4.23.4  Workpapers — Employment Tax Examinations

Manual Transmittal

September 16, 2011


(1) This transmits a revision to the Table of Contents and text for IRM 4.23.4, Employment Tax - Workpapers, Employment Tax Examinations.

Material Changes

(1) Editorial, typographical and technical changes have been made throughout the section. References to LMSB changed to LB&I.

(2) Discussion of risk analysis in this section identified as pertaining to SBSE.

(3) Changed title to Form 4318–ET and Case File Organization.

(4) Added link to SBSE Reengineering workpaper site.

(5) Additional information on case activity record. Website added for LB&I Employment Tax Specialist Addendum.

(6) Added that the Specialist Referral Form is a required case document.

(7) Section title changed to LB&I Workpapers. Websites updated.

(8) Corrected link to IMS website. Additional information on Form 13327.

(9) Additional items included for Pre-Examination.

(10) Formerly Time Tracking. This subsection has been eliminated.

(11) Additional items included for Risk Analysis.

(12) Added that Form(s) 5701 and Form(s) 886-A are to be attached to the final audit report. Additional information on the approval of Form 5701.

(13) Formerly Deleted (1) and (3). Revision to the SAIN numbering chart.

(14) Corrected link to Corporate Executive website. Additional info for ETS examination of executive returns added.

(15) Additional closing information included.

Effect on Other Documents

This material supersedes IRM 4.23.4, dated May 14, 2008.


This section contains instructions and guidelines for all LB&I, TE/GE, and SBSE employees dealing with employment tax issues.

Effective Date


John H. Imhoff, Jr.
Director, Specialty Programs
Small Business/Self-Employed Division  (09-16-2011)

  1. This section explains the workpapers used in employment tax examinations and their functions. Examiners should also refer to IRM 4.10.9, Workpapers, for further guidance. LB&I examiners and SBSE examiners working Coordinated Industry Cases (CIC) and Industry Cases (IC) should also refer to the section entitled LB&I Workpapers. See IRM

  2. The examination workpapers and reports provide the basis for the decisions reached by the employment tax examiner. Only on the basis of the material in the workpapers can a reviewer determine if the examination was complete and correct. The workpapers should show explanations, analyses and conclusions developed and should be sufficiently complete so, generally, no additional comments will be needed in the transmittal letter for any items covered. Workpapers should clearly and concisely state the issue, facts, audit steps, law, taxpayer's position and conclusion for each issue examined. Workpapers should document that the examiner determined if the proper items were included in wages (i.e. fringe benefits, bonuses, etc.). Workpapers should also document acceptance of the Forms W-2 and 1099 as correctly filed and comment on the consideration of potential employer/employee relationships. All notes made before, during, and after the examination should be included in the workpapers.  (05-14-2008)
Purpose of Workpapers

  1. The workpapers are prepared by the employment tax examiners so the information will be available for the following purposes:

    1. Documentation of action(s) taken

    2. Preparation of necessary reports

    3. Managerial or technical review

    4. Use by other reviewers if technical advice is requested or results are appealed

    5. Authorized review by other governmental agencies

    6. Information for subsequent examination to determine the audit trail and scope of prior examination

    7. Support of the IRS position in an unagreed case

  2. The use of workpapers in every case serve to effectively explain the areas covered during an examination. Workpapers should include all the evidence gathered by the examiner to show the work performed, methods and procedures followed and conclusions reached.

  3. Workpapers prepared by an examiner may be utilized in the preparation of the report and its review as reference in cases where the determination is to be litigated, and as a source of more detailed information which may be requested later in writing.

  4. Workpapers are the best evidence to reflect the scope and depth of the examination. The workpapers further constitute the background for the determination of the tax liability. Documentation of transactions or other significant events should be complete and accurate. Workpapers should facilitate tracing the transaction or event and related information from beginning to end.  (09-16-2011)
Workpaper Preparation

  1. Properly prepared workpapers must provide adequate documentation to support conclusions. Without sufficient documentation, it is not possible for managers or review function personnel to review the examiner’s work and be assured that the scope of the examination or the basis for the examiner’s professional judgement is adequate.

  2. Workpapers should be neat, legible, clear and concise. The legibility of examination workpapers and reports is an important aspect of the overall quality of the examination. This is true from a reviewer’s as well as a taxpayer’s point of view. The easier it is to read workpapers and reports, the easier it is to understand them.

  3. Each of the workpapers should be headed clearly, showing the name of the taxpayer, taxpayer's identification number (TIN), tax period examined, date workpapers were prepared, name or initials of the examiner and the issues or items being examined. The pages should be indexed, numbered, and securely fastened together. The workpaper footer should indicate the computer file name, if applicable.

  4. Examiners should always cite legal authority such as Internal Revenue Code, applicable regulations, court cases, revenue ruling and/or revenue procedures to support the conclusions reached.

  5. The first step in a quality tax examination is the development of a pre-examination analysis and a work plan of action. The time and effort spent during this phase of the audit process will result in an efficient and quality examination.

  6. Risk-based decision-making is critical to the effective allocation of limited examination resources in any examination. IRM, Risk Analysis, contains a discussion for LB&I employment tax examiners. For SBSE, the Risk Analysis Workpaper has been changed from an issue-by-issue approach to one of a global or case focus. The SBSE Risk Analysis Workpaper is not required for each new issue added or for each issue declassified - it is only required for each taxpayer/entity and is designated as W/P #150. This design supports the Value-Added Decision Making (80/20) concept and the Mid-Audit Decision Point (50% Rule) concept of the reengineering process.


    The Risk Analysis Workpaper is not required for ET Tax Compliance Officers (TCOs). When an ET TCO expands the scope beyond the classified issue or limits the scope, it is discussed with the manager and the decision is documented on Form 9984, Examining Officer's Activity Record. See IRM, Risk Analysis Workpaper Documentation - Office Examination.  (09-16-2011)
Form 4318–ET and Case File Organization

  1. Form 4318–ET, Employment Tax Examination Workpapers - Index, is the examination workpapers cover sheet used by SBSE employment tax examiners. It is used for pre-employment tax examination planning and as the first page and index to the audit workpapers. When needed, Continuation Sheet for Form 4318-ET, will be used. TE/GE examiners may use Form 5773, EP/EO Workpaper Summary Continuation Sheet, in place of Form 4318–ET.

  2. Form 4318-ET is part of the employment tax workpaper templates available on the Examining Employment Taxes web page found at: http://mysbse.web.irs.gov/Specialty/et/initiate/work/setting/default.aspx. These templates are part of the Specialty Program Reengineering Process, which is required in all SBSE employment tax examinations.

  3. The sections of Form 4318-ET are arranged by specific purpose;

    1. Section 100 - 190, Administrative and Planning

    2. Section 200 - 205, Evaluation of Records and Fraud

    3. Section 300 - 305, Penalty Consideration

    4. Section 400 - 405, Identified/Classified Issues

    5. Section 500 - 514, Additional Issues

    6. Section 600 - 650, Miscellaneous

  4. Each section, 1XX through 3XX, has references and links to additional lead sheets.

  5. Enter all wage adjustments by year and amount for each rate used in the "Adjustments to Wages" columns in sections 4XX and 5XX. This provides source data for report preparation and highlights adjustments for reviewers and other uses of the case file.

  6. All mandatory lead sheets that are a part of the workpaper templates should be utilized in all SBSE employment tax examinations, except where noted:

    • 000 - Form 4318 ET, Employment Tax Examination Workpapers – Index

    • 100 - Form 9984, Examining Officer's Activity Record

    • 105 - Administrative Lead Sheet

    • 110 - ET Plan to Close Check Sheet

    • 115 - GM Concurrence Meeting Check Sheet (Optional for TCOs and RA/ ROE Grades 13 and above)

    • 120 - Initial Taxpayer Contact Check Sheet

    • 125-1 - Initial Appointment Agenda

    • 125-2 - Initial Interview Questions

    • 130 - Multi-Year and Related Returns Lead Sheet

    • 135 - Records Check List

    • 140 - Mandatory Issues Check Sheet (Field Only, not Office)

    • 150 - Risk Analysis Workpaper (Field Only, not Office)

    • 190 - Closing Conference Agenda

    • 200 - Payroll Reconciliation & Evaluation

    • 205 - Fraud Awareness Lead Sheet

    • 300 - Penalty Approval Form


    National Research Project (NRP) employment tax cases are delivered through Report Generation Software (RGS) and contain a pre-populated workpaper package in the Data Capture Instrument-1, (DCI-1). As all issues in the Employment Tax NRP study are under examination, Lead Sheets 140 and 150 are not contained in the package and not required.

  7. Index workpapers as you prepare them. When additional workpapers for explanations, analyses, schedules, computations, etc. are required, prepare and index them under the index number and subheading assigned to the specific issue. These are referred to as "subsidiary" workpapers. All subsidiary workpapers related to an issue should be numbered in the appropriate sequence. For example, if an issue in the "Description" column is placed on the line 400, the lead sheet workpaper for the issue would be labeled 400-1.1. Any subsidiary workpapers for the issue would be labeled 400-2.1, 400-2.2, 400-3.1, 400-3.2, etc.

  8. The case file should include a well-documented contemporaneous case history sheet. In SBSE and TE/GE: ITG, Form 9984, Examining Officer's Activity Record, is used for this purpose and numbered as Workpaper 100. In LB&I, the IMS Activity Record should be used for this purpose. The case history provides a summary of contacts made, actions taken, and time spent on the case. For SBSE, if there is no activity on a case for a period of 45 days, a comment should be made explaining why there was no activity during this time period. The history sheet should also document all discussions held with the manager and decisions reached.


    For LB&I, if there is no ETS activity on a case for a period of 30 days, the assigned ETS must document the case file as to any delays. The history sheet should also document all discussions held with the manager and decisions reached. See The Employment Tax Specialist Addendum, Quality Element 4A2. at: http://lmsb.irs.gov/hq/pqa/2/ReviewersGuides/ReviewersGuideLQMS/print/19_12-2010_Ch%2015-ET%20Addendum.doc.

  9. The examiner should ensure that the taxpayer has been provided the most recent revision of Publication 1, Your Rights as a Taxpayer, prior to contacting a worker. This publication includes the advance general notice of potential third-party contact that is required by IRC 7602. Document the case history/activity record with the date and fact of mailing or personal delivery of the Publication 1 to the taxpayer. Other publications provided to taxpayers at the beginning of the examination, including Notice 609, Privacy Act Notice, and Pub 1976, Do You Qualify for Relief Under Section 530?, also need to be documented in the case history/activity record. See IRM, Initial Contact with Taxpayers, and IRM, Scheduling the Appointment, for additional requirements.

  10. When an examination results in a no-change, Form 4318-ET is required. Form 4666, Summary of Employment Tax Examination, is provided to the taxpayer by the examiner to indicate that no changes are being proposed. For additional procedures regarding examinations resulting in no-changes, see IRM, Employment Tax No-Change Report.  (05-14-2008)
Format and Volume of Workpapers

  1. For most employment tax issues, the employment tax workpaper templates include an issue specific lead sheet with the audit steps and references to the IRC, regulations, and IRM procedures.

  2. The volume of subsidiary workpapers prepared during examinations will vary depending on the size of the entity and the number and type of items or activities reviewed. There is no minimum volume standard for subsidiary workpapers. Subsidiary workpapers must be prepared when detail is needed that is not included in the issue lead sheet workpaper. For example, subsidiary workpapers would be used to schedule out wage adjustments by employee.

  3. There are no fixed requirements to include specific schedules or analyses in the subsidiary workpapers. However, the issue lead sheet workpapers should include a summary of those items which were analyzed and/or specifically verified and all other pertinent notes of the work performed during the examination.

  4. The workpapers should not include superfluous documentation or copies of irrelevant data. For example, copies of CPA workpapers or reports should not be included in the workpapers where they do not contribute to a conclusion. To be meaningful, the workpapers should reflect what was actually accomplished during the examination.

  5. Where necessary, the workpapers should cite legal authority such as the Code, regulations, revenue ruling or procedures, or court decisions to support the conclusions reached in the examination. This requirement is usually met with the use of the issue lead sheets, each of which has a section for listing the legal authority. The notes and specific citation assure the reviewer that the examiner has researched the issues, studied them, applied the appropriate provisions of the law in resolving them, and reached what the examiner considered a proper conclusion.

  6. The Specialist Referral Form is a required case document which must be included within the work papers of all employment tax case files.  (09-16-2011)
LB&I Workpapers

  1. Due to the large volume of workpapers in LB&I cases, it is critical that they be well organized and properly prepared. The discussions that follow are intended to be suggestions and to provide guidance to Employment Tax Specialists (ETS).

  2. The LB&I web page contains links to many of the job aids that are used in these cases. They can be found at: http://lmsb.irs.gov/reference/audit_tools/index.asp.

  3. The LB&I Employment Tax website contains a link to many of the workpapers that are used in these cases. These links can be found under ET Audit Resources at: http://lmsb.irs.gov/hq/fs/employment_tax/index.asp.

  4. The LB&I Issue Management System (IMS) is required to be used in all LB&I employment tax cases worked by LB&I ETS. It is designed to:

    • support remotely located revenue agents,

    • enhance issue identification,

    • improve issue tracking and reporting,

    • share information through a centralized data repository, and

    • capture data in support of LB&I performance measures.

    LB&I examiners will create:

    • Form 4564, Information Document Requests (IDR), and

    • Form 5701, Notice of Proposed Adjustment (NoPA),

    for each issue in IMS. For information on other IMS mandatory input requirements, refer the following IMS web site: http://lmsb.irs.gov/hq/bsp/IMS/MandatoryInput111208.asp.

  5. LB&I Examiners will use:

    • Form 13327, LB&I Quality Measurement System-Administrative Procedures,

    • Form 13744, Examiner's Risk Analysis Worksheet, and

    • a work plan of action consisting of:

    • Form 4764-A, LB&I Examination Plan, Part III - Summary of Assignments, and

    • Form 4764-B, LB&I Examination Plan, Part III - Examination Procedures Section.

  6. The Form 13327 should be completed contemporaneously by the ETS and team manager during the course of the audit. A copy of Form 13327 will be maintained in the case file under work paper SAIN # 031.

  7. LB&I examiners will establish their cases in the Issue Management System (IMS) to:

    • perform preliminary risk analysis,

    • perform in-process risk analysis for issues,

    • set-up and monitor case assignments,

    • input and monitor their issue progress and status of IDRs and Forms 5701,

    • input case documents and time information per issues,

    • generate various time reports and activity records, and

    • create a next case cycle automatically populating selected information from a previous case cycle.

    Refer to the IMS web site at: http://lmsb.irs.gov/hq/bsp/IMS/3_6/ims_agent_home36.asp

  8. LB&I no longer uses Form 4318-A. Instead, Form 4764-A and Form 4764-B are the examination workpaper cover sheets. They are used for pre-employment tax examination planning and as the first page and index to the audit workpapers. These forms also summarize the audit results. The use of Forms 4764-A and Forms 4764-B are required on LB&I employment tax cases.

  9. For further guidance, examiners should refer to IRM 4.10.9, Workpapers, and IRM 4.46, LB&I Guide for Quality Examinations.  (09-16-2011)
Pre-Examination Analysis and Audit Plan

  1. The audit plan projects which issues will be examined and assigns planned time to each issue based on the Standard Audit Index Number (SAIN) numbering system. Audit plans are required on all Coordinated Industry Cases (CIC) and Industry Cases (IC). The examination plan is a written document for all LB&I cases containing agreements with the taxpayer, information for Service personnel, work assignments, examination scope, examination procedures, time estimates, and special instructions.

  2. Examiners are required to prepare an audit plan no later than when they have applied 25 percent of the total time they expect to spend working the case.

  3. The plan is prepared by the Team Coordinator using Form 4764, LB&I Examination Plan, Form 4764A, LB&I Examination Plan - Summary of Assignments, and Form 4764B, LB&I Examination Plan – Examination Procedures. See IRM, Step Five - The Examination Plan. Both the employment tax team manager and the CIC/IC team manager approve and sign the plans.

  4. ) During the pre-planning stages of the examination, the examiner should review a copy of the income tax return filed by the taxpayer to determine if there are any large, unusual or questionable employment tax issues. When a CIC case is selected for review, the reviewer will have access to the income tax return at the CIC audit site where the review is taking place. However, when an IC case is selected for review, the reviewer will not have access to the income tax return. Therefore, for all IC closures, the relevant pages of the income tax return that were reviewed by the examiner must be included in the closed employment tax case file. Relevant pages may include, but are not limited to, the following:

    • First four pages of Form 1120,

    • Form 851- Affiliation Schedule,

    • Consolidated schedule of income and deductions,

    • Statement of "Other Deductions,"

    • Schedule M-1, M-2, and M-3.

  5. During the pre-planning stages of the examination, the examiner should review historical files as well as any prior employment tax audit reports for potential issues. IDRS command code BMFOL Z can be used to determine if there were any prior employment tax examinations.

  6. In those cases where only an employment tax examination is being conducted, it will be the responsibility of the ETS to complete the relevant portions of Form 4764.

  7. The taxpayer will be given a copy of the audit plan in all cases and such action should be documented in the history sheet. See IRM, Sections of the Examination Plan. If the audit plan is forwarded to the taxpayer by the team coordinator, the ETS should provide a statement in the ETS history sheet.

  8. An officer of a corporation must sign either the communications agreement contained in the Audit Plan or any other type of written authorization that designates the persons with whom the examination team can communicate. A copy of the written authorization must be included and documented in the employment tax case file.  (09-16-2011)
Risk Analysis

  1. A risk analysis is required on all CIC and IC cases. The initial risk analysis is prepared during the initial planning phase of the examination. Depending on materiality, the risk analysis can be done on an issue-by-issue or on a case basis. The standardized worksheet must be used and the Team Manager must approve all risk analyses. IMS should be used for the preparation of the risk analysis. Form 13744, Examiner's Risk Analysis Worksheet, should be completed as part of the pre-audit analysis.

  2. Risk analysis is an on-going process that should be documented during the examination of all Coordinated Industry Cases (CIC) cases and Industry Cases (IC) cases. A mid-cycle risk analysis will be done, at a minimum, when 50 percent of the projected time or time span is reached on the audit plan. A mid-cycle risk analysis may also be required when a significant event occurs or if requested by the team coordinator. The mid-cycle risk analysis is optional for key and related Industry Cases that are corporate cases Activity Code 221 and below, partnerships, S-Corporations, and individuals returns, and if the case will be closed within 12 month of the status 12 date.

  3. The risk analysis should discuss carryover items from the prior cycle and new issues in process. It will also include planned time. The mid-cycle risk analysis includes time applied and indicates if additional time is needed. It also covers the number of Forms 5701, Notice of Proposed Adjustment, issued plus the number of Information Document Requests (IDRs) issued and outstanding. The examiner should also state the potential tax liability by issue and by year and provide a brief assessment of the audit.  (05-14-2008)
Requests for Additional Time

  1. After the agent completes the mid-cycle risk analysis, it may be apparent that additional time will be needed to complete the examination. If the examiner needs more time than was originally planned, an explanation of why additional time is warranted and how much additional time is needed to complete the examination should be provided.

  2. The employment tax team manager and the CIC/IC team manager must approve a request for additional time.  (05-14-2008)
Information Document Requests (IDRs)

  1. All requests for information should be specific, clear, and concise and must be in writing using Form 4564, Information Document Request (IDR). On LB&I cases, this can be done within the Issue Management System (IMS).

  2. Prior to issuing an IDR, the examiner should discuss with the taxpayer and the team coordinator what specific information is needed. The taxpayer may be able to explain what type of information is available and may suggest a preferred way to request it on the IDR. Conferring with the team coordinator also ensures that the specialist does not ask for information that is already available.

  3. The team coordinator may determine the numbering system that is used for all IDRs issued. An IDR log is maintained to provide a source for assigning numbers and to monitor response times.

  4. Four copies of each IDR request are printed. Two are given to the taxpayer, one is given to the team coordinator and one is maintained in the examiner's case file.

  5. IDRs should generally include only one issue or subject. This results in a faster turnaround time since information covering multiple topics may need to come from several sources.

  6. Team coordinators provide guidance on IDR response times and follow-up based on their arrangement with the taxpayer. The Information Document Request Management Process must be used for all CIC and IC cases. The process begins at the opening conference and centers on collaboration between the taxpayer and members of the audit team on IDR response times. The importance of timely responses is emphasized as it will improve cycle time and currency of cases and promote earlier issue resolution.

  7. A memorandum of understanding stating the agreed upon IDR response time is signed by the taxpayer and team coordinator or agent in charge. A series of conferences and follow-ups will be conducted on the 15th, 30th, and 45th day of delinquency. If a request is still delinquent after 90 days, a joint IDR status meeting will be held, which includes the territory manager, IRS counsel, team manager, IDR requester and senior corporate officers of the taxpayer.

  8. The process does not preclude the examination team from using judgment on a case by case basis. Continuous collaboration is needed to reach realistic due dates and dates can be revised based upon the facts and circumstances. A detailed description of the IDR Management Process can be found at IRM, Information Document Request Management Process.  (09-16-2011)
Form 5701 – Notice of Proposed Adjustment

  1. On LB&I cases, all adjustments are proposed on a Form 5701, Notice of Proposed Adjustment, as they are developed. This form serves as a cover sheet to Form 886–A, Explanation of Adjustments, which is attached to fully explain the basis for proposing each adjustment. Form 5701 should be prepared within IMS.

  2. The employment tax team manager reviews and signs the Form 5701 to accept the examiner's position. The Territory Manager is required to approve Forms 5701 on:

    • IC cases with adjustments of $10 million or more,

    • CIC cases with adjustments than of $50 million or more, and

    • all Tier I issues.

    Potential adjustments should be discussed with the team coordinator and the taxpayer prior to issuing the notice.

  3. The Form(s) 5701 and Form(s) 886-A are to be attached to the final audit report.  (05-14-2008)
Issue Lead Sheets

  1. Form 4764-B, LB&I Examination Plan, Part III - Examination Procedures Section, is the lead sheet to describe the audit procedures applied and the conclusions reached for each issue. They should be properly headed, include a discussion of the applicable law, document the audit trail and lead to a clear and logical conclusion.

  2. Supporting documentation should be attached as a workpaper when further explanation is needed to support conclusions reached.

  3. Lead sheets also serve as an index for any workpapers that relate to a specific issue. All workpapers should be numbered, indexed and referenced to the issue lead sheet.  (09-16-2011)
Workpaper Organization

  1. Workpapers should be organized by SAIN number. This will ensure that each issue is organized uniformly to provide readability for the team coordinator, team managers and others who may review the case file.

  2. For each issue under examination, enter all wage adjustments by year and amount for each employment tax rate used. This provides source data for report preparation and highlights adjustments for reviewers and other users of the case file. Give a brief explanation of the issue developed and the extent of the verification. Simply stating that an item is "OK" is not an acceptable explanation.

  3. Index workpapers as you prepare them. When additional workpapers for explanations, analyses, schedules, etc. are required, prepare and index them under the appropriate SAIN code. All workpapers related to an issue should be numbered in the appropriate sequence.

  4. SAIN codes can be found in Exhibit 4.46.6-1, LMSB Corporate SAIN Codes, in IRM 4.46.6. If the SAIN codes used in the Audit Workpaper System or Workpaper Index Files conflict with SAIN codes in IMS, the IMS SAIN codes should be used.

    The following SAIN numbers are those most frequently used by employment tax examiners:

    001 Pre-Contact Analysis
    004 Preparing Audit Plan
    007 Report Preparation:
    Audit reports, 30-Day Letters, etc.
    009 Meetings
    010 Protest / Rebuttal
    011 Penalties
    012 Information Document Requests
    013 Notice of Proposed Adjustments
    014 Referrals
    015 Financial Interest
    016 Correspondence
    017 Tax Information Authorization
    018 Statute of Limitations
    024 Risk Analysis
    031 Form 13327 Quality Measurement System
    060 Claims
    512 Executive Compensation
    IRC 162(m), Fringe Benefits, Aircraft Usage, IRC 280G Golden Parachute Payments, Loans as Compensation, Non-qualified Deferred Compensation, Offshore Employee Leasing, Stock Options, Split-dollar Life Insurance, Back-dated Stock Options, etc.
    513 Salaries and Wages
    Back Pay, Bonuses, Certain Fringe Benefits, Commissions, Discharge of Indebtedness, Employee vs. IC, Group Term Life Insurance, Lawsuit Settlement Payments, Legal & Financial Planning, Loans vs. Compensation, Meals, Payment for Personal Expenses, Per Diem Allowances, Prized & Awards, Gifts, Vacations, Reimbursed Moving Expenses, Severance Payments, Spousal Travel, Tax Prep Fees, Working Condition Fringes, etc.
    526 Back-up Withholding and Worker Classification  (09-16-2011)
LB&I Package Audit Requirements

  1. LB&I package audit requirements regarding inspection of officer and key executives' returns can be found at IRM, Corporate Officers' Returns, which discusses the requirements to verify fact of filing and to inspect certain executives' tax returns. If the CIC or IC income tax team is not available to complete this task, it becomes the responsibly of the ETS assigned to the examination. Additional guidance on inspection of officers' returns has been published in Q & A format at: http://lmsb.irs.gov/hq/fs/employment_tax/ASPVersion/Resources_and_Information/CEC/CEC_FAQ.asp.  (09-16-2011)
Workpaper Disposition

  1. For CIC cases, the employment tax audit workpapers will remain at the audit site. At the conclusion of the examination, they will be archived by the team manager along with the workpapers of the other team members. The workpapers provide important historical information and are valuable for any subsequent cycles that may be opened.

  2. For IC cases, workpapers are included in the closed employment tax case file.

  3. When closing a related case at the same time as the primary/key case file, the required administrative workpapers do not need to be duplicated in the related case files if:

    • the related cases are being closed from the group at the same time, and

    • the returns are properly linked on ERCS and identified as being either the Primary/Key Return or the Related Return.

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