4.13.7  Exhibits

4.13.7.1  (09-01-2006)
Exhibits

  1. This chapter contains all of the exhibits for the Audit Reconsideration Handbook.

Exhibit 4.13.7-1  (12-31-2009)
ASFR - Reconsideration Returns - Centralized Processing Sites

Addresses for ASFR Reconsideration Returns (Tax return filed after ASFR has made an assessment TC 290 with a TC 150 for $0.00.

W & I Cases SB/SE Cases
Form 1040 with Schedule C, E, F, or Form 2106
International Returns
FSC - 89 BSC - 19 BSC - 19
Fresno Campus
ASFR Unit Stop 81304
PO Box 24015
Fresno, CA 93779 1–866–897–3370
Brookhaven Campus
ASFR Unit Stop 654
PO Box 9013
Holtsville, NY 11742-9013
(631) 447-4984
Brookhaven Campus
ASFR Unit Stop 654
PO Box 9013
Holtsville, NY 11742-9013 (631) 447-4984

Exhibit 4.13.7-2  (12-31-2009)
Routing of Campus Reconsideration Requests

Use this exhibit to identify the Primary Business Code (PBC), Filing Location Code (FLC) and the Employee Group Code (EGC) on an IDRS TXMODA screen.

If the receiving campus does not work the exam program, assessments originating in the Campuses will be sent back to that campus. Refer to the Filing Location Code (FLC) and Employee Group Code (EGC) to determine the Campus where the assessment originated.

Assessments made by the Area Office are sent to SB/SE based on back end state mapping.

For more information refer to IRM 4.13.2.2(4). .

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Exhibit 4.13.7-3  (12-31-2009)
Routing of Area Office Reconsideration Requests (as of 01/01/2006)

  North Atlantic Central South Atlantic Midwest Gulf States
Realigned Area PBC 201 202 203 204 205
Servicing Campus BSC CSC PSC CSC MSC
Areas PBC<01/01/2006 201 (BSC) 202 (BSC) 203 (PSC) 206 (CSC) 204 (PSC) 205 (MSC) 207 (CSC) 209 (CSC) 208 (MSC) 210 (MSC)
  Western California Employment E & G Excise
Realigned Area PBC 206 207 212 213 214
Servicing Campus OSC OSC CSC CSC CSC
Areas PBC<01/01/2006 211 (OSC) 212 (OSC) 213(OSC) 214 (OSC) 216 (OSC)      
  International        
Realigned Area PBC 215        
Servicing Campus PSC        
Areas PBC<01/01/2006 215 (PSC)        
State Alignment as of January 1, 2006
Alabama MSC Hawaii OSC Massachusetts BSC New Mexico OSC South Dakota CSC
Alaska OSC Idaho OSC Michigan CSC New York BSC Tennessee MSC
Arizona OSC Illinois CSC Minnesota CSC North Carolina PSC Texas MSC
Arkansas MSC Indiana CSC Mississippi MSC North Dakota CSC Utah OSC
California OSC Iowa CSC Missouri CSC Ohio CSC Vermont BSC
Colorado OSC Kansas CSC Montana OSC Oklahoma MSC Virginia PSC
Connecticut BSC Kentucky CSC Nebraska CSC Oregon OSC Washington OSC
Delaware PSC Louisiana MSC Nevada OSC Pennsylvania CSC West Virginia CSC
Florida PSC Maine BSC New Hampshire BSC Rhode Island BSC Wisconsin CSC
Georgia MSC Maryland/DC PSC New Jersey CSC South Carolina PSC Wyoming OSC
NRP Coordinator Mailing/Shipping Addresses
TCO EGC RA EGC PBC Mailing/Shipping Address
2861 1861 201
IRS
Stop 41175
15 Sudbury Street
Boston, MA 02203
Attn: NRP Coordinator
2969 1969 202
IRS
Room 5230 - Mason/Quinn
600 Arch Street
Philadelphia, PA 19106
Attn: NRP Coordinator
2984 1984 203
IRS
Attn: NRP Coordinator
7850 SW 6th Ct - Stop 4010
Plantation, FL 33324
2901 1901 204
IRS
30 E 7th St - Suite 900A - Stop 4032
St Paul, MN 55101
Attn: NRP Coordinator
2908 1908 205
IRS - PSP
801 Broadway MDP 43
Nashville, TN 37203
Attn: NRP Coordinator
2945 1945 206
IRS
M/S: 4033DEN Attn: NRP Returns
1999 Broadway
Denver, CO 80202
2865 1865 207
IRS
Attn: NRP Coordinator
300 N Los Angeles Street, MS 4101
Los Angeles, CA 90012
  1932 315
IRS
Attn: NRP Coordinator
SE:LM:IN:C:FR:PSP:TEAM 1
1111 Constitution Ave NW, MA3-324
Washington, DC 20224
Cincinnati Campus Correspondence 5260 296
IRS
201 West River Center Blvd
Stop 825G Team 103
Covington, KY 41011
Attn: NRP Coordinator

Exhibit 4.13.7-4  (12-31-2009)
Central Reconsideration Unit (CRU) Addresses

Central Reconsideration Unit (CRU) Addresses, Telephone and Fax Numbers
Campus Address RA Code Toll Free Telephone Number and Fax Number Hours of Operation
Andover Internal Revenue Service
P.O. Box 9053
Stop 823
Andover, MA 01810-0953
AQ Telephone Number 1-866-897-0177
Fax Number 1-978-691-6588
8:00 am to 8:00 pm EST
Atlanta Internal Revenue Service
P.O. Box 48-389
Stop 54A
Doraville, GA 30362
AS Telephone Number 1-866-897-0177
Fax Number 1-678-530-6351
8:00 am to 8:00 pm EST
Austin Internal Revenue Service
P.O. Box 934
Stop 4103
Austin, TX 78767
AU Telephone Number 1-866-897-0177
Fax Number 1-512-460-0146
8:00 am to 8:00 pm CST
Fresno Internal Revenue Service
P.O. Box 12067
Stop 82206
Fresno, CA 93776
AR Telephone Number 1-866-897-0177
Fax Number 1-559-454-6627
8:00 am to 8:00 pm PST
Kansas City Internal Revenue Service
P-3
Stop 4200
Kansas City, MO 64999
AT Telephone Number 1-866-897-0177
Fax Number 1-816-292-6322
8:00 am to 8:00 pm CST
         
Brookhaven Internal Revenue Service
Stop 656
P.O. Box 9005
Holtsville, NY 11742
AW Telephone Number 1-877-834-6303
Fax Number 1-631-447-4448
7:00 am to 7:00 pm EST
Cincinnati Internal Revenue Service
P.O. Box 308
Stop 8202
Covington, KY 41012
AY Telephone Number 1-800-477-0602
Fax Number 1-859-669-5251
7:00 am to 7:00 pm EST
Memphis Internal Revenue Service
P.O. Box 30086
Stop 8236
Memphis, TN 38130-0086
AV Telephone Number 1-866-899-9085
Fax Number 1-901-395-1620
7:00 am to 7:00 pm CST
Ogden Internal Revenue Service
Stop 4440
P.O. Box 9036
Ogden, UT 84201
AX Telephone Number 1-866-899-9083
Fax Number 1-801-620-2073
7:00 am to 7:00 pm MST
Philadelphia Internal Revenue Service
Stop #S623
PO Box 331
Bensalem, PA 19020
AZ Telephone Number 1-866-583-3251
Fax Number 1-215-516-1553
8:00am to 9:00pm EST

Exhibit 4.13.7-5  (09-01-2006)
Appeals Account Resolution Specialist

Contact the Appeals Account Resolution Specialist in Fresno at (559) 456–5931 to find out who worked the case in Appeals.

Exhibit 4.13.7-6  (12-31-2009)
Addresses for AUR Reconsideration Requests

The originating campus may be determined from the address in the upper left corner of the CP2000 (if available) or from the first two digits of the TC922 DLN. Send the request to the Campus where the assessment originated. A listing of contact telephone numbers is available on SERP http://serp.enterprise.irs.gov/databases/who-where.dr/aur-recon.htm ().

Addresses for AUR reconsideration requests
Campus Address Campus Address
ATSC
07
Atlanta Campus
AUR STOP 84
PO Box 47-421
Doraville, GA 30362
FSC
89
Fresno Campus
AUR STOP 86106
5045 East Butler
Fresno, CA 93888
AUSC
18
Austin Campus
AUR STOP 6692
PO Box 2986
Austin, TX 78768-2986
OSC
29
Ogden Campus
AUR STOP 6652
Ogden, UT 84201
BSC
19
Brookhaven Campus
AUR STOP 655
PO Box 9012 1040
Waverly Avenue
Holtsville, NY 11742
PSC
28
Philadelphia Campus
AUR Drop Point S-836
11601 Roosevelt Blvd. Philadelphia, PA 19154

Note:

Phone numbers are for internal contacts relating to AUR Audit Reconsideration cases only. These numbers are not for distribution to the taxpayer.

Exhibit 4.13.7-7  (09-01-2006)
Form 12249 Adjustment Document

This Form 12249 is prepared using the fields indicated, and outlined in Exhibit 4.13.8.

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Exhibit 4.13.7-8  (09-01-2006)
Completing Form 12249 (Adjustment Tag)

  1. Check "IDRS Adjustment" box.

  2. Employee Number - IDRS # of person inputting the adjustment.

  3. Input Date - Date of actual input.

  4. TIN- Taxpayer’s SSN.

  5. MFT - 30

  6. TX-PRD - Tax Year

  7. NM-CNTRL - Name Control.

  8. SEQ-NUM - 3 digit number. (i.e. 101, 102, etc. on Monday and 201, 202, etc. on Tuesday and so on). You cannot use the same number twice the same day.

  9. BLK - Blocking Series -

    • 00 – with original return

    • 05 – Adjustment made without original return

    • 18 – Adjustment made without original return (informs Files to pull original return to the adjustment).

    • 98 – Complete claim disallowance without original return (Certified Disallowance Letter being sent)

    • 99 - Complete claim disallowance with original return (Certified Disallowance Letter being sent)

  10. CORRESP-DT - Correspondence Date (MMDDYYYY). This date will print on a notice when it is generated resulting from a TP’s correspondence

  11. CASE STS-CD - C (for closed).

  12. IRS-RCVD-DT - received date.

  13. CRTL-CAT - RECN for audit recon.

  14. ACTIVITY - Issues of case (FS4/EIC, or EXEMPT/EIC, or FS2/EIC as Examples). 10 characters maximum.

  15. TC –Transaction Code - 290/291 (change to tax) or 290.00 (No tax change)

    • 15a. AMT- Input appropriate amount. Must be input in dollars and cents format with commas and decimal points.

  16. TC– Transaction Code - 160/161, or 170/171 to address penalty if on account. TC 160 .00 or 170 .00 if not changing penalty.

  17. SRCE-CD Source Code- chooses the statement which will appear on the taxpayer’s adjustment notice with the literal reason code (RC) completing the statement.

  18. RSN-CDS - Reason Codes: Maximum allowed is 3. Use reason code to designate item being adjusted and the audit recon reason code. Will determine the explanation that will print on the adjustment notice to the taxpayer.

  19. HOLD-CD - Hold Codes- Hold codes are entered to restrict offsetting, refunding and/or issuance of adjustment notices.

  20. PRT-CD - Priority Code - Priority Codes are input to bypass certain unpostable checks. Failure to use the PC, when needed, will cause the transaction to unpost. When adjusting credits and there is a prior TC 30X/29X on the account, a PC 8 is needed.

  21. AMD-CLMS-DT - Amended claims date is used when an Overpayment results from a claim or amended return and the refund is not issued within 45 days of the received date. Credit interest is allowed from the received date to the refund date. Master file will use this date to apply the 45-day rule. This date should be used when the taxpayer initiates the adjustments resulting in a refund. Priority code 3 is used when IRS initiates the adjustment. Use the IRS received date.

  22. CD - Credit Reference codes. Maximum of 8.

    • 22a. If the credit reference or item reference amount is being decreased enter a minus. Do not reduce Taxable Income below 0.

  23. REMARKS – Y- SD if adjustment goes to files, NSD if it is not going to files.

  24. REMARKS - generally should match the Activity code Leave notes for other transactions needed (ENMOD changes, add telephone #s, remove STAUP/TC 470) to instruct for the person inputting the adjustment.

  25. RFSCDT – (MMDDYYYY) Refund Statute Control Date is used when the RSED (Refund statute expiration date) has expired (return due date plus 3 years). Override indicator code "S" must be present on applicable tax decrease.

  26. Override Code – An "R" is necessary if the rec’d date of the correspondence is more than 1 year old. Use "S" if the current date is later than the RSED and the RFSCDT field is used.

Exhibit 4.13.7-9  (09-01-2006)
ADJ54 Format

This screen print of an ADJ54 screen identifies the fields that are optional or that need to be entered. Exhibit 4.13.10 provides the valid entries for each field.

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Exhibit 4.13.7-10  (09-01-2006)
Adjustment Items Job Aid

Reason Codes Transaction Codes
01 Filing Status to Single 150 Tax on original return
02 Filing Status to MFJ 424 Examination requested
03 Filing Status to MFS 420 Examination opened
04 Filing Status to HOH 421 Examination closed
05 Filing Status to Qualifying widower with child 300 Increase in tax after Examination
06 Exemptions 301 Decrease in tax after Examination
30 Adjustments to Income 336 Interest assessed on additional Tax
32 Adjusted Gross Income 290 Increase in tax manually
75 Taxable Income 291 Decrease in tax manually
92 Standard Deductions 166 Computer generated Delinquency Penalty
44 SE Tax 176 Computer generated Estimated Tax penalty
49 Advanced EIC 196 Computer generated interest
36 Tax Credits 826 Credit applied to another tax year
51 Federal Income Tax Withholding 706 Credit applied from another year
53 EIC  
54 EIC Disallowance  
55 Excess SS tax and RR tax Withheld  
64 Audit Recon-No Response  
66 Audit recon-Fully Disallowed  
67 Audit Recon- Partially Disallowed  
68 Audit Recon- Fully Allowed  
Reference Codes
336 Child Tax Credit
764 Earned Income Credit
765 Earned Income Credit (decrease)
766 Substantiated Credit (increase)
767 Substantiated Credit (decrease)
768 EIC allowed by computer (original processing)
806 W-2 Withholding (Credit)
807 W-2 Withholding (debit)
878 Adjusts Primary Self-Employment Income
879 Adjusts Secondary Self-Employment Income
881 Total Positive Income
885 Advance EIC
886 Taxable Income (– sign decreases income)
887 Number of Exemptions example: .01 to increase .01- to
888 Adjusted Gross Income Adjustment
889 Self-Employment Tax Adjustment
895 Primary Medicare Income
896 Secondary Medicare Income
Amounts allowed for Filing Status & Dependency Deductions
  2009 2008 2007 2006 2005
F/S          
Single 5700 5450 5350 5150 5000
HOH 8350 8000 7850 7550 7300
MFJ 11400 10900 10700 10300 10000
Widow(er) 11400 10900 10700 10300 10000
MFS 5700 5450 5350 5150 5000
           
Exemption 3650 3500 3400 3300 3200
Blocking Series
00 With Original Return
05 Full Allowance
18 Refile DLN without Original Return
98 Complete disallowance without Original Return
99 Complete disallowance with Original Return
Change Filing Status using cc ENREQ Source Codes
Code Literal
1 As you requested, we changed your account for [20XX] to correct your [RC].
2 We changed your [20XX] account to correct your [RC].
3 Because of recent changes in tax laws, rulings, or regulations, we changed your [20XX] tax return to correct your [RC].
4 We changed your tax return for 20XX] to correct an error we made. We apologize for any inconvenience we caused. The change will correct your [RC].
HOLD CODES
HC 1 Stops refund, mails adj. notice.
HC 2 Holds notice and credit.
HC 3 Stops adj. notice, allows refund.
HC 4 Stops notice forever stops refund.
HC 0 Use when not using any other HC.
IDRS STATUS - CC STAUP
19/21 Initial Notice
20 501 Notice
56 503 Notice
58 504 Notice
22/24/26 TDA Status
Priority Codes
PC 1 Used with an L freeze when both PC1 and PC8 are needed.
PC 3 Use when considering the 45- day interest-free period.
PC 5 Use with TC 290.00 to force post accruals of unrestricted interest and/or FTP penalty
PC 8 Use when inputting an adjustment within $10.00 of a prior adjustment, when EIC is increased or when adjusting W/H and TC 17X is posted.

Exhibit 4.13.7-11  (09-01-2006)
Form 8758 Excess Collections & Instructions

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Exhibit 4.13.7-12  (09-01-2006)
Audit Reconsideration First Read Checksheet

This sheet should be prepared for each Audit Reconsideration received and worked by the first read examiner.

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Exhibit 4.13.7-13  (09-01-2006)
Audit Reconsideration of Assessments Made by Appeals Processing Unit

Don't automatically send audit reconsideration requests on closed Appeals cases to Appeals. Some reconsideration requests should go to Appeals. Some should be routed to the originating function that made the adjustment – AUR, ASFR, Exam, etc. Some must be rejected because the Appeals closure was final. It depends on how Appeals closed the case.

  1. Send the audit reconsideration request directly to Appeals when:

    • The TP agreed with the Appeals finding and signed agreement form 870. (Appeals closing code 03 or 04.)

      Note:

      Appeals also uses closing code 03 on closures with Form 870-AD or Form 906 (Closing Agreements of Final Determination of Tax Liability) or 866 (Agreement as to Final Determination of Tax Liability). Don’t send audit reconsideration requests on these cases to Appeals. (Refer to IRM 4.13.1.8.(1) b.& e.) Follow the instructions in #3 below.

    • Appeals issued a Statutory Notice of Deficiency but, the TP did not respond so Appeals defaulted the notice and assessed the tax. (Appeals closing code 05)

      In these cases, when you forward the audit reconsideration to Appeals, send the TP letter 916C and select the optional paragraph that reads:

      "Thank you for your audit reconsideration request dated ______. Appeals previously considered and closed your case. We are forwarding your audit reconsideration case to the Appeals office located at _________________________ . You should hear from them within 90 days."

  2. Don’t send the audit reconsideration request to Appeals – but route it to the originating function that made the initial determination (AUR, ASFR, Exam, etc) when:

    • The case was docketed in Appeals and the Tax Court dismissed the TPs case for Lack of Jurisdiction. In these cases, Appeals had no involvement with the issue and Appeals processing input the adjustment per the Statutory Notice of Deficiency for Area Counsels’ office. (See IRM 4.13.1.8(1)F.) (Appeals closing codes 08, 11, or 21.)

      In these cases, send the case to the appropriate originating function and send the TP letter 916C and select the optional paragraph that reads:

      "Thank you for your audit reconsideration request dated ________. We are forwarding your case to_________________ for consideration. You should hear from them within ___days."

  3. Deny the TPs audit reconsideration request when the case was previously in Appeals and the Appeals determination was final or the Tax Court entered a final decision. This would include cases closed as follows:

    • With a decision document secured in a case docketed before the United States Tax Court. (Appeals closing codes 08, 10, or 21).

    • A decision made by the Court in a case that went to trial. (Appeals closing code 17).

    • A dismissal by the Tax Court due to Lack of Prosecution. (Appeals closing code 12).

      In these cases send the TP letter 916C and select the optional paragraph that reads:

      "The Appeals Office or the Tax Court previously considered the examination of your tax return at your request. The Appeals Office or the Tax Court closed that examination based on the last examination report you received. That determination was final and we cannot reopen or reconsider your case."

Exhibit 4.13.7-14  (09-01-2006)
Examination Documentation Requirements Paragraphs

  1. The following 12 exhibits (4.13.14 through 4.13.26) provide what paragraphs are needed for each of the situations outlined.

C] MARRIED FILING SEPARATE RETURN
1. Please furnish your spouse’s full name, current address, and social security number.

D] HEAD OF HOUSEHOLD
1. If you were divorced or legally separated, send a complete copy of divorce decree or separation agreement, including any modifications.
2. Send copies of cancelled checks and receipts for the qualifying person’s expenses such as mortgage payments rent, utilities, repairs, insurance, food, clothing and other personal expenses.
3. Send records to show who paid or contributed toward the support of the qualifying person(s) and the amount contributed by each person involved, including amounts received from governmental agencies such as food stamps or any payments made by any social service agency.
4. Send copies of school records, driver’s license and medical bills for the qualifying person to verify his or her place of residence.

E] QUALIFYING CHILD FOR EARNED INCOME CREDIT
1. Send a copy of the social security card for each qualifying child.
2. Send a copy of the official birth certificate for each qualifying dependent.
3. List all persons living with you in the same household for the calendar year. Include the name, social security number, relationship to you and the number of months each person lived with you.
4. Send copies of the records to show your dependent’s place of residence for the year. These records must be official, must show the name and residence address of each qualifying dependent, and must show specific residence dates during the calendar year.
5. Send a copy of the doctor’s statement if your qualifying child is totally and permanently disabled.

Exhibit 4.13.7-15  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 1

F] DEPENDENTS WHO LIVE WITH YOU
1. Send a computation of the total cost of support for each dependent living with you.
2. Send a computation of the amount of income or other funds received by or for each dependent. This would include, for example, wages, payments from social service agencies, Social Security, V.A. benefits and child support.
3. Show how you used each dependent’s income or other funds and the amounts contributed to the household expenses by each dependent living with you.
4. Send a copy of the birth certificate and social security card for each dependent claimed.
5. Send a copy of school, medical, or other records to determine each dependent’s place of residence.
6. Send a record of amounts contributed to household expenses by each person living in the household with the dependent.
7. If you were divorced or legally separated, send a complete copy of your divorce decree or separate maintenance agreement, including any modifications. Send a copy of any written agreement showing which parent will have custody and who can claim the dependent(s).
(Selective paragraph continues)
OTHER DEPENDENTS
(Selective paragraph continues)
1. Send a computation of the total cost of the dependent’s support as well as cancelled checks and receipts to verify amounts you spent for the dependent’s support. Provide a signed statement (Form 2120, Multiple Support Agreement) from each person with whom the dependent lived, confirming that they did not claim an exemption for the dependent(s). Statements should include their name, address and social security number.
2. Send a written statement showing the amount provided by any person or agency (such as, Social Security, social service agencies, Veterans Administration) that provided funds for the dependent’s support.
3. If you were divorced or separated, send a complete copy of your divorce decree, separate maintenance agreement, including any modifications, or any written statement stating which parent will have custody and claim the dependent(s).
4. Send a copy of Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, or similar written statement. This must be signed by the custodial parent agreeing not to claim an exemption for the child.
5. Send a copy of the birth certificate and social security card for all dependents.

Exhibit 4.13.7-16  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 2

G] FORMS W-2, 1098, 1099
Because your return did not report the same income or deductions as reported to IRS by employers or trustees, you must provide verification of all income received from the following sources:
1. Wages. Salaries, tips, fees, commissions (copies of Forms W-2).
2. Interest, dividends, unemployment compensation, proceeds from bartering, gambling winnings, prizes, awards, tips, disability income, etc (copies of Forms 1098,1099,5498, W-2G).
3. Pensions, annuities, royalties, estate or trust income and non-employee compensation (copy of Forms 1099R,1099S, 1099MISC, K-1).
4. Alimony received: (a copy of divorce decree or separation agreement).
5. Income earned from providing childcare.

H] INDIVIDUAL RETIREMENT ARRANGEMENTS
1. Send copies of the documents, which establish your Individual Retirement Arrangement (IRA) and copies of cancelled checks showing all contributions to the IRA for the year under examination.
2. Send copies of the documents showing sources of any rollover contributions to your IRA from a qualified pension or profit sharing plan or from another IRA, if applicable.

I] MOVING EXPENSES
1. Send copies of cancelled checks and receipts verifying the amount you paid to travel to your new home and to move your household goods and personal property.
2. Send a statement from your employer showing the allowance or reimbursement paid to you for moving expenses. This statement should identify the amounts by kind of expense, such as automobile, train, plane and transportation of household goods and personal property.
3. Send a statement from your employer as to whether the reimbursement was included on Form W-2.
4. Send the names and relationship of household members who moved with you.
5. Send the name and address of each employer you had since moving to your new place of employment and dates employed by each.
6. Send computations showing number of miles by direct route from your old residence to your new place of employment and from your old residence to your old place of employment.

Exhibit 4.13.7-17  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 3

J] SELF EMPLOYMENT HEALTH INSURANCE
1. Send proof of amount paid for health insurance.
2. If you or your spouse is an employee, send copies of statements from all your employers as to your eligibility to participate in the employer’s health plan at any time during the year.
3. Send proof the self-employment plan provides nondiscriminatory health insurance coverage to employees.

K] ALIMONY PAYMENTS
1. Send a copy of your divorce decree, separate maintenance agreement, or other instructions specifying the basis for alimony payments.
2. Send the current name, address, and social security number of the divorced or separated spouse.
3. Send copies of canceled checks or receipts to verify payments you made. If alimony payments were not made directly by you, provide copies of documents showing the source (such as an insurance policy, endowments, or annuity contract).

L] MEDICAL AND DENTAL EXPENSES
1. Send copies of cancelled checks, receipts or statements for all medical savings accounts, medical and dental expenses (including medical insurance) showing the person for whom each expense was incurred, along with any insurance or employer reimbursement records. Send a copy of your medical insurance handbook or policy describing the benefits and reimbursement policy and verification of premium cost.
2. For prescription drug expenses, send copies of statements or receipts showing the prescription numbers, names of drug, cost and date purchased.
3. For other expenses (including equipment, capital improvements, transportation and lodging) send proof of payment and statements to show cost and medical requirement.

M] STATE AND LOCAL INCOME TAXES/STATE TAX RETURN
1. Send copies of State, local, and Federal tax returns for the years involved.
2. Send copies of cancelled checks and receipts showing taxes paid.

N] REAL ESTATE AND PERSONAL PROPERTY TAXES
1. Send verification of your legal ownership of the property.
2. Send copies of cancelled checks, mortgage statements or receipts for taxes paid. Send a copy of your property tax bill and documentation for any property tax rebates or refunds.
3. Send a copy of the settlement statement if real property was sold or purchased during the year.
4. Send verification of any special assessments deducted as taxes and an explanation of their purpose.

Exhibit 4.13.7-18  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 4

O] INTEREST PAID
1. Send copies of mortgage interest statements, equity credit lines/loans, land and mortgage contracts, and amortization schedules for loans outstanding. Send copies of cancelled checks, receipts or other evidence of payments made for the year under examination.
2. Send copies of statements from financial institutions, investment brokerages or persons to verify your total investment interest deduction.

P] CONTRIBUTIONS
1. Send copies of your cancelled checks and receipts for contributions to churches or other organizations.
2. If the contribution was other than money, send the name and address of the charitable organization along with the description of the items contributed. Send a copy of the appraisal of the fair market value of each item on its contribution date and its original cost.
3. If you claimed expenses for attending a convention or similar activity, provide a statement showing you were an official representative of the organization. Also, provide the organization’s reimbursement policy, expense receipts and an itinerary or agenda for the activity.

Q] CASUALTY AND THEFT LOSS
1. If your property was insured, send a copy of the insurance report showing the date and nature of the loss or damage to the property. This report also should show the amount of damage, amount of coverage carried, and the date and amount of the claim paid by insurance, or the amount of the claim pending.
2. If your property was not insured, send copies of the fire or police department reports on losses from fire, theft, or accident.
3. Send photographs or videos showing the extent of the loss, if available.
4. Send an appraisal from a qualified estimator or adjuster showing the fair market value of the property before and after the casualty or showing an estimate of the damages.
5. Send verification of the cost or other basis of the property, the date it was acquired and the actual cost of repairs.

R] BUSINESS USE OF HOME-2106 EXPENSE
1. Send a statement from your employer stating that you are required to maintain an office in your home.
2. Send copies of cancelled checks and receipts verifying expenses incurred, such as interest, taxes, insurance, repairs and utilities.
3. Send a calculation of the total square footage of your home and the total square footage used for business.
4. Send copies of the documents that establish the cost or other basis of the home including the value of the land.

Exhibit 4.13.7-19  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 5

S] LEGAL, TAX, AND INVESTMENT COUNSEL FEES
1. Send copies of cancelled checks, receipts, and statements showing the amount of the payment and the purpose of the expense.

T] MISCELLANEOUS DEDUCTIONS
1. Verify the deductions claimed on your tax return and provide an explanation of each.

U] CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES
1. If you were divorced or legally separated, send a complete copy of your divorce decree or separation agreement (including any modifications). Also send the dates you had custody of the child and dates the other parent had custody of the child.
2. Send the name, address and social security number of each person or organization you paid for childcare or for the care of a disabled dependent. Also send copies of cancelled checks and receipts documenting the expenditures. If you do not have cancelled checks, provide a statement from each person or organization showing his/its name, address, period of care and amount paid.
3. If the expenses were paid for a disabled dependent, send a doctor’s statement showing that the dependent was physically or mentally unable to care for himself or herself,
4. Send a statement from your employer outlining any dependent care benefits paid.

V] FOREIGN TAX CREDIT
1. Send copies of receipts or statements showing foreign source income and foreign income taxes paid or withheld from your earnings. Provide translations of the necessary words so that the following items are clear:


a. Type of foreign tax paid or accrued
b. Date of payment or accrual
c. Exchange rate used to convert foreign currency to U.S. dollars
d. Amount of payment


2. Send a complete copy of the tax return(s) filed with foreign authorities covering the same periods as your U.S. tax return. Clearly indicate the tax liability and refund (or balance due) on the foreign return.
3. Send a list and verification of the foreign taxes paid or accrued that relate to tax years other than the one being examined. Provide copies of foreign tax returns for those years.
4. Provide a schedule showing how you computed the credit carryback or carryover, if applicable.

Exhibit 4.13.7-20  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 6

W] FEDERAL INCOME TAX WITHHOLDING/EXCESS FICA
1. Send copies of all Forms W-2, W-2G, or 1099 to verify withholding or excess FICA withheld by employers or trustees.

X] CAR AND TRUCK
1. Send copies of repair receipts, inspection slips, and other records showing total mileage for the year.
2. Send copies of logbooks and other records to support business mileage claimed.
3. Provide a copy of your appointment book or calendar of business activities for the year.
4. If you are claiming actual expenses, please provide copies of paid bills, invoices and canceled checks or automobile expenses. These would include gas, oil tires, repairs, insurance, interest, tags, taxes, parking fees and tolls.
5. Send a copy of the bill of sale or other verification to establish your basis in the vehicle, including the trade-in of another vehicle.

Y] EDUCATION EXPENSES
1. Send a statement from your employer explaining whether you needed the education to keep your job, salary or status. Explain how the education helped maintain or improve the skills needed in your job and how much reimbursement you received. Break down the reimbursement by category of expense.
2. Send copies of cancelled checks and receipts to verify amounts you spent for tuition, books, transportation and other educational expenses. If you were away from home overnight for educational purposes, provide expense verification for your meals, lodging and travel.
3. Send documents such as transcripts, course descriptions and catalogs showing your period of enrollment in the educational institution and the principal subjects studied.
4. Provide complete information about any scholarship or fellowship grants, including amounts you received during the year.

Z] EMPLOYEE BUSINESS EXPENSES
1. Send a statement from your employer showing:


a. A copy of your job description or a brief outline of your duties
b. A copy of the reimbursement policy or a statement that there is no reimbursement policy
c. Whether or not reimbursement is included on your W-2, and, if so, where the reimbursement is reported
d. The amount and kind of expense reimbursed, charged or provided
e. The specific expenses not covered by reimbursement policy
f. The territory assigned to you and the dates and locations of temporary jobs


2. Send copies of the expense vouchers submitted to your employer.
3. Send copies of logs, diaries or other records of expenses showing all expenses incurred, job locations and dates you were at each location.

Exhibit 4.13.7-21  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 7

0] GAS, FUEL AND OIL
1. Send copies of cancelled checks and receipts for gas, fuel, and oil expense.
2. Send documentation that the amount of the Gas Tax Credit claimed was also reported as income

1] INSURANCE EXPENSE
1. Send copies of all insurance policies for which you deducted premiums.
2. Send copies of cancelled checks for insurance paid, or invoices for insurance owed.

2] JOB HUNTING
1. Send a copy of the log or diary showing your job-hunting activity and copies of canceled checks or receipts showing expenses paid, including payments to employment agencies.
2. Send a statement from your employer showing the amount of reimbursement, if any.
3. Send documents to establish type of job sought.

3] RENTAL
1. Send copies of cancelled checks and receipts to verify all rental expense claimed
2. Send a copy of the lease or rental agreement, canceled checks, and statements for rent paid or owed during the year

4] ENTERTAINMENT, MEALS, GIFTS AND OTHER EXPENSES
1. Send copies of the records and receipts for entertainment expenses and meals you claimed. The records must have been made timely and must show the name(s) and business relationship of the person(s) entertained. The records also must show the date, place and purpose of the entertainment and the amount of the expenditure.
2. For entertainment facilities, send copies of the records showing the expenses you incurred. Show total use, and business use of the facility if it was maintained by you.
3. For business gifts, send copies of records and receipts showing the cost of the gifts you provided, the persons to whom the gifts were given and their business relationship.

5] TRAVEL, LODGING, AND OTHER EXPENSES
1. Send copies of documents showing that this travel was related to your business.
2. Send copies of transportation tickets, receipts and cancelled checks to substantiate the expenses you claimed.
3. Send copies of lodging receipts and verification of the number of days away from home overnight for business purposes.
4. Send copies of brochures, activity schedules and agendas for all conventions, cruises or meetings.

6] UNIFORMS, EQUIPMENT AND TOOLS
1. Describe the items claimed and explain how they related to your employment.
2. Send a statement from your employer stating whether or not the expense was required, Also provide your employer’s description of the reimbursement policy and the amount reimbursed or allowance paid.
3. Send copies of canceled checks and receipts verifying expenses.

Exhibit 4.13.7-22  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 8

7] BAD DEBTS/BAD DEBTS FROM SALES OR SERVICES
1. Send a verification of your debt, such as a note or contract establishing the debtor-creditor relationship.
2. Send the full name and the last known address of the debtor.
3. Send evidence of your efforts to collect the debt.
4. Send evidence of the uncollectability of the debt in the year claimed.
5. Send evidence that the debt previously was included in income.

8] COPIES OF ALL FORMS 1099 FOR COMMISSIONS PAID.
1. If Forms 1099 were not issued, send the names, addresses, and social security numbers for recipients of commissions who are individuals.
2. Send copies of contracts or other written agreements for contract labor.
3. Send copies of cancelled checks and all other records to verify amounts paid to each individual and in each contract.

9] COST OF GOODS SOLD
1. Send copies of the physical inventory sheets for both the beginning and the ending inventory for the year.
2. Send copies of receipts, cancelled checks, purchase journals or summaries and all other records for materials, supplies and other costs incurred to raise, produce or purchase goods for resale.
3. Send copies of cancelled checks, contracts and other records to verify the amount paid to each individual or contractor. Send the names, addresses and social security numbers of individuals paid.
4. Send the description and computation of the cost of the inventory items withdrawn for personal use. Include gifts to family and friends and items for personal consumption.

a] COST OF LIVESTOCK OR OTHER ITEMS BOUGHT FOR RESALE
1. Send copies of the physical inventory sheets for both the beginning and the ending inventory for the year.
2. Send copies of the receipts, cancelled checks and purchase journals or summaries for goods purchased for resale.
3. Send the description and computation of the cost of inventory items withdrawn for personal use. Include gifts to family and friends and items for personal consumption.

Exhibit 4.13.7-23  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 9

b] DEPRECIATION/SECTION 179
1. Send copies of the purchase invoices, settlement sheets, receipts and any other evidence to verify ownership of the assets.
2. Send a computation of how you determined that the depreciable basis of the assets. Provide a detailed depreciation schedule for all assets.
3. Send copies of records and log books showing the total business and personal use of the depreciable assets.
4. For real property, verify your ownership of the property, the date acquired, the cost of the property, the land allocation and the cost of improvements or additions to the property.

c] DEPRECIATION OF RENTAL PROPERTY
1. Send evidence to verify your ownership of the property, the date acquired, the cost and the computation of basis if different from cost. Also, send a calculation showing allocation of basis to land and to buildings and another to show the cost of improvements and additions to the property.
2. Send a schedule of depreciation computed for the current and prior year.

d] GROSS RECEIPTS
1. Send a brief history of your business operations.
2. Send copies of all books, journals, ledgers and workpapers used to determine gross receipts.
3. Send copies of all bank statements and deposit slips, both business and personal, savings and checking, for the 14 month period from December through January of the year in question.
4. Send records of all savings and invested funds, for the year. This would include such investment vehicles as money market accounts, certificates of deposit and other items.
5. Send copies of records and documentation of all other business and personal receipts. These might be loans, insurance proceeds, inheritances, salaries, employer reimbursements, gifts, Social Security benefits and transfers between bank accounts.
6. Send copies of purchase invoices or closing statements for acquisitions and dispositions of business and personal capital items. This includes real estate, automobiles, machinery and equipment, etc.

e] MACHINE AND LABOR HIRE
1. Send copies of all Forms 1099 for machine expenses paid.
2. If Forms 1099 were not issued to individuals who were paid for machine work, provide the names, addresses, and social security numbers of those individuals.
3. Send copies of cancelled checks, invoices and other records to verify amount paid.

Exhibit 4.13.7-24  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 10

f] OFFICE IN THE HOME-SCHEDULE C EXPENSE
1. Send copies of statements from third parties, if applicable, showing you were required to provide an office in your home or elsewhere.
2. Send copies of canceled checks or receipts verifying expenses incurred such as interest, taxes, insurance, and utilities.
3. Send copies of records to support cost basis for depreciation.
4. Send verification of the square footage of the home and the total square footage in the area used for business.

g] PENSION OR PROFIT SHARING PLANS
Please provide copies of cancelled checks and other documents verifying the establishment of and contributions to the plan for the year.

h] RENT EXPENSE
Send copies of the lease or rental agreement, canceled checks, and statements for the rent paid or owed during the year.

i] RENTAL INCOME
1. Send evidence to verify your ownership of the property.
2. Send copies of receipts, lease agreements and other records showing the total amount of rent you received.
3. Send a statement from a real estate agent showing the fair rental value for similar properties in the same geographic area. If any of the units were occupied rent-free or below fair rental value during the year, provide an explanation.
4. Tell us the total number of days the unit was rented and the number of days the unit was used for personal purposes.
5. If the property was converted from a personal residence to rental property give the date of the conversion.

j] SALARIES AND WAGES PAID
1. Send copies of the employment tax returns (Forms 940, 941, or 943) to support your deduction for salaries and wages paid to employees.
2. Send copies of Forms W-2, W-4, and 1099 for all employees.
3. Send copies of payment records, including canceled checks, for salaries and wages paid.

Exhibit 4.13.7-25  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 11

k] SCHEDULE D - SALES OF REAL AND PERSONAL PROPERTY
1. Send a copy of the bill of sale or closing/settlement statement for the purchase of the property.
2. Send copies of the verification of the capital improvements made to the property, such as receipts, bills and/or contracts.
3. Send a copy of the closing statement and the records showing the terms and expenses of the sale.
4. If the property was repossessed or foreclosed, send a copy of the income tax return for the year of the original sale. Also send copies of all contracts or legal documents involved, and verification of the repossession or foreclosure costs.
5. Send copies of documents to verify the purchase cost and sales price of other capital assets sold.

l] STOCK SALES
1. Send copies of brokerage vouchers and monthly statements establishing the purchase price, the sales price and the dates of transactions.
2. If you sold securities on which you had a return of capital or stock splits, send copies of your records showing distributions received during the holding period, For worthless securities, provide verification of the dissolution or liquidation and the amount of the liquidating distribution.

m] STUDENT LOAN INTEREST
1. Send copies of student loan contracts (original and refinanced), interest paid statements and cancelled checks or receipts to verify payments.
2. Send copies of transcripts for all years that you incurred student loans.
3. Send copies of receipts for all education costs, such as tuition, fees, room and board, books and equipment.
4. Send statements for all nontaxable sources of income from:


a. all employer-provided educational assistance programs
b. withdrawals from any educational Individual Retirement Account
c. U.S. savings bond interest that is nontaxable because you paid qualified higher education expenses
d. Qualified scholarships
e. Veterans educational assistance benefits
f. Any other nontaxable payments received for educational expenses


5. Send copies of all tax returns for years that you incurred student loans.

Exhibit 4.13.7-26  (09-01-2006)
Examination Documentation Requirements Paragraphs - Cont. 12

n] MEDICAL SAVINGS ACCOUNT
1. Send copies of statements from all employers showing the total number of employees and total contributions made to your medical savings account (if a joint return, both spouses).
2. Send a copy of all health insurance plans.
3. Send copies of cancelled checks or other verification of contributions.

o] SALE OF PERSONAL RESIDENCE
1. Send copies of closing statements for the sale of the residence and for the cost of the residence when it was purchased.
2. Send copies of cancelled checks and receipts for improvements made to the residence that was sold.
3. Send a copy of documentation for any casualty loss deduction previously claimed.
4. Send a copy of documentation for any other sales of personal residence(s) within the previous 2 years.
5. If the residence was converted to rental or business use, give the date of the conversion and the date it reverted to personal use.
6. Send a copy of your income tax return for the last year the home was used for business before the sale.
7. Provide copies of all Forms 2119 from prior years to verify the adjusted basis of the residence sold.


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