The Service has the authority to prepare returns for any person who fails to submit a return required by Internal Revenue law or regulation at the time prescribed, or makes (willfully or otherwise), a false, or fraudulent return. The return is prepared from the personal knowledge of the Service's employee or from information which can be obtained through testimony or otherwise.

IRC § 6020(b) provides that the return is prima facie good and sufficient for all legal purposes, however despite this language, for most purposes of the IRC, the section 6020(b) return is not treated as a return filed by the taxpayer. For example be aware of the following:

IRC § 6020(b) pertains to individual income tax returns. Such returns may be automatically generated by the Campus or manually prepared with reports of proposed tax adjustments.

When the taxpayer has not filed an individual income tax return, the Service needs to create a valid IRC § 6020(b) return to apply the Failure to Pay (FTP) Penalty.

The Tax Court does not consider a mere assessment of tax or FTP penalty to constitute a "return" under the provisions of IRC § 6651(a) (2) and will not sustain the penalty. Therefore, to sustain a FTP penalty on a taxpayer who has not filed a return, the Service must, IN ALL CASES, properly process an IRC § 6020(b) return or have the taxpayer sign an appropriate return according to the following Form 13496 Certification procedures

There are two different processes for certifying a valid IMF IRC § 6020(b) return. The first is the RGS/Batch procedure, the other is Form 13496, IRC Section 6020(b) Certification.

Electronic Form 13496 - The RGS/Batch IRC § 6020(b) Certification and attached documents are generated systemically. Under Exam RGS/Batch procedures, the data that constitutes a valid return under IRC § 6020(b) includes computation of the taxpayer’s tax liability for the tax period in question and a completed Electronic Certification form with the electronic signature of the delegated IRS employee

Paper Form 13496 Procedures - Form 13496 MUST be completed with a live signature if not generated systemically through RGS/Batch and MUST be dated on or after the date the 30-day letter (or revised 30-day letter) is signed and dated such that the date of the certification is identical to, or later than, the 30-day letter. The completed Form 13496 MUST :

Form 13496 may not be prepared or dated after the date of the 90-day letter.

The 10/2005 version of Form 13496 must be used to create the IRC § 6020(b) return.

Whenever the examiner revises a report of proposed adjustments that increases the total tax liability of the taxpayer (without regard to whether or not the revised report is reissued to the taxpayer), a re-certification is required on another Form 13496 dated on (or after) the same day as the revised report.

When the report of proposed adjustments involves more than one tax year, create a separate Form 13496 for each year and attach each one to a photocopy of the report for each year.

Headquarters Examination establishes the priority of cases to be selected based on the availability of cases identified through the Collection Inventory and other Compliance Service initiatives for investigation by Examination.

The Operations Manager, Examination performs a periodic review of inventory selection and coordinates with Headquarters Examination to address inventory selection concerns to improve the selection criteria or suggest new initiatives.

Accounts selected for the Exam SFR program will be established on AIMS for each tax year as follows:

The filing status will be Single or MFS.

The following letters are used most often in the Non-filer Programs and have the same suspense time frames as other Correspondence letters, i.e. 45 days for most letters except Statutory Notice Of Deficiency (SNOD), which is suspended for 105 days, or 165 days for a foreign address. A few letters, such as Disallowance letters, will not be suspended.

The table below shows the most commonly used Source and Project Codes used in Correspondence Exam in the Non-filer program

The table below shows the most commonly used Disposal Codes in Correspondence Exam in the Non-Filer program.

The following Disposal Codes (DC) will be used is closing Campus Exam SFR cases.

Non-filer cases with deficiencies of $500,000 or more will be rejected from Batch Processing for review by TCO or Revenue Agents in Classification to validate income sources are accurate.

Cases rejected from Batch for "manual" reports must be reviewed by lead or manager.

Each year the Government Accountability Office (GAO) examines the Service’s financial statements. As a part of this audit, GAO reviews documentation for taxpayers whose balance due (including interest and penalties) is over $10 million.

The Office of Unpaid Assessments has access to Correspondence Examination Automation System (CEAS) and will review all reports over $10 million.

Time for Filing a Claim for Credit or Refund — Generally, a claim for a credit or refund must be filed within 3 years from the filing of the return or 2 years from the payment of tax, whichever is later.

An original delinquent return claiming an overpayment is a claim for refund. A taxpayer is entitled to a credit/refund for any payment paid within three years from the received date of an original delinquent return, including extensions.

Expired credits are not to be used to offset liabilities for other tax periods.

Certified notice of Claim Disallowed, Letter 105C must be issued when delinquent returns are received with refunds barred by the statute of limitations. If a notice of claim disallowance is not sent by registered or certified mail to the TP, the refund claim on the original return is not properly disallowed in accordance with IRC § 6532, and the statute of limitations for filing a refund suit has not expired, IRC § 6532(a)(1).

Resolve credit balance accounts where the RSED has expired by preparing Form 8758,Excess Collection Additions to transfer the expired credits to Excess Collection.

DO NOT resolve credit balances on partial assessments until final closure.

If the RSED has expired it is not necessary to cycle the balance due years first. When multiple years are received from the same taxpayer, process all years at the same time.

The statutory period for making an assessment usually expires three years from the date the original return was filed or three years from the due date of the original return, whichever is later. This is known as the Assessment Statute Expiration Date (ASED).

The posting of a SFR TC 150 Dummy return does not set the ASED date.

Use the earliest IRS received date to set the ASED. If the received date is missing or illegible, enter the postmark date (excluding metered mail) or the signature date, whichever is closer to the current date.

Returns printed from Correspondence Imaging System (CIS) may not always reflect the actual IRS received date since the original return was scanned into CIS and destroyed. When the return is printed from CIS it may reflect a date later than the TC 976 posted date. If this is the case, use the TC 976 date as the earliest IRS received date in updating ASED

To set the ASED date input a TC 971 Action Code (AC) 282 using IDRS Command Code (CC) REQ77.

To correct an ASED posted to IDRS, input a TC 560 using CC REQ77.

The initial request for relief may occur either during or after an examination.

When the tax liability has been resolved, the FTF and FTP penalties are applied unless the non-filer has provided an explanation and documentation for Reasonable Cause (RC).

Refer to IRM 20.1.1.3 as a resource guide for the non-assertion of penalties due to RC.

If the taxpayer is entitled to penalty relief, document workpapers that RC was considered, and how RC was established.

If the taxpayer is not entitled to penalty relief, follow procedures in IRM 20.1.1.3.4.3 Document workpapers that RC was considered and why RC does not apply and what penalties are to be assessed when the case is forwarded to AIMS as both partial and final assessments. Also include the date to start the FTP penalty if the FTP penalty applies.

Correspondence and telephone inquiries on non-filer cases without a return will often ask general questions such as how to secure prior year forms, requests for extension, or explain why the taxpayer is not required to file. The table below provides a list of the most common taxpayer replies and guidelines on how to respond.

Document workpapers for telephone calls and correspondence to/from the taxpayer with actions taken and decisions made.

Delinquent returns can be received directly in the Operation from the taxpayer or posted to Master File as a duplicate return, TC 976/977.

Professional judgment should be used in the review, acceptance, and selection of return(s) with Large, Unusual, and Questionable (LUQ) issues. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

A return is not considered filed for interest computation purposes until the return is received in processable form.

A return is in processable form if it:

If the requested information is received after the return due date, the return is processed with a "Return Processable Date (RPD) " reflecting the date the information was received. This date is also known as the "Correspondence Received Date (CRD)." The CRD is used to calculate interest the IRS owes on refunds.

The "RPD" date should be input on all secured SFR returns even if a balance due. This is needed since the taxpayer may file at a later date an "Amended" tax return which at that time may contain a refund.