4.17.1  Overview of Compliance Initiative Projects

4.17.1.1  (02-25-2010)
Overview

  1. This chapter contains procedures for the development, approval, and management of Compliance Initiative Projects (CIPs).

4.17.1.1.1  (02-25-2010)
Background

  1. The organization continues to evolve, as does the identification, selection, and delivery of workload. Recognizing we have limited resources, it is imperative we make the best use of these resources while, at the same time, treating taxpayers consistently and fairly servicewide.

4.17.1.2  (02-25-2010)
Purpose and Scope

  1. The purpose of this chapter is to ensure all compliance employees follow consistent guidelines and comply with Service policies regarding:

    • Privacy,

    • Compliance,

    • Security,

    • Disclosure,

    • Data acquisition and management, and

    • Measurement of results.

  2. Fundamental principles of CIPs include:

    • Identifying trends of non-compliance and improper treatment of tax issues.

    • Safeguarding taxpayer privacy and protecting taxpayers against unauthorized disclosure of confidential information or unauthorized compliance contacts,

    • Improving voluntary compliance,

    • Using data driven business decisions as the basis for expending resources,

    • Ensuring authorization by all functions whose resources will be significantly impacted, and

  3. CIPs are any activities involving contact with specific taxpayers and collection of taxpayer data within a group, using either internal or external data to identify potential areas of non-compliance within the group, for the purpose of correcting the non-compliance.

  4. CIP procedures apply to gathering taxpayer specific external data, whether or not taxpayers are contacted.

  5. 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 SB/SE Director, Examination Planning and Delivery (or equivalent); SB/SE Director, Campus Reporting; LMSB Director, Planning, Quality, Analysis and Support; or W&I Director, Reporting Compliance or delegate (W&I).

4.17.1.3  (02-25-2010)
Activities Not Subject to CIP Procedures

  1. 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. Examples are:

    • Contacts generated by automated return selection systems such as DIF (Discriminant Function), DAF (Discriminant Analysis Function), or automatics (audit codes) identified during return processing;

    • Ordering, classifying and storing returns (this includes training returns);

    • Any group of taxpayers that fall within an issue that is identified on a business operating unit's annual work plan for examination;

    • Securing information necessary for the collection of delinquent returns and taxes;

    • Submitting and verifying information reports;

    • Extending audits or investigations to related taxpayers;

    • Fraud/BSA compliance examinations or compliance reviews, (Refer to IRM 4.26, BANK SECRECY ACT, Handbook);

    • AT and AT Offshore compliance examinations (Refer to IRM 4.32.2.3.2 and Delegation Order 4.60, Functions Related to Potential Promoters/Tax Shelters Cases);

    • Taxpayer contacts generated as a result of Information Reports

    • Referral Reports - Forms 3449, Referral Report, Form 5346, Examination Information Report, and referrals from other functions;

    • Form 3031, Reports of Investigation of Transferee Liability,

    • 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

    • Projects approved through the Communication Liaison, and Disclosure Business Initiative Proposal or via the Pre-Filing Activity Control and Time system process unless compliance contacts are going to be required. Refer to IRM 11.53.3, Communications and Liaisons, SB/SE, Policy and Strategic Planning and IRM 11.53.6, Stakeholder Liaison Compliance Support Programs .

  2. CIP procedures do not apply to mandatory activities such as national strategies or initiatives or Memorandums of Understanding (MOUs) if all the following applicable conditions are met:

    • They contain a valid business case.

    • They contain clear, specific details regarding taxpayer/return selection criteria and any alternative treatments.

    • They are adopted and approved at Headquarters by individuals (directors or higher) who have authority to commit the resources of the initiating function.

    • They are approved by all significantly impacted functions.

    • The Director, Examination Planning and Delivery or equivalent, (SB/SE), or Director of Campus Reporting (SB/SE Campus), Director, Planning Quality Analysis and Support (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 apply.

4.17.1.4  (02-25-2010)
Definitions

  1. Alternative Treatments – Non-audit/collection activities by personnel for the purpose of improving voluntary compliance. Examples include but are not limited to the following:

    • Taxpayer outreach/education,

    • Revisions to forms or publications,

    • Legislative or regulatory changes, and

    • Agreements with state or local business licensing authorities for tax compliance requirements.

  2. 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.

  3. CIP Contact - Office/individual responsible for initiating a CIP.

  4. CIP Coordinator - CIP coordinators have program responsibility for monitoring CIP projects on a Headquarters, Area, or Industry level.

  5. Compliance Data Environment (CDE) – CDE is a workload identification, planning, and delivery system that operates in a web-based environment. It includes Individual, Business, and Trust returns for the current year and 3 prior years.

  6. Examination Specialization (ES) – 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.

  7. External Data – Taxpayer specific data (see definition below) collected from public and private sources outside of IRS. External data does not include non-sensitive data such as electronic asset locator and people locator services, newspaper articles, periodicals, taxpayer websites, etc.

  8. 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.

  9. Monitoring - Utilize AIMS data as a tool to track individual CIP results.

  10. National CIP Database – The National CIP Database is an Access database which contains information on past and present CIPs. This database contains a brief description of the activities and/or issues that each CIP addresses. The database has historical and current CIP information that is available for Service personnel.

  11. New Taxpayer Contact – For the purpose of Part 4 Chapter 17, any contact made with a taxpayer whose case is in a status below 10 at the expiration/termination date of an authorization.

    Note:

    For the purpose of the no new taxpayer contact rule, these are cases that are below status 10 and considered not to be in the audit pipeline at the expiration/termination of the authorization.

  12. Privacy – The right of taxpayers to be free from unauthorized or unnecessary intrusion into their personal affairs.

  13. 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.

  14. Security – The protection of data from loss or inappropriate use.

  15. 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.

  16. Taxpayer – Relates to the key case identified under an approved CIP; does not include related returns or prior or subsequent year returns.

  17. New Taxpayer Contact – Any contact made with a taxpayer whose case is in a status below 10 at the expiration/termination date of an authorization.

    Note:

    For the purpose of the no new taxpayer contact rule, these are cases that are below status 10 and considered not to be in the audit pipeline at the expiration/termination of the authorization.


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