4.22.9  International Form 1040 NRP Study

Manual Transmittal

November 18, 2011

Purpose

(1) This transmits revised IRM 4.22.9 - International Form 1040 NRP Study.

Material Changes

(1) This IRM was updated with the following offices name change:

  1. Large and Mid-Size Business (LMSB) changed to Large Business and International (LB&I)

  2. International Compliance Strategy and Policy, and Foreign Resident Compliance combined and is now International Individual Compliance (IIC)

Effect on Other Documents

This transmits specific guidance for International Individual Compliance examiners with reference to guidance and procedures in IRM 4.22.1- NRP Overview, IRM 4.22.3 - Classification of NRP Returns, IRM 4.22.4 - Area Office - Examination of NRP Cases and IRM 4.22.6 - Area Office - Examination of Individual Returns.

Audience

The offices of Large Business and International (LB&I) and International Individual Compliance.

Effective Date

(11-18-2011)

William W. Hannon
Director, National Research Program

4.22.9.1  (11-04-2011)
NRP Overview

  1. International Individual Compliance (IIC) examiners will refer to IRM 4.22.1 - NRP Overview dated 04-24-2008, which provides an overview of the need for current compliance measures and the National Research Program's approach to measuring and reporting compliance.

4.22.9.2  (11-04-2011)
NRP Case Building

  1. IIC examiners will refer to IRM 4.22.6 - Area Office - Examination of Individual Returns, which provides information that is used during the classification and examination of tax returns in NRP, describes the research that will be included in NRP case files, and explains how it should be utilized. The NRP approach maximizes use of data available to the IRS and, to the extent possible, minimizes intrusiveness and taxpayer burden.

4.22.9.3  (11-04-2011)
Classification of NRP Returns

  1. Generally, IIC examiners will follow IRM 4.22.3 - Classification of NRP Returns. However, return classification assignment may vary in LB&I International due to resources. The following statements refer to the classification of International Form 1040 NRP returns.

    Reference IRM 4.22.3.2.2.1 – Earned Income Credit (EIC) and Related Issues

    Returns claiming EIC will be examined by a IIC examiner by correspondence or face-to-face.


    Reference IRM 4.22.3.2.2.6 – Foreign Tax Credit

    1. International classifiers will select all Forms 1116 filed.

    2. International classifiers will select Form 2555 based on tolerances found in IRM 4.22.3.2 under Tolerances and any IRP discrepancy or processing error.

    Reference IRM 4.22.3.2.2.7 – Schedule A – Itemized Deductions

    In general, International classifiers will consider Schedule A variations as they relate to International taxpayers.


    Reference IRM 4.22.3.2.3 – Classification Results

    1. The NRP tax return will be completely classified prior to the determination of the classification results. The classifier will select the appropriate issues on the classification checksheet, review those issues against the following criteria for determining the overall result, and will lastly check the "Classification Results" box(es) on the classification checksheet.

    2. All returns designated as "Accepted as Filed" , "Accepted with Adjustments" or Selected will be reviewed and concurred by a NRP Coordinator or classification reviewer.

      Reference IRM 4.22.3.23.4 - Area Examination

      1. International classifiers will identify a return as "Selected for Examination" .

      2. International classifiers will not designate the type of contact for examination. Management will make this determination.

4.22.9.4  (11-04-2011)
Examination of NRP Cases - Area Office

  1. Generally, IIC examiners will follow IRM 4.22.4 - Area Office - Examination of NRP Cases, which provides guidance for conducting NRP examinations in Area Offices. The emphasis is on quality examinations within the guidelines that will produce reliable research information to be used in future workload selection. Consideration will be given to minimize taxpayer burden and to maximize IRS resources through maximum use of in-house data to limit the scope, where appropriate, in NRP examinations. The following statements refer to the examination of NRP Form 1040 returns in LB&I International.

    Reference IRM 4.22.4.4- Examination of Returns

    For IIC examiners: in addition to the information provided in IRM section 4.22.4.4, the following also applies:

    (13) International cases may require special procedures

    Reference IRM 4.22.4.4.1 – Scope and Depth of Examination

    For IIC examiners: in addition to the information provided in IRM section 4.22.4.4.1 the following also applies:

  2. Mandatory Probes

    (a) IIC examiners will request and inspect copies of all tax returns filed in the host country.

    (b) IIC examiners will request Foreign Information Return Payment documents (similar to Form 1099), if available.

    Reference IRM 4.22.4.4.5 – Transfers

    For IIC examiners:

    Generally, LB&I International will follow the procedures in IRM 4.22.4.4.5 dealing with return transfers. However, the International NRP Coordinator will determine whether case transfers will be made within International or to a SBSE domestic group.

4.22.9.5  (11-04-2011)
IRM 4.22.6 - Area Office - Examination of Individual Returns

  1. Generally, IIC examiners will follow IRM 4.22.6 - Area Office - Examination of Individual Returns, which provides guidance for conducting NRP examinations in Area Offices. The following statements refer to the examination of NRP Form 1040 returns in LB&I.

    Reference IRM 4.22.6.2 - Initiating Examinations

    For IIC examiners: in addition to the information provided in IRM 4.22.6.1 the following also applies:

    1. Correspondence procedures may vary for International examinations.

    2. MAP procedures may be required for International examinations. See IRM 4.60.2 - Mutual Agreement Procedures and Report Guidelines and 4.60.3 - Tax Treaty Related Matters.

    Reference IRM 4.22.6.3 - Individual Examination Guidelines

    Generally, IIC examiners will follow the procedures in IRM 4.22.6.3 LB&I will provide training separate from the NRP training modules, as needed, for:

    1. foreign income exclusion and,

    2. foreign tax credit.

    Reference IRM 4.22.6.5.2 - NRP Program Office and Operating Divisions Program Monitoring

    For IIC examiners in addition to the information provided in IRM 4.22.6.5.2 the following also applies:

    (2) Due to overseas travel requirements, IIC group managers should complete a minimum of one evaluative in-process review per examiner within 120 days of the date of the examiner's first interview.


    Reference IRM 4.22.6.5.3 - Area NRP Program Monitoring

    For IIC examiners the following will apply: The International NRP Quality Review Team Lead will identify the make-up of the review team.


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