4.22.2  NRP Case Building

4.22.2.1  (10-01-2008)
Introduction

  1. The NRP approach maximizes use of data available to the IRS and, to the extent possible, minimizes intrusiveness and taxpayer burden.

  2. Case building is the process of adding information to the case file, from both IRS and non-IRS sources, prior to classification. Use of this information during the classification process will identify or eliminate potential issues prior to contacting the taxpayer.

  3. Examiners should supplement the case building material included in the file as necessary.

  4. For the Individual Form 1040 Study, case building will be conducted at the Cincinnati Campus.

  5. NRP training Module C (Case Building Tools and Classification Overview) provides more detailed information on items contained in this IRM.

4.22.2.2  (10-01-2008)
Case Building Tools

  1. The following subsections describe the case building items that will be included in the Individual NRP case files. These items will be used as investigative tools to facilitate improved analysis and enhanced decision making by NRP classifiers and examiners.

4.22.2.2.1  (10-01-2008)
NRP Case Building Inventory Sheet

  1. The NRP Case Building Inventory Sheet is stapled to the inside left of the case folder. It contains a list of all case building information included in the case file. The NRP Case Building Inventory Sheet provides a quick overview of the case building tools provided in the case file.

4.22.2.2.2  (10-01-2008)
Examination Return Charge-Out (Form 5546)

  1. Form 5546 is attached to the top of the original return or return facsimile. It verifies that the return has been established on AIMS and will show the NRP Source Code, Project Code, and Tracking Code. It provides an audit history, information for any Power of Attorney, and a myriad of codes (AIMS, BOD, etc.) giving information about the selected tax return.

  2. Form 5546 provides the classifier and the examiner an audit history. It lets the classifier and examiner know the results of the last two returns the Service either classified or examined. Care should be taken in using this information to draw conclusions. The classifier and examiner need to look at the current overall picture of the taxpayer based on the case building and other known data.

4.22.2.2.3  (10-01-2008)
Original Tax Return

  1. The original NRP Individual key case tax return will be included in the case file. This includes either an original paper filed return or a return facsimile if e-filed. An imaged copy of the NRP key case return will be included in the NRP RGS Case File Documents.

4.22.2.2.4  (10-01-2008)
Midwest Automated Compliance System (MACS)

  1. MACS is a security-certified, menu driven database that contains a combination of all transcribed lines from returns and selected entity information for IMF and part of the BMF. MACS does not include all the line items of the return. It is limited to what is transcribed for RTVUE. MACS generates three years of tax return data in a side-by-side tax return format so returns are easy to compare, thus enabling the examiner to readily see changes from year to year. Additionally, the MACS print includes several helpful and informative specially calculated fields.

  2. Variances and trends (in income, deductions, other information, etc.) can be detected through correlation of MACS with other case building data. MACS data could indicate unusually low Schedule C or F gross profit year after year or consistent losses with low net profit and no other apparent sources of income to support expenditures. The three-year comparative MACS analysis would reflect any other significant changes from year to year.

4.22.2.2.5  (10-01-2008)
Currency and Banking Retrieval System (CBRS)

  1. CBRS reports large individual financial transactions and cash transactions in excess of $10,000. Cash transactions include deposits, withdrawals, check cashing, wire transfers, sales and redemption of money orders, travelers’ checks or stored value, casino activity, payments for certain services, and information on foreign bank accounts. In addition, CBRS contains reports of cash and/or other monetary instruments in excess of $10,000 used as payment for certain goods.

  2. For NRP, the following extracts will be secured for all NRP sample select entities by primary and secondary Social Security Number (SSN) and by any Schedule C or F Employer Identification Number (EIN):

    1. Form 4789, Currency Transaction Report (CTR), for cash transactions in excess of $10,000 filed by financial institutions and non-bank financial institutions (by the entity that has received cash from an individual or given cash to an individual in excess of $10,000).

    2. Form 8300, Report of Cash Payments over $10,000, filed by businesses when cash and/or monetary instruments of $10,000 or more are received for goods or services.

    3. Form 8362, Currency Transaction Report by Casinos (CTRC), or Nevada Form 8852 (CTRC-N), filed by casinos for cash transactions (cash in or cash out) in excess of $10,000.

    4. Form 4790, Report of International Transportation of Currency or Monetary Instruments (CMIR), filed by anyone carrying cash or monetary instruments in excess of $10,000 into or out of the country.

4.22.2.2.6  (04-25-2008)
ChoicePoint

  1. ChoicePoint information is provided on the primary and secondary SSN and is a general combination report with data from multiple sources. ChoicePoint is used in NRP case building versus Accurint because it can be generated and printed in a batch mode and Accurint is only available on a one-by-one lookup basis.

  2. Various consumer reporting agencies are scanned and the information is utilized to search public records. The ChoicePoint print included in the file will show that the information search was performed even if no data was found. A single report of search results (including both the primary and secondary SSN’s, if applicable) is generated and may include:

    1. Taxpayer name.

    2. Possible "Also Known As" (or AKA's) for the taxpayer.

    3. Addresses associated with the taxpayer. This section includes current and prior addresses and possible phone numbers.

    4. Real property ownership and deed transfers.

    5. Vehicles registered at the taxpayer’s addresses. Vehicles (including possible leased vehicles) appear regardless of the name on the vehicle registration.

    6. Watercraft ownership including state registrations and boating accidents.

    7. Aircraft registrations.

    8. Professional licenses.

    9. Business affiliations.

4.22.2.2.7  (10-01-2008)
Information Data Retrieval System (IDRS) Command Codes

  1. IDRS provides filing and payment history by using specific command codes. The following are IDRS command codes used for NRP.

    1. INOLE - Displays filing requirements such as current name and address.

    2. DDBKD - Displays the person who may be entitled to claim the child indicated on the return, who actually claimed the child, the number of returns on which the child was claimed, and if the child filed a return and claimed their own exemption.

    3. DDBOL - Displays the possible erroneous claim of a person receiving public assistance.

    4. RTVUE - Displays return items from Form 1040 (as filed, and as changed during processing).

    5. IRPTR - Displays IRP (income) information: W-2s, K-1s, 1099s, etc.

    6. IMFOLI - Displays filing history and module balances (if any).

    7. IMFOLT - Displays a list of posted transactions to a specific period.

    8. IMFOLE - Displays information to determine if Earned Income Credit was disallowed in a prior year. This command code is only included for returns designated as an "EIC Case."

    9. BMFOL - Displays the EIN filing history, module balances (if any), and provides a Form 941 reconciliation report.

    10. PMFOL - Displays Payer Master File information such as whether the entity filed W-2s and 1099s.

  2. NRP training Module C (Case Building Tools and Classification Overview) contains a more detailed description, benefits and how to leverage each of the aforementioned IDRS command codes.

4.22.2.2.8  (10-01-2008)
Other Case Information

  1. There are two other documents that may be present in a fully case built Individual NRP file. Their inclusion in the file is dependent on whether the tax return is claiming the Earned Income Credit or whether it was filed with a Schedule D and/or E.

  2. The EIC Stuffer is included in a case file if the return is designated as an EIC case. The stuffer alerts the examiner that there is additional training that must be completed to audit the EIC returns and that there are special and specific RGS NRP requirements for this type of return.

  3. The Transcript of Summary Data for Schedules D and E is included in the case if the return contains either of these two schedules. The information on this document is used:

    1. In the calculation of the Per Return amounts used in the NRP RGS case data for Schedule D Line 3F (Short Term Gain/Loss) and Line 10F (Long Term Gain/Loss) and/or

    2. If the return contains a Schedule E with multiple rental properties. This document displays the calculated Per Return amounts used in the NRP RGS case data for the summary of all Schedule E Rental Real Estate income and expense line items.

4.22.2.3  (10-01-2008)
Beyond Case Building

  1. Upon completion of the case building process, NRP returns will be classified by highly skilled, well-trained classifiers who will determine if the return should be considered accurate as filed or if more data collection is necessary to make a determination about the accuracy of the return. If more data collection is necessary, the classifier will make a determination about the best way to obtain the data. If in the judgment of the classifier (taking into full consideration the sufficiency of the data and the complexity of the return under consideration) a decision can be made to accept the return as filed, no further examination techniques will be necessary. If the return cannot be accepted as filed, it will be identified for examination through either Correspondence or face-to-face (Tax Compliance Officer or Revenue Agent) techniques.


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