local Source. Identifies direct examination time spent on returns with Source Codes 01, (20 without Project Code 0158), 30, 31, 32, 40, 45, 46, 49, 50, 60, 62, 64, 70, 73, 77 or Project Codes 0131, 0175–0200, 0500–0575, or 0700–0799.
6 Campus Contacts/IRP. Identifies direct examination time spent on returns with Source Codes 03, 04, 06, 08, 11, 14, 26, 48, or 85.
7 Identifies direct examination time spent on returns identified as tax shelters with Source Codes 17, 23, 35, 39 or Special Project Codes 0013, 0015, 0101, 0102, 0103, 0104, 0106, 0107, 0109, 0114, 0118, 0121, or 0122.
8 NRP/ Compliance Studies. Identifies direct examination time spent on NRP returns or returns that are identified for a national compliance study. These returns are identified with Source Codes 80, or 91. This code must be used with Special Feature Codes 2 or 8.
9 Identifies direct examination time spent on training returns identified with Project Code 0204. This code cannot be used with Special Feature Codes 1 or 3.

Note:

Source Codes 12, 24, 25, 44 or 65 are used with nonfiler returns and are reported under the definition for Category Code 8.

Fifth Digit Category Code Definition
0 No Category—Used on all cases not covered by categories 1 thru 9 as defined below.
1 Fraud, Regular—Identifies time spent while temporarily working on a fraud case (Status 17) as well as when regularly assigned to fraud work (Status 18). When fraud develops during a regular examination, fraud time is determined from the time the examiner suspends the examination and participates in a joint investigation with the Criminal Investigation function. If a joint investigation is terminated but the examiner continues independent examination applying fraud techniques to the civil aspects of the case, such time is reported as fraud time to the extent the case retains a fraud status. All time developing the criminal or civil aspects of a case will be charged to Category Code 1, whether joint investigations are initiated or referrals are declined. Fraud time may also be determined when a "civil referral" has been submitted to and evaluated by Criminal Investigation Division and the case continues to retain its fraud status. If the category changes (fraud to non-fraud, or vice versa) all time applied during the month is charged to the last category assigned. (Category Code 1 is not used for any SEP examinations.)
2 All SEP:
  SEP–1—A taxpayer identified by the Field Territory Manager or Area Director, as being engaged in organized criminal activities; notorious or powerful with respect to local criminal activities; receiving substantial income from illegal activities as a principal, a major subordinate, or an important aide or abettor; or infiltrating legitimate business through illegal means or through loaning or investing therein the proceeds from illegal activities. Does not include taxpayers who meet the definitions of Categories 3, 5, or 6.
  SEP–2—Taxpayers engaged in an occupation requiring registration as one who is engaged in receiving wagers.
  SEP–3—If the Department of Justice (DOJ) attorney advises the Service that CID is authorized for inclusion in the DOJ Strike Force, CID and Examination will promptly reclassify the case as SEP–3. Otherwise, the case shall continue to be classified as SEP–1.
  SEP–4—Includes any person who, while not meeting the criteria of SEP–1, SEP–2 or SEP–3, is reasonably believed to be receiving substantial income from an illegal activity that is separate and apart from the alleged tax violations, such as corruption in government, welfare fraud or commercial bribery.
3 Joint Committee—Identifies direct examination time spent on Joint Committee returns. These returns are identified with Project Code 0077.
4 FHWA—Fed State Motor Fuel Project identifies all primary and related cases that result from leads generated by project cases.
5 Non DEA Class 1 Violations—Used for all narcotic examinations except those examinations identified as Drug Enforcement Task Force cases. Category Code 5 is only used with Special Feature Codes 0, 4 or 5.
6 DEA Class 1 Violations—Designates any examination which is included in the Drug Enforcement Task Force Program. Category Code 6 is only used with Special Feature Codes 0, 4 or 5.
7 Compliance Research/Strategies—These returns have been identified as National Research Projects by Chief, Research and are identified with Project Codes 0674 or 0675.
8 Nonfiler—Identifies all nonfiler cases. These returns are identified with Source Codes 12, 24, 25, 44 or 65 or Project Codes 0149, 0150, 0154, 0156, 0437, 0438, 0449, 0655 or 0669. Category Code 8 may only be used with Program Monitoring Codes 4 or 6.
9 Claims—Identifies time spent by examiners on returns with a dollar or more in the amount claim field, or a Source Code 30, or an "AA" statute.
Sixth Digit Special Feature Code Definition
0 No Feature—Used to report examination time on all cases not covered by Special Feature Codes 1 thru 9 as defined below.
1, 3 CIC Case—primary area examination (1), CIC Case support area examination and non-CIC (3). Special Feature Code 1 identifies time expended in the CIC program and is used with Program Monitoring Code 2. However, since support can be given without the case being CIC, Special Feature Code of 3 is not required to have a program Monitoring Code of 2. The following definitions of terms determine the use of Special Feature Code 1 or 3.
  1. A CIC case is a taxpayer together with effectively controlled entities (regardless of percentage of ownership) whose organizational structure, geographical dispersion, or other examination problems warrant application of CIC case management procedures, especially those involving inter industry/area coordination. Foundations, trusts, and all forms of business entities effectively controlled by the primary taxpayer are component parts of a CIC case.

  2. The primary area is the area in which the entire examination is managed.

  3. The support area is an industry/area providing support for a team member or members to participate with the primary area in planning and executing a team examination. A case does not have to be CIC or controlled by a team for it to be considered support.

  Example: The following example illustrates the entry found in the SETTS file when a revenue agent examined corporations with assets of $275,000,000. The examination involves fraud and is an examination in a primary area under CIC.
  1. Activity Code 226

  2. Program Monitoring 2

  3. Category Code 1

  4. Special Feature Code 1

2 NRP—Identifies direct examination time on returns selected for NRP. These returns are identified with source codes 80 and 91.
4 Narcotics Case—Termination. Examination time on all narcotic termination cases. Special Feature Code 4 is only used with Category Codes 5 and 6.
5 Narcotics Case—Jeopardy Assessment. Examination time on all narcotic jeopardy assessments. Special Feature Code 5 is only used with Category Codes 5 and 6.
6 Innocent Spouse—Used when an innocent spouse return has been secured. The time is charged to the Activity Code of the return with xx6 as the second segment.
7 Tax Shelters—Used when tax shelter cases are worked.
8 Compliance Studies—These returns have been identified as National Research Projects by Chief, Research and are identified with Project Codes 0674 or 0675.
9 Foreign Controlled Corporation—Applies to time charged by International Specialist to returns which have international features. This code is used with Position Code 115.

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