4.32.3  Coordination and Roles of Cross-Functional Units (Cont. 1)

4.32.3.5 
Counsel

4.32.3.5.2 
LB&I Division Counsel

4.32.3.5.2.3 
Promoter Investigations

4.32.3.5.2.3.1  (06-07-2012)
LB&I Technical Tax Shelter Promoter Committee (TTSPC)

  1. Area Counsel for Financial Services and the Special Counsel designated by LB&I Division Counsel are members of the LB&I TTSPC, which serves under the LB&I Tax Shelter Steering Committee and is authorized to approve all LB&I tax shelter promoter contacts and investigations. The Financial Services Industry Director is the chairperson of the LB&I TTSPC.

4.32.3.5.2.3.2  (06-07-2012)
Initiation of Approved Promoter Investigations

  1. Once the LB&I TTSPC has approved a promoter investigation, LB&I Area Counsel assigns an attorney to provide legal assistance to the examiner conducting the investigation.

4.32.3.5.2.3.3  (06-07-2012)
Promoter Meeting

  1. Information Document Request (IDR) Assistance - Area Counsel attorneys work with examiners to obtain any necessary documentation from promoters, including assisting in the drafting of language for IDRs.

  2. Assigned attorneys assist examiners in conducting interviews of promoters, investors and third parties. Interviews may or may not be conducted pursuant to summons. Servicewide Delegation Order 25-1, Summons, Oaths, Certifications and Related Functions, authorizes LB&I Counsel attorneys to take testimony from a summoned witness.

  3. During promoter investigations, the assigned attorney, team manager, and examiner may meet with the promoter to discuss the status of the investigation and give the promoter an opportunity to provide documents requested or to present arguments about why a penalty or other actions should not be imposed.

4.32.3.5.2.3.4  (06-07-2012)
Summonses

  1. Area Counsel attorneys assist examiners in preparing and issuing administrative summonses, including dual purpose, third-party, and "John Doe" summonses to promoters.

  2. All summonses in promoter cases must be pre-reviewed by LB&I Area Counsel, the LB&I Area Counsel for Financial Services, LB&I Division Counsel and then sent to DOJ for pre-issuance review.

  3. To ensure prompt enforcement of any summonses, promoter teams should follow the best practice of also obtaining pre-service review of summonses by the Office of Associate Chief Counsel (Procedure and Administration) of the Chief Counsel’s Office.

  4. See IRM 25.5, Summons, for additional information on summonses.

4.32.3.5.2.3.5  (06-07-2012)
Penalty/Injunction Determination

  1. Area Counsel attorneys assist examiners in determining if penalties or injunctive relief are applicable to a promoter. If the evidence is deemed sufficient, the attorney prepares an injunction suit letter for referral of the case to DOJ, Civil Trial Section, Central Region.

  2. Counsel, designated as the referral authority pursuant to IRC 7401, authorizes DOJ through the injunction suit letter to file a complaint for injunctive relief against the promoter under one or more of the following code sections:

    • IRC 7402

    • IRC 7407

    • IRC 7408

  3. Area Counsel attorneys must coordinate technical legal positions in these cases with the IMT Counsel, or, if none, with the LB&I Division Counsel and the appropriate Associate Chief Counsel Office as early as possible. All existing Chief Counsel coordination procedures must be followed before referring the case to DOJ, and a copy of the injunction suit letter should be sent to the TTSPC.

4.32.3.5.2.3.6  (06-07-2012)
Referral to Criminal Investigation (CI) / Office of Professional Responsibility (OPR)

  1. Area Counsel attorneys assist examiners in determining whether a referral to CI and/or the OPR is warranted.

4.32.3.5.2.3.7  (06-07-2012)
Final Memorandum

  1. Area Counsel attorneys assist examiners in preparing a final memorandum to the LB&I Director of Field Operations recommending action to be taken against the promoter.

4.32.3.5.3  (06-07-2012)
TE/GE Division Counsel/Associate Chief Counsel

  1. TE/GE Division Counsel/Associate Chief Counsel (TE/GE Counsel) provides legal support and guidance throughout each step of promoter investigations and participant examination cases that involve either TE/GE Operating Division taxpayers or issues within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel. See IRM 4.70, TE/GE Examinations, for additional TE/GE procedures.

4.32.3.5.3.1  (06-07-2012)
Servicewide Support

  1. TE/GE Counsel is an integral partner in the Service's effort to combat ATATs. TE/GE Counsel coordinates with the Department of Justice (DOJ) and all operating divisions, counsel divisions and Associate Counsel offices. TE/GE Counsel provides coordination and guidance on the early identification of technical shelters, including formulation of policy and legal positions, and continues its support throughout the ATAT process.

4.32.3.5.3.1.1  (06-07-2012)
TE/GE Compliance Issues Council

  1. TE/GE Counsel serves as a member of the TE/GE Compliance Issues Council (CIC), which provides leadership and executive oversight in implementing TE/GE's ATAT program.

4.32.3.5.3.1.2  (06-07-2012)
Servicewide Compliance Strategy Executive Steering Committee (SCS ESC)

  1. TE/GE Counsel serves as a member of the SCS ESC, which provides leadership, Servicewide coordination and policy regarding the Service's methods of addressing abusive tax avoidance transactions.

4.32.3.5.3.1.3  (06-07-2012)
Emerging Issues Group

  1. TE/GE Counsel receives information on emerging abusive tax avoidance transactions and refers that information to the Senior Counsel to the Chief Counsel and provides early leadership and guidance regarding appropriate methods to address ATAT issues.

4.32.3.5.3.1.4  (06-07-2012)
Issue Management Teams (IMT)

  1. TE/GE Counsel attorneys serve as supporting members and legal advisors on all IMTs that involve either TE/GE Operating Division taxpayers or issues within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel.

4.32.3.5.3.2  (06-07-2012)
Promoter/Preparer Investigations

  1. TE/GE Counsel attorneys provide legal support and guidance to the Service's promoter investigations, regardless of which Operating Division is conducting the investigation, whenever the investigation involves either a TE/GE Operating Division taxpayer or an issue within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel. TE/GE Counsel assists the Service as necessary in every aspect of its ATAT investigations. Examiners, revenue officers, and other support functions should not hesitate to call TE/GE Counsel for advice.

4.32.3.5.3.3  (06-07-2012)
Penalties

  1. TE/GE Counsel provides advice regarding promoter and participant penalty assessments.

4.32.3.5.3.4  (06-07-2012)
Examination of ATAT Participants

  1. TE/GE Counsel is available to provide support with ATAT participant examinations, such as:

    • Summons language and enforcement

    • Taxpayer meetings

    • Statutory Notice of Deficiency language

    • Designating cases for litigation

4.32.3.5.3.5  (06-07-2012)
Litigation

  1. TE/GE Counsel defends the Service's positions and facilitates its goals through litigation and alternatives to litigation.

4.32.3.6  (06-07-2012)
Criminal Investigations (CI)

  1. This section describes roles that the CI Operating Division plays in the ATTI process.

4.32.3.6.1  (06-07-2012)
Notification to CI by the Civil Operating Divisions

  1. The SB/SE LDC and OTSA forward a recommendation memorandum summarizing their findings to the CI LDC and stating their desire to open an investigation under IRC 6700, IRC 6701, IRC 6707, and/or IRC 6708.

  2. See IRM 4.32.2.3, Lead Identification and Investigation Authorization, for further information.

4.32.3.6.2  (06-07-2012)
Role of the Designated CI LDC

  1. The CI LDC is responsible for coordination with SB/SE and LB&I.

  2. When the CI LDC receives a memorandum from the SB/SE LDC or OTSA, Criminal Investigation Management Information System (CIMIS) research is conducted. The preliminary deconfliction process simply involves a search by name and taxpayer identification number, associate identity or DBA for any numbered CI investigation. If the CIMIS check fails to disclose any open investigations or associate identities, the CI LDC sends a memorandum to SB/SE LDC/OTSA advising that there is no conflict in proceeding with a civil promoter investigation under IRC 6700, IRC 6701, IRC 6707, or IRC 6708.

  3. If the CI LDC CIMIS check discloses an open investigation or associate identity, a memorandum is forwarded to the Special Agent in Charge (SAC) of the respective Field Office requesting a determination whether there is a "conflict" or "no conflict" between the proposed civil action and the criminal investigation. A "conflict" determination means that a civil investigation would greatly harm the ongoing criminal investigation. A "no conflict" determination means that pursuing a civil investigation (parallel investigation) would not harm the criminal investigation.

  4. See the following IRM sections for further information on CI’s involvement in the ATTI process:

    1. IRM 4.32.2.3.5, Coordination with Criminal Investigation (CI)

    2. IRM 4.32.2.6.3, Six-Way Conference

    3. IRM 4.32.2.6, Parallel Investigations

4.32.3.6.3  (06-07-2012)
CI Field Office Actions

  1. The SAC makes a conflict/no conflict determination within 10 days of receiving the CI LDC memorandum and faxes the determination to the SB/SE LDC or OTSA. See IRM 4.32.2.3.5, Coordination with Criminal Investigation (CI), for further information on CI's involvement in determining if a parallel investigation should be initiated.

  2. If the Field Office opens a Primary Investigation (PI) after the IRC 6700, IRC 6701, IRC 6707, and IRC 6708 investigation has started, the Special Agent and immediate supervisor are responsible for scheduling and conducting a six-way conference. This conference assists CI in evaluating criminal potential and provides an opportunity to discuss conducting parallel civil and criminal investigations.

  3. If a fraud referral has been developed with the assistance of a Fraud Technical Advisor (FTA) or by the referring Division, CI handles it as a regular fraud referral. See IRM 25.1.3, Criminal Referrals, for additional information.

  4. See IRM 4.32.2.6.3, Six-Way Conference.

4.32.3.7  (06-07-2012)
Referrals to the Department of Justice (DOJ)

  1. IRC 7401 authorizes the Secretary to make referrals to the Attorney General to bring civil suit.

  2. All promoter and preparer injunction cases are referred to the DOJ Civil Trial Section, Central Region.

  3. Attorneys in DOJ Tax Division bring injunctive actions in federal district court under one or more of the following code sections:

    • IRC 7402, Jurisdiction of District Courts

    • IRC 7407, Action to Enjoin Tax Return Preparers

    • IRC 7408, Actions to Enjoin Specified Conduct Related to Tax Shelters and Reportable Transactions

  4. A DOJ trial attorney from the Civil Trial Section generally makes all the court appearances and prepares the pleadings, motions, etc. In some cases the local US Attorney's Office, a branch of DOJ, makes court appearances on behalf of DOJ.

4.32.3.7.1  (06-07-2012)
Steps in an Injunction Case

  1. The steps in an injunction case involve several actions that the DOJ trial attorney deems appropriate and necessary. These actions are determined by the DOJ trial attorney based on evidence that examiners have accumulated.

    1. The DOJ trial attorney may request that the examiner perform additional case development.

    2. The initial action taken by DOJ is the filing of a complaint in the appropriate federal district court. The complaint contains a written narrative describing the conduct of the promoter and the attributes of the promotion or transaction being promoted.

    3. If the conduct of the promoter is so egregious and the harm to the government is significant, damaging, and ongoing, DOJ may ask for an immediate halt to the promoter's activities through a request for a temporary restraining order (TRO). TROs are only in effect for a short time, usually no more than 30 days.

    4. If DOJ does not believe a TRO is warranted or it is not granted by the court, a motion for a preliminary injunction is usually filed with the court. DOJ will determine the best time to file this motion, either simultaneously with the complaint or at a later date. The filing of a motion for a preliminary injunction begins a series of events that could culminate in terminating the actions of the promoter.

    5. The court order for a preliminary injunction, orders the promoter to immediately terminate the promotion activities in order to prevent continuing harm to the government. However, as the name implies, it is only preliminary. DOJ generally files a motion for summary judgment, asking the court for a permanent injunction without a trial.

  2. If, after the promoter has been enjoined by the court, the IRS learns that a promoter has violated the terms of the injunction order, contempt proceedings may be instituted. Promoters are subject to either civil or criminal contempt charges based on the judgment of the DOJ attorney. Penalties for violating court orders include fines, imprisonment, or both.

4.32.3.7.2  (06-07-2012)
Requests by DOJ Trial Attorneys

  1. The DOJ trial attorney assigned to the injunction case may continue to request other evidence, documents, testimony, and requests for other assistance from the IRS throughout the litigation process. These requests may include:

    1. Requests for IRS assistance in preparing declarations to be filed with the court. A declaration is a summary of the examiner’s portion of the case and contains relevant information vital to obtaining an injunction against the promoter. The declaration generally is drafted by the DOJ attorney assigned to the case.

    2. Requests related to depositions. Examiners may be deposed under oath by promoters or their representatives once DOJ has filed the complaint. This happens in the discovery phase of the injunction process and may occur on more than one occasion. Examiners should never appear at a deposition without the presence and counsel of a DOJ trial attorney.

    3. Requests related to hearings. DOJ attorneys may request that examiners testify in court during court hearings. Examiner testimony usually occurs at hearings for requests for preliminary injunctions. Examiners prepare to testify with the assistance of attorneys from DOJ and the Office of Chief Counsel.

4.32.3.8  (06-07-2012)
Tax Exempt and Government Entities (TE/GE)

  1. The TE/GE Compliance Issues Counsel (CIC) is responsible for formulating a uniform and consistent approach to ATATs involving TE/GE entities and TE/GE issues. It is a resource for, and coordinates among, the various TE/GE functions: Government Entities, Employee Plans and Exempt Organizations. The following are members of the TE/GE CIC:

    • Division Commissioner

    • Deputy Division Commissioner

    • Senior Technical Advisor to the Division Commissioner

    • TE/GE Division Counsel/ Associate Chief Counsel

    • Director – Exempt Organizations (EO)

    • Director – of EO Exam

    • Director – of EO Rulings and Agreements (R&A)

    • Director – Employee Plans (EP)

    • Director – Government Entities (GE)

    • Director – Indian Tribal Governments (ITG)

    • Director – Tax Exempt Bonds (TEB)

    • Director – Federal, State & Local Governments (FSLG)

    • Representatives from the various abusive transaction and emerging issue committees

  2. The TE/GE CIC also addresses issues raised by the Servicewide Compliance Strategy Executive Steering Committee.

  3. The TE/GE Senior Technical Advisors' Office to the Division Commissioner or delegate coordinates the dissemination of reports and other activities between the TE/GE functions and the SB/SE LDC and OTSA.

  4. For additional information and points of contact related to abusive transactions and emerging issues contact the appropriate function through the links on TE/GE Emerging Issues Intranet page.

4.32.3.8.1  (06-07-2012)
Coordination of Procedures between TE/GE and SB/SE

  1. The purpose of this section is to outline the procedures for TE/GE and SB/SE regarding promoter investigations involving TE/GE taxpayers or issues. This section is intended to effectively provide support and efficiently allocate resources to ensure proper consideration, development and exchange of information on TE/GE-related promotions and promoters.

4.32.3.8.1.1  (06-07-2012)
Identification of Promoters and Participants

  1. As TE/GE identifies potential promoter leads, it will submit referrals to the SB/SE LDC.

    Note:

    The referral form is located on the LDC webpage of MySB/SE.

4.32.3.8.1.2  (06-07-2012)
Receipt of Referrals and Development of Leads

  1. The SB/SE LDC will coordinate with the appropriate TE/GE point of contact when developing any lead or referral that involves a TE/GE-related promotion or taxpayer.

  2. TE/GE has prepared a criteria matrix to assist TE/GE and the SB/SE LDC in determining which division will take the lead on a promoter investigation. The criteria matrix may be accessed via the TE/GE ATAT Portal webpage.

  3. De-confliction—TE/GE contacts and TE/GE Counsel will assist with the de-confliction process. De-confliction is a cross-functional process designed to ensure that the beginning of an investigation will not interfere with another operating division’s investigation or examination.

4.32.3.8.1.3  (06-07-2012)
Organizational Points of Contact

  1. TE/GE will annually provide the names and contact information for the following personnel:

    • Executive Issue Owner

    • TE/GE Promoter Investigation Coordinator

    • Assistant TE/GE Promoter Investigation Coordinator

    • TE/GE Counsel

    • TE/GE Functional Promoter Coordinators for EO, EP and GE (ITG, TEB and FSLG)

  2. SB/SE will annually provide the names and contact information for the following personnel:

    • SB/SE Abusive Transactions and Technical Issues Director

    • SB/SE LDC

    • SB/SE Counsel

    • SB/SE AT Senior Program Analysts

    • SB/SE AT Listkeeper

4.32.3.8.1.4  (06-07-2012)
Assignment of Authorized Investigations

  1. The SB/SE LDC will contact the appropriate TE/GE point of contact once an investigation has been authorized and provide a copy of the authorization memo and attachments to the TE/GE Promoter Investigation Coordinator. For additional information, please see IRM 4.70.

  2. If it is determined that TE/GE will be the lead operating division, the TE/GE Promoter Investigation Coordinator or the functional point of contact will provide the SB/SE LDC with contact information for the TE/GE revenue agent and the TE/GE Counsel attorney assigned within 30 days of receipt of the case file. If TE/GE determines SB/SE assistance is necessary, TE/GE will contact the SB/SE LDC. The SB/SE LDC will coordinate with the appropriate AT territory manager to provide such assistance within 30 days of notification.

  3. If it is determined that SB/SE will be the lead operating division, the SB/SE LDC will provide the TE/GE Promoter Investigation Coordinator with contact information for the SB/SE examiner and SB/SE Counsel attorney assigned within 30 days of case opening by SB/SE. The SB/SE LDC will track promoter investigations involving TE/GE taxpayers or issues and provide monthly reports to TE/GE. See IRM 4.32.3.8.1.8, Information Sharing. The TE/GE Promoter Investigation Coordinator or functional point of contact will provide SB/SE with the contact information of the TE/GE revenue agent and TE/GE Counsel attorney assigned to assist on the investigation within 30 days of case assignment.

  4. TE/GE – Tax Exempt Bonds will continue to use its existing TEB § 6700 Committee to receive, review, authorize, and assign ATAT promoter and penalty cases.

4.32.3.8.1.5  (06-07-2012)
Cooperative Investigations and Case Coordination

  1. TE/GE led investigations:

    • TE/GE revenue agents will contact TE/GE Counsel within two weeks of receiving the investigation assignment.

    • The TE/GE revenue agent, TE/GE Counsel, and relevant SB/SE personnel (legal, technical, revenue agent, or other) and appropriate management will hold a planning conference within 60 days after the SB/SE LDC coordinates with the appropriate SB/SE AT territory manager to provide assistance to TE/GE.

    • An investigation action plan will be developed within 30 days of the planning conference and shared as appropriate to ensure proper coordination.

  2. SB/SE led investigations:

    • SB/SE examiners will contact SB/SE Counsel within two weeks of receiving the investigation assignment.

    • The SB/SE examiner, SB/SE Counsel, and relevant TE/GE personnel (legal, technical, revenue agent, or other), and appropriate management will hold a planning conference within 60 days after the TE/GE Promoter Investigation Coordinator and other appropriate TE/GE points of contact have been informed that TE/GE assistance with the investigation is needed.

    • An investigation action plan will be developed within 30 days of the planning conference and shared as appropriate to ensure proper coordination.

  3. Tax Exempt Bonds will coordinate as appropriate with the SB/SE LDC and SB/SE Counsel when taking the lead on a promoter investigation.

4.32.3.8.1.6  (06-07-2012)
Client Lists and/or Participant Lists

  1. TE/GE will provide the SB/SE AT Listkeeper with client and participant lists within 30 days of receipt. See IRM 4.32.2.13, Participant/Investor Lists, for additional information.

4.32.3.8.1.7  (06-07-2012)
Releasing Jurisdiction of Taxable Returns to TE/GE to Conduct Supporting Examinations

  1. Participant examinations may be necessary to support promoter investigations. If the promoter is a TE/GE taxpayer, and TE/GE takes the lead on the investigation, TE/GE may request SB/SE’s assistance in the examination of related returns under SB/SE jurisdiction. Examples include but are not limited to the result of a revocation or other findings giving rise to a potential tax liability.

  2. TE/GE will request SB/SE assistance with participant examinations by completing Form 6229, Collateral Examination. The Form 6229 should be sent to the SB/SE Planning and Special Programs (PSP) territory manager (TM) with jurisdiction for the geographic area of the taxpayer to be examined. See the PSP Staff page on MySB/SE to determine the appropriate office.

  3. If SB/SE is unable to initiate an examination within 30 days, TE/GE may request that SB/SE release its jurisdiction over the participant. TE/GE should direct the request to the appropriate PSP TM.

  4. TE/GE should obtain a release of jurisdiction in writing before opening up the return for examination.

  5. This process does not apply in the case of discrepancy adjustments for Form 1040, U.S. Individual Income Tax Return and Form 1120, U.S. Corporation Income Tax Return without flow-through issues, which are not deemed examinations, and which are already under TE/GE jurisdiction.

4.32.3.8.1.8  (06-07-2012)
Information Sharing

  1. The SB/SE LDC will track promoter investigations involving TE/GE taxpayers or issues and provide reports to the TE/GE Promoter Investigation Coordinator on a monthly basis. These reports will mirror the monthly reports issued by the SB/SE LDC to SB/SE areas.

  2. The TE/GE points of contact and the SB/SE LDC will conduct quarterly conference calls to share best practices, discuss promoter investigations, and address case and issue coordination matters.

  3. The TE/GE Promoter Investigation Coordinator and/or appropriate TE/GE representatives will visit the SB/SE LDC periodically to review in-process leads that, if approved, may fall under the jurisdiction of TE/GE and provide requested TE/GE issue training to the SB/SE LDC.

4.32.3.8.1.9  (06-07-2012)
Monitoring

  1. TE/GE currently receives monthly reports from the SB/SE LDC regarding promoter investigations with TE/GE issues or TE/GE taxpayers. TE/GE will validate this data and notify the SB/SE LDC of any changes or updates to the database.

4.32.3.9  (06-07-2012)
Technical Services (TS)

  1. Technical Services (TS) supports the ATTI program by conducting in-process case reviews and examination end processes where the authority for such processes is delegated to TS managers and its employees. Alternative Resolution Implementation (ARI) Program represents Technical Services as a member of the ATTI Issue Management Teams or Programs. ARI assists in the implementation of approved settlement strategies such as Commissioner’s Initiatives, Global Settlement Initiative, Appeals Settlement Guidelines and other alternative resolutions. The role of ARI is to continually engage the Issue Management Teams (IMT) to provide technical and procedural guidance to assist with the development, coordination and implementation of alternative resolution strategies and procedures as it relates to abusive transactions. ARI ensures Technical Services groups are consistent in applying processes and procedures to specific abusive transactions. For example, Technical Services will:

    • Conduct in-process case reviews where agreed to by the TS Director and the Examination Area Director or upon a specific request and agreement by the Examination Area Director to the TS Territory Manager (TSTM). See IRM 4.8.7.2.4, In-Process Case Reviews, and IRM 4.8.2.2, Cases Requiring Action By Technical Services.

    • Perform Closed Case Reviews by coordinating with Issue Management Teams, Counsel and Appeals. See IRM 4.8.1.4.1, Case Reviews, IRM 4.8.2.7, General Case Review Procedures, and IRM 4.8.5, Post Examination Case Processing Requirements.

    • Prepare and issue Notices of Deficiency with ATTI approved language for various abusive transactions. See IRM 4.8.9, Statutory Notices of Deficiency.

    • Review and execute Closing Agreements using ATTI pre-approved language. See IRM 4.8.8.3, Closing Agreements, and IRM 8.13.1, Closing Agreements.

    • Suspense promoter or investor cases in bankruptcy, IRC 1254, fraud, or grand jury suspense statuses where agreement to place cases in suspense has been reached between the TSTM and the Area Territory Manager (TM) assigned ATTI program oversight. See IRM 4.8.2.10, Suspense Cases, and IRM 4.8.5, Post Examination Case Processing Requirements.

      Note:

      parallel investigation cases are suspended at the group level.

    • Coordinate technical assistance at a local level upon specific request where agreed to by the TSTM and the Area TM assigned ATTI program oversight. See IRM 4.8.7.2.3, Technical and Procedural Inquiries.


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