- 4.17.1.1 Overview
- 4.17.1.2 Purpose and Scope
- 4.17.1.3 Activities Not Subject to CIP Procedures
- 4.17.1.4 Definitions
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This chapter contains procedures for the development, approval and management of Compliance Initiative Projects (CIPs).
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The organization has changed as has the workload selection and delivery. Recognizing we have limited resources, it is imperative that we make the best use of these resources while, at the same time, treating taxpayers consistently and fairly nationwide. To do this, we must have consistent thresholds and tolerances nationwide, and ensure that employees are given consistent direction. For these reasons, we no longer have a local focus but a national one.
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The purpose of this chapter is to ensure that all Headquarters and field offices within the Small Business/Self Employed (SB/SE) Operating Division, Large and Midsize Business Division (LMSB) and Wage and Investment Division (W&I) follow consistent guidelines and comply with Service policies regarding:
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Privacy
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Compliance
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Security
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Disclosure
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Data acquisition and management
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Measurement of results
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Fundamental principles of CIPs include:
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Safeguarding taxpayer privacy and protecting taxpayers against unauthorized disclosure of confidential information or unauthorized compliance contacts,
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Improving voluntary compliance,
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Using data driven business decisions as the basis for expending resources, and
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Ensuring authorization by all functions whose resources will be significantly impacted.
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CIPs are any activities involving contact with specific taxpayers within a group, using either internal or external data to identify potential areas of noncompliance within the group, for the purpose of correcting the noncompliance. The term CIP refers to activities formerly categorized as Return Compliance Programs (RCP), Information Gathering Projects (IGP), Compliance 2000 Projects, etc.
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CIP procedures apply to gathering taxpayer specific external data, whether or not taxpayer contacts are made.
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CIP procedures apply to all functions and units within the Internal Revenue Service and are mandatory. No deviation from these procedures is allowed without the written approval of the Director, Centralized Workload and Selection (SB/SE), Director of Strategy Research and Program Planning (LMSB), or the Director, Reporting Compliance or delegate (W&I).
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CIP procedures do not apply to routine business operations. Routine business operations are structured activities commonly conducted in day-to-day operations, in which taxpayers are specifically identified. Routine business operations should be authorized in the IRM or interim documents. Examples are:
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Contacts generated by automated return selection systems such as DIF (DIscriminant Function), UIDIF, ADDAPT (Alternative DIF Delivery and Planning Tool), DAS (Discriminant Analysis Function), or automatics (audit codes) identified during return processing.
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Ordering, classifying and storing returns,
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Any group of taxpayers that fall within an issue that is identified on the W & I annual work plan for examination,
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Securing information necessary for the collection of delinquent returns and taxes,
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Submitting and verifying information reports,
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Extending audits or investigations to related taxpayers,
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Anti-Money Laundering compliance examinations or compliance reviews, (Refer to IRM 4.26, Anti–Money Laundering)
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Taxpayer contacts generated as a result of Information Reports,
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Referral Reports (Forms 3449, 5346) and referrals from other functions,
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Reports of Investigation of Transferee Liability (Forms 3031),
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Approved Research Projects (Examination of taxpayers and use of information obtained will require approval by a CIP, a National Strategy, or the approved W&I annual work plan.), and
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Projects approved through the TEC Business Initiative Proposal or via the PACT process unless compliance contacts are going to be required. (Refer to IRM 22.21, Taxpayer Education and Communication.)
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CIP procedures do not apply to mandatory activities such as national strategies or initiatives or MOUs (Memorandums of Understanding) if all the following applicable conditions are met:
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They contain a valid business case.
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They contain clear, specific details regarding taxpayer/return selection criteria and any alternative treatments.
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They are adopted and approved at Headquarters by individuals (directors or higher) who have authority to commit the resources of the initiating function.
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They are approved by all significantly impacted functions.
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The Director, Centralized Workload Selection and Delivery (SB/SE), or the Director, Strategy Research and Program Planning (LMSB), or the Director, Reporting Compliance or delegate (W&I) must be part of the review and approval process.
If the above criteria are not met, CIP procedures will still apply.
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Alternative Treatments – Non-audit/collection activities by personnel for the purpose of improving voluntary compliance. Examples are:
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Taxpayer outreach/education
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Revisions to forms or publications
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Legislative or regulatory changes
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Agreements with state or local business licensing authorities for tax compliance requirements
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Business Case – A collection of facts developed to support a request for implementation of any compliance initiative project. The business case should address all material issues, including why resources should be allocated to the project for which approval is requested rather than other compliance activities.
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Examination Specialization Program (ESP) – A program designed to increase the level of expertise of employees through specialization and the development of audit techniques specific to particular market segments, with the goal of increasing efficiency, effectiveness and consistency of audits within market segments.
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External Data– Taxpayer specific data (see definition below) collected from public and private sources outside IRS. External data does not include non-sensitive data such as research services (e.g. Lexis/Nexis™, ChoicePoint™), newspaper articles, periodicals, taxpayer websites, etc.
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Internal Data – Information that is required to be filed with the IRS or is produced within the IRS or is furnished to the IRS and incorporated into its data systems. An example is information received from other government agencies as part of an agreement.
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Midwest Automated Compliance System (MACS) – A PC based, automated, menu driven database containing multiple year tax returns and other information, that can be accessed to profile filing populations, identify groups of potentially non-compliant taxpayers, locate taxpayers, etc.
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Privacy – The right of taxpayers to be free from unauthorized or unnecessary intrusion into their personal affairs.
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ROTERS (Record of Tax Enforcement Results) – data, statistics, compilations of information or other numerical or quantitative recordations of the tax enforcement results reached in one or more cases, but not to include the tax enforcement results of individual cases when used to determine whether an employee has exercised appropriate judgment in pursuing enforcement of the tax laws based upon a review of the employee’s work on that individual case.
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Security – The protection of data from loss or inappropriate use.
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Taxpayer Specific Data– Any information that contains taxpayer identifiers or can be traced back to a specific taxpayer. Examples are name, address, taxpayer identification number, driver’s license number, telephone number, or coding used in place of another identifier that can ultimately be traced to a specific taxpayer.