4.24.6  Excise Tax Examiner Responsibilities

Manual Transmittal

October 07, 2011

Purpose

(1) This transmits a revision to IRM 4.24.6, Excise Tax, Excise Tax Examiner Responsibilities. Significant procedural changes were made and existing content reorganized for clarity.

Material Changes

(1) Editorial changes have been made throughout this IRM to add clarity and consistency. Also, hyperlinks and IRM references were reviewed and updated as necessary. Deleted content not relevant such including listing of other IRM sections found at IRM 4.24.6.3.

Updated IRM Subsection number Description of Change
4.24.6.1 Overview of Excise Tax Examiner Responsibilities Title changed and added for link to web page.
4.24.6.2 Excise Issue Management System (IMS) Removed Excise Tax Agent Center guidance, new content added relating to IMS, and Notebook Job Aid.
4.24.6.3 Mandatory Administrative Forms Consolidated and updated all prior IRM 4.24.6 guidance relating to Mandatory Administrative Forms to be consistent with IRM 4.10.9 Workpapers. Added IGM SBSE-04-1210-73 International Case Referrals for Foreign Insurance Excise Tax. New content added relating to extension of periods of limitations. Added SBSE-25-0910-050 Interim Guidance for Extending the Statute of Limitations for Form 720-TO Terminal Operator Report and Form 720-CS Carrier Summary Report Returns. Updated Group Manager Concurrence Meeting (GMCM) guidance to align with SBSE MOU.
4.24.6.4 Case File Documentation Moved and updated content from prior IRM 4.24.6.3. New content relating to documentation in IMS added.
4.24.6.5 Conversion of QuickBooks Accounting Software New content added.
4.24.6.6 Source Codes, Examination Activity Codes, Project and Tracking Codes Consolidated all guidance relating to coding of work and use of lead feedback form.
4.24.6.7 Procedural Guidance for Certain Types of Excise Examinations Moved and updated content from prior IRM 4.24.6 14 through 4.24.6.16. Added IGM SBSE-04-1210-072 Guidance for Wagering Cases. Added new guidance relating to Ozone Depleting Chemicals testing. Added additional guidance relating to Structured Settlement Factoring Transactions.
4.24.6.8 Processing of Excise Substitute for Return Content moved from IRM 4.24.11.9.1.
4.24.6.9 Overview of SFR Action on Nonfiler Cases Moved content from prior IRM 4.24.6 17.
4.24.6.10 Substitute for Return No Examination Action Taken Moved content from prior IRM 4.24.6.19.
4.24.6.11 Delinquent Return No Examination Action Taken Moved content from prior IRM 4.24.6.18.
4.24.6.11.1 Processing of Excise Delinquent Returns Moved content from IRM 4.24.11.9.2.
4.24.6.12 Procedures for Securing MOU for Joint Audits New content added.
4.24.6.13 Requesting Excise Subject Matter Expert Assistance Consolidated guidance found in IRM 4.24.3 and IRM 4.24.12. Added SBSE-04-0311-034 Interim Guidance on Requesting Excise Subject Matter Expert (SME) Assistance.
Exhibit 4.24.6-1 Statute of Limitations Chart Added information relating to Form 720-TO/CS.

Effect on Other Documents

This material supersedes IRM 4.24.6, dated 08/13/2008. This updated IRM section includes procedural guidance found in the following Interim Guidance Memos; SBSE-04-1210-73 (12-17-2010) on International Case Referrals for Foreign Insurance Excise Tax, Interim Guidance Memo SBSE-04-1210-072 (12-172010) on Guidance for Wagering Cases, SBSE-25-0910-050 (9-15-2010) Interim Guidance for Extending the Statute of Limitations for Form 720-TO Terminal Operator Report and Form 720-CS Carrier Summary Report Returns, and SBSE-04-0311-034 Interim Guidance on Requesting Excise Subject Matter Expert (SME) Assistance Date: March 23, 2012

Audience

This section is for SBSE Excise Managers, Excise Tax Examiners, and Specialists.

Effective Date

(10-07-2011)



/s/ John Imhoff
Director, Specialty Programs
Small Business/Self Employed

4.24.6.1  (10-07-2011)
Overview of Excise Tax Examiner Responsibilities

  1. This section provides general excise tax examination procedural guidance and examination procedures specific to certain types excise examinations.

  2. The procedures found in IRM 4.10 Examination of Returns shall apply to Excise Tax Examiners and their Managers unless otherwise noted in IRM 4.24.4 Excise Tax.

  3. See the Excise Library and Resources web page located in the Examining Excise Tax Issues and Procedures section at http://mysbse.web.irs.gov/Specialty/excise/default.aspx for more information.

4.24.6.2  (10-07-2011)
Excise Issue Management System (IMS)

  1. The Excise Tax Examiner, Fuel Compliance Agent, and Fuel Compliance Officer is required to utilize management specified report generating software system and utilize the appropriate lead sheets and templates for all Excise tax case examinations, Form 637 compliance reviews, Form 637 initial applications and all fuel compliance inspections. The Issue Management System (IMS) is the current version of this type of system used by Excise.

  2. Guidance below is specifically for Excise Tax Revenue Agents and Fuel Compliance Agents ("Excise Tax Examiners" ) when performing examination or 637 Program related activities. See Fuel Compliance Technical Guidance IRM 4.24.13.16 for specific IMS guidance for fuel compliance inspections.

  3. IMS is an issue driven system that consist of three parts:

    1. The IMS Client (application on user's laptop),

    2. IMS Team Web site, and

    3. Issue Based Management Information System (IBMIS) which is the reporting component used by management.

  4. The IMS Client (laptop application) will be used by Excise Tax Examiner to:

    1. Set up and perform their duties from an ordered checklist of examination steps,

    2. communicate taxpayer case information to a central computer and query taxpayer entity data,

    3. request information from the taxpayer to work issues,

    4. complete and store examination results and work papers for various taxpayers,

    5. scan in documents received while in the field, and

    6. account for their direct and indirect time.

  5. The benefits realized from the use of IMS are:

    1. Consistent formatting, identifying, and arranging of work papers,

    2. passive flow of data to forms, and,

    3. allows for the group managers to review live cases on line.

  6. The IMS Team Web site and IBMIS captures information from the laptop application upon synchronization by the Excise Tax Examiner. Managers will use issue information in the database to make decisions and evaluate the progress of cases being examined or the effectiveness of new processes and strategic initiatives.

  7. IMS captures information for both Industry Cases (IC) and Coordinated Industry Cases (CIC).

  8. Excise Tax Examiners are required to synchronize their case data with the centralized data repository at least every 10 work days.

  9. Activity Code 613 should be used when problems using hardware and/or software applications result in a loss of productivity due to time spent on non-case related activities. Both of the following requirements must be met before the Excise Tax Examiner can charge time to Activity Code 613:

    1. A help ticket has been submitted and remains open with the ticket number annotated in the case file, and

    2. the Excise Tax Examiner is actively engaged in the fix. This includes troubleshooting with someone to fix the system, resolving equipment and software problems, server time-outs or outages, computer problems (pre-refreshment or post-refreshment) and participating in phone testing.

  10. Detailed guidance on IMS may be found in the IMS Excise User Guide located on the Excise IMS Site which can be accessed from the Examining Excise Homepage at http://mysbse.web.irs.gov/Specialty/excise/prog/default.aspx.

4.24.6.2.1  (10-07-2011)
Lead Sheets and the Notebook Job Aid

  1. The Notebook Job Aid is to be used by Excise Tax Examiners to generate lead sheets, workpapers, reports, letters, and closing forms.

  2. The lead sheets and templates outline mandatory and discretionary processes to be used in all Excise examinations, Form 637 reviews, ExSTARS compliance exams, and penalty review cases. Lead sheets will be utilized to clearly communicate expectations of both the taxpayer and Excise Tax Examiner regarding the specific examination issues, required documentation, and a mutually agreed upon date to complete the examination.

  3. The lead sheets include use of mandatory and discretionary administrative and issue related templates. Excise Tax Examiners are required to use the standardized templates to gather the information necessary to resolve issues.

  4. The Notebook Job Aid contains a standard library of Excise Tax forms, letters, lead sheets and templates and pre-populates many of the headers with the text entered. These forms are also organized in a logical manner so that they can easily be imported to IMS into the applicable Entity issue being worked by the Excise Tax Examiner.

  5. Detailed guidance on the Notebook may be found in the Notebook User Guide (201101) located on the Excise Notebook Site which can be accessed from the Examining Excise Homepage at http://mysbse.web.irs.gov/Specialty/excise/prog/default.aspx.

  6. Excise Tax Examiners will be required to periodically update their Notebook Job Aid when new or updated forms are available.

4.24.6.2.2  (10-07-2011)
IMS Time Reporting

  1. Excise Tax Examiners working cases in IMS will input all direct and indirect time in IMS. This time will be electronically transmitted from IMS to Examination Returns Control System (ERCS).

  2. Excise Tax Examiners will be required to synchronize their time at least by the Thursday close of business before the end of the ERCS reporting cycle.

  3. Excise Tax Examiners are encouraged to synchronize their time each time a case is worked but by no later than Thursday since time is fed to ERCS each Thursday night and is available for reconciliation on Friday.

  4. The need to synchronize time more than once a cycle will be at the discretion of management.

4.24.6.3  (10-07-2011)
Mandatory Administrative Forms For Revenue Agent Examinations

  1. By choosing to add Mandatory Administrative Forms to the Taxpayer Case, the Notebook Application will deploy Excise Forms related to the set of Mandatory Administrative Forms an Excise Tax Examiner has selected. These Administrative Forms will have information pre-populated with the Common Fields captured during the setup of a Taxpayer Case and User Details in the Notebook.

  2. Mandatory Administrative Forms deployed are:

    1. A105 Administrative Check Sheet

    2. A110 Excise Tax Plan to Close Check Sheet

    3. A115 Group Manager Concurrence Meeting Check Sheet

    4. A120 Initial Appointment Check Sheet

    5. A125 Initial Interview Questions and Notes

    6. B200-1 Multi-Period and Related Returns Check Sheet

    7. B200-2 FET Check Sheet

    8. C300 Books to Returns Reconciliation Check Sheet

    9. C305 Internal Controls Check Sheet

    10. C310 Fraud Awareness Check Sheet

    11. D400 Initial Taxpayer Contact Check Sheet

    12. E500 Penalty Check Sheet

  3. There are different sets of Administrative Forms with different numbers and titles for:

    1. Fuel Compliance Officer Inspections,

    2. Coordinated Industry Examinations,

    3. Form 637 Registration Cases, and

    4. Form 720TO/CS Compliance Examinations.

4.24.6.3.1  (10-07-2011)
A105 Administrative Check Sheet

  1. Excise Tax Examiners will use the A105 to address the following:

    1. Pre-Audit Issues, including Collectibility. See IRM 4.10.2, Examination of Returns, Pre-contact Responsibilities for more information

    2. 637 Registration information if applicable

    3. Power of Attorney

    4. Initial Taxpayer Contact

    5. Initial Appointment

    6. Referrals

    7. Statute of Limitations

    8. Issue Resolution and Risk Analysis

    9. Payment

    10. Additional Procedural Items including Third Party Contacts, Inadequate Records Notice and Case File Assembly

4.24.6.3.1.1  (10-07-2011)
Pre-Audit Issues Collectibility

  1. To lessen the size of Unpaid Assessments and increase the quality of assessments, Excise Tax Examiners should consider collectibility when setting the scope of an examination. Collectibility will be based on today’s financial condition and not the tax return (which reflects the taxpayer’s past financial condition). Excise Tax Examiners are required to document their evaluation of collectibility during the preplanning phase of the examination using Mandatory Administrative Form A105, Administrative Check Sheet.

  2. Form 5546 ,Examination Return Charge-Out, may provide alerts to potential collectibility issues. Excise Tax Examiners should review this form for collectibility indicators. Form 5546 contains the statement "Excise Tax Examiner Alert" in the remarks section when the following collectibility indicators are present:

    • B - Bankruptcy,

    • N - Currently Not Collectible,

    • C - Open Collection status,

    • O - Offer in Compromise.

    See IRM 4.20.2.2, General Collectibility Considerations, for a listing and definition of collectibility indicators, and steps to take when evaluating collectibility potential during the pre-planning phase.

  3. When no Form 5546 is enclosed in the Excise Tax Examiners file, the Excise Tax Examiner should request an AMDISA print.

  4. On AMDISA Line 22 of Page 1, the following collectibility indicators appear:

    • BANKRUPTCY – Taxpayer is currently in bankruptcy or bankruptcy discharge in a prior period,

    • CURNOTCOLL - Prior period was closed as Currently Not Collectible,

    • COLLSTCD26 - Open Collection status (i.e. assigned to Revenue Officer, Automated Collection, or is in Collection queue),

    • OIC Offer -In-Compromise Pending.

  5. If collectibility indicators are present or there are reasons to believe that the taxpayer has liabilities outstanding for other tax periods, a SUMRY, IMFOLI or BMFOLI should be obtained. This will provide a list of any previous tax periods with account balances. A TXMOD can then be obtained on those years to determine account activity. If Transaction Code 480 is present on any of the modules, an Offer in Compromise is under consideration. The group and employee number of the Revenue Officer charged with the account will also be reflected on the TXMOD.

  6. Not all taxpayers lacking the means to satisfy additional tax liabilities will be identified. Excise Tax Examiners should be alert for indications in the file that collectibility may be a factor to consider; i.e., the taxpayer is deceased or the taxpayer is a defunct corporation and the issue of transferee liability is not present. Form 9439, Collectibility Evaluation Form may be used to help document collectibility.

  7. If collectibility is an issue in an assigned case, the Group Manager should be alerted as soon as the issue is discovered. Managers will make the final determination whether to survey the return or to limit the scope/depth of an examination. A tax return may be surveyed due to an absolutely uncollectible assessment or subjected to a limited scope examination where there is lack of collectibility.

  8. It should be emphasized, however, that returns should not be surveyed based solely on collectibility when a limited examination has the potential for developing leads to other non-compliant taxpayers or for cases involving Fraud or special cases referred by Counsel.

4.24.6.3.1.2  (10-07-2011)
Specialist Referral System

  1. The Specialist Referral System (SRS) is an online automated system that allows for all submissions and approvals for specialist assistance. It automates the referral request process for LB & I, SBSE, and W & I field specialists. See IRM 4.10.2.6.5.2.1 and IRM 4.24.5.3 for additional guidance.

  2. See IRM 4.24.6.12 regarding submissions and approvals for assistance or advice of an Excise Subject Matter Expert (SME) or Excise Issue Specialist (EIS).

4.24.6.3.1.2.1  (10-07-2011)
International Case Referrals for Foreign Insurance Excise Tax

  1. When an Excise Tax Examiner encounters a case with a foreign captive insurance entity, the following information is to be secured and forwarded via secure e-mail to the Excise Northeast Territory Manager and the International Excise Tax Group Manager through their Excise Tax Examiner’s Group Manager:

    1. Name and EIN of parent company (or entity currently under audit),

    2. full name and EIN of the captive subsidiary,

    3. location or country of domicile of the captive subsidiary,

    4. amount of premiums insured with the captive subsidiary,

    5. amount of premiums reinsured by the captive subsidiary to reinsurance companies (if known), and

    6. indicate whether the captive subsidiary has a IRC 953(d) election (if known).

  2. The information will be reviewed to determine if the captive subsidiary is to be examined by the International Excise Tax Group. This determination will be made and communicated back to the Excise Tax Group Manager and the Excise Tax Examiner within 10 days of receipt.

  3. If the examination of the foreign subsidiary is to be conducted by an International Excise Tax Examiner, that Examiner will coordinate all actions with the Excise Tax Examiner assigned to the parent/related entity case, as well as with the CIC Coordinator assigned to the parent/related entity case, if applicable.

4.24.6.3.1.3  (10-07-2011)
Extending the Period of Limitations for Assessment of Tax

  1. The Internal Revenue Code limits the time in which the government may make an assessment of tax. Excise Tax Examiners have the primary responsibility for identifying and protecting the period of limitations for returns in their custody. IRM 25.6.1, Statute of Limitations Processes and Procedures, provides guidance for verifying statute dates. Failure to protect the period of limitations can result in disciplinary action.

  2. If the period of limitations for assessment of tax is due to expire, or if it has already expired on the assigned return, the return should be immediately brought to the Group Manager to determine the return’s disposal.

  3. A period of limitation to assess certain excise taxes can generally be extended with the taxpayer’s consent. Excise Tax Examiners must obtain the approval of the Group Manager before requesting a taxpayer to execute a consent. The need for a consent should be clearly identified before it is solicited and the Group Manager’s approval documented in the case file. See IRM 25.6.22.2.1 (2), Assessment, for a listing of some of the conditions that allow for an extension of limitation to assess certain excise taxes.

    Note:

    An Excise Tax Examiner cannot initiate an examination on any return with less than 12 months remaining on the period of limitations for assessment, without prior managerial approval.

  4. Form 872-B, Consent to Extend the Time to Assess Miscellaneous Excise Taxes, is used to extend the statutory period of limitation on assessment of the excise taxes reported on:

    • 720, Quarterly Federal Excise Tax Return,

    • Form 2290, Heavy Highway Vehicle Use Tax Return,

    • Form 730, Monthly Tax Return for Wagers,

    • Form 11-C, Occupational Tax and Registration Return for Wagering,

    • Form 720-TO, Terminal Operator Information Report,

    • Form 720-CS, Carrier Summary Information Report.

  5. The consent agreement is signed by the taxpayer(s) and an IRS representative to extend, to a mutually agreed upon (new) specified date, the Assessment Statute Expiration Date (ASED) on assessment of excise taxes.

  6. Instructions for proper completion of Form 872-B are found in IRM 25.6.22.11, Excise Tax.Form 872-B may be signed on behalf of the Director of Specialty Programs by Specialty Programs Field Group Managers as specified in Delegation Order 25-2. See IRM 1.2.52.3 for more information.

    Note:

    When consent agreements are executed by Specialty Programs Field Group Managers, the name of the Director of Specialty Programs will be written, typed, or stamped on the signature line of the form. The Specialty Programs Field Group Managers will sign his/her own name and indicate his/her title and date on the line immediately below.

  7. Claims for Refund of excise taxes filed on Form 8849 and/or amended Form 720 returns present unique statute situations. Refer to IRM 4.24.8, Claims for Refund or Abatement, for more information.

  8. Exhibit 4.24.6-1. for a summary of the statutory period of limitations for excise returns.

  9. For additional information refer to the Statute of Limitations Job Aid located in the Excise Library and Resources at http://mysbse.web.irs.gov/Specialty/excise/library/default.aspx

4.24.6.3.1.3.1  (10-07-2011)
Extending the Period of Limitations for Form 720-TO and Form 720-CS Information Reports

  1. In the case of a filed Form 720-TO or 720-CS information report that does not contain the required information, or contains incorrect information, the penalty imposed by IRC 6725 generally must be assessed within 3 years after the report was filed. The period of limitation may be extended by using a modification of Form 872-B.

  2. Since the current Form 872-B is designed for extending "tax" return periods of limitations, all references to "tax" on the Form 872-B in (1), (2), and (3) must be modified to reflect the word "penalty."

  3. Since some terminal operators have multiple filings under a single EIN, the Form 872-B must be specific to the respective terminal. The specific terminal control number (TCN) of the respective terminal should be reflected on the Form 872-B for Form 720-TO filers.

4.24.6.3.1.3.2  (10-07-2011)
Extending the Period of Limitations to Assess Air Transportation Taxes

  1. With collected taxes, special care is needed to ensure that all aspects of the period of limitations for filed returns are protected. The forms and wording needed to accomplish this task depends upon the type of entity under audit. Special language must be written on the Form 872-B and depends on the function that the taxpayer plays (i.e. collector, taxpayer, or air carrier).

    Note:

    The entity being audited may be providing more than one function and period extensions for each function must be secured.

  2. In cases where the collector has failed to charge and collect tax from their customers, a 100% Trust Fund Recovery Penalty can be asserted against the collector to recoup non-collected taxes. The Form 2750, Waver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, is used to extend the period of limitations for this penalty.

  3. For more information see IRM 4.24.9.4, IRC 6672,Trust Fund Recovery Penalty.

  4. For Collectors, the following forms are to be secured:

    1. Form 2750 is to be secured for each tax period under audit. The form can be prepared for the entity or for each responsible official depending upon the facts and circumstances of the case. This form will protect the period of limitations for the imposition of IRC 4261 and 4271 Taxable Transportation by Air excise taxes and the Trust Fund Recovery Penalty under IRC 6672.

    2. Form 872-B is to be secured to protect the collectibility for the collected taxes under IRC 7501. The wording to be used depends upon the type of tax being protected. The underlined items below are the entries which must be entered onto the form.

    • For the transportation of persons by air tax, the Form 872-B is to specify the amount of liability for collecting/ remitting IRC 4261 Taxable Transportation by Air tax, imposed on the taxpayer(s) by section 7501 and 4291 of the Internal Revenue Code.

    • For the transportation of property by air tax, the Form 872-B is to specify the amount of liability for collecting/remitting IRC 4271 Taxable Transportation by Air tax, imposed on the taxpayer(s) by section 7501 and 4291 of the Internal Revenue Code.

  5. For Taxpayers, the following forms are to be secured:

    1. Form 872-B is to be secured to protect the collectibility for the taxes imposed under IRC 4261 and 4271. The wording to be used depends upon the type of tax being protected. The underlined items below are the entries which must be entered onto the form.

    • For the transportation of persons by air tax, the Form 872-B is to specify the amount of liability for Taxable Transportation of Persons by Air tax, imposed on the taxpayer(s) by section 4261 of the Internal Revenue Code..

    • For the transportation of property by air tax, the Form 872-B is to specify the amount of liability for Taxable Transportation of Property by Air tax, imposed on the taxpayer(s) by section 4271 of the Internal Revenue Code.

  6. For Air Carriers, the following forms are to be secured:

    1. Form 872-B is to be secured to protect the collectibility for the tax imposed on the air carrier under IRC 4263. The underlined items are the entries which must be entered onto the form.

    • The amount of liability for IRC 4261 taxes not paid or collected under any other provision tax, imposed on the taxpayer(s) by section 4263 of the Internal Revenue Code.

4.24.6.3.1.3.3  (10-07-2011)
Extending the Period of Limitations to Assess Communications Taxes

  1. Special language on the Form 872-B is needed and is dependent upon the function that the taxpayer plays (i.e. collector, taxpayer, or communication provider).

  2. In cases where the collector has failed to charge and collect tax from their customers, a 100% Trust Fund Recovery Penalty can be asserted against the collector to recoup non-collected taxes. The Form 2750, Waver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty, is used to extend the period of limitations for this penalty.

  3. Extension information for a Collector:

    1. Form 2750 for IRC 4251 taxes.

    2. Form 872-B stating that "The amount of liability for collecting/remitting IRC 4251 communication tax, imposed on the taxpayer(s) by IRC 7501 and 4291."

  4. Extension information for a Taxpayer:

    1. Form 872-B specifying the type of tax and code sections. For example "The amount of liability for Communication Tax imposed on the taxpayer(s) by IRC 4251" .

4.24.6.3.1.3.4  (10-07-2011)
Six Year Period of Assessment under IRC 6501(e)(3) for Substantial Omissions of Excise Taxes

  1. If an excise tax return omits an amount of tax properly includible that exceeds 25% of the amount of tax reported on that return, the Service has additional time to assess (up to six years) the additional tax from the date the return was filed.

  2. For example, where a Form 720 is filed including the word" None" or "0" in the abstract’s tax column, a return has been filed in accordance with IRC 6501(b)(4) and any omission of tax from that return would trigger the 6 year period for assessment provided by IRC 6501(e)(3) since the omission would be in excess of 25% of the tax reported on that return.

  3. Since BRTVU and BMFOLR will not always reflect what is recorded on the actual tax return, the original return should be solicited to confirm the amount of tax reported.

4.24.6.3.1.4  (10-07-2011)
Issue Resolution and Risk Analysis

  1. Excise Tax Examiners should compare the potential benefits to be derived from examining a return to the resources required to perform the examination.

  2. Excise Tax Examiners are expected to effectively manage their workload by prioritizing the issues so that the issues with higher audit potential are examined over those with lower potential. Issues with little or no audit potential should not be selected for examination.

  3. Excise Tax Examiners should use the Risk Analysis Work Paper as warranted on a case by case basis to document their risk based decisions. This workpaper was designed as a tool to assist the Excise Tax Examiner in making and documenting their risk analysis decisions with regard to depth and scope of their examination.

  4. Excise Tax Examiners are expected to use their professional judgment to determine if it is in the government’s best interest to continue the examination. If it is not in government’s best interest to continue the examination, the Excise Tax Examiner must document their decision on the mandatory Risk Analysis Work Paper.

  5. At the mid point of the examination, using risk analysis, the Excise Tax Examiner should determine whether the remaining classified/identified issues should be examined. This decision should be based on the facts and circumstances, evaluation of internal controls (in business examinations) and the Excise Tax Examiner’s judgment. For example, the resulting additional tax is not expected to be material, or the time to develop additional issues is not justified based on the potential for more tax.

  6. See IRM 4.10.2, Examination of Returns, Pre-contact Responsibilities for more information.

4.24.6.3.1.5  (10-07-2011)
Third Party Contacts

  1. The Third Party Contact statute IRC 7602(c) imposes three duties on the Excise Tax Examiner:

    1. Give reasonable notice to the taxpayer in advance via Pub 1, Your Rights as a Taxpayer,,

    2. record the third party contact made using Form 12175, Third Party Contact Report Form,and

    3. report a listing of the third party contact to the taxpayer upon request.

  2. The goal is to attempt to balance three interests:

    1. Taxpayer’s concerns - reputation and business relationships,

    2. Third party’s concerns - privacy, and

    3. Service’s concerns - tax administration.

  3. In general, it is the Service's practice to obtain information directly from the taxpayer whenever possible. Under both third party contact and disclosure guidance the Excise Tax Examiner should first try to obtain the information directly from the taxpayer and/or representative or obtain taxpayer approval to contact third parties using Form 12180, Third Party Contact Authorization Form. The Excise Tax Examiner must not contact any third party without first providing reasonable notice to the taxpayer that contacts with persons other than the taxpayer may be made.

  4. The Third Party Contact procedures intend to prevent the IRS from disclosing to third parties that the taxpayer is the subject of an IRS action without first providing reasonable notice and allowing the taxpayer an opportunity to provide the information and resolve the matter. The Third-Party Contact provisions do not affect the IRS’s authority to examine books and records or to talk to third parties. However, the additional administrative steps must be taken when making third-party contacts.

  5. The Excise Tax Examiner must document the Form 9984 Examining Officers Activity Record with the date and the fact of mailing or personal delivery of the Pub 1 to the taxpayer.

  6. Certain contacts are not considered third party contacts under IRC 7602(c) and therefore do not require prior notice or reporting on Form 12175Third Party Contact Report Form. The following are not considered third party contacts:

    1. Contacts with other IRS employees who are acting within the scope of their official duties.

    2. Contacts relating to a matter and issue being litigated.

    3. Obtaining information from a computer database provided the IRS employee conducts the research.

    4. Contacts with employees of the taxpayer who are acting within the scope of their employment during normal business hours on business premises. It is best to allow the taxpayer to identify employees authorized to speak on behalf of the taxpayer. The remaining employees are treated as third party contacts.

    5. Contacts made with any government officials, except where the contact concerns the taxpayer’s business with the government office, such as the taxpayer’s contracts with the government office.

    6. Contacts made as part of an information-gathering project where specific taxpayers have not yet been identified or singled-out for further investigation.

    7. Contacts made with a third party when the third party initiated the contact.

  7. For more information refer to Examining an Excise Case web page found under Job Aids at http://mysbse.web.irs.gov/Specialty/excise/examcase/job/default.aspx

  8. The Third Party Contacts web page is located at http://mysbse.web.irs.gov/exam/tip/3rdparty/default.aspx

4.24.6.3.1.6  (10-07-2011)
Inadequate Records Notice

  1. For a discussion of Inadequate Taxpayer Records and for appropriate procedures, see IRM 4.10.8.16. The Excise Tax Examiner will use mandatory administrative form A105, Administrative Check Sheet, to document and address inadequate records notice.

4.24.6.3.2  (10-07-2011)
A110 Excise Tax Plan to Close Check Sheet

  1. The Excise Tax Examiner will use this excise mandatory administrative form as a guide for the exam planning phase.

  2. The A110 is a summary sheet of reminders to complete as part of the entire audit process. The A110:

    • Keeps the Excise Tax Examiner focused on a plan to close.

    • Keeps the Excise Tax Examiner organized.

    • Lets the Excise Tax Examiner know what the next steps are.

    • Lists all the steps that need to be completed.

    • Makes sure the Excise Tax Examiner has completed the steps in each section before proceeding to the next one.

    • Ensures that the Excise Tax Examiner is prepared to go to the next step.

  3. The A110 consists of the following steps:

    1. Review the case built file.

    2. Develop the audit plan

    3. Establish initial taxpayer contact

    4. Import, prepare, and mail approved taxpayer appointment letter and initial IDR.

    5. Conduct the initial appointment within 14 days of initial contact.

    6. Obtain GM audit plan concurrence within 14 business days after initial appointment if case not closed.

4.24.6.3.3  (10-07-2011)
A115 Group Manager Concurrence Meeting (GMCM) Check Sheet

  1. Within fourteen (14 days) business days after the initial meeting with the taxpayer or the first receipt of information from the taxpayer in correspondence cases, the Excise Tax Examiner and their Manager will meet to discuss:

    1. The initial appointment meeting and Mutual Commitment Date

    2. Accomplishments and planned actions for completing the case;

    3. Issues currently identified;

    4. Location of the audit work; and

    5. Concerns or barriers to closing the case

  2. GMCM are required for all Excise Tax Examiners GS-12 and below.

  3. GS-13 examiners are encouraged to utilize a GMCM in order to provide updates on cases and obtain guidance from managers.

  4. Excise Tax Examiners and managers are strongly encouraged to hold concurrence meetings.

  5. Face to face meetings should be strived for, but the Excise Tax Examiner's schedule and post of duty location can be taken into consideration. In situations where the fourteen (14) day requirement cannot be met, reasons for the delay will be documented. Only in rare circumstances should the meeting occur prior to the initial meeting with the taxpayer or the initial receipt of information from the taxpayer.

  6. Group Managers are to acknowledge completion of the GMCM by initialing and dating Workpaper A115.

  7. See IRM 1.4.40.7.6 Group Manager Concurrence Meeting (GMCM) for Field Examination for more information.

4.24.6.3.4  (10-07-2011)
A120 Initial Appointment Check Sheet

  1. Excise Tax Examiners must complete the Mandatory Administrative Form A120, The Initial Appointment Check Sheet. The A120 provides guidance in conducting the initial contact with the taxpayer.

  2. Initial contact procedures found in IRM 4.10.2 Pre-contact Responsibilities apply.

  3. When the initial contact is made by telephone, the Excise Tax Examiner will immediately identify themselves, provide their identification number, state the purpose of the call, and provide their telephone number.

  4. Field examination cases should be scheduled using telephone contact. and a confirmation letter. This will allow the Excise Tax Examiner to schedule the initial appointment at an appropriate time, which is agreeable to the taxpayer/POA and reduce the number of rescheduled appointments.

  5. During the initial contact by telephone or in person, the Excise Tax Examiner will explain/discuss the taxpayer’s rights as outlined in Pub 1, Your Rights As A Taxpayer, and answer any questions the taxpayer may have concerning their rights.

  6. The Excise Tax Examiner must explain to the taxpayer what records should be available for the examination during the initial contact. If the taxpayer volunteers information during this initial contact concerning audit issues, the Excise Tax Examiner should document the discussion.

  7. The Excise Tax Examiner should check IDRS command code CFINK to determine if a POA exists for the taxpayer and for which periods. This should be noted on the Form 9984 Examining Officers Activity Record.

  8. When the initial appointment is made by telephone, a follow-up Letter 3253, Taxpayer Appointment Confirmation Letter, and/or Letter 3254, Representative Appointment Confirmation Letter, will be mailed to the taxpayer/POA confirming the time/place of the examination and the records which are to be available and include the following enclosures:

    1. Pub 1, Your Rights As A Taxpayer,

    2. Notice 609, Privacy Act and Paperwork Reduction Act Notice, and

    3. Form 4564, Information Document Request,.

  9. When the Excise Tax Examiner is unable to make initial contact by telephone due to factors outside of his control, the Excise Tax Examiner should use Letter 2205-A, Initial Contact Letter, to request the taxpayer call and schedule an appointment.

  10. If the taxpayer fails to respond to Letter 2205-A, the Excise Tax Examiner must determine why the taxpayer is not responding and should reissue the appointment letter as registered return receipt requested.

  11. During the examination, the Excise Tax Examiner should review the taxpayer's sales literature, catalogs, brochures, price lists, and web sites and consider:

    1. Currency and Banking Retrieval System (CBRS) for leads relating to imported trucks, tires, electronic components and foam products potentially containing Ozone Depleting Chemicals (ODC).

    2. Fed State agreement for leads.

    3. Foreign Insurance issues.

  12. D400 Initial Taxpayer Contact Check Sheet contains action items to consider when making initial contact.

4.24.6.3.5  (10-07-2011)
A125 Initial Interview Questions and Notes

  1. The initial interview with the taxpayer is an opportunity to obtain a general knowledge of the taxpayer's operations, related entities, and company history.

  2. Each interview should be tailored to the taxpayer's situation. Questions that are specific to the abstract(s) that are being examined should be incorporated into Mandatory Administrative Form A125, Initial Interview Questions and Notes.

  3. Adequate narrative and specific abstract commentary is essential. Excise Tax Examiners need to follow the interview guidance contained in IRM 4.10.3.2 for more information.

4.24.6.3.6  (10-07-2011)
B200-1 Multi-Period and Related Returns Check Sheet and B200-2 FET Check Sheet

  1. Required Filing Checks (RFC) are necessary to ensure voluntary compliance.

  2. Excise Tax Examiners should perform Taxpayer Filing Verification Checks to determine that taxpayers are in compliance with all federal tax return filing requirements and that all returns reflect the substantially correct tax. Required filing checks are to be documented on B200-1 Multi-Period and Related Returns Check Sheet and B200-2 FET Check Sheet.

  3. Required Filing Checks include the analysis of prior, subsequent and related returns and when warranted, the expansion of the examination to include additional returns. The analysis and pick up of prior, subsequent and related returns, when warranted, is an Excise Tax Examiner’s primary responsibility in every examination.

  4. The inspection of a return is essentially the same as classifying a return for examination potential. No records should be examined as part of this process. The Excise Tax Examiner may question the taxpayer concerning items on the return in an attempt to understand how or why they occurred. The inspection of a return is not an examination.

  5. Excise Tax Examiners should use internal sources of information generated from the Corporate Files On Line (CFOL) system to obtain information relating to the taxpayer’s prior and subsequent years, related returns, and any other return the taxpayer is required to file.

  6. Documentation in the case file should include the actual internal documents secured from CFOL system used to verify filing such as:

    1. BMFOLI

    2. BMFOLT

    3. SUMRY

    :

  7. Excise Tax Examiners need to document on B200-1 with a summary of the analysis performed and conclusions reached.

  8. Excise Tax Examiners need to document on B200-1 why a prior or subsequent return is not being picked up when an adjustment is being proposed in the current year.

  9. Once an Excise Tax Examiner has identified a related return, analyzed the return and made the determination to either expand the examination to that return, or the return does not warrant examination, it is required that the Excise Tax Examiner document that the analysis was performed.

  10. A Form 5346, Examination Information Report, should be prepared and forwarded to the appropriate examination function where warranted.

  11. Limited scope examinations do not eliminate the need to perform Required Filing Checks.

  12. See IRM 4.10.5 Examination of Returns, Required Filing Checks and Policy Statement P-4-4 for more information.

4.24.6.3.7  (10-07-2011)
C300 Books to Returns Reconciliation Check Sheet

  1. In the course of examining Form 720 Excise Tax Returns it is often necessary for the Excise Tax Examiner to verify the taxpayer’s total sales of relevant products for a tax period.

  2. The Excise Tax Examiner will often review the total sales for a year shown on a taxpayer’s income tax return, look at any relevant adjustments to this total, and inquire into the purpose of an adjustment. This information helps establish the accuracy of all Form 720's filed during the taxable year.

    Note:

    The inspection of the year-end books and records to determine year-end adjustments and total sales for the year for excise purposes and tying the year end books and records to the reported sales on the income tax return, are categorized as part of an excise tax examination. There is no legal requirement to treat a thorough review of the annual sales receipts as well as any documents related to adjustments as reported on the annual return as a separate income tax examination. When the period under examination is the third quarter, the review of the year-end books and records for sales and adjusting entries does not constitute an examination of the fourth quarter Form 720 return.

  3. The Excise Tax Examiner will reconcile all sales/revenues that are shown on the excise tax return with those on the income tax return. The agent will document the justification for any differences between the two amounts.

  4. The Excise Tax Examiner will document any adjustments made by the taxpayer to the amounts shown for sales/revenue on the books of the taxpayer.

  5. The Excise Tax Examiner will use the Mandatory Administrative Form C300, Books to Returns Reconciliation Check Sheet to document this action.

4.24.6.3.8  (10-07-2011)
C305 Internal Controls Check Sheet

  1. Internal controls must be analyzed and documented on Form C305 Internal Controls Check Sheet to show the effectiveness and efficiency of the business operations and the strengths, weakness and reliability of the applicant's financial reporting.

  2. It is important to obtain sufficient competent evidence to determine the accuracy of the taxpayer’s return. Every Excise Tax Examiner must determine the appropriate amount of evidence to accumulate and establish the proper depth of the examination. This decision is a matter of judgment and important because of the prohibitive cost of examining and evaluating all available evidence. Factors to consider when establishing the depth of the examination include:

    1. The risk that the taxpayer has made errors that are individually or collectively material.

    2. The risk that the audit tests will fail to uncover material errors e.g. the examination techniques used, the nature of the errors (intentional or unintentional) and the reliability of available evidence.

  3. The Excise Tax Examiner should either flowchart a step by step process of key business operations or document, in narrative form, sufficient detail which provides information comparable to that shown by flowcharting the process.

  4. At the start of an examination the Excise Tax Examiner should tour the facilities to get a better understanding of the taxpayer's operations and business flow. The Excise Tax Examiner needs to document all findings and conclusions in the work papers.

  5. See IRM 4.10.3.3 Tour of Business Site for more information.

4.24.6.3.9  (10-07-2011)
C310 Fraud Awareness Check Sheet

  1. Excise Tax Examiners should familiarize themselves with the Fraud Handbook IRM 25.1.1 through 25.1.6 when developing a fraud case.

  2. IRM 25.1.7, Failure to File, discusses the various procedures concerning fraud in failure to file cases.

  3. To assist in the timely development of fraud cases, the Excise Tax Examiner should contact a Fraud Technical Advisor (FTA) and the Excise Fraud Analyst when the initial indicators of fraud are uncovered. A plan of action should be developed jointly to document firm indications of fraud. An integral part of the plan is establishing that sufficient affirmative acts exist to confirm fraud. The plan should be a joint effort of the Excise Tax Examiner, the group manager, the FTA, and the Excise Fraud Analyst. The FTA and the Fraud Analyst will continue to serve as a consultant during the development of the case. If a case is referred to Criminal Investigation (CI) and is accepted for a criminal investigation, the group manager will continue to monitor status code 18 cases through the use of the quarterly four-way conferences with CI. The Fraud/BSA program staff will coordinate with CI to address cycle time on accepted cases.

  4. The Excise Tax Examiner will use the C310 Fraud Awareness Check Sheet to document this action.

4.24.6.3.10  (10-07-2011)
E500 Penalty Check Sheet and Managerial Approval for Penalty Assessments

  1. Penalty Check Sheet E500 is used by Excise Tax Examiners and Managers to document the assertion or non-assertion of penalties.

  2. IRC 6751(b)(1) states that in general, no penalty under the Code shall be assessed unless the initial determination of such assessment is personally approved (in writing) by the immediate supervisor of the individual making such determination or such higher level official as the Secretary may designate.

  3. Notwithstanding the exception noted in paragraph 4 below, this approval requirement will also apply to the imposition of any fraud penalty including fraudulent failure to file penalty under IRC 6651(f).

  4. IRC 6751(b)(2) provides an exception to the managerial approval requirement for penalties calculated through electronic means. This exception applies to the following penalties:

    1. IRC 6651, Failure to File Tax Return or to Pay Tax,

    2. IRC 6656 Failure to Deposit, and

    3. any other penalties automatically calculated through electronic means.

    Note:

    Penalty automatically calculated through electronic means something more than merely an electronic device to perform arithmetic functions to determine the amount of a penalty. Instead, the assessment of a penalty qualifies as one calculated through electronic means if the penalty is assessed free of any independent determination by an IRS employee as to whether the penalty should be imposed against a taxpayer.

  5. For purposes of this section, the term "penalty" includes any addition to tax or any additional amount. See IRC 6751(c) and IRM 20.1.1.1.13.

  6. The manager must perform a meaningful review of the employee's penalty determination prior to assessment. The manager should verify that the penalties impositions are accurate and the employee properly documents the conclusions regarding assertion or non-assertion of penalties in the file. The manager must document the review in writing on the Form 9984 and on the E500. Managerial approval should also be documented on C310 when warranted. The managerial review and approval must be documented in writing and retained in the case file.

  7. See IRM 4.10.6 Penalty Considerations for additional support/documentation for the assertion and non-assertion of penalties.

  8. See Penalty Handbook IRM 20.1.1.3 , Criteria for Relief from Penalties, for penalty relief based on reasonable cause.

  9. See IRM 4.24.9, Excise Penalty Procedures, and IRM 20.1.11, Excise Tax and Estate and Gift Tax Penalties, for more information regarding specific excise tax penalties.

4.24.6.4  (10-07-2011)
Case File Documentation

  1. It is mandatory that all employees document all actions taken in the case file.

    1. Documentation must be recorded on Form 9984 Examining Officer’s Activity Record. The IMS generated Form 9984 should be used.

    2. Documentation must include the date, the location of the activity, the contact code, and remarks/notes/actions taken.

    3. Time charged for each activity must also be recorded on Form 9984.

    4. Group managers, Excise Tax Examiners, audit accounting aides, specialists, clerical employees, reviewers, and any other employee involved in the examination process, for a specific case, must also document their activities on Form 9984.

      Note:

      GM's are to document their actions in IMS and on the manager's activity record

      .

    5. Form 9984 must be documented to show when notices or other written communication are provided to both the taxpayer and the authorized representative. See IRM 4.10.9.3, Activity Record.

    6. Form 9984 must also be used to document activity on cases worked by Examination after assessment, such as audit reconsiderations and collection referrals.

    7. It is critical that periods of inactivity, such as extended leave, training and details also be documented on Form 9984. For example, proper documentation of an audit span is needed when determining if interest abatement is applicable.

  2. Form 4318-E, Excise Work Papers Index, is to be used as a cover sheet and index to the Excise Tax Examiner's work papers.

4.24.6.5  (10-07-2011)
Conversion of QuickBooks Accounting Software

  1. When QuickBook data is received from the taxpayer, the Excise Tax Examiner will:

    1. forward the data to the QuickBooks user in their group, or

    2. to one of the designated Non-Group Users.

  2. QuickBooks users will covert the data to an Excel spreadsheet and return it in that format to the Excise Tax Examiner.

  3. Refer to the QuickBooks records web page athttp://mysbse.web.irs.gov/exam/tip/quickbooks/default.aspx

4.24.6.6  (10-07-2011)
Source Codes, Examination Activity Codes, Project and Tracking Codes

  1. Consistent and accurate coding used for application of time and for case data allows the Excise Program to measure and plan workload with confidence.

  2. Excise uses data to capture business results, develop the Excise work plan and answer questions posed by various internal and external stakeholders about resource application and results.

  3. It is the responsibility of the Excise Tax Examiner to confirm as accurate the source code, activity code, project and tracking codes for accuracy. The Excise Tax Examiner will correct these codes if warranted before case is updated to Status 12.

  4. When the Excise Tax Examiner expands the examination to other tax periods, the appropriate codes should be updated and/or corrected if appropriate. In most cases the project/tracking codes of the primary return should be carried over to all related returns.

  5. When an audit is expanded to another tax period or entity it is important to utilize the appropriate source code when establishing the return on ERCS to accurately reflect Excise pick up practices. Normally there will be only one period with a primary source code on ERCS and on AIMS. The related and multiple year periods should have a pickup source code. Exceptions are each cycle of a CIC case which stands alone. Claims can have more than one return with a primary source code.

  6. See Document 6209, IRS Processing Codes and Information, and IRM Exhibit 4.9.1-2 for a list of all direct examination activity codes.

  7. Aging reason code 62 (Excise Tax FCA) will be used when establishing/closing all cases assigned to Fuel Compliance Agents.

4.24.6.6.1  (10-07-2011)
Use of Excise Project and Tracking Codes

  1. A project code is a four digit number indicating that a case belongs to a special program which allows monitoring of the program by project code. A project code should be used for large broad based exam actions that cannot be monitored via activity codes alone.

  2. A tracking code is a four digit code used to identify specific categories of projects or specific exam issues or strategies.

  3. All requests for new Project and Tracking codes or to discontinue use of a code must be routed to PSP WIC for approval. PSP WIC will update the list of Project and Tracking codes and will post the listing to the PSP web page at http://mysbse.web.irs.gov/Specialty/excise/initiating/psp/default.aspx

  4. Managers and Excise Tax Examiners need to review case inventory to verify that the correct Project/Tracking codes have been input on ERCS/AIMS and to confirm that the codes are recorded on Form 5345-D Examination Request for any examination pick-ups.

  5. The accurate use of these codes will allow for meaningful data analysis regarding the success of each project and provide Excise Management critical information regarding resource allocation.

4.24.6.6.2  (10-07-2011)
Excise Lead Feedback Form

  1. The Excise Tax Examiner needs to complete the Excise Lead Feedback Form at the conclusion of every examination and submit via E-mail or FAX to PSP WIC. A copy of this form may be found on the PSP web page at http://mysbse.web.irs.gov/Specialty/excise/initiating/psp/default.aspx

4.24.6.7  (10-07-2011)
Procedural Guidance for Certain Types of Excise Examinations

  1. This section covers unique procedural guidance relating to examinations involving:

    1. Excise examinations with International issues.

    2. Excise examinations of Federal Agencies.

    3. Excise examinations with wagering issues.

    4. Excise examinations relating to Facilities and Services Taxes under IRC 5251 and 4271.

    5. Excise examinations of a collector for taxes imposed under IRC 4261.

    6. Direct assessment procedures under IRC 4251, 4261, and 4271.

    7. Excise examinations relating to Structured Settlement Factoring Transactions.

    8. Excise examinations relating to Ozone Depleting Chemicals.

    9. Executing blanket export exemption certificates.

    10. Jeopardy assessments transferor and transferee cases.

4.24.6.7.1  (10-07-2011)
Excise Examinations with International Issues

  1. Excise Tax Examiners will be responsible for conducting excise tax examinations of International taxpayers, especially in the area of air transportation, foreign insurance, Ozone Depleting Chemicals (ODC), and fuel. Taxpayers who import ODCs frequently have foreign parents and transfer pricing and other issues frequently emerge.

  2. See IRM 4.24.6.3.1.2.1 International Case Referrals for Foreign Insurance Excise Tax for more information.

4.24.6.7.2  (10-07-2011)
Excise Examinations of Federal Agencies

  1. Agencies of the United States government in general are not exempt from excise taxes.

  2. Special procedures should be followed in cases involving federal agencies. At the beginning of an examination of a federal agency, the Excise Tax Examiner should notify the appropriate Federal, State and Local Governments office (FSLG) which has primary responsibility for examination of tax returns filed by Federal agencies.

  3. FSLG is responsible for ensuring federal tax compliance by federal, quasi-governmental and state agencies; city, county and other units of local government; and American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands. The office coordinates activities with other IRS offices such as Customer Account Services, Counsel, Government Liaison & Disclosure, Employee Plans and Excise Tax.

  4. See IRM 4.90 Federal, State, and Local Governments (FSLG) for additional guidance and information.

4.24.6.7.3  (10-07-2011)
Excise Examinations with Wagering Issues

  1. One of the factors to be taken into account during the examination of a wagering case is the potential collectibility of the proposed excise tax liability.

  2. For any wagering case where the excise tax liability is $75,000 or greater, the Excise Tax Examiner must contact the Collection Abusive Tax Avoidance Transactions (ATAT) Coordinator covering the state where the taxpayer resides for assistance in determining collectibility.

  3. A listing of Collection ATAT Coordinators may be found on the ATAT web page at http://mysbse.web.irs.gov/Collection/toolsprocesses/CollATAT/default.aspx

  4. The Excise Tax Examiner should provide the Collection ATAT Coordinator with the taxpayer's

    1. name,

    2. address, and

    3. TIN.

  5. The Collection ATAT Coordinator will assign an ATAT Revenue Officer to assist the Excise Tax Examiner.

  6. The Excise Tax Examiner should contact the assigned Revenue Officer to provide any pertinent financial information that has been secured.

  7. Upon completion of the investigation, the Revenue Officer will provide the Excise Tax Examiner with a summary addressing the collectibility of the proposed tax assessment. This collection determination should be taken into account by the Excise Tax Examiner and Excise Group Manager in the further examination of the case.

4.24.6.7.4  (10-07-2011)
Excise Examinations Relating to Facilities and Services Taxes Under IRC 4251, 4261 and 4271

  1. For procedures for examinations including an air carrier for imposition of tax under IRC 4261, refer to IRM 4.24.6.7.5.

  2. For general guidelines, see Treas. Reg. Section 49.4291-1.

  3. Determine whether the collector (the entity that files the Form 720 and deposits taxes collected from the actual taxpayers) has provided an "uncollected tax report" described in section 49.4291-1 of the regulations. If the collector has not provided the report, and an examination reveals that the collector failed to collect taxes due on past transactions, the Excise Tax Examiner should request that the collector:

    1. Attempt to collect the back taxes from the actual taxpayers,

    2. report the taxes on Form 720X, Amended Quarterly Federal Excise Tax Return, for the period during which the taxes should have been collected,

    3. provide a list of back taxes collected showing each person's name and address, the amount of tax collected, the date the tax was incurred, and the date the tax was collected, and

    4. provide a list of uncollected back taxes, showing each person's name and address, the amount of tax due, and the date the tax was incurred.

  4. If the collector agrees to follow the procedures in the preceding paragraph, the examination will be held open for a reasonable amount of time to allow the agent to collect the back taxes.

  5. The Excise Tax Examiner should also follow the procedures below:

    1. If the collector filed Form 720, the prior periods covered by the examination should be established on AIMS using regular Master File procedures.

    2. The substitute for return procedures will be followed if the collector did not file Form 720.

    3. Copies of current Form 720 filed by the collector to report tax collected on past transactions will be secured and made a part of the examination work papers. The work papers will also include the lists described in (2) (c) and (d) above.

    4. Where the collector is unable to collect back taxes and the failure to collect was not willful, as defined for purposes of IRC 6672, Non-Masterfile assessments will be made directly against the actual taxpayers using the correspondence examination procedures. For example, the failure is not willful if the collector timely provided the "uncollected tax report" . See IRM 4.24.6.7.6, Direct Assessments, for detailed procedures.

    5. In that case, the examination of the collector should be closed as a "no change" . An assessment of additional tax should not be proposed for the prior periods.

  6. If the collector refuses to collect the taxes it failed to collect on past transactions, the following procedures will apply:

    1. All prior periods covered by the examination should be established on AIMS.

    2. The Trust Fund Recovery Penalty under IRC 6672 will be considered if the collector's failure to collect and remit the tax was willful. See IRM 5.7.3.3.2 for a discussion of willfulness. See IRM 4.24.9 for procedures to assert the Trust Fund Recovery Penalty.

    3. If the IRC 6672 penalty is not applicable, the back taxes will be assessed directly against the actual taxpayers using correspondence examination procedures found in IRM 4.24.6.7.6.

    4. In that case, the examination of the collector should be closed as a "no change" . The work papers will reflect the back taxes which were not collected by the collector.

  7. If the collector volunteers to pay an amount equal to the back taxes from its own funds, the procedures in IRS Policy Statement 4-104 allow for acceptance of the payment by the collector in lieu of asserting tax against the taxpayers or asserting the IRC 6672 100% Trust Fund Penalty. As a condition to the acceptance of such payments, the collector will be required to execute a waiver of its rights to claim any refund on the grounds of failure to collect the tax.

    Note:

    The waver language should read as follows; "It is agreed that (Corporation) waives its right to claim a refund with respect to any portion of this voluntary payment. No penalties will be assessed in connection with these tax assessments. " I

  8. The Excise Tax Examiner should make the assessments directly on the collectors Form 720 using normal agreed report writing procedures. Attach the signed waver to the RAR.

  9. Rev. Rul. 58-300, 1958–1 C.B.454, provides guidelines on the assessment of interest in collected tax cases. Interest assessments will be made against the actual taxpayers when warranted.

  10. There is no basis for assertion of a delinquent filing penalty against the actual taxpayer.

  11. For information regarding statute of limitations see IRM 4.24.6.3.1.3.2.

4.24.6.7.5  (10-07-2011)
Excise Examinations of an Air Collector for Taxes Imposed Under IRC 4261

  1. If an examination of a collector, who is also an air carrier, for taxes imposed under IRC 4261, (including the transportation of persons by air excise tax, the segment excise tax, and the use of international facilities excise tax), reveals that the collector/air carrier failed to collect one or more of these taxes due on past transactions, the Excise Tax Examiner should follow the procedures below.

    1. Determine if the air carrier under exam provided the initial segment of taxable transportation. IRC 4263(c) provides that where any tax imposed by IRC 4261 is not paid at the time payment for transportation is made, then such tax shall be paid by the air carrier providing the initial segment of such transportation which begins or ends in the United States. Normally this will be the carrier/collector who sold the transportation to the Taxpayer but it could be another carrier.

    2. If the Excise Tax Examiner does not have the air carrier that provided the initial segment under examination then an examination request is to be forwarded to classification to initiate an examination on that air carrier. If the air carrier the Excise Tax Examiner currently has under examination is the air carrier who provided the initial segment of transportation beginning or ending in the U.S., then the prior and subsequent periods should be established on AIMS using regular master file procedures.

    3. The substitute for return procedures will be followed if the air carrier who provided the initial domestic segment of air transportation did not file Form 720.

    4. The Excise Tax Examiner should prepare detailed work papers to support taxes being assessed under IRC 4263(c). For example, date of ticket sold, ticket number, amount of uncollected taxes now being assessed, and whether taxes are IRC 4261(a), (b) or (c) taxes.

    5. Ensure all components of the taxes imposed under IRC 4261 are properly included in the amount of back taxes due. The work papers will include computations of the tax and a review of all unreported flights.

    6. Prepare an assessment of the uncollected tax against the air carrier utilizing the forms used in an agreed or unagreed case, whichever is applicable.

    7. If statute of limitation extensions are necessary, be sure to extend the statute for an air carrier under IRC 4263(c) as the applicable taxing authority. For information regarding statute of limitations see IRM 4.24.6.3.1.3.2.

  2. These procedures are limited to taxes imposed under IRC 4261 and may not be utilized for IRC 4271 taxes which an air carrier failed to collect. See IRM 4.24.6.7.4.

4.24.6.7.6  (10-07-2011)
Direct Assessment Procedures Under IRC 4251, 4261, and 4271

  1. Under IRC 4251, 4261, and 4271, the taxes imposed are "collected taxes" . Therefore, the person who is making the payment for the service provided is liable for the tax. The collector of the payment for the service is the entity which is required to file Form 720 and remit the collected tax to the Government. The tax attaches at the time the payment is made for the air transportation service. The Form 720 filed by the collector is to include all amounts collected for the period for which the Form 720 is filed. There is no tax period involved nor is there a requirement for a return to be filed by the actual taxpayer, i.e., the person paying for the service provided. Treas. Reg. Section 40.6011(a)-1(a) (3) provides that the person required to collect a collected tax, and not the person incurring liability for the tax, must file the Form 720.

  2. Direct Assessments are to be controlled on Non-Masterfile

  3. In collected tax cases where a case already has Masterfile controls and a Non-Masterfile Direct Assessment is identified, either as the only issue or in addition to a Masterfile assessment, it is important to understand that ERCS has limitations that do not allow both Masterfile and Non-Masterfile controls to be established at the same time. Since all cases come to the field with Masterfile controls, it is impossible to establish controls on ERCS for the Non-Masterfile Direct Assessment case.

  4. In such instances it is necessary to establish Non-Masterfile controls on AIMS with the assistance of the local AIMS/ERCS Analyst. This is done by the Excise Tax Examiner submitting Form 5354 to their manager.

    1. Each separate period must be controlled.

    2. The Non-Masterfile controls should be established on AIMS, concurrently with the Masterfile controls established on ERCS.

  5. AIMS has the ability to control both a Masterfile and a Non-Masterfile record at the same time. A record controlled only on AIMS does not allow the Excise Tax Examiner to charge time to the case, and IMS can not be utilized for the AIMS controlled case. The time spent working the Non-Masterfile case should be charged to the Masterfile record controlled on ERCS.

    Note:

    If the Non-Masterfile Direct Assessment issue is only present in subsequent periods for which no controls are established on ERCS and the Excise Tax Examiner can be sure no Master File Assessments will be needed, the case controls can be established on ERCS using Non-Masterfile 45 controls.

  6. Have each tax period controlled where a collector or collectors have failed to collect tax on transactions arising in different quarters.

  7. A Statute of Limitation date must be entered. Even though the taxpayer is not required to file a return, the taxpayer’s statute is started by the filing of Form 720 by the collector that should have collected the tax. See IRC 6501(a). The Form 720 looked to for statute control is the one that includes the date the purchasing taxpayer paid the service provider. If there are transactions involving more than one quarter, all statutes must be individually protected and Form 895, Notice of Statute Expiration, prepared as necessary. Update the statute of limitation information as needed for statute extensions secured from the taxpayer. Statute extensions executed by the entity that should have collected tax on the transaction (the collector) do not extend the statute for assessments against the taxpayer.

  8. Letter 898,15-30 Day Letter-Statement of Proposed Adjustments, is designed to be utilized when making direct assessment of a "collected" tax against an actual taxpayer where the collector has failed to collect taxes due on past transactions. Items to consider when preparing Letter 898 as listed below:

    1. The period covered by the examination should be shown on Letter 898 as an inclusive period from the date of the first transaction for which tax was not collected to the date of the last transaction for which tax was not collected.

    2. By completing the reverse side of Letter 898, the need for an accompanying report is eliminated. If a separate report is necessary as in the case of claim adjustments, Letter 898 should be used to transmit the report and should be notated "See Attached Report" on the reverse side.

    3. Form 886-A, Explanation of Items should be attached to explain the proposed assessment.

  9. Letter 898 offers the recipient taxpayer three options. The taxpayer can:

    1. Sign and return the agreement form,

    2. contact the originating office within 15 days for an appointment to discuss the case with the originator, or

    3. within 30 days, request consideration of the case by Appeals.

  10. If the taxpayer agrees to the proposed assessment, the Letter 898 become the "return" for processing and a Form 5344, Examination Closing Record, and Form 5734, Non-Master File Assessment Voucher, are to be completed before forwarding the case to the Group Manager for closure. When preparing Form 5734, the Excise Tax Examiner needs to be careful to utilize:

    1. NMF 46, even though the case is controlled on NMF 45, and

    2. Tax Class 6.

  11. If the taxpayer has not responded to the Letter 898 after 30 days, the case will be processed as agreed and the procedures in IRM 4.24.6.14.3 (5) above are to be followed. The initialed copy of the letter, along with Form 5344 and Form 5734 are sufficient for assessment of the tax.

  12. If the taxpayer does not agree and responds to the Letter 898 requesting an Appeals hearing, standard procedures for unagreed cases are to be followed.

  13. It is important to remember no penalties apply in direct assessments as the taxpayer was not required to file a return or to make deposits. See Rev. Rul. 58-300, 1958-1 CB 454. Additionally, because the tax attaches at the time the taxpayer/customer pays the seller/collector for the taxable services, interest is due from the time the taxable services were paid for until the time the tax is paid, either to the collector or the Service. See Rev. Rul. 58-300; Rev. Rul 59-306; 1959-2 CB 422; and IRM 20.2.10.3.11. In order for the interest to be calculated by the Centralized Case Processing (CCP), the Excise Tax Examiner must include a list of the transaction dates and amount of tax due for each transaction in the case file at closing.

  14. Once the Non-Masterfile Direct Assessment case established on AIMS is ready to close it will have to be updated to Status 51, by the local AIMS/ERCS Analyst. The case should be closed to CCP with a note on the Form 3210 indicating that, "This case is NMF and is controlled on AIMS ONLY and must be closed accordingly. As such no time has been applied. The case has been put in Status 51 by the AIMS/ERCS Analyst prior to it closing to CCP."

4.24.6.7.7  (10-07-2011)
Excise Examinations Relating to Structured Settlement Factoring Transactions

  1. Form 8876, Excise Tax on Structured Settlement Factoring Transactions, can be filed multiple times during the year and does not have a due date tied to a specific tax period. Any taxpayer filings of this form are posted for assessment to Non-Master File using Abstract Code 234.

  2. Leads for Excise Tax on Structured Settlement Factoring Transactions will be sent to the field from PSP WIC and controlled on AIMS and ERCS on Non-Masterfile as non-filer leads using MFT 27, Abstract Code 034.

  3. If during the course of the examination it is determined that the taxpayer is liable for filing a prior or subsequent period Form 8876, the Excise Tax Examiner will submit Form 5345-D, Examination Request ERCS Users, and request Non Master File controls.

  4. Refer to AIMS web page at for more information regarding closing procedureshttp://mysbse.web.irs.gov/exam/tip/CloseaCase/default.aspx.

  5. If the Excise Tax Examiner is reviewing records for multiple months, complete the Form 5345-D for each month/year being reviewed.

  6. The statute will be the alpha statute EE.

  7. If the case is agreed, the Excise Tax Examiner will update the statute to 3 years from the date the signed Form 5384 is received. The Excise Tax Examiner need not submit a substitute for return for processing.

4.24.6.7.7.1  (10-07-2011)
Examples of Closing Procedures for Excise Tax on Structured Settlement Factoring Transactions

  1. In February 2009 the group manager receives a non-filer lead for a company that may be liable for the Excise Tax on Structured Settlement Factoring Transactions from Centralized Specialty Tax Operations. The case controls are established on NMF under MFT 27, abstract code 034 for the 200712 period. The case is assigned to an Excise Tax Examiner for examination who examines the taxpayer’s books and records for the month of December 2007. The Excise Tax Examiner determines the taxpayer is not liable for the tax for this month, but through discussions with the taxpayer the Excise Tax Examiner decides to examine the books and records for October and November 2007. The Excise Tax Examiner submits Form 5345-D requesting Non-Master File case controls for the 200710 and 200711 periods. The Excise Tax Examiner determines the taxpayer is liable for the excise tax on structured settlement factoring transactions for the 200710 and 200711 periods. The Excise Tax Examiner solicits and receives a signed agreement on March 15, 2009. At this point the Excise Tax Examiner will:

    1. Issue a No-Liability Letter 930 for the 200712 period,

    2. update the statute for the 200710 and 200711 periods to 03/15/2012, and

    3. prepare the case file for closure using disposal code 02 for the 200712 period and disposal code 03 for the 200710 and 200711 periods on Form 5344.

  2. Assume the same facts as in IRM 4.24.6.7.7.1(1) except that upon arrival for the initial appointment on March 8, 2009, the taxpayer gives the agent delinquent Form 8876 for the 200710, 200711 and 200712 periods. The excise agent will examine the taxpayer’s books and records to determine whether the submitted delinquent forms are substantially accurate. As a result, the agent will:

    1. Not forward the delinquent forms to the Service Center for processing,

    2. ask the taxpayer to make an advanced payment on the deficiency, which will ensure the taxpayer isn’t charged any undue interest, and

    3. submit Form 5345-D requesting Non-Master File case controls for the 200710 and 200711 periods.

  3. If, after review of the taxpayer’s books and records, it is determined that the delinquent forms will be accepted as filed, the agent will:

    1. Incorporate the amounts shown on the delinquent form into the final examination report,

    2. attach the delinquent form to the RAR and obtain the taxpayer’s signature on the RAR which will suffice as agreement to the tax liability represented on the RAR,

    3. update the statute for the periods to 03/08/2012, and

    4. close the case using disposal code 08.

  4. If, after review of the taxpayers books and records, it is determined the delinquent forms will not be accepted as filed, the agent will

    1. Process the delinquent form(s) as a partial assessment by incorporating the amounts shown on the delinquent form(s) into an appropriately completed examination report,

    2. prepare Form 3198,

    3. complete line 12 of Form 5344,

    4. submit the partial agreement package to Centralized Case Processing for a NMF assessment and indicate on Form 3198"NMF - Partial Assessment " ,

    5. complete the examination,

    6. on the final RAR completed following the exam, use the tax liability reported on the processed delinquent form as a starting point, and

    7. close the case using disposal code 03 (DC 07 if appealed).

4.24.6.7.7.2  (10-07-2011)
Disposal Codes for Excise Tax Cases on Structured Settlement Factoring Transactions

  1. The following examined disposal codes are available for closing these cases:

    1. Disposal Code 01 – No change with adjustment

    2. Disposal Code 03 – Agreed before issuance of Letter 950-E

    3. Disposal Code 04 – Agreed after issuance of Letter 950-E

    4. Disposal Code 07 – Appealed

    5. Disposal Code 08 – Other. Use when taxpayer did not sign report

  2. The above listed disposal codes all require a completed Form 3198, Special Handling Notice for Examination Case Processing, Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection and Form 5344, Examination Closing Record.

  3. All agreed, no change, and surveyed cases are to be closed to the Cincinnati Campus, Centralized Case Processing. The address for the Cincinnati Campus is:

    IRS – Centralized Case Processing
    Mail Stop 8412-G
    201 W. Rivercenter Blvd
    Covington, KY 41011

  4. All cases closing to Appeals (DC 07) will be updated to status 21 and sent to the local Area Technical Services office.

  5. The following non-examined disposal codes are available for closing these cases:

    1. Disposal Codes 31/32 – If after due consideration it is determined that an examination of the taxpayer is not necessary; the case file should be surveyed. Use either disposal code 31, Survey Before Assignment, or disposal code 32, Survey After Assignment.

    2. Disposal Code 33 – Error accounts with no returns. This disposal code is used to remove records from the AIMS database that were established in error.

    3. Disposal Code 40 – No return, taxpayer unable to locate.

4.24.6.7.8  (10-07-2011)
Product Testing Procedures for Ozone Depleting Chemicals (ODCs)

  1. Excise Tax Examiners often find that taxpayers who import taxable electronic products claim to be exempt from tax on the basis that ODCs were not used in the manufacture of the imported product. A letter is usually provided to the taxpayer from the manufacturer of the product that outlines the process that is used to manufacture the goods. This would include a statement as to when they stopped using ODCs and what process replaced the previous process. If this letter does not contain sufficient and reliable information or contains vague and generic statements from the foreign manufacturer of the product, the Excise Tax Examiner should consider having the product tested for the presence of ODC's.

  2. The Excise Tax Examiner must have discussed and secured agreement from the taxpayer for testing of their products for ODCs.

  3. The Excise Tax Examiner must complete the Laboratory Test Request Form before any Items that are to be tested by the laboratory are to be obtained.

  4. Laboratory Test Request Form needs to be approved by:

    1. Excise Tax Examiner Group Manager

    2. ODC Analyst

    3. Excise Policy Senior Manager

    4. Chief, Excise Tax Program

  5. Once approved for testing the samples are to be secured, maintaining strict chain of custody rules on the sampled items. Only persons trained in chain of custody procedures may obtain sampled items. Once at the lab, the samples will be taken apart for testing and will not be able to be returned to the taxpayer.

  6. How the tested items are obtained will be determined on a case-by-case basis. If the taxpayer offers to provide samples of the product, this will be discussed with the ODC Analyst before agreeing to accepting samples that are in the taxpayer's control.

  7. The test does not destroy the item and multiple tests may be performed on a single sample item. The test confirms whether ODCs are present and what ODCs were used in the manufacture of the product. The test does not quantify the ODCs present or used.

  8. For detailed information contact the ODC Analyst or refer to the ODC Audit Technique Guide (ATG) located on the Excise Library and Resources page at http://mysbse.web.irs.gov/Specialty/excise/library/default.aspx

4.24.6.7.9  (10-07-2011)
Executing Blanket Export Exemption Certificates

  1. Form 1363, Export Exemption Certificate, is used to support exemption under IRC 4272(b)(2) from the excise tax on the transportation of property by air, where property is being transported by two or more methods of transportation in the course of exportation. For general guidelines see section 49.4271-1(d) of the regulations.

  2. Form 1363 may be prepared by the shipper for each payment or, if the shipper expects to make payments for numerous export shipments over a definite or an indefinite period of time, it may be used as a blanket exemption with the permission of the Chief, Excise Tax Program.

  3. Written requests for permission to execute a blanket exemption certificate will be reviewed by the Air Transportation Analyst and if necessary will be assigned to an excise tax group. Requests will be reviewed for completeness, and additional information will be secured from the shipper when necessary to make a determination. The determination, if made by the excise tax group, will be forwarded to the Air Transportation Analyst who will make the final determination of granting the permission.

  4. Permission will be granted where the shipper can demonstrate that it is impractical to execute a separate Form 1363 for each payment.

  5. Written notice of permission to issue a certificate is to be prepared by the Air Transportation Analyst and is to be signed by or for the Chief, Excise Tax Program. There is no standard form to be used for the shipper's request or for the Chief, Excise Tax Program's permission.

  6. If the permission is for an indefinite time or an extended period time, the status of shippers who receive permission to execute blanket exemption certificates should be reviewed within six months after permission is granted, and every two years thereafter, to determine if the shipper still qualifies to execute the certificates.

  7. If denial of permission to execute a blanket exemption certificate is recommended, and agreement with the shipper cannot be reached at the group manager level, the shipper can appeal to the Chief, Excise Tax Program. Written notice to the shipper that they are not entitled to execute a blanket exemption certificate will be prepared by the Air Transportation Analyst for signature of the Chief, Excise Tax Program.

  8. For indefinite or extended periods of time for the blanket exemption, a copy of the written requests and all notices of permission and denial are sent to the affected excise tax group and are to be maintained in a file by the group. Permission to execute a blanket certificate shall remain in force until withdrawn or until the date noted in the permission.

4.24.6.7.10  (10-07-2011)
Jeopardy Assessment Transferor/Transferee Cases

  1. Under IRC 6901(a)(2) assessment may be made of the liability of a transferee for excise taxes incurred if the transferee liability arises from the liquidation of a partnership or a corporation or a reorganization within the meaning of IRC 368 (a).

  2. In such a case, if the transferee agrees to pay the excise tax due, the Excise Tax Examiner will prepare a supplemental return for the taxpayer or collecting agency involved. The transferee will evidence his or her agreement by signing the return as transferee under IRC 6901(a)(2).

  3. See IRM 4.4.17 AIMS Procedures and Processing Instructions, Jeopardy Assessments/Termination Assessments/Transferor-Transferee Assessments for additional processing Instructions.

4.24.6.8  (10-07-2011)
Processing of Excise Substitutes for Return

  1. The Cincinnati Submission Processing Center (CSPC) processes all substitutes for returns (SFR) submitted. Procedures found in IRM 4.4.9, AIMS Processing Handbook, are also applicable.

  2. A SFR prepared by the Excise Tax Examiner will be identified properly by CSPC if the SFR includes a phrase in the top margin of the return stating, "SUBSTITUTE FOR RETURN PREPARED BY EXAMINATION" . The phrase should be legible and noticeable in the top margin. It should not be written across the left margin and should not be too small to notice or placed under other stapled documents. The phrase may be written, stamped, or printed on the return. Red ink may be used to increase visibility of the phrase.

  3. The entity section of an SFR submitted by Excise Tax Examiner must be complete. Missing names, EINs, periods, etc. will delay processing and may result in processing errors.

  4. When more than one SFR is submitted at one time, each SFR should contain all necessary entity information since these returns are processed separately and each receives a separate Document Locator Number (DLN).

  5. The Excise Tax Examiner must indicate a return received date to use on the SFR. Generally, the date the SFR is prepared by the Excise Tax Examiner is the date used. The date prepared should be written in the top margin of the return next to the PREPARED BY EXAMINATION phrase. For example: "SFR PREPARED BY EXAMINATION ON 7/l/11" .

4.24.6.9  (10-07-2011)
Overview of SFR Action on Non-Filer Cases

  1. Push Code 036 will be used to establish a TC 150 (Master File Entity Created) on MFT 03 for all Non-Filer Form 720 cases sent to the field for examination. The MFT 03 Master File account will be controlled on AIMS.

    Note:

    No filing requirement is established through this process.

  2. If during the course of the examination it is determined that a taxpayer is liable for filing prior/subsequent period excise tax returns, the Excise Tax Examiner will initiate SFR procedures outlined below for the periods in question.

  3. The Excise Tax Examiner will request information necessary from the taxpayer to determine a substantially correct tax liability. If the taxpayer provides the Excise Tax Examiner with delinquent returns, the Excise Tax Examiner will review the books and records of the taxpayer to determine the accuracy of the delinquent returns received.

  4. The controlling IRM for SFR actions is IRM 4.4.9 AIMS Processing - Delinquent and Substitute for Return Processing.

  5. The Excise Tax Examiner needs to properly consider the assertion or non-assertion of penalties. See IRM 4.24.10.11 for information regarding completion of Form 3198 Special Handling Notice for Examination Case Processing.

  6. See IRM 4.24.9.3.3 for more information on SFR penalties.

  7. Additional information regarding the Delinquent Return and SFR processes are found in the SBSE Technical Services Keys to Success web pages. Below are several links to these pages

    1. General guidance on Delinquent and SFR http://mysbse.web.irs.gov/RefLibrary/kts/ktsissues/14352.aspx

    1. Detailed guidance on SFR Procedures http://mysbse.web.irs.gov/RefLibrary/kts/supparticles/14014.aspx

    1. Detailed guidance on Delinquent Return Procedures http://mysbse.web.irs.gov/RefLibrary/kts/supparticles/15039.aspx

    :

4.24.6.9.1  (10-07-2011)
Examples of SFR Action on Non-Filer Cases

  1. Tables 1 and 2 below contain examples of SFR action on Non-Filer Cases. These examples pertain to a SFR that already has AIMS controls.

  2. Tables 3 through 6 contain examples of delinquent return actions taken.

    If ... Then ...
    TABLE 1- Excise Tax Examiner concludes SFR taxpayer IS NOT liable for Excise tax in the period examined and will not be liable for tax in subsequent periods
    1. Prepare a no-change report, Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection (RAR). A no-change examination will be accounted for by writing "0" in columns 4 and 5 (to represent the SFR TC 150 posting) and also in columns 6 and 8 for the appropriate tax period. No-change, Subject to Chief, Excise Tax Program Approval will be written in the Other Information section.

    2. Prepare Letter 3401-E for the group manager’s approval and issuance to taxpayer.

    3. Prepare the case file for closure using Disposal Code 02 on Form 3198.

    4. Prepare Form 5344 and enter zero (0) in 404d.

    5. Prepare Letter 590, No Change Final Letter.Letter 590 will be signed by the Manager for , Chief, Excise Tax Program, and left in the case file. It will be dated and mailed to the taxpayer by CCP.

    6. On Form 3198 check the following boxes in the Letter Instructions for CCP section: No Change Letters and Letter 590 (straight N/C).

    7. Review the BMFOLE to determine if the Form 720 filing requirement indicator is present.

    8. If the filing requirement is present then prepare Form 3177 Notice of Action for Entry on Master File. Check the "Other" box and insert Transaction Code 591 and Closing Code 75 to remove the filing requirement indicator. Include the form in the case file and check the Form 3177 box on Form 3198.

    9. FAX Form 3177 to CCP and include copy in case file

    10. If no filing requirement is present then no further action is necessary.

    11. Close case following normal No Change case closing procedures. See IRM 4.24.10.5.7.1.

    TABLE 2- Excise Tax Examiner concludes SFR taxpayer IS liable for Excise tax in the period examined and will be liable for tax in subsequent periods
    1. Prepare Form 5384 using the exam adjustment amount as the "Correct Liability" in column 4, and zero (0) in the "Previous Assessment" , column 5. The correct liability will also be shown in column 6, "Tax ."

    2. Recommend penalties as applicable.

    3. Sign the Form 5384.

    4. Date stamp the received date on Form 5384.

    5. Complete Form 5344. Enter the tax amount in Item 404d.

    6. Prepare the case file for closure using the appropriate disposal code on Form 3198.

    7. Prepare Letter 987 Agreed Tax Change Letter for the manager to sign on behalf of , Chief Excise Tax Program. Leave the letter in the case file for CCP to date and mail to the taxpayer.

    8. Review the BMFOLE to determine if a Form 720 filing requirement indicator is present.

    9. If the filing requirement is present then no further action is necessary.

    10. If the filing requirement is not present then Form 2363, Master File Entity Change will be prepared. Check the F720 box to set the filing requirement indicator. Leave the completed form in the case file and check the Form 2363 box on Form 3198.

    11. Fax Form 2363 to CCP and include copy in case file

    12. Leave the statute as EE and enter the statute on Form 3198.

    13. Close case following normal case closing procedures. See IRM 4.24.10.9.

    TABLE 3- Excise Tax Examiner receives delinquent return from taxpayer, and after review accepts them as filed
    1. Do NOT forward delinquent return to the service center for processing.

    2. Date stamp the received date on the return.

    3. Ask the taxpayer to make an advance payment on the deficiency, which will ensure the taxpayer is not charged any undue interest.

    4. Prepare Form 5384 using the amounts shown on the delinquent return as the "Correct Liability" in column 4 and zero (0) in the "Previous Assessment" column 5. The correct liability will also be shown in column 6, "Tax " . Attach the delinquent return to the RAR. The taxpayer’s signature on the delinquent return will suffice as agreement to the tax liability shown on the RAR.

    5. Complete Form 5344. Enter the tax amount in Item 404d. Do not make an entry in Item 414.

    6. Prepare the case file for closure using the appropriate Disposal Code on Form 3198.

    7. Prepare Letter 590, No Change Final Letter. Letter 590 will be signed by the Manager for , Chief, Excise Tax Program, and left in the case file. It will be dated and mailed to the taxpayer by CCP.

    8. On Form 3198 check the following boxes in the Letter Instructions for CCP section: No Change Letters and Letter 590 (straight N/C).

    9. Update the statute to the date the delinquent return was received using Form 5348, AIMS/ERCS Update (Examination Update).

    10. Review the BMFOLE to determine if a Form 720 filing requirement indicator is present.

    11. If the filing requirement is present then no further action is necessary.

    12. If the filing requirement is not present then Form 2363, Master File Entity Change, will be prepared. Check the F720 box to set the filing requirement indicator. Leave the completed form in the case file and check the Form 2363 box on Form 3198.

    13. FAX Form 2363 to CCP.

    14. Close case following normal No Change case closing procedures. See IRM 4.24.10.5.7.1.

    TABLE 4- Excise Tax Examiner receives delinquent return from taxpayer and after review doesNOT accept them as filed
    1. Prepare Form 5384 using the amounts shown on the delinquent return as the "Correct Liability" in column 4 and zero (0) in the "Previous Assessment" column 5. The correct liability will also be shown in column 6, "Tax " . Attach the delinquent return to the RAR. The taxpayer’s signature on the delinquent return will suffice as agreement to the tax liability shown on the RAR.

    2. In the Special Features section of Form 3198 check the Partial Assessment Requested box. Submit the partial agreement package to CCP for assessment.

    3. Complete the examination.

    4. Review IDRS to ensure that the delinquent return/partial assessment has been processed before completing the final RAR.

    5. Once the partial assessment has posted, complete a second Form 5384 using the amount shown on the delinquent return (the partial assessment amount) as the starting point in the "Previous Assessment" column 5, and the total amount of tax in column 4, "Correct Liability" . The adjustment will be entered in column 6, "Tax" .

    6. Solicit the taxpayer's signature on Form 5384.

    7. Date stamp the received date on Form 5384.

    8. Complete Form 5344. Enter the adjustment amount in Item 404d. Do not make an entry in Item 414.

    9. Prepare the case file for closure using the appropriate Disposal Code on Form 3198.

    10. Prepare Letter 987 for the manager to sign on behalf of Chief Excise Tax Program. Leave the letter in the case file for CCP to date and mail to the taxpayer.

    11. Update the statute to the date the delinquent return was received using Form 5384 and enter on Form 3198.

    12. Close case following normal case closing procedures. See IRM 4.24.10.5.7.1.

    TABLE 5- Excise Tax Examiner receives additional delinquent returns for periods which are currently not controlled on AIMS and after review accepts the returns as filed
    1. Date stamp the received date on the delinquent returns.

    2. Complete SFR procedures to establish a TC 150 on AIMS for each delinquent return received.

    3. Submit Form 5345-D (Examination Returns Control System) Users to the group secretary requesting controls on each return received.

    4. Prepare Form 5384 using the amounts shown on the delinquent return as the "Correct Liability" in column 4 and zero (0) in the "Previous Assessment" , column 5. The correct liability will also be shown in column 6, "Tax " . Attach the delinquent return to the RAR. The taxpayer’s signature on the delinquent return will suffice as agreement to the tax liability shown on the RAR.

    5. Complete Form 5344. Enter the tax amount in Item 404d. Do not make an entry in Item 414.

    6. Prepare Letter 590, No Change Final Letter. Letter 590 will be signed by the Manager for , Chief, Excise Tax Program, and left in the case file. It will be dated and mailed to the taxpayer by CCP.

    7. Update the statute to the date the delinquent returns were received using Form 5348. Enter the updated statute date on Form 3198.

    8. Review the BMFOLE to determine if a Form 720 filing requirement indicator is present.

    9. If the filing requirement is present then no further action is necessary.

    10. If the filing requirement is not present then Form 2363 Master File Entity Change will be prepared. Check the F720 box to set the filing requirement indicator. Leave the completed form in the case file and check the Form 2363 box on Form 3198.

    11. FAX Form 2363 to CCP.

    12. Close case following normal No Change case closing procedures. See IRM 4.24.10.5.7.1.

    TABLE 6- Excise Tax Examiner receives additional delinquent returns for periods which are currently not controlled on AIMS and after reviewDOES NOT accept the returns as filed.
    1. Date stamp the received date on the delinquent returns.

    2. Complete SFR procedures to establish a TC 150 on AIMS for each delinquent return received.

    3. Submit Form 5345-D, Examination Returns Control System Users, to the group secretary requesting controls on each return received.

    4. Prepare Form 5384 using the amounts shown on the delinquent return as the "Correct Liability" in column 4 and zero (0) in the "Previous Assessment" column 5. The correct liability will also be shown in column 6, "Tax " . Attach the delinquent return to the RAR. The taxpayer’s signature on the delinquent return will suffice as agreement to the tax liability shown on the RAR.

    5. In the Special Features section of Form 3198 check the Partial Assessment Requested box. Submit the partial agreement package to CCP for assessment.

    6. Complete the examination.

    7. Review IDRS to ensure that the delinquent return/partial assessment has been processed before completing the final RAR.

    8. Once the return/partial assessments have been processed, complete a second Form 5384 using the amounts shown on the delinquent returns as the starting points in the "Previous Assessment" column 5, and the total amount of tax in column 4, "Correct Liability" . The adjustment will be shown in column 6," Tax" .

    9. Solicit the taxpayer's signature on Form 5384.

    10. Sign the Form 5384.

    11. Date stamp the received date on Form 5384.

    12. Complete Form 5344. Enter the adjustment amount in Item 404d. Do not make an entry in Item 414.

    13. Prepare the case file for closure using the appropriate Disposal Code on Form 3198.

    14. Prepare Letter 987 for the manager to sign on behalf of , Chief Excise Tax Program. Leave the letter in the case file for CCP to date and mail to the taxpayer.

    15. Update the statute to the date the delinquent returns were received using Form 5348.

    16. Review the BMFOLE to determine if a Form 720 filing requirement indicator is present.

    17. If the filing requirement is present then no further action is necessary.

    18. If the filing requirement is not present then Form 2363 Master File Entity Change will be prepared. Check the F720 box to set the filing requirement. Leave the completed form in the case file and check the Form 2363 box on Form 3198.

    19. FAX Form 2363 to CCP

    20. Close case following normal case closing procedures. See IRM 4.24.10.9.

4.24.6.10  (10-07-2011)
Substitute for Return (SFR) No Examination Action Taken

  1. When a field group receives a classified Non-Filer case from PSP WIC for examination the case may be surveyed, or closed no-change.

  2. The group manager may survey the case before assignment (DC 31), or survey after assignment (DC 32).

  3. If an Excise Tax Examiner reviews a case and determines that the issues appear to be a one time event with minimal tax implications and after discussing the case with the manager a determination is made not to work the case. The taxpayer has not been contacted but time has been applied to the case. The Excise Tax Examiner will take the actions listed below.

    1. Prepare Form 5384 using the no-change procedures.

    2. Prepare the case for closure using Disposal Code 02 on Form 3198.

    3. In the Letter Instructions to CCP section check the No Letter Required to be sent by CCP box.

    4. Prepare Form 5344 and enter zero (0) in item 404d.

    5. Review the BMFOLE to determine if a Form 720 filing requirement indicator is present.

    6. If the filing requirement is present then prepare Form 3177, Notice of Action for Entry on Master File. Check the "Other" box and insert Transaction Code 591 and Closing Code 75 to remove the filing requirement indicator. Leave the completed form in the case file and check the Form 3177 box on Form 3198.

    7. FAX Form 3177 to CCP.

    8. If no filing requirement is present then no further action is necessary.

4.24.6.11  (10-07-2011)
Delinquent Return No-Examination Action Taken

  1. If an Excise Tax Examiner receives a delinquent return through no direct or indirect action by the Excise Tax Examiner , the Excise Tax Examiner should:

    1. If Taxpayer Assistance Center services are available in the Excise Tax Examiner's post-of-duty, accept the delinquent returns and deliver them for processing to the Customer Service – Tax Assistance Center.

    2. If Taxpayer Assistance Center services are not available in the Excise Tax Examiner's post-of-duty, accept the returns, date stamp them received, and mail them to IRS Center, Cincinnati, OH 45999-0009.

  2. The Excise Tax Examiner will not process these delinquent returns as delinquent returns secured in the field, or obtain controls via SFR procedures as if they were secured during the course of an examination.

4.24.6.11.1  (10-07-2011)
Processing of Excise Delinquent Returns Secured by Compliance Examination

  1. CSPC processes all delinquent returns submitted. Procedures found in IRM 4.4.9, AIMS Processing Handbook, are also applicable.

  2. A delinquent return secured by Excise Tax Examiner will be identified properly by CSPC if the delinquent return includes a phrase in the top margin of the return stating "DELINQUENT RETURN SECURED BY EXAMINATION." The phrase should be legible and noticeable in the top margin. It should not be written across the left margin and should not be too small to notice or placed under other stapled documents. The phrase may be written, stamped, or printed on the return. Red ink may be used to increase visibility of the phrase.

  3. The entity section of delinquent returns submitted by Exam must be complete. Missing names, EIN, periods, etc., will delay processing and may result in errors in processing.

  4. When more than one delinquent return is submitted at one time, each return should contain all necessary entity information since these returns are processed separately and each receive a separate DLN.

  5. A signature is required on all delinquent returns. If a signature is missing, the delinquent return will be returned to the Excise Tax Examiner.

  6. Generally, the date the delinquent return is secured by the Excise Tax Examiner is the date used. The delinquent return should be date stamped by the Excise Tax Examiner when received.

  7. If no penalties are to be assessed on the delinquent return, the Excise Tax Examiner must clearly indicate that no penalties should be assessed. If CSPC identifies the request for waiver of penalties, CSPC will write a Computer Condition Code (CCC) on the return to prevent automatic penalty assessment.

  8. If no request by Exam is prominent on the return or its attachments, no CCC will be written on the return. The IRS computer will then assess all applicable penalties automatically based on due date of the return versus filing date.

  9. Any attachment requesting penalty waiver should be near the front of the return and should contain short statements indicating which penalties are to be waived.

  10. The Excise Tax Examiner may write the CCC on the return, but the CCC must appear exactly as described below to be acknowledged. If the CCC is not written as below, CSPC Data Processing will not acknowledge the code.

    1. To waive Failure to Pay penalties for reasonable cause, a capital letter "D" must be written in the entity section of the return. The capital D must be written in red ink and should be located in the blank area of the lower right portion of the entity section on the front page of the return but to the left of the FOR IRS USE ONLY blocks. The capital D should be approximately 3/4 inch tall.

    2. To waive Delinquency Penalty for reasonable cause, a capital letter "R" must be written in the entity section of the return. The capital R must be written in red ink and should be located in the blank area of the lower right portion of the entity section on the front page of the return but to the left of the FOR IRS USE ONLY blocks. The capital R should be approximately 3/4 inch tall.

    Note:

    Additional information on Computer Condition Codes is contained in Document 6209, Section 3.

4.24.6.12  (10-07-2011)
Procedures for Securing Memorandums of Understanding (MOU) for Joint Audits Between IRS and State Taxing Agencies

  1. Memorandums of Understanding are required to exchange data or conduct joint audits/investigations with state agencies. The procedures listed below must be followed to ensure consistent and accurate MOU's are completed.

  2. Prior to entering any agreements, coordination with the following offices must take place:

    1. Excise Policy – to ensure the work meets established policies.

    2. Excise PSP – to solicit agreement that the audits meet the work plan and that results monitoring will be conducted - this may be accomplished via a project or tracking code.

    3. HQ Governmental Liaison (GL).

    4. Local GL – to ensure appropriate communications with the state agency. The local GL can provide the status of the state agency’s Implementing and Basic Agreements and Safeguards Procedure Report (SPR) certification all of which are required prior to completing an MOU.

    5. Local Disclosure – to ensure appropriate disclosure policies are adhered to. The local GL may be able to complete this step.

  3. Upon approval from the coordinating offices and with the assistance of the local GL, complete the MOU using the approved GL template (available from the HQ GL Analyst). Ensure all sections are completed including Exhibit A, List of Authorized Agents, and Exhibit B, List of Joint Examination.

  4. Pursuant to the GL securing the state agency’s authorized signature on the MOU (two copies should be signed), complete the following information package as an attachment to the Form 131893A Note to Reviewer, to secure IRS management approval for the MOU:

    1. A detailed explanation of how the MOU was originated including the requesting and receiving office or agency (who contacted who).

    2. A detailed explanation of why the MOU is being requested. It is not sufficient to indicate that tax evasion or fraud is suspected, an explanation of why fraud is suspected is necessary.

    3. A statement of benefits to the IRS for conducting the joint audits, e.g., as the expected tax increase, data acquisition, etc.

    4. Form 13839A.

    5. Form 14074, Action Routing Sheet.

  5. Provide the entire package to the local GL for submission to the Chief, Excise Tax Program. The GL will send the package including the two signed copies of the MOUs to the Chief, Excise Tax, for signature processing at:

    IRS – SE:S:SP:EX
    1111 Constitution Ave. NW
    Attn.: Excise Technical Advisor CM4 11th Floor
    Washington, D.C. 20224

  6. The GL will E-mail the HQ GL Analyst that the MOU has been forwarded to the Chief, Excise Tax, and will forward the SPR certification to the Office of Safeguards.

  7. Upon approval by the Chief, Excise Tax, return the MOU to the local GL and provide a copy to the Excise Territory Manager. The GL office will input the MOU to their GLD shared site with the standard naming convention and provide a copy to the state agency.

4.24.6.13  (10-07-2011)
Requesting Excise Subject Matter Expert (SME) Assistance

  1. When an Excise Tax Examiner determines that he/she needs the assistance or advice of an Excise Subject Matter Expert (analyst or EIS), the Excise Tax Examiner must first discuss the need for assistance with his/her group manager. If the manager agrees that SME assistance or advice is needed, the Excise Tax Examiner will complete a Guidance Request Memorandum (GRM) and submit it to the group manager for review and approval. Additional information about the GRM is found on the EIS web page at http://mysbse.web.irs.gov/Specialty/excise/issues/eis/default.aspx

  2. If the group manager approves the request for advice or assistance, the GRM will be e-mailed to the Territory Manager for review and approval.

  3. Upon review and approval, the Territory Manager will E-mail the GRM to the Excise Policy Manager for review and assignment to the appropriate SME.

  4. The Excise Policy Manager will monitor requests to ensure they are handled expeditiously and that responses are consistent with current policy.

  5. Within 10 business days after receiving the GRM, the SME will provide a written response to the GRM. In the event the SME is unable to provide a written response within 10 business days, they will notify the Excise Tax Examiner, the Group Manager, and the Excise Policy Manager of the time within which the advice will be provided.

  6. All requests for Counsel opinions, guidance, and any other type of legal assistance are to be routed through the Excise Territory Managers, to the Excise Policy Manager, who will forward the request to the SME for technical review before final approval by the Chief, Excise Tax Program.

  7. Upon the Chief, Excise Tax Program approval, the request will be routed either to the Associate Chief Counsel, Passthroughs and Special Industries (PSI Branch 7), or to the Division Counsel SBSE assigned to excise tax matters.

  8. There will not be any technical advice requests, opinion, guidance, or assistance going directly to local Counsel offices, even on an informal or draft basis.

4.24.6.13.1  (10-07-2011)
Coordinated Excise Issues

  1. Coordinated Excise Issues may be proposed by the Excise Policy Manager or SME to ensure key excise issues within a particular abstract are raised, developed and resolved on a consistent basis. The purpose of Coordinated Excise Issues is to provide Excise Tax Examiners with guidance on significant national issues that are not being resolved consistently.

  2. Coordinated Excise Issues establish uniform positions within the excise tax abstract or issue area. Excise Tax Examiners cannot deviate from such positions without the concurrence of the HQ Excise Policy Manager.

4.24.6.13.2  (10-07-2011)
Coordination of Excise Technical Advice and Guidance

  1. The following are the duties and responsibilities of Excise Management with regard to technical advice and guidance:

    1. Ensure that the policies and procedures instituted by the Excise Tax Program for uniform and consistent excise tax administration are followed.

    2. Ensure that Excise Coordinated Issues are considered during the examination process.

    3. Ensure that Excise Tax Examiners consult with the SME as warranted whenever the excise examination involves an abstract/issue within the SME area of expertise.

    4. Ensure that Excise Tax Examiners consult SME in preparing requests for Technical Advice whenever the request involves an excise issue. Requests should be made as early as possible in the examination process. A copy of each request should be sent to the appropriate SME in accordance with the yearly Technical Advice Request Revenue Procedure. The SME should be involved in every step in the process leading to the release of the Technical Advice Memorandum including Chief Counsel requests for additional information, conferences, discussions of tentative conclusions, etc.

    5. Ensure that the SME is involved on all excise issues selected for the LB & I Pre-Filing Program, Industry Issue Resolution Program, or Fast Track Mediation Program.

4.24.6.13.3  (10-07-2011)
Excise Technical Advise Memorandum Procedures

  1. Excise Technical Advice Memorandum (TAM’s) are furnished as a means of assisting personnel in closing cases and establishing and maintaining uniformity in the treatment of Excise issues. The Office of Associate Chief Counsel issues TAM’s. The procedures to request a TAM are found each year in Rev Proc 20XX-2. The Excise Tax Examiner must:

    1. Follow the requirements of the yearly Technical Advice Request Revenue Procedure.

    2. Request assistance of the SME assigned to the specific abstract involved.

    3. Forward the completed request immediately to the Excise Policy Manager.

    4. Notify the Excise Tax LB & I Program Analyst if the request for Technical Advice Memorandum originates from a Coordinated Industry Case (CIC) in LB & I.

  2. The Excise Policy Manager will forward the Request for Technical Advice to the Office of Associate Chief Counsel.

  3. Other Technical Requests, such as Coordinated Issues, and issues resulting from the Compliance Assurance Process (CAP) program will involve the following procedures:

    1. Forward the request immediately upon receipt to the Excise Policy Manager.

    2. Notify the Excise Tax LB & I Program Analyst if the request originates from a Coordinated Industry Case.

    3. Obtain the involvement of the SME for the excise issue abstract if needed.

  4. Coordination of Technical Excise Issues with other divisions:

    1. All Technical Excise Issues will include involvement by the Chief, Excise Tax Program through the Excise Policy Manager.

    2. All Technical Excise Issues originating from a Coordinated Industry Case will include involvement by the Excise Program Manager through the Excise Tax LB & I Program Analyst.

    3. The Excise Policy Manager will work jointly with the LB & I Technical Advisors to resolve Excise issues in the case, but the resolution of the excise issue is the responsibility of the Excise Tax Program.

Exhibit 4.24.6-1 
Statute of Limitations Chart

  1. The IRM controlling Statutes of Limitation issues is IRM 25.6, Statute of Limitations Handbook.

  2. Statute Controls-Due Dates and Statutory Period of Limitations. See the current "ADP and IDRS Information" Document 6209.

  3. IRM Citations for Statute of Limitations.

    1. Extensions: Use Form 872-B, Consent to Extend the Time to Assess Miscellaneous Excise Taxes. See IRM 25.6.22.5.

    2. Preparation of Consent Forms: See IRM 25.6.22.6.11, Preparation of Consents for Specific Entities and Taxes-Excise Tax.

    3. Statute Controls: All statute controls outlined in IRM 1.4.40.4.3 SB/SE Compliance Field Examination Group Manager Resource Guide must be followed.

    4. Form 895 procedures: See IRM 25.6.23 Statute of Limitations - Examination Process - Assessment Statute of Limitations Controls.

    5. Alpha Codes: See IRM Exhibit 25.6.23-3.

    1. MFT Code Form No Type of Return Period Covered Due Date Statutory Period of Limitations
      03 720 Excise Tax Quarter Last day of the month following the end of the quarter (April 30, July 31 Oct 30, Jan 31.) 3 years after due date of return or 3 years after the date return was actually filed, whichever is later. 6 year assessment period may also apply. See IRM 4.24.6.3.1.3.3
      64 730 Wagering Tax Month Last day of the month following the month in which the wagers are accepted. 3 years after due date of return or 3 years after the date return was actually filed, whichever is later.
      60 2290 See Note Below Heavy Highway Vehicle Use Tax Year August 31, if in use in July, or last day of the month following the month first used in a period 3 years after due date of return or 3 years after the date return was actually filed, whichever is later.
      63 11-C Occupational Tax on Wagering And Registration Return For Wagering Year Register prior to accepting first wager, then renew by July 1 each year. 3 years after due date of return or 3 years after the date return was actually filed, whichever is later.
      NA 720TO/CS Terminal Operator Report and Carrier Summary Report Returns Monthly Last day of the month following the month 3 years after due date of return or 3 years after the date return was actually filed, whichever is later

      Note:

      The IRS has issued a temporary regulation to extend the due date of Form 2290 to 11/30/2011 for returns due 08/31/2011 due the possibility of the expiration of this tax. Congress has passed and the President has signed an extension of the Heavy Highway Vehicle Use tax through September 30, 2012. By November 30th, 2011, taxpayers will be required to file Form 2290 for the full year on vehicles first used in July, August or September 2011. Form 2290 will be available after September 30, 2011.


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