4.19.11  Examination Classification of Work (Cont. 1)

4.19.11.1 
Examination Classification of Work

4.19.11.1.26  (11-09-2007)
International Special Instructions

  1. The mathematical DIF formulas for individual returns with certain modifications apply to returns identified for Director, International.

  2. Returns with APO/FPO addresses are also selected under the DIF system.

    • These returns are filed by military personnel stationed overseas or on ships, and are under the jurisdiction of the Director, Area 15 CP:IN:D.

    • All APO/FPO returns are to be filed at the Austin Campus.

  3. Computer reports for individual returns (1040-1, 1040-2, etc.), and corporate returns (1120-1,1120 -2, etc.), are generated for the Director, International, Area Office 15.

    Note:

    Computer report 1040-2 contains the number of returns filed which have a Form 2555 or 2555EZ attached.

  4. Individual return Post-of-Duty (POD) report 1040-1 is generated for AOs 15 by country or countries.

    1. Separate PODs are used for APO/FPO returns.

    2. All Forms 1040NR are assigned to AO 15, POD 081.

    3. Forms 1040PR and 1040SS are assigned to various PODs within AO 15.

    4. POD 999 will be assigned primarily to AO 15 returns and APO/FPO returns for which a valid ZIP code does not exist.

  5. Return orders for these returns are submitted to the Philadelphia Campus.

    1. Individual returns for Area Office 15 may be ordered with or without Forms 2555 (Foreign Earned Income) or 2555EZ (Foreign Earned Income Exclusion), attached to the returns.

    2. Individual returns for Area Office 15 Indicator Code F will be used to order returns with Form 2555 or 2555EZ attached.

    3. Individual returns for Area Office 15 Indicator Code G will be used to order returns without Form 2555 or 2555EZ attached.

    4. Forms 1040NR, 1040PR, or 1040SS may be deleted from Area Office 15 return orders by excluding the applicable POD(s) to which these returns are assigned from the individual return order.

    5. Forms 1040NR, 1040PR, or 1040SS may be separately ordered for Area Office 15 by placing a POD Supplemental Order for individual returns.

    6. Forms 1040NR are delivered only when the indicator code is blank or a J.

    7. Forms 1040PR and 1040SS are delivered only when the indicator code is blank.

  6. Office Examination returns are classified by Tax Auditors from the Director, Area 15. These returns include:

    • Forms 1040 with Form 2555 or 2555EZ attached,

    • Forms 1040 with foreign addresses,

    • Forms 1040PR,

    • Forms 1040SS, and

    • APO/FPO returns.

  7. Field Examination returns are classified by Revenue Agents from the Director, Area 15. These are primarily Forms 1120F, U.S. Income Tax Return of a Foreign Corporation.

4.19.11.1.27  (11-09-2007)
Missing Return Procedures

  1. There are instances in which the Campus cannot furnish all returns ordered by Examination because returns are missing from the block. They may be already charged to Examination or to other functions or operational units.

    Note:

    Returns charged to Examination are not considered missing.

  2. Upon conclusion of the initial pull and delivery by Files Management of a returns order to the Campus Examination Branch (SCEB), Files Management makes a special search for any returns missing from the order.

    1. Charge-Out Documents (Forms 5546) are assigned to Special Searchers in the Files Management Unit who will make an extensive search for the returns.

    2. For returns located in the special search, related Charge-Out Documents are attached to the returns and the package is forwarded to SCEB.

    3. For returns still missing after the special search, SCEB receives only the Charge-Out Documents. However, each missing return charge-out document will contain an explanation of to whom the return is charged.

  3. SCEB takes the following steps with regard to missing returns for Non Automatics:

    1. A print of CC RTVUE/BRTVUE or MACS (Midwest Automated Compliance System) print is utilized for classification purposes if the return cannot be located.

    2. If a proper classification determination can be made from the print, accept or select and process the print as if it were a copy of the returns.

    3. If a determination cannot be made from a print, close the AIMS base using Disposal Code 29.

  4. SCEB takes the following steps with regard to missing returns for Automatics and Specials:

    1. At least one follow-up attempt is made on or before March 31 of the succeeding year.

    2. If follow-up action is discontinued, close the AIMS base using disposal code 29.

    3. If the attempted disposal code 29 closing of an automatic returns rejects, this means the prior year return was an automatic and was closed using disposal code 29.

    4. When this condition exists, the AIMS assembly, along with a full explanation of the situation, will be sent via a Form 3210, Document Transmittal, to the Chief, PSP for an accept or select determination.

    5. Chief, PSP considers whether or not the taxpayer should be contacted to request a copy of the return.

    6. Due to the taxpayer burden, a copy will be requested only if deemed absolutely necessary.

4.19.11.1.28  (11-09-2007)
Returns to Be Transferred

  1. The inventory of individual returns for Area Offices is based on the Zip Code of the address shown on the return. California is divided into more than one Area Office. When transferring returns to this state, check http://sbse.web.irs.gov/AIMS for the AIMS listing, which is updated monthly, to determine the proper Area Office.

  2. The inventory of corporation, partnership and fiduciary returns for an Area Office is based on the Area Office in which a return is filed and not the Area Office location indicated by the address shown on the return.

  3. When a return is transferred, classification is not to set the scope and type of examination to be performed by the office receiving the return after the transfer. This does not apply if the return is to be classified at the Campus and the transfer Area Office is serviced by the same Campus.

  4. When a return is to be transferred to another Area Office, prepare Form 3185 (Transfer of Returns—Transfer of Administrative File) in accordance with the AIMS handbook.

  5. Identify all cases transferred-in from the Assistant Commissioner (International) as pre contact analysis cases.

4.19.11.1.29  (11-09-2007)
Abatement of Interest

  1. The taxpayer may request abatement of interest due to an error or delay in the performance of a ministerial/managerial act.

    • The IRS has the authority to abate interest in cases where the additional interest was caused by IRS errors or delays, per IRC 6404(e).

    • However, the IRS may act only if there was an error or delay in performing either a ministerial act or a managerial act (including loss of records by the IRS, transfers of IRS personnel, extended illness, extended personnel training or extended leave) and only if the abatement relates to a tax of the type for which a notice of deficiency is required.

    • Such taxes would be those relating to income, generation-skipping transfers, estate, gift and certain excise taxes, but not abatement of interest for employment taxes or other excise taxes.

  2. The Accounts Management Operation at each campus generally receives requests for abatements of interest and determines which functional area is the source of the claimed error or delay. Accounts Management Branch will:

    1. Obtain the administrative file,

    2. Correct transcripts and

    3. Route the file to the Interest Abatement Coordinator (IAC) in that functional area.

  3. Accounts Management will forward claims originating in Customer Account Services (CAS) to Examination as Technical Advice requests. Examination will review and return them with a recommendation whether to allow or disallow the claims.

  4. Interest abatement claims may also be received directly in Examination Branch, either in the processing of an Examination program, or in a prior examination reconsideration request.

    1. If the interest abatement claim/request is received during the examination process, it should be forwarded to the IAC before the issuance of the statutory notice of deficiency and/or closing of the case.

    2. Correspondence examiners should initially screen the interest abatement claim for validity.

      Reminder:

      The Internal Revenue Service does not have the authority to abate interest charges due to "reasonable cause" , on the part of the taxpayer, for underpayment of taxes.

    3. If there is any question regarding the validity of the interest abatement claim, it should be forwarded to the IAC in the Campus Examination Operation.

  5. The Interest Abatement Coordinator in Examination Branch Operation will follow the criteria in IRC Section 6404(e)(1) to process requests.

  6. Interest is charged on taxes not paid by the due date of the return without regard to extensions or late filing. Refer to IRM 20.2.7, Interest Abatement, for complete procedures for receiving, processing, determining and closing requests for interest abatement.

  7. See IRM 21.5.2.4.10.1, Adjustment Guidelines for additional information.

4.19.11.1.30  (11-09-2007)
Administrative Adjustment Request (AAR) - Form 8082

  1. An AAR is an amended return with a Form 8082, Notice of Inconsistent Administrative Treatment of Amended Return (Request for Administrative Adjustment), as a Adjustment Request cover sheet. See IRM 4.31.4, Administrative Adjustment Requests, for information concerning these returns.

4.19.11.1.31  (11-09-2007)
Form 5346, Examination Information Report

  1. When Examination receives information of sufficient compliance value to warrant enforcement follow-up, concerning a return filed or to be filed by a taxpayer:

    1. Prepare Form 5346, Examination Information Report, and

    2. Submit to the immediate manager for approval.

  2. If the examination cycle for the return to which the information report pertains will expire within 180 days, there must be a firm and clearly defined issue involving substantial additional tax for the period before the Form 5346 is prepared.

4.19.11.1.31.1  (11-09-2007)
Screening Forms 5346

  1. All approved Examination Information Reports including those relating to returns for tax years not yet filed are referred to the Chief, PSP, in the applicable Area Office.

  2. Forms 5346 which relate to a taxpayer filing in another Area Office are mailed to that Area Office to the attention of the Chief, PSP.

  3. Research AIMS for any open cases on the applicable period(s) and associate the Form 5346 with the case file.

4.19.11.1.31.2  (11-09-2007)
Intercept File — Form 5346

  1. Forms 5346, Examination Information Report, approved by the Chief, PSP, are sent to the Operations manager, Examination, after input of Source Code 60 on AIMS.

  2. An annual review should be conducted to determine if reports should have the returns secured for classification.

4.19.11.1.32  (10-01-2009)
Form 8697, Look Back Method

  1. Form 8697 is required for each year when a taxpayer completes a long-term contract after February 28, 1986, that was accounted for using either the percentage of completion method or the percentage of completion - capitalized cost method for Federal income tax purposes.

  2. Form 8697 is required for any tax year in which the contract price or contract costs are adjusted for one or more of these long-term contracts from a prior year. See IRM 20.2, Interest Handbook, for instructions.

4.19.11.1.32.1  (05-21-2010)
Form 8697 General Procedures

  1. Accounts Management Branch forwards all Forms 8697 to Examination ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Examination reviews the Form 8897 for completeness and accuracy and, if errors are found, mails a photocopy to the taxpayer explaining the information required to correct the form. The letter should direct the taxpayer to return the completed form to the reviewing agent.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the correct amount is more than the amount claimed by the taxpayer, the reviewing agent allows the additional amount and prepares Form 3198, Special Handling Notice, with processing instructions.

  3. If the correct amount is less than the amount requested by the taxpayer, issue a partial refund and Letter 106(C).

4.19.11.1.33  (11-09-2007)
Prompt Assessments

  1. Examination Branch is responsible for processing prompt assessments requests under IRC Section 6501(d) as follows:

    • The original return(s) must be filed prior to submitting the request.

    • The statute of limitations is limited on all returns referenced to 18 months from received date of the request or 3 years from the date the original return is filed, whichever is earlier.

    • The request must be made by the executor, administrator, or other fiduciary representing the estate of the decedent, or by the corporation (or fiduciary representing the dissolved corporation) and must be in relation to a decedent Form 1040 return during the period of administration, a gift tax return, Form 709, or a fiduciary income tax return, Form 1041, for a decedent’s estate, or a Form 1120, Form 940, Form 941, Form 990-T, or other forms for any tax for which a return is required, for a corporation contemplating dissolution, a corporation in the process of dissolving, or corporation that has dissolved.

    • Requests for a prompt assessment generally are received from taxpayers on Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d).

  2. Classification Section will determine if the request is complete and valid, the person making the request is authorized to do so, and all returns referenced have been filed.

    • Refer to Treasury Regulation 301.6501(d)-1 for reference in making these determinations.

    • If the request is incomplete or invalid for any reason, advise the requestor accordingly.

  3. Classification Section will input TC 560 using REQ77 on all cases selected for examination (this allows the input of a date that is earlier than the original date thus identifying the correct assessment statute expiration date and primary and/or secondary TIN for each return considered).

    Note:

    You must use a unique blocking series with the TC 560 or it will unpost if the ASED input is earlier than the MF ASED.

  4. Following is from the IMF PRP. CC AMSTU generates one of the blocking series below so our ASED updates will not unpost. If you directly input the TC 450 you must use one of the following or it will unpost:

    1. RC2 ASED TC 560 (TC 560 blocking series 700, 775, 990-999 bypass checks a, c and d below)

    1. The ASED of the input transaction is not equal to or greater than regular ASED.

    2. An unreversed TC 480.

    3. The transaction date of the TC 560 is later than the previous ASED as extended

    4. The transaction date of the TC 560 is earlier than the transaction date of a previously posted TC 560.

    5. The transaction date of the TC 560 is prior to the later of RDD or transaction date of the TC 150

  5. If the returns referenced in the request are accepted as filed, Classification Section will send Letter 621(C) to the requestor.

  6. If the returns referenced in the request are selected for examination, they will be controlled on AIMS to the appropriate Area Office. Send Letter 621(C) to notify the requestor that the request has been transferred to the Area Office for consideration.

  7. If it is determined upon review of the case that Document Matching Branch has an open control on a related period, Examination will contact the area to determine the status of their case.

    1. If there are more than six months remaining on the statute for assessment, Document Matching will determine if they wish to proceed with their case.

    2. If Document Matching processes their case, do not reference the year on Letter 621(C).

4.19.11.1.34  (11-09-2007)
Unlawful Returns - Joint Filed Returns

  1. Allow claims based on unlawful filings where the marriage was not valid if the following is present:

    • Verification, such as court documents, showing marriage was not valid for the tax period involved, and

    • Proper allocation of all return income, credits, and payments is provided.

  2. When one spouse to a joint return claims that he or she is not liable for the tax shown on that return because his or her signature was forged, that spouse must prove to the examiner's satisfaction that:

    • His or her signature on the joint return is in fact a forgery, and

    • He or she did not intend to file a joint return with the other spouse for the tax year in question.

  3. To determine whether the spouse’s signature on the joint return is a forgery, the claim’s examiner should:

    1. Determine that the spouse did not authorize signing of his or her name to the joint return.

    2. Compare reliable documentation showing the spouse’s true signature (driver’s license, social security card, or other official identification), to the signature on the return and

    3. Determine whether the signature on the return is a forgery.

  4. In cases where the return is filed and signed electronically with a paperless pin, requesting documentation to verify the spouse’s signature would not be applicable. Follow the procedures below for working these claims, disregarding references that would only pertain to the filing of a paper return.

  5. To determine whether the spouse intended to file a joint return with the other spouse for the year in question, the examiner should consider the following factors:

    • Did the spouse whose signature was forged file a separate return for the year in question?

    • Did the spouse whose signature was forged sign a request for extension of time to file the joint return for the year in question?

    • Did the spouse whose signature was forged participate in making of the joint return for the year in question i.e. by providing Forms W-2 or 1099 to the other spouse?

    • Did the spouse whose signature was forged pay any balance due or receive any refund in connection with the joint return?

    • Do any other facts indicate that the spouse whose signature was forged consented to the filing of the joint return for the year in question?

  6. If an analysis of these factors indicates to the examiner that the spouse whose signature was forged intended to file a joint return for the year in question, then the claim should be disallowed.

  7. If an analysis of these factors indicates to the examiner that the spouse whose signature was forged did not intend to file a joint return for the year in question, then the claim should be allowed.

  8. If the claim is allowed, then the taxpayer must provide proper allocation of all return income, credits, and payments.

  9. If all information is not provided, follow IRM 4.4.4, General Claim Processing. Include the following in any denial of a claim of forged signature on a joint return:

    • A copy of the Form 1040 signature line

    • A statement in the disallowance, "Internal Revenue Code Section 6064 states, the fact that an individual’s name is signed to a return, statement, or other document shall be prima facie evidence for all purposes that the return, statement, or other document was actually signed by him."

  10. In accordance with IRC Section 6064, the taxpayer must prove that he did not intend to file jointly and that the signature was forged.

4.19.11.1.35  (11-09-2007)
Low-Income Housing Credit (LIHC)

  1. The Low-Income Housing Credit under IRC 42 provides an incentive for taxpayers to invest in affordable housing. The taxpayer receives tax credit for ten years (credit period). To keep the credit, the taxpayer must provide affordable housing for fifteen years (compliance period). After IRS jurisdiction ends, the taxpayer must continue to provide affordable housing under the terms of the extended use agreement, which is at least another fifteen years. Altogether, the taxpayer is obligated to provide affordable housing for at least thirty years.

  2. The LIHC program is co-administered by the IRS and state agencies. The state agencies receive a specific amount of credit each year (based on population) and are responsible for determining which housing projects will receive credits, and how much credit. They are also responsible for monitoring the housing projects to ensure that taxpayers remain compliant throughout the life of the project; i.e., at least 30 years.

  3. A centralized LIHC Unit is located at the Philadelphia Compliance Campus, and is responsible for the following:

    1. Receiving, processing and storing physical files for forms and documentation submitted by state agencies and taxpayers as required under IRC 42.

    2. Maintaining the LIHC database; including transcribing data from submitted forms, correcting errors, and preparing analyses,

    3. Customer service to state agencies and taxpayers,

    4. Supporting Examination's classification of tax returns for audit, and

    5. Providing technical support to IRS personnel.

4.19.11.1.35.1  (11-09-2007)
Form 8610, Annual Low-Income Housing Credit Agencies Report

  1. State agencies file Form 8610, Annual Low-Income Housing Credit Agencies Report, to

    1. transmit Forms 8609 and Forms 8610, Schedule A

    2. report the dollar amount of credit allocated during the year under IRC 42 and to projects financed by tax-exempt bonds subject to the volume caps under IRC 146,

    3. provide reconciliation of the state agency's credit ceiling and allocations, and

    4. report compliance with compliance monitoring requirements.

  2. Form 8610 Schedule A, Carryover Allocation of Low-Income Housing Credit, is used by state agencies to report carryover allocation of LIHC. It is reviewed for accuracy, completeness and timeliness.

  3. Form 8609, Low-Income Housing Credit Allocation and Certification - Part I, Allocation of Credit is completed by the state agency to document allocations of credit. It is reviewed for accuracy, completeness, and timeliness.

  4. Form 8610 is reviewed to:

    1. ensure summary in Part I reconciles with the attached Forms 8609 and 8610, Schedule A,

    2. ensure the unused LIHC carryover assigned to the national pool is accurately computed, and

    3. ensure that the state agency has not allocated more credit than it is authorized to allocate during the year. Failure to comply with the monitoring requirements is reported to the SBSE program analyst assigned to the program.

  5. The state agency must file Form 8610 and attachments by February 28th of the year following the end of the calendar year for which the form is filed. The $100 penalty under IRC 6652(j) applies to any failure to file Form 8610 when due.

  6. Forms 8610 are to be made available to Statistics of Income and IRS Chief Counsel upon request.

  7. Information from Form 8610, 8610 Schedule A, and 8609 Part I is maintained in a database

4.19.11.1.35.2  (11-09-2007)
Form 8609, Part II (Taxpayers)

  1. Form 8609, Part II, First-Year Certification, is completed by taxpayers and filed with the LIHC Compliance Unit to comply with the one-time certification requirement under IRC 42(l).

  2. Form 8609 is reviewed to ensure:

    1. Part I has been completed and signed by a state agency official,

    2. all line items in Part II have been completed,

    3. the taxpayer signed the form and the signature date is annotated, and

  3. If Part II is incomplete or otherwise flawed, the forms should be returned to the taxpayer for correction.

  4. If the taxpayer has submitted a Form 8609 without Part I completed or signed by the state agency, the forms should be reviewed for audit potential.

  5. Information from Form 8609, Part II is maintained in a database.

4.19.11.1.35.3  (11-09-2007)
Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition

  1. State agencies file Form 8823 to notify the IRS of noncompliance with IRC 42 or to report a low-income building disposition. The forms are analyzed upon receipt.

    1. If the form was filed solely to report that previously reported noncompliance has been corrected, no further action is required.

    2. If the form reports noncompliance or a building disposition, the taxpayer receives a notification letter (L-3464 or L-3467) specific to the type of noncompliance (or building disposition) that explains that noncompliance may result in the loss and/or recapture of the tax credit. The taxpayer is advised to contact the state agency to resolve the noncompliance issue.

  2. Follow-up communication with state agencies or taxpayers (or their representatives) may occur.

  3. Forms 8823 are evaluated for audit potential. See IRM 4.19.11.1.35.6.

  4. Form 8823 information is maintained in a database.

4.19.11.1.35.4  (11-09-2007)
Form 8877, Request for Waiver of Annual Income Recertification Requirement for the Low-Income Housing Credit

  1. Taxpayers file Form 8877 to request a waiver of the annual income recertification requirements outlined in Reg. 1.42-5(b)(1)(vi). To qualify:

    1. the building must be a 100% low-income building; i.e., all the households occupying rental units in the building are income-qualified and the units are rent restricted,

    2. the state agency must attest that the building is a 100% low-income building and agree to exempt the owner from the annual income recertification requirements.

    3. the taxpayer must consent to IRS disclosure to the state agency, should the waiver be revoked.

  2. Resources:

    1. Under Rev. Proc. 94-64, in effect before July 6, 2004, taxpayers requested the waiver by submitting a letter.

    2. Under Rev. Proc. 2004-38, effective July 6, 2004, taxpayers request the waiver using Form 8877.

  3. Upon receipt, the Form 8877 is reviewed to ensure:

    1. the information is complete and accurate,

    2. the state agency has completed its attestation and exemption,

    3. the taxpayer has agreed to the disclosure provisions in the event the waiver is revoked.

  4. The taxpayer will be notified within 30 days of receipt:

    1. If approved, a copy of the approved Form 8877 will be sent to the taxpayer with letter L-3462.

    2. If not approved, the taxpayer will be provided an explanation with letter L-3461.

  5. The waiver takes effect on the date the IRS approves the waiver, and is in effect until the end of the 15-year compliance period, unless subsequently revoked.

  6. A waiver can be revoked if:

    1. the building ceases to be a 100% low-income building,

    2. the taxpayer violates IRC 42 in a manner that is sufficiently serious to warrant revocation,

    3. the state agency requests that the waiver be revoked, or

    4. the ownership of the building changes for federal purposes, including a termination of a partnership under IRC section 708.

  7. If the waiver is revoked:

    1. the taxpayer will be notified within 30 days using letter L-3460.

    2. the state agency will be notified within 30 days.

  8. If a waiver is revoked, audit potential will be evaluated. See IRM 4.19.11.1.35.6.

  9. Information from Form 8877, Part II is maintained in a database.

4.19.11.1.35.5  (11-09-2007)
Form 8693, Low-Income Housing Credit Disposition Bonds

  1. Taxpayers file Form 8693 to place surety bonds or Treasury Direct accounts upon disposition of a low-income building (or interest therein) to avoid the credit recapture provisions under IRC 42(j) . The taxpayer qualifies for a disposition bond if it is reasonably expected that the building will continue to be operated as a qualified low-income building for the remainder of the 15-year compliance period.

  2. Resources:

    1. Rev. Rul. 90-60 provides guidance for determining the bond amount and the period of time for which the bond is required.

    2. Rev. Proc. 99-11 provides guidance for establishing a Treasury Direct account.

    3. Surety companies can be found in Treasury Circular 570.

  3. Upon receipt, the Form 8693 is reviewed to ensure:

    1. the taxpayer qualifies,

    2. the Form 8693 was submitted timely,

    3. the proper bond factors are used, and that the bond or security is adequate to cover the recapture amount.

  4. Bonds/securities will be denied if:

    1. the Form 8693 is incomplete or incorrectly completed; i.e., the bond factor is incorrect or the bond amount is inadequate,

    2. the LIHC Compliance Unit does not have a signed Form 8609 from the state agency,

    3. the taxpayer does not submit the Form 8693 within the prescribed time. The time may be automatically extended to 120 days upon request. At the discretion of the LIHC Compliance Unit, the time may be further extended based on the facts and circumstances. However, the time to post the bond/security should never be extended beyond the due date (with extensions) for the tax return upon which the recapture should be made.

    4. the taxpayer submits the Form 8693 after the due date (with extensions) for the tax return on which the credit recapture should be made,

  5. The taxpayer will be notified within 30 days of receipt:

    1. If the bond is approved, the taxpayer will receive Letter 4366 and a copy of the Form 8693 with Part IV, Approval by IRS, completed.

    2. If the bond/security is denied, the taxpayer will receive Letter 4265, with an explanation for the denial.

    3. If the bond/security is denied, the information will be evaluated for audit potential. See IRM 4.19.11.1.35.6.

  6. Once approved, taxpayers should fund a Treasury Direct account and notify the IRS. If the taxpayer fails to notify the IRS within 60 days, or if the Bureau of Public Debt does not confirm funding on one of the following two quarterly reports, the taxpayer should be asked for an explanation. If confirmed that the taxpayer did not fund the account, the account should be revoked.

  7. If an audit of a LIHC property results in the recapture of credit, the LIHC Compliance Unit will be provided with a copy of the audit report indicating the LIHC adjustments (and taxpayer's agreement), schedule of all the buildings impacted, and the amount of credit to be recaptured for each year.

    1. If previous owners have posted bonds, the LIHC Compliance Unit will contact the surety company to "call" the bond or notify Treasury Direct to collect the recapture amount.

    2. If the previous owner did not post a bond/security, the information will be evaluated for audit potential

  8. Information from Form 8693 is maintained in a database.

  9. Physical files for bonds/securities are maintained within the LIHC Compliance Unit until called or, if not called, 58 months after the last day of the compliance period for the building.

4.19.11.1.35.6  (11-09-2007)
Evaluations for Audit Potential

  1. The LIHC Unit supports the classification of returns for audit by evaluating the information submitted on forms and documents submitted to the unit by state agencies and taxpayers.

  2. The evaluation will include consideration of:

    1. large, unusual, or questionable items,

    2. predetermined criteria intended to identify specific noncompliance issues. Criteria may be established based on current trends or known noncompliance strategies. These criteria may be documented by internal memoranda.

    3. fact patterns requiring evaluation.

  3. Large, unusual and questionable items are defined as:

    1. Comparative nature of the issue: two of a hundred of a building's rental units out of compliance for a month is not as important as a project failing the 40/60 minimum set-aside.

    2. Absolute nature of the issue: violations of the physical conditions standards should be evaluated based on the severity of the noncompliance, as well as the number of units impacted. Consideration must also be given to the documentation provided by the state agency.

    3. Inherent nature of the issue: a permanent decrease in the eligible basis of the property is more significant than two units that are not available for rent for two months.

    4. Evidence of intent to mislead; which includes missing, misleading or incomplete documentation.

    5. Extenuating circumstances: the issue cited is very temporary or quickly remedied once identified.

  4. The following instances always require evaluation of audit potential:

    1. Form 8609, Part II, if Part I of the form is not completed and signed by a state agency.

    2. Form 8823, if a state agency determines that the building (or project) is no longer in compliance and is no longer participating in the program or reports a disposition of a building (or interest therein).

    3. Form 8877, if the waiver is revoked.

    4. Form 8693 if the bond is denied or a Treasury Direct account is revoked.

  5. Once it is determined that further consideration of audit potential is needed, a classification package will be prepared. The file will include

    1. Classification checksheet,

    2. Masterfile research,

    3. Copies of Form 8609, parts I and II,

    4. Copies of Forms 8823, and

    5. Other relevant information.

  6. The information in the classification package is reviewed for audit potential.

  7. IRS personnel may contact the LIHC Compliance Unit for database research by calling 215-516-3572, faxing request to 215-516-1293, or writing to:
    Internal Revenue Service
    Attn: LIHC Compliance Unit, DP 607S
    P.O. Box 331
    Bensalem, PA 19020

  8. Files for selected taxpayers will be forwarded to St. Paul, where the PSP orders and controls tax returns for classification.

4.19.11.1.35.7  (11-09-2007)
Contact Information

  1. Information about the program is also available at the SBSE Examination Specialization and Technical Guidance web page: http://sbse.web.irs.gov/TG/TGIndustryIssues.htm#LowIncome

  2. Technicians within the LIHC Compliance Unit are assigned specific states; the agencies are provided contact information.

  3. Taxpayers and other external customers are provided contact information on correspondence as needed.

4.19.11.1.36  (11-09-2007)
Federal/State Exchange Agreements

  1. Under Federal/State Exchange Agreements, Classification in the Campuses and Area Offices may receive information which applies to returns beyond the 26/27 month examination cycle.

  2. If the information is substantial, the information is not accepted on classification or surveyed, solely because old years are involved.

  3. The selected old year returns are not included in the prior year percentiles for 270 days from establishment on AIMS.

4.19.11.1.37  (11-09-2007)
Potentially Dangerous Taxpayers (PDT) - Caution Indicator (CAU)

  1. Refer to IRM 5.1.3, General - Safety, Employee and Security Programs, for the criteria established to identify potentially dangerous taxpayers - Caution Indicator taxpayers.

  2. Report all incidents to TIGTA, by telephone, as Form 4652, Assault, Threat of Assault, or Harassment Report, is now obsolete. TIGTA can be reached at 1-800-366-4484.

  3. Once TIGTA’s investigation is completed, a Report of Investigation is sent to the Office of Employee Protection (OEP).

  4. The OEP analyzes the report, conducts needed IDRS research, and makes a recommendation to the Director, Compliance Area 6, SB/SE, who has the authority to make all PDT determinations. Once the determination is made, the OEP will inform the Exam employee and the referring employee’s Director of the disposition of the case in a memorandum. Exhibit 4.19.11-2.

  5. If the determination is that the case does not meet PDT/EAU criteria, the Director will be informed of the determination, prior to the Employee, in order to provide the Director with the opportunity to appeal the determination.

  6. If the Director disagrees with the determination, an appeal is to be made within 15 days from the date of the memorandum.

  7. Cases that are appealed are sent to the Associate Chief Counsel (GLS), by the OEP, for a final decision on the determination.

  8. For general procedures on handling the designated PDT/EAU cases, refer to Correspondence Research, IRM 21.3.3.3.2.

  9. See IRM 4.4.1 AIMS Processing Handbook, Form 5546, Examination Return Charge-out and Document 6209, Section 12.3(5) for indicator regarding PDT/EAU cases.

    Note:

    See multi-functional IRM Part 25.4. Course material (Course 5618) is available for all IRS public contact employees on the "Caution Indicator" (PDT program.) Training videos should be available from your Training Coordinator. If your Training Coordinator no longer has any videos, the Office of Employee Protection (OEP) will be making their few copies of the video available for loaning to the field. Requests to borrow videos from the OEP can be made by calling 313-628-3742.

4.19.11.1.38  (11-09-2007)
Employee Returns

  1. Employee Returns will not be worked in Campus Correspondence Examination.

  2. Cases worked in Campus Correspondence Examination are stored on the Correspondence Examination Automated Support (CEAS) server that allows for universal view in all campuses.

  3. In order to ensure impartiality, independence, and privacy, the classification and examination of employee returns will not be performed by subordinates, associates or co-workers of the affected employee.

  4. All identified Employee Returns selected for examination will be sent to the appropriate Area Office PSP Employee Audit Coordinator and screened by the PSP Support Manager.

  5. The appropriate PSP Area Office is the office closest to where the employee lives.

  6. The returns will then be forwarded to an office audit/field examination group where an objective examination will be conducted. This includes:

    1. All Employee Returns filtered out in the Case Creation Process of RGS/Batch Processing, or

    2. An Employee Return identified during any phase of the Correspondence Examination process.

  7. The original return will be secured from Files and the return and case file will be shipped in a "confidential" envelope to Area Office PSP Employee Audit Coordinator closest to where the employee lives.

    1. If the original return cannot be secured from Files, a current RTVUE, TXMOD and DDBOL if the case was selected for EITC, will be included in the case file.

    2. The Files Return Charge Out, Form 4251, will also be included in the case file to identify that the return could not be secured.

    3. Attach Form 3198 to the case file with "EMPLOYEE RETURN" on the Other Instructions line in the Special Features box. Also include on this line the examination program for which the case was selected.

    Note:

    For additional information: See IRM 4.2.6, Classification, Examination and Review of Employee Returns

4.19.11.1.39  (11-09-2007)
State Business Licensing Compliance Program

  1. Purpose:The instructions in this text are used to process the state business license compliance initiative known as the DLSE (Division of Labor Standards Enforcement) Program. The DLSE Program provides taxpayers with certifications of compliance for Federal employment tax return filing and payment in order for them to obtain certain industry business licenses in their states. Currently, the only participant is the state of California.

  2. Scope:The DLSE Program is centralized at the Ogden Compliance Services Campus. The process is co-administered by the IRS and the respective state Division of Labor Standards. Guidance for the program must be a mutually agreed upon process with SBSE Campus Reporting Compliance, the appropriate IRS state Governmental Liaison, and the State Division of Labor Standards Enforcement staff.

  3. Charge time spent on this program to OFP 710-91715 or 790-91715, DLSE.

  4. Background:IRS and the California State Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) have a mutual interest in accurate wage reporting by those parties who are licensed by DLSE. The Division of Labor Standards Enforcement is concerned with the success of these businesses and that they pay the proper wage and withhold and transmit fiduciary funds. IRS is concerned about licensees becoming delinquent in the payment of federal taxes and the resulting burden on the government.

  5. MOU: A memorandum of understanding (MOU) has been designed to provide a means of mutual cooperation to the end that labor standards obligations and federal employment taxes of licensees can be more effectively met. The means for exchange of appropriate information are delineated in the MOU. The agreement involves the central office of the California DLSE, the IRS Ogden Compliance Services Campus, and the Government Liaison for Northern California.

4.19.11.1.39.1  (11-09-2007)
Overview of Process

  1. The State of California requires yearly renewal of business licenses. As a condition of granting the licenses, the State must receive proof of compliance from IRS that the applicant has filed all required Federal tax returns, and resolved all outstanding Federal tax balances, through full payment or appeal.

  2. The DLSE Program is processed as follows:

    1. DLSE will require the applicant to furnish the IRS with a valid "Tax Information Authorization" , Form 8821, naming DLSE as the appointee to receive tax information and a copy of their State business license application. The current state industry applications are: DLSE Form 810, Application for Registration Garment Manufacturing Industry; DLSE Form 401, Application for Farm Labor Contractor License; and DLSE Form 666, Car Washing and Polishing Registration Application.

    2. IRS shall supply DLSE with a weekly summary of Forms 8821 received and the status of the account compliance in a mutually agreeable format. See 4.19.11.1.39.9 State Data Delivery, for guidelines.

    3. DLSE will supply IRS with a monthly summary of licenses denied or revoked in a mutually agreeable format.

      Note:

      This information is not currently needed or being delivered but is provided for in the current MOU.

    4. The IRS will review the Business Master File (BMF) to ascertain whether statutory provisions for tax return filing and payment requirements are complied with by the applicant.

    5. License applicants who fail to meet statutory filing and payment requirements will be notified by IRS of these conditions, via IDRS Correspondex Letter 4267C, along with instructions on how they can be resolved. Applicants who have met all requirements will be similarly notified. All applicants will receive educational materials from IRS on how to comply with future filing and payment requirements via referral to Circular E on www.irs.gov.

    6. IRS will provide DLSE and the applicant with a statement that all filing and payment requirements have been met or information on the type and years of returns not filed and/or the year(s), type(s) and amount(s) of balances outstanding.

    7. DLSE's review board will assess the applicant's character and competency in light of the tax information to determine if the license should be denied based on failure to meet employment tax currency conditions.

    8. DLSE shall take precautions to ensure that information provided by the IRS under this agreement is used solely for the purpose of license determinations and the enforcement of license and labor standards. The information shall be safeguarded to prevent improper disclosure.

    9. In cases where the denial of license is based, at least in part, on the applicant's failure to resolve outstanding Federal tax problems by filing required returns or paying balances due, the IRS will honor DLSE's requests and provide employees to testify in civil court or administrative hearings. Testimony will be provided pursuant to subpoena by DLSE and upon the approval of the IRS Area Director per provisions of the Code of Federal Regulations Section 301.9000-1.

    10. DLSE will provide three weeks notice to IRS of the scheduled date for administrative or judicial hearings where an IRS witness is requested.

    11. IRS will support DLSE in its compliance efforts to address the underground economy relative to the licensing programs.

    12. To enhance customer service, joint education and outreach seminars will be conducted in each IRS area on an as-needed basis. The need will be determined by the respective agencies.

4.19.11.1.39.2  (11-09-2007)
DLSE Database

  1. The DLSE database is a local Access application used to track inventory.

  2. Permission to access the DLSE database is controlled by group membership on the Domain. Access to the folder on the server, where the data is stored, is granted through the 5081 system by modifying the LAN application and being added to the appropriate group. Access is granted by the Systems Administrator after manager approval. The database does not interface with Master File.

  3. All records or documents to determine access control should be documented and disseminated to appropriate elements within the organization. They should also be periodically reviewed by responsible parties within the organization.

  4. The organization should establish, activate, modify, review, disable, and remove information system accounts in accordance with documented account management procedures.

4.19.11.1.39.3  (11-09-2007)
Initial Screening of Applications

  1. Process new receipts as follows:

    1. All incoming Forms 8821 must be IDRS controlled and assigned to an employee or group/unit number for purposes of inventory management. Use Command Code ACTON to IDRS control inventory within 7 days of stamped IRS received date.

    2. Control all Forms 8821 to the most current available tax module on IDRS.

    3. Research IDRS

    4. If open case, route to assigned employee.

    5. If record exists, check whether application was recently cleared. If recently cleared and application is a duplicate, destroy. If unable to determine if application is a duplicate, contact taxpayer on why application is being submitted.

    6. If application was not recently cleared, continue processing.

    7. Ensure Form 8821, Line 2, indicates Appointee as "DLSE." If Form 8821 does not indicate appointee as DLSE, route to CAF Unit unless it appears taxpayer is requesting DLSE clearance.

  2. Enter case data to the Access database.

    1. If existing record, ensure updates are made as appropriate.

    2. If new record, click on "Add New Record" and enter or review the following for new or updated information:

    • EIN if required - Form 8821

    • SSN if required - Form 8821

    • Current Year - enter current year

    • License Number - state application

    • Taxpayer Telephone Number - 8821/state application

    • Name line 1 DBA/Legal Entity/Owner - state application

    • Name line 2 Legal Entity/Owner - state application

    • Address - Form 8821 if available; otherwise, use state application

      Note:

      If no address is on Form 8821, input address from Garment Application, Line 5a; Farm Labor Contractor, Line 3; Car Washing and Polishing, Line 3

    • Received date will be generated

    • Case Status - Received

    • Business Type - Sole Proprietorship, C Corp., S Corp., Partnership, LLC

    • Business/Industry as appropriate - state application

    • Employee IDRS #

    • Assigned TE IDRS Employee #

    • Contacts - list owners and POA information - state application and Form 8821/Form 2848

4.19.11.1.39.4  (11-09-2007)
Casebuilding

  1. Print database case sheet and labels and assemble cases as follows:

    1. In database, go to "Reports."

    2. Click on "Generate Case Labels and History Sheets."

    3. Input date is usually generated with current date.

    4. Click "OK."

    5. Click "Print all case sheets."

    6. Click "Print."

    7. Ensure printer has correct paper and click "OK."

    8. Click "No" to question "Did case sheets print correctly?"

    9. Click "Print all case sheets" again to un-check.

    10. Click "Print all case labels."

    11. Click "Print."

    12. Ensure correct labels are in printer and click "OK."

    13. Click "Yes" to question "Did case labels print correctly?"

    14. Assemble Form 8821, state application, and any associated correspondence into the appropriate color folder for the industry.

    15. Put Case Label on outside lip of folder.

    16. Staple Case Sheet on the inside left of folder.

    17. Insert Form 8821 and application on right side of folder with TE file copy on top of Form 8821

4.19.11.1.39.5  (11-09-2007)
Application Verification

  1. Applications must be verified for completeness and accuracy. Verify the following information on Form 8821:

    1. Form 8821 and all pages for state license application are included. If the required application(s) are not included with the Form 8821, return Form 8821 to the taxpayer via Letter 4267C.

    2. Name line for application and Form 8821 agree and match IDRS.

    3. EIN is present and accurate. If no EIN, research INOLEX on the related SSN to find any cross-referenced EINs. Verify the SSN only to ensure information on the Form 8821 and application matches IDRS. Check NAMEE for business name and/or zip code. If EIN is found, enter to database.

      Note:

      If any outstanding liabilities are found on the SSN, issue a clearance letter for the EIN if appropriate.

      Note:

      If a sole proprietor has no employees or leases their employees, they are not required to provide an EIN.

    4. SSN if no EIN is required

    5. Appointee is "DLSE"

    6. Section 3 reflects tax matters

    7. Signature

    8. Signature date. The signature date must be within 60 days of the IRS received date.

      Note:

      A dated DLSE application may be accepted in lieu of a Form 8821 date.

4.19.11.1.39.6  (11-09-2007)
Compliance Checks

  1. Observing tolerances, perform compliance checks for filing and paying employment taxes.

  2. Verify INOLES name matches exactly to Legal Entity on Form 8821.

  3. Research INOLES for business established date and filing requirements to record in case sheet work papers.

  4. Research BMFOLI/SUMRY for employment tax MFT filing requirements. See Document 6209 for Filing Requirement Codes. Review appropriate MFTs for filing status codes to verify that all returns have been filed for the last six years as applicable and for any outstanding balances due. See Document 6209, MF and IDRS Collection Status Codes for current filing requirement and status codes and work as follows:

    • 02 - returns not filed - code as N for Non-compliant

    • 03 - IDRS in delinquency status - code as N

    • 06 - Requires further TXMOD research for pending transactions. See status 06 guidance below.

    • 10, 12 - paid in full - code C for Compliant

    • 21, 22 - balance due - code as N

    • 23 - balance due but may be below tolerance - review total assessed for tolerance - if above tolerance, review TXMOD

      Note:

      Include all modules in balance due to determine tolerance

    • 26 - revenue officer - Contact RO to determine compliance

    • 60 - payment plan - code as P for payment plan clearance

      Note:

      If status codes are 02 or 03, taxpayer contact may be needed to determine whether filing requirements are truly appropriate and/or delinquent. Although IDRS shows filing requirements are delinquent, circumstances may have changed since filing of the SS-4. If it is determined that filing requirements are not appropriate for this tax period and MFT, input FRM49 to delete open status. Note also that filing requirements are not considered delinquent until 60 days after the return due date.

    • 71 - OIC pending - Review TXMOD for TC480/481 (OIC pending/rejected) or 780 (OIC accepted). If pending/rejected, work as Non-compliant. If 780, work as Compliant.

  5. Status 06 guidance: Account will have pending 59X which will determine compliance status. If pending TC150 or 599, verify return balance due matches credit posted to tax period. If other 59X, review TDI Closing Codes in Document 6209, Section 11, for appropriate action.

  6. When reviewing for compliance, account should be looked at in its entirety to determine if balances due are above tolerance. Pending payments or offsets may affect balance due.

  7. All Agricultural industry non-compliant accounts must be referred to the designated RO via fax.

4.19.11.1.39.7  (11-09-2007)
Responding to Taxpayer Applications and Closing Cases

  1. After reviewing taxpayer application and conducting compliance check, respond to taxpayer as follows:

    IF THEN
    Any form information is missing or incomplete or taxpayer has open filing requirements or balance(s) due, Return Form 8821 to taxpayer via IDRS Letter 4267C using the appropriate paragraph(s).
    The taxpayer does not provide requested form information but has met all filing and paying requirements, Issue IDRS Letter 4267C using the appropriate paragraph(s) to request needed information.
    Proof of payment is not valid as on-line EFTPS, copy of money order or cashier's check paid at local IRS office, Apprise taxpayer that payment must be posted to IRS system or be EFTPS or local IRS office money order or cashier's check. Issue non-compliant letter.
    The taxpayer provides requested signed form(s) and/or valid proof of payment(s), Issue clearance letter.

  2. Send taxpayer appropriate IDRS 4267C Letter paragraphs and close cases on Access database.

    For Select
    Insufficient Data: "Insufficient Data" case status.
    Non-compliant:
    1. "Non-compliant" case status.

    2. Table option as appropriate - Forms Not Filed, Balance Due, or both.

    Compliant: "Compliant" case status.
    Payment Plan:
    1. Select "Payment Plan" case status.

    2. Select "Generate Payment Plan" letter and print letter

    3. Select save option.

  3. Close any IDRS control bases with action taken.

4.19.11.1.39.8  (11-09-2007)
Responding to Taxpayer Hotline Telephone Calls

  1. A taxpayer hotline telephone is available for taxpayer messages. Respond to taxpayer message within 24 hours following appropriate Disclosure procedures as follows:

    1. Review taxpayer account information from the DLSE database and/or IDRS prior to returning taxpayer calls.

    2. Apprise taxpayer of status of clearance including what is required for clearance if appropriate.

    3. If balance(s) due and taxpayer has supporting documentation of payment, request faxed proof of receipt. Verify receipt indicates proof of payment and not merely that a check was received.

      Note:

      Money orders and bank/cashier's checks are considered same as cash.

    4. If return delinquency(ies), advise taxpayer of forms required to file returns and, where to send completed returns for processing.

      Note:

      Tax examiners are not required to secure delinquent returns. However, should the taxpayer send delinquent returns to the DLSE function, prepare the returns for processing, route to appropriate function and capture return type, delinquent year and tax owed (TC 150 amount to post) on the Access database. Include this information in the weekly report to HQ.

    5. Enter remarks in the database that the taxpayer called, the date, whether any information was faxed to or from the taxpayer, what the status is as a result of the call, taxpayer remarks, and TE IDRS employee number.

4.19.11.1.39.9  (11-09-2007)
State Data Delivery

  1. On a weekly basis, encrypt and send new open case program data to California DLSE as follows:

    1. On database, click on "Reports."

    2. Click on District Downloads.

    3. Input formatted floppy disc at prompt for state disc. Click on "OK."

    4. Click on "Cancel" two times.

    5. Select floppy drive and right click downloaded file.

    6. Select Winzip.

    7. Click on "Encrypt." Click on "OK."

    8. Enter password (this will cause encryption to occur).

    9. Exit file and then re-select to review that encryption was successful.

    10. Close file and then right click again to select "Copy" option.

    11. Insert formatted CD and copy encrypted file to the disc.

    12. When ejecting CD, select "Close to read on any computer. Close the CD so it can be read automatically in most standard CD-ROM drives. "

    13. Label CD, "State DLSE." Wrap CD with Form 3210 addressed to DLSE with Remarks of "State disc for DLSE" and send to: DLSE, Licensing & Registration, 455 Golden Gate Ave 9th Fl., San Francisco, CA 94102, each Thursday via UPS Overnight/2 day service with Form 9814-A, Overnight/2 Day Service Routing. Affix orange warning label "Do not X-ray" on the UPS folder-A and route through express tub.

4.19.11.1.39.10  (11-09-2007)
Point of Count and Data Reports

  1. Enter to Daily number of cases worked, number of faxes sent, and number of telephone calls received.

  2. Track weekly and provide report to HQ DLSE Analyst the following information:

    • open and closed cases

    • incoming and outgoing telephone calls

    • number of new receipts for the same week in the previous year

4.19.11.1.39.11  (11-09-2007)
Disclosure Authentication

  1. Ensure all appropriate caller authentication is conducted per IRM 21.1.3.2, General Disclosure Guidelines.

4.19.11.1.40  (11-09-2007)
Form 8282, Donee Information Return, Form 8283, Non-cash Charitable Contribution, Match Program

  1. Purpose: The instructions in this text are used to process Forms 8282, Donee Information Return, as part of the 8282/8283 Match Program.

  2. Scope: Ogden Campus Compliance Examination Field Support Operation conducts the Form 8282/8283 Match Program under policy direction from Exam Policy, Campus Reporting Compliance, Campus Compliance. The headquarters analyst with responsibility for the program will coordinate technical issues with Exam Specialization, Exam Policy, Examination. The program screens Forms 8282 for potential selection for audit. Cases are selected when non-cash contribution deductions do not meet the criteria established for substantiation. Cases may be selected for Area Office or Campus examination.

  3. Process cases under OFP 91717, Form 8282 Cases.

  4. Background: IRC170, Charitable, etc., contributions and gifts; IRC 6050(L), Returns relating to certain donated property; and Treasury Regulation 1.170A-13, Recordkeeping and Return Requirements for Charitable Contributions, provide authority for processing non-cash charitable contributions.

  5. Non-cash contributions larger than $5,000, made to an organization eligible to receive tax deductible contributions, are tax deductible if:

    1. The donee organization supplied the donor with a contemporaneous written acknowledgement of the contribution Acknowledgements must include the amount of cash and a description (but not value) of any property other than cash contributed, whether the donee organization provided any goods or services in consideration, in whole or in part, for any property, a description and good faith estimate of the value of any goods or services, or, if such goods or services consist solely of intangible religious benefits, a statement to that effect. An acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of the date on which the taxpayer files a return for the taxable year in which the contribution was made, or the due date (including extensions) for filing such return.

      Note:

      Form 8282 is most often supplied as the acknowledgement but is not required.

    2. The donor obtained a qualified written appraisal of the property, and

    3. The donee organization signed the Form 8283, Part IV, Donee Acknowledgement, appraisal summary acknowledging receipt of the property and awareness of the subsequent filing requirement, in the event they dispose of the asset within three years.

4.19.11.1.40.1  (11-09-2007)
General Information

  1. Original and successor donee organizations are required to file Form 8282 to the Ogden IRS Campus about dispositions of certain charitable deduction property if the donee sells, exchanges, consumes, or otherwise disposes of the contribution within three years after the date the original donee received the property.

  2. Form 8283, Non-cash Charitable Contribution, is filed by individuals, partnerships, and corporations. Individual taxpayers are required to file Form 8283 when non-cash charitable contributions reported on Form 1040 Schedule A exceed $500.00. C corporations, other than personal service corporations and closely held corporations, must file Form 8283 only if the amount claimed as a deductions is more than $5,000. Partnerships and S corporations that claim deductions for non-cash gifts of more than $500 must file Form 8283 with Form 1065, 1065-B, or 1120S.

    Note:

    The partnership or S corporation must give a completed copy of Form 8283 to each partner or shareholder receiving an allocation of the contribution deduction.

  3. The 8282/8283 Match Program compares information from both forms 8282 and 8283 to ensure that appropriate deductions are being allowed on both IMF and BMF filings.

    Note:

    Items valued at $500 or less and items consumed or distributed for charitable purpose without consideration do not require completion of the Form 8282. See Instructions to Form 8282 for additional information.

  4. Donees are instructed to file Form 8282 within 125 days after the date donated property is disposed.

    Note:

    Form 8282 is not used for donations of motor vehicle, boats, or airplanes. Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, is used to report charitable contributions of motor vehicles, boats, and airplanes after December 31, 2004 as required by Section 884 of the American Jobs Creation Act of 2004 (Public Law 108-357) which added new IRC Section 170(f)(12). A donee organization may use Form 1098-C to provide a contemporaneous written acknowledgment to the donor and must use it when reporting the same information to the IRS. Per General Instructions for 2007 Form 1098, donee organizations should send all Forms 1098-C filed on paper to the Internal Revenue Service Center, Ogden, UT 84201-0027.

  5. The forms are sent to the Internal Revenue Service, Ogden, UT 84201-0027. Per Ogden's Mail Routing Guide (MRG), Form 8282 should be routed to: Exam at M/S 4140 (SKOW).

4.19.11.1.40.2  (11-09-2007)
Form 8282 Processing

  1. Process new receipts of Form 8282 as follows:

    1. Remove staple and envelopes from Form 8282 ensuring any correspondence remains with the form.

    2. Stamp Form 8282 at bottom with current date.

    3. Separate forms 8282 by years (all years will be worked separately)

    4. Perfect forms missing any required information (see paragraph 3 below for required information).

    5. Enter perfected 8282s to centralized database (see 4.19.11.1.40.3, 8282 Database, below for data items.

    6. File all 8282s entered for each date in folder with the input date on the right-hand corner of the folder.

  2. Perfect forms as follows:

    • For missing TINS, research cc NAMES(I) for IMF or NAMEE(B) for BMF.

    • If unable to identify TIN, use Accurint to secure.

    • If unable to identify with Accurint, send letter to cases meeting tolerance criteria to donee or donor as appropriate to secure information.

    • Suspend case for 30 days.

    • If no response to letter, make a second request.

  3. In accordance with IRC section 6050L(a) if a charitable organization sells, exchanges, or otherwise disposes of charitable deduction property within 3 years after its receipt, the organization must file an information return Form 8282, Donee Information Return, which contains the following information:

    • The name, address, and Taxpayer Identification Number (TIN) of the donor

    • A description of the property

    • The date of the contribution

    • The amount received on the disposition

    • The date of such disposition

  4. After database processing secures appropriate tax returns, process them as follows:

    1. Match returns with appropriate Form 8282.

    2. Complete Form 12547-A, Document Transmittal, listing each TIN, MFT, Tax Year, and name control.

    3. Print three copies of transmittal and attach two with the returns and one in the transmittal book.

    4. Route to classifier.

  5. After classification is complete, returns will be processed as follows:

    • Returns accepted as filed - Ensure "Refile" is annotated on chargeout sheet and return to Files.

    • Returns selected for area office referral - Process per classification checksheet.

  6. Returns selected for area office referral should be processed as follows:

    1. Folder case using Form 4607, Examination Action and Time Record.

    2. Complete Form 6754, Examination Classification Checksheet..

    3. Enter PC0075 and SC85 at top of checksheet.

    4. Cases selected for Office Audit should have Box 3 checked in Section B.

    5. Cases selected for Field Audit should have Box 4 checked in Section B.

    6. Check Box 18, Contributions.

    7. Write in Remarks, "See 8282 and stuffer."

    8. Enclose Stuffer 0075, Non-Cash Contributions with Form 8282 Filed by Donee, on all cases.

    9. Enclose Stuffer 7643, Tracking Code 7643, Large Non-Cash Charitable Contributions, when the value difference between the 8282 and what the taxpayer deducted meets the local criteria established.

    10. Enclose Stuffer 7644, Tracking Code 7644, Structures Donated to Fire Departments, when the non-cash charitable contribution is for a structure donated to a fire department.

    11. Prepare Form 3210

  7. Destroy forms 8282 not selected for examination if corresponding tax returns are not available to associate with.

4.19.11.1.40.3  (11-09-2007)
8282 Database

  1. The 8282 centralized database is a local Access database and includes the following information:

    • TIN

    • Primary Name

    • Secondary Name

    • STIN

    • Charity TIN

    • Property Donated

    • Year Received

    • Date Disposed

    • Disposition Amount

  2. The 8282 database will be maintained by the Ogden Campus. Approval is needed for access to the Form 8282 database. Approval may be requested by submitting an Online Form 5081, Information System User Registration/Change Request.

4.19.11.1.40.4  (11-09-2007)
Database Matching with Tax Return Information

  1. Database information is periodically matched against taxpayer return data using a Masterfile interface as follows:

    1. Form 1040, Schedule A, Line 16, Gifts to Charity - Other than by cash or check, are compared to corresponding Form 8282 data.

    2. A comparison of the amounts received by the charity for the sale of the donated item(s) is made to the amount claimed by the taxpayer on Schedule A.

    3. The difference in amounts is calculated for potential tax increase based on LEM criteria.

    4. Returns meeting the tolerance are systemically requested from Files for classification.

4.19.11.1.40.5  (11-09-2007)
Classifying 8282/8283 Match Data

  1. Forms 8282 are received for the following types of property:

    • Art (paintings, sculptures, watercolors, prints, drawings, ceramics, antiques, decorative arts, textiles, carpets, silver, rare manuscripts, historical memorabilia, and other similar objects)

    • Collectibles (coins, stamps, books, gems, jewelry, sports memorabilia, dolls, etc.)

    • Equipment

    • Intellectual Property

    • Qualified Conservation Contribution (including facade easement)

    • Real Estate

    • Securities

    • Vehicles (Automobiles, boats, airplanes, motor homes, etc.)

    • Other

  2. In many cases there will be an exact match where all property donated was sold by the donee. However, the donee may have sold only a partial interest, e.g., sold 35 of 100 acres or sold 100 of 500 shares, etc. Look at exactly what was donated to determine to what extent such donation was ultimately sold by the donee.

  3. The taxpayer will most likely have some type of appraisal that supports the Fair Market Value (FMV) they report on their return. This should not be accepted at face value.

  4. For BMF returns, there is no separate line item for non-cash contributions. Therefore, a presumption can be made that the entire contributions (both cash and non-cash) deducted by a corporation or flow-through entity (partnership, S corporation, or trust) represented the exact contribution reported to the IRS on Form 8282. Although this presumption is inherently flawed, it is made with the best information the IRS has available to them and is only done for pre-screening purposes.

  5. Form 1120 reports all charitable contributions on line 19. Taxpayers required to file Form 1120 are limited to 10% of taxable income before charitable deductions, NOL carrybacks or capital loss carrybacks and the dividend received deduction. Taxpayers who file forms 1120S or 1065 are required to show charitable contributions as a separately stated item on Schedule K, Lines 12a and 13a respectively (2004 returns). These amounts then flow through to the respective shareholders or partners on the Schedule K-1 they receive from the S-Corp or the partnership under Other deductions, Line 12 for Form 1120S, Schedule K-1 and Line 13, Form 1065, Schedule K-1.

  6. The Classifier will review returns meeting program criteria as follows:

    1. Compare Form 8282 data with taxpayer return information and Form 8283.

    2. If no Form 8283 is attached to return, compare Form 8282 data with Form 1040, Schedule A information.

    3. If significant differences are noted and meet the LEM tolerance established for tax increase, select return for referral to area office.

    4. If no significant differences are noted, accept return as filed.

    5. Review returns for other issues such as civil fraud, abusive preparers and/or abusive promotions and route as appropriate.

4.19.11.1.40.6  (11-09-2007)
Referrals to Area Offices

  1. Cases classified for referral to area offices will be returned by classifier in folders for routing and should be processed as follows:

    1. Research IDRS for AIMS status. If case exists on AIMS, send case to controlling office.

    2. If AIMS not established, input AM424 only ordering labels.

    3. Complete Form 12616, Correspondence Examination History Sheet, and insert in folder.

    4. Control account on TXMOD via cc ACTON using C#,Waitforlabels,A,AUDT.

    5. Suspend filed in numerical order to wait for labels.

  2. When labels are received:

    1. Associate files with labels.

    2. Update account control to area office on IDRS.

    3. Close TXMOD control via cc ACTON using C#,3210Area# (where Area# is the specific area office,C.

    4. Complete Form 3210, Document Transmittal, and route to area office.

    5. File originator copy of 3210 in book.

  3. If labels are not received after 30 days, indicate on Form 12616 that they were not received and continue processing as if they were received

4.19.11.1.40.7  (11-09-2007)
Additional Information

  1. The following publications provide additional information for the 8282/8283 Match Program:

    • Form 8282 and Instructions

    • Form 8283 and Instructions

    • IRM 3.11.3.15.7, Lines 15, 16, 17 & 18 - Gifts to Charity

    • IRM 4.76.51.7, Non-Cash Charitable Contributions

    • Publication 526, Charitable Contributions

Exhibit 4.19.11-1 
Campus Examination Operations Flowchart

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Exhibit 4.19.11-2 
Example of Memorandum Regarding PDT - Caution Indicator (CAU)

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Exhibit 4.19.11-3 
BMF DIF Order Error Register

Each item on each of the lines of the report has a related numeric identifier. The field is identified by the following numeric list:

IF the Item Number is THEN the Definition of Field is
1 Program/File/Run (P/F/R) number to identify the report
2 DIF MCC Processing Cycle
3 Date of Report
4 Page Number of Report
5 Error Sequence Number
6 Filing Year Error Indicator
7 Filing Year
8 MCC Order Cycle Date Error Indicator
9 MCC Order Cycle Date
10 Location Codes Error Indicator
11 Campus Code
12 Area Office Code
13 Post of Duty Code Error Code
14 Post of Duty Code
15 BOD Error Indicator
16 BOD Code
17 BOD Client Code Error Indicator
18 BOD Client Code
19 MFT Error Indicator
20 MFT Code

The errors on the BMF return orders means there is a consistency error. If there is a consistency error present it will be denoted by ** to the left of the alpha indicator.

Consistency Check Reason for Error
DIF/Area Office/Campus Area Office or Campus is inconsistent.
MFT Code MFT = 05 and Data is present in Section 01 after K. OR
MFT = 6 and DATA is present in Section 01 after S.
POD Code and POD Exclusion Identical code appears as POD Code and POD Exclusion.

Validity Errors will be denoted by * to the left of the Alpha Indicator.

Validity Check Reason for Error
MCC Processing Cycle MCC Processing Cycle is not equal to current cycle.
DIF File Year DIF File Year is not equal to the Current or Prior File Year
POD Code MFT is 05 or 06 and POD is other than 0
MFT is 02 and the POD is other than 00 through 50, 80 through 88, or 99.
Area Office/Campus Code Area Office or Campus are inconsistent
MFT Code MFT is other than 05, 06, or 02
DIF Order Indicators MFT = 05 and DIF Order Indicator is other than 0 or 1,
MFT = 06 and DIF Order Indicator is other than 0 or 1,
MFT = 02 and DIF Order Indicator is other than 0 or 1,
DIF Order Volumes Volumes are other than 0000 through 9999.
POD Exclusion Group 1. POD Exclusion Group is other than 00 through 50, 80 through 88 or 99, OR
2. Same code appears more than once, OR
3. POD Exclusion Group reflects numbers which are not left justified, contains blanks, zeroes, or alpha characters between POD Codes.

Duplicate orders will be denoted by a ## next to the alpha field for Area Office/Campus Codes.

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Exhibit 4.19.11-4 
SC Inventory and Delivery Report 1040–3

The numbered items on the report match the numbers shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC Cycle Number.
2 Computer Services Program/Run/File Number for the report.
3 File Year of returns in report.
4 Campus Code.
5 Campus Name Abbreviation.
6 Area Office Code.
7 Area Office Name.
8 Run Date of Report.
9 Self-Employment Tax Inventory by Income Range.
10 Self-Employment Tax Deliveries by Income Range.
11 Total Inventory of Self-Employment Tax Returns.
12 Total Deliveries of Self-Employment Tax Returns.
13 Total Deliveries in Current Cycle of Self-Employment Tax Returns.
14 Total DIF returns processed.
15 Percent based on returns projected to be processed.
16 Returns identified for Unallowable Program.
17 Identification Rate for Unallowable Program.
18 Returns identified for Tax Preference Program.
19 Identification Rate for Tax Preference Program.
20 Returns identified for Self-Employment Tax Program (same as item 11 above.)
21 Identification Rate for Self-Employment Tax Program.
22 Cumulative Deliveries of Special Returns as indicated on report (total of items E, F, and G on Special Report should be the same as item 16 above. Item P on Special Report should be the same as item 20 above.
23 Deliveries of Special Returns in Current Cycle.
24 Total Cumulative Deliveries of Special Returns.
25 Total Current Deliveries of Special Returns.

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Exhibit 4.19.11-5 
Individual Amended Returns Inventory and Delivery Report 1040-5

The numbered items below match the numbers shown on the format of the report and provide an explanation for each element of the report. The header of the report have related numbers as outlined in the following chart.

Note:

Items 10-20 are amended returns by dollar amounts in inventory according to issue Code. Items 23 - 33 are amended returns by dollar amount delivered according to issue code.

IF the Item Number is THEN the Definition of Field is
1 Current MCC Cycle number.
2 Data Services Program/Run/File number for the report.
3 Year in which the amended returns were filed.
4 Campus number.
5 Campus name.
6 Area Office number.
7 Area Office name.
8 Quarter for File Year. Literal prints only at the end of quarter.
9 Run Date.
10 and 23 Adjustments to Income.
11 and 24 Filing Status and/or exemptions.
12 and 25 Tax Computation.
13 and 26 Credits.
14 and 27 Itemized Deductions.
15 and 28 Schedule C and/or Schedule F.
16 and 29 Schedule D or Supplemental Gains.
17 and 30 Schedule E.
18 and 31 Other Taxes.
19 and 32 Multiples - Any combination of items 10-18, or items 23-31.
20 and 33 Other issues.
21 Total returns by dollar amount.
22 Total returns by Issue Code in Inventory.
34 Total returns dollar amount delivered.
35 Total returns by Issue Code delivered.
36 Total percentage delivered.
37 Total returns delivered in current cycle.
38 Intelligence (TC 91X) deletes.
39 TC 420/424 Deletes.

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Exhibit 4.19.11-6 
AO/SC Individual Inventory and Delivery Report 1040-6

The numbered items below match the numbers shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC Cycle Number
2 Computer Services Program/File/Run number for the report.
3 File year of the returns in report.
4 Campus code.
5 Campus name abbreviation.
6 Area Office code.
7 Area Office name.
8 Post-of-duty number; literal is printed only if report is for the POD.
9 Quarter for File Year. Literal is printed only at the end of a quarter.
10 Run data of the report.
11 The number of returns in inventory, by DIF score and TPI class, through the current cycle.
12 The total number of returnsin inventory by DIF score and TPI class.
13 The number of returns delivered, by DIF score, from Correspondence Inventory for Campus use through the current cycle.
14 The number of returns delivered, by TPI Class, from Correspondence Inventory for Campususe through the current cycle.
15 Current cycle total deliveries, by TPI Class, for Campus use.
16 The number of returns delivered, by DIF score, from Correspondence Inventory for area office use, through the current cycle.
17 The number of returns delivered, by TPI Class, from Correspondence Inventory for area office use, through the current cycle.
18 Current cycle total deliveries, by TPI class, for area office use.
19 The number of returns delivered, by TPI Class, from Correspondence Inventory for Campus and for area office use, through the current cycle.
20 The total number of returns deliveredfrom Correspondence Inventory for Campus and for area office use, through the current cycle.
21 Current cycle total deliveriesfor the area office use and Campus use.
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Exhibit 4.19.11-7 
SBSE Corporate DIF Inventory and Delivery Report 1120-1

The numbered items below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC Cycle Number
2 Computer Services Program/File/Run number for the report.
3 File year of the returns in report.
4 Campus number.
5 Campus name.
6 Area Office code.
7 Area Office name.
8 Post-of-duty number; literal is printed only if report is for a POD.
9 Quarter for File Year. Literal is printed only at the end of a quarter.
10 Run data of the report.
11 The number of returns posted to the inventory at MCC through the current cycle, by FRMLA and DIF score.
12 Totals by DIF Score of returns posted in inventory.
13 Total of and by of each Column 11in inventory.
14 Total of all returns posted to the inventory.
15 Totals of Tax Preference returns included in totals of and by each Column 11 in inventory.
16 Totals of Tax Preference returns included in totals of Column 12 in inventory.
17 Total number of returns delivered for classification, by FRMLA and DIF Score through the current cycle.
18 Totals, by DIF Score, of delivered returns for classification.
19 Totals of each Column 17 delivered.
20 Total of all returns delivered for classification.
21 Totals of Tax Preference delivered returns included in Total of each Column 17 .
22 Totals of Tax Preference delivered returns included in Total of Column 18 .

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Exhibit 4.19.11-8 
LMSB Corporate Inventory and Delivery Analysis Report 1120-2

The numbered items below match the number shown on the format of this report and provide an explanation for each element of the report. Numbered items not specifically described are total figures for the particular item.

IF the Item Number is THEN the Definition of Field is
E1 Current MCC cycle number.
E2 Computer Services Program/Run/File number.
E3 File Year of returns in the report.
E4 Campus number.
E5 Campus name.
E6 Area office number.
E 7 Area office name.
E8 MCC Run Date of the report.
1 Projected Filings - The total number of returns filed last year, by Exam Class.
2 Processed Cumulative - the total number of returns posted to the inventory at MCC through the current cycle. Includes all returns with Asset Ranges 01 through 05.
3 Percent Process - Processed Cumulative (9) divided by Projected Filings (11).
4 DIF Inventory Cumulative - Size of DIF inventory if no extractions (Deliveries, Specials, Deletions, and/or Extractions from Audit Categories E/M) had been made by Exam Class. Includes TC 150 that have a prior TC 424 posted.
5 Cumulative DIF Specials (Audit Category E) Delivered from the DIF Inventory through the current cycle, by Exam Class.
6 Cumulative total of Automatics - Audit Category S delivered with Asset Ranges of 01-05 and Audit Category A delivered with Asset Ranges 4-5.
7 Cumulative DIF Regular Deliveries - Cumulative total of DIF Forms 1120/1120A (Audit Category M) returns ordered regular order records that fall within Asset Ranges 01 through 05.
8 Cumulative DIF POD - Total Supplemental Deliveries - Cumulative number of Forms 1120/1120A (Audit Category M) delivered through the current cycle via POD Supplemental orders, that fall within Asset Ranges 01 through 05.
9 Cumulative Regular and POD Deliveries - Total of Columns 20 and 22.
10 Percent POD - column 22 divided by Column 24.
11 Current Special Deliveries - The current number of Specials delivered since the previous report by Exam Class.
12 Current Automatic Deliveries - The current number of Automatics delivered since the previous report, by Exam Class.
13 DIF Regular Deliveries - The current number of Forms 1120/1120A ordered via Regular orders since the previous report, by Exam Class.
14 DIF POD Supplemental Deliveries - The current number of Forms 1120/1120A ordered via POD Supplemental orders since the previous report, by Exam Class.
15 Total Current Deliveries - Total of Column 28 through Column 34.
16 Deletions - The cumulative number of returns deleted from the inventory, or not added to the inventory, because of a TC 424 or 30X posting to the account, by Exam Class.
17 Exclusions - The cumulative number of returns excluded from inventory because of a TC 420, 421, 941, or 940 posting to the account by Exam Class.
18 Current Special Deliveries - The current number of Specials (Category N/Category O) delivered since the previous report, by type of return or Audit Code.
19 Cumulative Special Deliveries - The current number of Specials (Category N/Category O) delivered since the previous report, by type of return or Audit Code.
20 Current Special Deliveries - The current number of Specials (Category E) delivered since the previous report, by type of return or Audit Code.
21 Cumulative Special Deliveries - The current number of Specials (Category E) delivered since the previous report, by type of return or Audit Code.
22 & 24 Current Special Deliveries - The current number of Specials (Category P) delivered since the previous report, by type of return or Audit Code.
23 & 25 Cumulative Special Deliveries - The cumulative number of Special (Category P) returns delivered through the current cycle, by type of return or Audit Code.
26 Miscellaneous Return Inventory - The total number of Miscellaneous Forms 1120 posted to inventory, by type of return.
27 Current miscellaneous Return Deliveries - the number of Miscellaneous Forms 1120 (Low Asset) delivered since the previous report, by type of return.
28 Cumulative Miscellaneous Return Deliveries - The number of Miscellaneous Forms 1120 (Low Asset) delivered through the current cycle, by type of return.
29 Percent Miscellaneous Return Deliveries - Percent of returns delivered from the Miscellaneous Inventory. (56 divided by the sum of 52+56)
30 POD 99 Inventory - Cumulative Inventory figures for Forms 1120/1120A, Consolidated, Final, Short/Initial Period DIF scored returns in POD 99.
31 Percent of POD 999 Inventory - Column 59 divided by Column 14.
32 POD 999 Inventory - Cumulative Inventory figures from Form 1120S DIF scored returns in POD 999.
33 Percent of POD 99 Form 1120S - (62 divided by the sum of Columns 52 and 56).
34 Current Automatic Deliveries - Current deliveries figures for Forms 1120/1120A Automatic returns (Category H).
35 Cumulative Automatic Deliveries - The cumulative delivery figures for Forms 1120/112A Automatic returns (Category H) delivered through the current cycle.
36 Cumulative Automatic Deliveries - Current deliveries figures for Forms 1120/1120A Automatic returns (Category H).
36 Current Automatic Deliveries - Current delivery figures for Automatic returns (Category A, D, and S) delivered for the current cycle.
37 Cumulative Automatic Deliveries - The cumulative delivery figures for Automatic returns (Categories A, D, and S) delivered through the current cycle.
38 Form 1120F Inventory - The cumulative number of Forms 1120F (Category Q) returns in the current inventory.
39 Current Form 1120F Deliveries - The number of Forms 1120F (Category Q) delivered since the previous report.
40 Cumulative Form 1120F Deliveries - The number of Forms 1120F (Category Q) delivered through the current cycle.
41 Percent Form 1120F Deliveries - (77 divided by the sum of 73 and 77.)

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Exhibit 4.19.11-9 
SBSE 1120S DIF and 1120F Inventory and Delivery Report 1120-3

The numbered items below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC cycle number.
2 Computer Services Program/Run/File number.
3 File Year of returns in the report.
4 Campus number.
5 Campus name.
6 Area office number.
7 Area office name.
8 Post of Duty name. Literal is printed only on the report for a POD.
9 MCC Run Date of the report.
10 Total number of returns posted to the inventory at MCC through the current cycle, by FRMLA, DIF score, and dollar amount.
11 Totals by DIF Score of returns posted.
12 Totals of Column 10.
13 Total of all returns posted to inventory (column 11).
14 Totals of Tax Preference returns included in Totals of Column 10.
15 Total of Tax Preference returns included in Totals of Column 11.
16 Total number of returns delivered for classification, by FRMLA and DIF Score through the current cycle.
17 Totals, by DIF Score, of returns delivered for classification.
18 Total of Column 16.
19 Total of all returns delivered for classification (17).
20 Total of Tax Preference returns included in Total of columns 16.
21 Total of Tax Preference returns included in total of column 17.
22 Total number of returns posted to the inventory at MCC through the current cycle, by FRMLA.
23 Total number of returns posted.
24 Total number of returns delivered for classification, by FRMLA, through the current cycle.
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Exhibit 4.19.11-10 
SBSE Corporate Inventory and Delivery Analysis Report 1120-5

The numbered items below match the number shown on the format of this report and provide an explanation for each element of the report. Numbered items not specifically described are total figures for the particular item.

IF the Item Number is THEN the Definition of Field is
E1 Current MCC cycle number.
E2 Computer Services Program/Run/File number.
E3 File Year of returns in the report.
E4 Campus number.
E5 Campus name.
E6 Area office number.
E 7 Area office name.
E8 MCC Run Date of the report.
1 Projected Filings - The total number of returns filed last year, by Exam Class.
2 Processed Cumulative - the total number of returns posted to the inventoryat MCC through the current cycle. Includes all returns with Asset Ranges 01 through 05.
3 Percent Process - Processed Cumulative (9) divided by Projected Filings (11).
4 DIF Inventory Cumulative - Size of DIF inventory if no extractions (Deliveries, Specials, Deletions, and/or Extractions from Audit Categories E/M) had been made by Exam Class. Includes TC 150 that have a prior TC 424 posted.
5 Cumulative DIF Specials (Audit Category E) Delivered from the DIF Inventory through the current cycle, by Exam Class.
6 Cumulative total of Automatics - Audit Category S delivered with Asset Ranges of 01-05 and Audit Category A delivered with Asset Ranges 4-5.
7 Cumulative DIF Regular Deliveries - Cumulative total of DIF Forms 1120/1120A (Audit Category M) returns ordered regular order records that fall within Asset Ranges 01 through 05.
8 Cumulative DIF POD - Total Supplemental Deliveries - Cumulative number of Forms 1120/1120A (Audit Category M) delivered through the current cycle via POD Supplemental orders, that fall within Asset Ranges 01 through 05.
9 Cumulative Regular and POD Deliveries - Total of Columns 20 and 22.
10 Percent POD - column 22 divided by Column 24.
11 Current Special Deliveries - The current number of Specials delivered since the previous report by Exam Class.
12 Current Automatic Deliveries - The current number of Automatics delivered since the previous report, by Exam Class.
13 DIF Regular Deliveries - The current number of Forms 1120/1120A ordered via Regular orders since the previous report, by Exam Class.
14 DIF POD Supplemental Deliveries - The current number of Forms 1120/1120A ordered via POD Supplemental orders since the previous report, by Exam Class.
15 Total Current Deliveries - Total of Column 28 through Column 34.
16 Deletions - The cumulative number of returns deleted from the inventory, or not added to the inventory, because of a TC 424 or 30X posting to the account, by Exam Class.
17 Exclusions - The cumulative number of returns excluded from inventory because of a TC 420, 421, 941, or 940 posting to the account by Exam Class.
18 Current Special Deliveries - The current number of Specials (Category N/Category O) delivered since the previous report, by type of return or Audit Code.
19 Cumulative Special Deliveries - The current number of Specials (Category N/Category O) delivered since the previous report, by type of return or Audit Code.
20 Current Special Deliveries - The current number of Specials (Category E) delivered since the previous report, by type of return or Audit Code.
21 Cumulative Special Deliveries - The current number of Specials (Category E) delivered since the previous report, by type of return or Audit Code.
22 & 24 Current Special Deliveries - The current number of Specials (Category P) delivered since the previous report, by type of return or Audit Code.
23 & 25 Cumulative Special Deliveries - The cumulative number of Special (Category P) returns delivered through the current cycle, by type of return or Audit Code.
26 Miscellaneous Return Inventory - The total number of Miscellaneous Forms 1120 posted to inventory, by type of return.
27 Current miscellaneous Return Deliveries - the number of Miscellaneous Forms 1120 (Low Asset) delivered since the previous report, by type of return.
28 Cumulative Miscellaneous Return Deliveries - The number of Miscellaneous Forms 1120 (Low Asset) delivered through the current cycle, by type of return.
29 Percent Miscellaneous Return Deliveries - Percent of returns delivered from the Miscellaneous Inventory. (56 divided by the sum of 52+56)
30 POD 99 Inventory - Cumulative Inventory figures for Forms 1120/1120A, Consolidated, Final, Short/Initial Period DIF scored returns in POD 99.
31 Percent of POD 999 Inventory - Column 59 divided by Column 14.
32 POD 999 Inventory - Cumulative Inventory figures from Form 1120S DIF scored returns in POD 999.
33 Percent of POD 99 Form 1120S - (62 divided by the sum of Columns 52 and 56).
34 Current Automatic Deliveries - Current deliveries figures for Forms 1120/1120A Automatic returns (Category H).
35 Cumulative Automatic Deliveries - The cumulative delivery figures for Forms 1120/112A Automatic returns (Category H) delivered through the current cycle.
36 Cumulative Automatic Deliveries - Current deliveries figures for Forms 1120/1120A Automatic returns (Category H).
36 Current Automatic Deliveries - Current delivery figures for Automatic returns (Category A, D, and S) delivered for the current cycle.
37 Cumulative Automatic Deliveries - The cumulative delivery figures for Automatic returns (Categories A, D, and S) delivered through the current cycle.
38 Form 1120F Inventory - The cumulative number of Forms 1120F (Category Q) returns in the current inventory.
39 Current Form 1120F Deliveries - The number of Forms 1120F (Category Q) delivered since the previous report.
40 Cumulative Form 1120F Deliveries - The number of Forms 1120F (Category Q) delivered through the current cycle.
41 Percent Form 1120F Deliveries - (77 divided by the sum of 73 and 77.)

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Exhibit 4.19.11-11 
SBSE Partnership Inventory and Delivery Report 1065-1

The numbered items below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC cycle number.
2 Computer Services Program/Run/File number.
3 File Year of returns in the report.
4 Campus number.
5 Campus name.
6 Area office number.
7 Area office name.
8 Post of Duty name. Literal is printed only on the report for a POD.
9 MCC Run Date of the report.
10 Total number of returns posted to the inventory at MCC through the current cycle, by Audit Class and DIF score.
11 Totals, by DIF Score, of returns posted.
12 Totals of Columns 10.
13 Total of Column 11.
14 Totals Deletes - The total number of returns deleted from inventory or not added to inventory because of a TC 424, or 30X posting to the account, by Audit Class.
15 Total of all Deletes.
16 Total number of returns delivered for classification through the current cycle, by Audit Class and DIF Score.
17 Totals, by DIF Score, of returns delivered from the inventory since the previous report, by Audit Class and DIF Score.
18 Totals of Column 16.
19 Total of column 17.
20 Total number of returns delivered from the inventory since the previous report, by Audit Class and DIF Score.
21 Total of all returns delivered from the inventory since the previous report.
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Exhibit 4.19.11-12 
LMSB Partnership and Delivery Report 1065-2

The numbered items with their definitions shown in the table below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
E1 Current MCC cycle number.
E2 Computer Services Program/Run/File number.
E3 File Year of returns in the report.
E4 Campus number.
E5 Campus name.
E6 Area office number.
E7 Area office name.
E8 MCC Run Date of the report.
E9 Projected Filings - The total number of returns filed last year, by Exam Class.
E10 Total of Column 9.
E11 Processed Cumulative - Total number of returns posted at MCC through the current cycle, by Audit Class.
E12 Total of column 11.
E13 Percent Processed - Column 11 divided by Column 9.
E14 Item 12 divided by Item 10.
E15 DIF Inventory Cumulative - the total number of returns in the DIF Inventory as if no deliveries or extractions had been made. Does not include counts for Specials or Automatics.
E16 Total of Column 15.
E17 Cumulative Specials - Cumulative number of Specials delivered through the current cycle, by Audit Class.
E18 Total of Column 17.
E19 Cumulative Automatics - Current number of Automatics delivered through the current cycle, by Audit class.
E20 Total of Column 19.
E21 Cumulative DIF Regular - Cumulative number of Forms 1065 ordered via regular orders.
E22 Total of Column 21.
E23 Cumulative DIF POD - Cumulative number of Forms 1065 ordered via POD Supplemental orders by Activity Code.
E24 Total of Column 23.
E25 Cumulative Regular and POD - total of Columns 21, and 23.
E26 Total of Columns 22 and 24.
E27 Current Specials - the number of specials delivered since the previous report, by Audit Class.
E28 Total of Column 27.
E29 Current Automatics - the number of Automatics delivered since the previous report, by Audit Class.
E30 Total of Column 29.
E31 Current Regular - The number of Forms 1065 ordered via regular orders since the previous report, by Audit class.
E32 Total of Column 31.
E33 Current delivery number of returns listed in Column 23.
E34 Total of Column 33.
E35 Total of Columns 27, 29, 31, and 33.
E36 Totals of columns 28, 30, 32, and 34.
E37 Deletions - The cumulative number of returns deleted from inventory or not added to the inventory, because of a TC 424 or 30X posting to the account, by Audit Class.
E38 Total of Column 37.
E39 Exclusions - The cumulative number of returns excluded from the inventory because of a TC 420, 421, or 914 posting to the account, by Audit Class.
E40 Total of Column 39.
E41 Special Current - The current number of Specials delivered since the previous report, by type of Special.
E42 Total of Column 41.
E43 Special Cumulative - The cumulative number of Specials returns delivered through the current cycle, by type of Special.
E44 Total of Column 43.
E45 POD 99 Inventory - The cumulative inventory numbers for Forms 1065 DIF Scored returns in POD 999.
E46 Total of Column 45.
E47 Column 45 divided by Column 15.
E48 Column 46 divided by Column 16.
E49 Automatics Current - The total number of Automatics delivered since the previous report, by type of Automatic.
E50 Total of Column 49.
E51 Automatic Cumulative - The cumulative number of Automatics delivered through the current cycled, by type of Automatic.
E52 Total of Column 51.

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Exhibit 4.19.11-13 
SBSE Partnership and Delivery Report 1065-4

The numbered items with their definitions shown in the table below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
E1 Current MCC cycle number.
E2 Computer Services Program/Run/File number.
E3 File Year of returns in the report.
E4 Campus number.
E5 Campus name.
E6 Area office number.
E7 Area office name.
E8 MCC Run Date of the report.
E9 Projected Filings - The total number of returns filed last year, by Exam Class.
E10 Total of Column 9.
E11 Processed Cumulative - Total number of returns posted at MCC through the current cycle, by Audit Class.
E12 Total of column 11.
E13 Percent Processed - Column 11 divided by Column 9.
E14 Item 12 divided by Item 10.
E15 DIF Inventory Cumulative - the total number of returns in the DIF Inventory as if no deliveries or extractions had been made. Does not include counts for Specials or Automatics.
E16 Total of Column 15.
E17 Cumulative Specials - Cumulative number of Specials delivered through the current cycle, by Audit Class.
E18 Total of Column 17.
E19 Cumulative Automatics - Current number of Automatics delivered through the current cycle, by Audit class.
E20 Total of Column 19.
E21 Cumulative DIF Regular - Cumulative number of Forms 1065 ordered via regular orders.
E22 Total of Column 21.
E23 Cumulative DIF POD - Cumulative number of Forms 1065 ordered via POD Supplemental orders by Activity Code.
E24 Total of Column 23.
E25 Cumulative Regular and POD - total of Columns 21, and 23.
E26 Total of Columns 22 and 24.
E27 Current Specials - the number of specials delivered since the previous report, by Audit Class.
E28 Total of Column 27.
E29 Current Automatics - the number of Automatics delivered since the previous report, by Audit Class.
E30 Total of Column 29.
E31 Current Regular - The number of Forms 1065 ordered via regular orders since the previous report, by Audit class.
E32 Total of Column 31.
E33 Current delivery number of returns listed in Column 23.
E34 Total of Column 33.
E35 Total of Columns 27, 29, 31, and 33.
E36 Totals of columns 28, 30, 32, and 34.
E37 Deletions - The cumulative number of returns deleted from inventory or not added to the inventory, because of a TC 424 or 30X posting to the account, by Audit Class.
E38 Total of Column 37.
E39 Exclusions - The cumulative number of returns excluded from the inventory because of a TC 420, 421, or 914 posting to the account, by Audit Class.
E40 Total of Column 39.
E41 Special Current - The current number of Specials delivered since the previous report, by type of Special.
E42 Total of Column 41.
E43 Special Cumulative - The cumulative number of Specials returns delivered through the current cycle, by type of Special.
E44 Total of Column 43.
E45 POD 99 Inventory - The cumulative inventory numbers for Forms 1065 DIF Scored returns in POD 999.
E46 Total of Column 45.
E47 Column 45 divided by Column 15.
E48 Column 46 divided by Column 16.
E49 Automatics Current - The total number of Automatics delivered since the previous report, by type of Automatic.
E50 Total of Column 49.
E51 Automatic Cumulative - The cumulative number of Automatics delivered through the current cycled, by type of Automatic.
E52 Total of Column 51.

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Exhibit 4.19.11-14 
Small Business Inventory and Delivery Report For Fiduciary Income Tax Returns 1041

The numbered items below match the number shown on the format of the report and provide an explanation for each element of the report.

IF the Item Number is THEN the Definition of Field is
1 Current MCC cycle number.
2 Computer Services Program/Run/File number.
3 File Year of returns in the report.
4 Campus number.
5 Campus name.
6 Area office number.
7 Area office name.
8 MCC Run Date of the report.
9 Quarter for File Year. Literal is printed only at the end of a quarter.
10 Inventory Current column shows the number of returns in the inventory for the current cycle.
11 Cumulative Returns Processed Total - The total of all 1041 returns posted to the master file and placed on the inventory for that particular posting year.
12 Current Delivery Report Total - The number of returns delivered during the year. The total of all lines for item 10.
13 Cumulative Delivery Report Total - the total number of all returns delivered during the year. The total of all lines for item 11.
14 Delivered Current - Provides the number of audit records delivered from the inventory this cycle for Form 1041 to a given district, service center, or nationwide.
15 Cumulative Delivered Total - Provides the cumulative number of audit records delivered from the inventory this year for Form 1041 to a given district, service center, or nationwide.
16 Total of item 14
17 Total of item 15
18, 27, 36 International/Audit Code 1 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) with Form 5471 having an Audit Code of 1 and Foreign Indicator Code of 1 (18). A total amount for the current cycle (27) and a cumulative amount (36) produced since cycle 01 of the current year is displayed.
19, 28, 37 Inconsistent Treatment/Audit Code 3 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code of 4 (19) . A total amount (28) for the current cycle and a cumulative amount produced (37) since cycle 01 of the current year is displayed.
20, 29, 38 Prompt Audit/Audit Code 4 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code of 5 (20). A total amount for the current cycle (29) and a cumulative amount (38) since cycle -1 of the current year is displayed.
21, 30, 39 Tax Exempt Trust/Audit Code 5 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code of 5 (21). A total amount for the current cycle (30) and a cumulative amount (39) since cycle -1 of the current year is displayed.
22, 31, 40 Nonexempt Charitable Trust/Audit Code 6 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code of 6 (22). A total amount for the current cycle (31) and a cumulative amount (40) produced since cycle 01 of the current year is displayed.
23, 32, 41 Form 1041-N/Audit Code 8 - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code of 8. A total amount for the current cycle (32) and a cumulative amount (41) produced since cycle 01 of the current year is displayed.
24, 33, 42 Other Reason Automatic - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code. A total amount for the current cycle (33) and a cumulative amount (42) produced since cycle 01 of the current year is displayed.
25, 34, 43 Total Delivered - The total number of Automatic Audit Records produced this cycle for Form 1041 (by Activity Code) having an Audit Code. A total amount of all activity codes (35) delivered for the current cycle (43) is displayed.
26, 35, 44 Cumulative Delivered - The cumulative number of Automatic Audit Records produced since cycle 01 of the current year by activity code. . A cumulative amount of all activity codes (36) delivered since cycle 01 (44) of the current year is also displayed.
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Exhibit 4.19.11-15 
DO Real Estate Mortgage Investment Conduit Inventory and Delivery Report 1066-1

The numbered items below (in the table) match the number shown on the format of the report. The definition of the item numbers are listed in column two, across from the numeric value.

IF the Item Number is THEN the Definition of Field is
1 Current MCC cycle number.
2 Computer Services Program/Run/File number.
3 File Year of returns in the report.
4 Campus number.
5 Campus name.
6 Area office number.
7 Area office name.
8 Post of Duty name. Literal is printed only on the report for a POD.
9 MCC Run Date of the report.
10 Total number of returns posted to the inventory at MCC through the current cycle, by Total Assets.
11 Total of Column 10.
12 Total number of returns delivered to the inventory since the previous report.
13 Cumulative Deliveries - Total of Column 12.
14 Current Deliveries - total of all returns delivered from the inventory since the previous report.

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