4.71.24  Whistle Blower Claims

Manual Transmittal

March 07, 2014

Purpose

(1) This transmits revised text and Table of Contents for IRM 4.71.24, Employee Plans Examination of Returns, Whistleblower Procedures.

Background

This revised IRM 4.71.24 provides guidance and information to assist EP agents in processing Whistleblower Claims.

Material Changes

(1) The IRM has been revised to add "sensitive case" criteria.

(2) This revision makes minor clarifying corrections to the May 10, 2013 published version of IRM 4.71.24.

(3) The links to the IRM Exhibits have been updated. The Exhibits are now posted on TE/GE Connect under the JOB tab at IRM 4.71 - Employee Plans Examination Exhibits.

Effect on Other Documents

This supersedes IRM 4.71.24 dated May 10, 2013.

Audience

TE/GE Employee Plans

Effective Date

(03-07-2014)


Robert Choi
Director, Employee Plans
Tax Exempt and Government Entities Division

4.71.24.1  (03-07-2014)
Overview

  1. On December 20, 2006, Congress made provision for the establishment of a Whistleblower Office within the Internal Revenue Service (IRS).

  2. The Whistleblower Office has responsibility for the administration of the informant award program under Internal Revenue Code (IRC) section 7623.

  3. IRC section 7623 authorizes the payment of awards from the proceeds of amounts the Government collects by reason of the information provided by the informant making the claim.

  4. Whistleblower claims are submitted by an informant on Form 211 , Application for Award for Original Information. See IRM 4.71.24 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 211.

  5. There are two types of Whistleblower Form 211 claim cases:

    1. Discretionary award IRC section 7623(a) cases ("Category A" cases), and

    2. Mandatory award IRC section 7623(b) cases ("Category B" cases).

  6. Payment of Category A awards is made at the discretion of the IRS.

  7. To be eligible for a Category B award, the amount in dispute (including tax, penalties, interest, additions to tax, and additional amounts) must exceed $2,000,000. If the taxpayer is an individual, the individual's gross income must exceed $200,000 for any taxable year at issue.

  8. This IRM section outlines the procedures for Employee Plans (EP) personnel who work Category A and Category B Whistleblower claims.

  9. IRM 25.2.2 provides general guidance for the handling of Category A and Category B Whistleblower claims. This section customizes those procedures for EP Exam.

4.71.24.2  (03-07-2014)
Category A Whistleblower Claim Procedures

  1. When Form 211 is received by Whistleblower Office (WB Office), the claim is added to the Whistleblower (WB) tracking system.

  2. If the WB Office determines that the case does not meet the $2,000,000 criteria to be a Category B case, the WB Office will route the case to the Informant Claims Unit (WB ICE Unit) in the Ogden Service Center for processing.

  3. If the case involves an issue under the jurisdiction of Employee Plans, the WB ICE Unit will prepare a Category A WB case file (Form 211 and any supporting information) and send it to EP Classification at the following address:
    IRS – EP Classification
    9350 Flair Drive – 2nd Floor
    El Monte, CA 91731-2885

4.71.24.2.1  (03-07-2014)
Category A Whistleblower Claim Procedures for EP Classification

  1. When the WB case file is received from the WB ICE unit, EP Classification will add the case to the EP Referral database.

  2. EP Classification has identified a WB Classifier who will be responsible for all WB activity.

    Note:

    The name of the WB Classifier is listed on the TEGE WB Intranet site.

  3. The WB Classifier will evaluate the claim to determine if it should be assigned for examination.

    1. If it is determined that the case will be examined, it will be assigned to the appropriate group when additional examination cases are requested by that group.

    2. If the case has issues that should be examined in an expedited manner, EP Classification will expedite the assignment of the case after the classification process is completed.

  4. If the case is determined to be a "sensitive case" and warrants a higher level of analysis and oversight, the WB Classifier will contact the EP WB Coordinator who will convene an EP Sensitive Case Committee, and the procedures in IRM 4.71.24.2.1.1 will be followed.

    Note:

    The determination of whether or not a case is a "sensitive case" is a facts and circumstances decision that will be made by the EP WB SME.

  5. If the case is selected for examination, it will be controlled using the following codes on RCCMS/AIMS:

    1. Project code 6068 (unless the type of case falls under a special project, such as EPTA , MAP, etc.)

    2. Source code 72

    3. Condition code 015

  6. The WB Classifier will prepare two files that will be sent to the group:

    1. The examination case file, and

    2. The Category A WB case file.

  7. EP Classification will include special handling instructions entitled EP Exam Group Form 211 Whistleblower/Informant Category A Claim Case Instructions (Category A Instructions) in the Category A WB case file. See IRM 4.71.24 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Category A Instructions.

4.71.24.2.1.1  (03-07-2014)
Special Instructions for Category A Cases That Are Determined to Be "Sensitive Cases"

  1. If the case is deemed to be a "sensitive case" by the WB Classifier warranting a higher level of analysis and oversight, the WB Classifier will contact the EP WB Coordinator who will determine whether or not the case should be categorized as a "sensitive case" .

  2. The EP WB Coordinator review the facts and will determine whether or not the case should be categorized as a "sensitive case" .

  3. The determination of whether or not a case is deemed a "sensitive case" is a facts and circumstances decision.

  4. The immediate supervisor of the EP WB Coordinator must concur with the decision regarding whether a case is deemed a "sensitive case."

  5. Situations and issues that the EP WB Coordinator must consider that may result in the case being deemed a "sensitive case" include:

    1. Cases involving high profile individuals (political, entertainer, etc.), companies or issues that will draw media attention.

    2. Cases involving an Indian Tribal Government, or State or Local Government where financial wrongdoing is alleged.

    3. Cases likely to attract Congressional attention.

    4. Cases containing evidence or allegations of financial transactions with, including contributions to, individuals or organizations with known or suspected terrorist connections.

    5. Cases where an informant or person making the referral has indicated that they intend to elevate the issue to Senior IRS Managers or Executives.

    6. Cases involving other factors indicating that review by the EP Sensitive Case Committee would be desirable for reasons of fairness or integrity.

  6. Cases involving a large taxpayer/employer/plan do not automatically make a case a "sensitive case" .

    1. For example, Employee Plans Team Audit (EPTA) cases are not automatically deemed to be sensitive cases because of their size.

    2. The EP WB Coordinator will coordinate with the EPTA Champion prior to making a decision on an EPTA case.

  7. If the EP WB Coordinator deems the case a "sensitive case" and his/her supervisor concurs, the EP WB Coordinator will convene an EP Sensitive Case Committee within 30 days. The Sensitive Case Committee will make a formal decision on the case within 30 days.

  8. The EP WB Coordinator will send a complete copy of the Category A WB case to members of the Sensitive Case Committee.

  9. The Sensitive Case Committee will consist of

    1. The EP WB Coordinator,

    2. Three Senior EP Managers, and

    3. Other EP personnel deemed appropriate to evaluate and make a decision on the case.

    Note:

    The members of Sensitive Case Committee must not be in the Area or Group where the case will be worked, if an examination is warranted.

  10. The members of Sensitive Case Committee must not be part of the same Area where the taxpayer is located.

    Note:

    For example, if the taxpayer is located in the Gulf Coast Area, none of the members on the Sensitive Case Committee can be managers or agents of the Gulf Coast Area.

  11. The Sensitive Case Committee will make a decision about compliance activity (examine or survey) and will prepare a memo to document the decision and return all WB material and documents to the EP WB Coordinator within 30 days after meeting.

  12. If the Sensitive Case Committee recommends an examination:

    1. The WB SME will determine if there is any tainted information or privileged information in the file. If so, then the EP WB SME will contact TEGE Counsel and request a "taint" review.

    2. The case file will be returned to the WB Classifier to assign the case to an examination group.

4.71.24.2.2  (03-07-2014)
Category A Whistleblower Claim Procedures for EP Agents

  1. The EP group will receive two files from EP Classification:

    1. The examination case file, and

    2. The Category A WB case file.

  2. When the Category A WB case file is received by the EP Examination group and assigned to an agent, the agent should carefully read the Category A Instructions in the WB case file.

    1. The Category A Instructions provide basic procedures and guidance for the EP agent with respect to the WB aspects of the examination.

    2. The Category A Instructions also explain the types of documents that should be contained in the WB case file. See IRM 4.71.24 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Category A Instructions.

  3. The Category A WB case file requires special protection.

    1. The Category A WB case file must be kept in a locked cabinet.

    2. Document 6441 must be on the outside of the file.

    3. All WB material, documents, interview notes, etc. must be kept separate from the examination case file.

    4. There should be no mention of the WB in the examination case file. Neither the case chronology record (CCR), exam workpapers nor any documents in the examination case file nor RCCMS should contain any information about the WB.

  4. The EP agent should never let the taxpayer know that there is a WB involved.

  5. If the agent thinks that an interview of the WB is warranted, the agent should contact the EP WB Coordinator for assistance.

    Note:

    TEGE Counsel will also need to be involved if the WB is interviewed; this will be coordinated by the EP WB Coordinator.

  6. At the conclusion of the examination, the EP agent must complete Form 11369, Confidential Evaluation Report on Claim for Award. See IRM 4.71.24 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 11369.

    1. Form 11369 must be completed for each taxpayer (with the exception of Forms 1040 that are jointly filed returns).

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    2. The agent must clearly explain how the material provided by the WB affected the examination.

    3. Form 11369 must be approved by the Group Manager.

      Note:

      The WB Office will rely heavily on this form when they make their decision on the amount of the award to be granted to the WB. It is the responsibility of the WB Office to determine whether an award is warranted and to determine the amount of the award. The EP Agent will not be involved with this decision; however, the agent’s write-up about the importance and value of the WB information will be critical for the award determination.

  7. At the conclusion of the examination, the Category A WB case file will be mailed by the agent to the WB ICE Unit in Ogden.

    Note:

    The address for the ICE Unit will be included in the case file when it is assigned for examination.

  8. When mailed, the WB case file should contain the following documentation, as appropriate and relevant:

    • Original WB Form 211 and attachments

    • Form 11369 for each taxpayer

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    • Copies of all examined returns, including substitute for returns (SFRs) prepared during the examination and/or secured returns prepared by the taxpayer

    • Copy of the examination report and attachments

    • Special agent’s evaluation report (if applicable) attached to Form 3949

    • Copies of Activity Records

    • Copies of appropriate lead sheets and workpapers

    • Any other information which may assist the WB Office in determining an award amount.

  9. The examination case file(s) will be closed according to normal procedures.

4.71.24.3  (03-07-2014)
Category B Whistleblower Claim Procedures

  1. When Form 211 is received by Whistleblower Office (WB Office), the claim is added to the Whistleblower (WB) tracking system.

  2. If the WB Office determines that the case meets the $2,000,000 criteria to be a Category B case, the WB Office will transmit copies of the entire file to the EP WB Coordinator at:
    IRS
    EP WB Coordinator
    31 Hopkins Plaza, Room 1520
    Baltimore, MD 21201

4.71.24.3.1  (03-07-2014)
Category B Whistleblower Claim Procedures for the EP WB Coordinator

  1. The EP WB Coordinator coordinates all WB Category B cases for EP Examinations.

  2. The EP WB Coordinator also acts as the EP WB Subject Matter Expert (EP WB SME).

    Note:

    The name of the EP WB Coordinator/EP WB SME is listed on the TEGE WB Intranet site.

  3. The EP WB SME will review the Category B WB claim to ensure that it is under the jurisdiction of EP.

    1. If the case is not under the jurisdiction of EP, the EP WB SME will return the case to the WB Office.

    2. If the case is under the jurisdiction of EP, the EP WB SME will notify the WB Classifier in EP Classification to establish the WB referral on the EP Classification Referral database.

  4. The EP WB SME will conduct a technical analysis of the case.

  5. The EP WB SME will request assistance from EP Exam personnel, EP Rulings and Agreements, EP actuaries, and EP Area Counsel as needed to evaluate the technical issues.

  6. The EP WB SME will also determine whether or not the case is a "sensitive case" .

  7. If the case is determined not to be a "sensitive case" , the EP WB SME will immediately determine whether or not the case will be examined.

    Note:

    This decision must be reviewed and approved by the EP WB SME's manager.

  8. If the EP WB SME determines the case to be a "sensitive case" warranting a higher level of analysis and oversight, the EP WB SME will convene a Sensitive Case Committee within 30 days and follow the procedures in IRM 4.71.24.3.1.1. The Sensitive Case Committee will make a formal decision on the case within 30 days.

    Note:

    The determination of whether or not a case is a "sensitive case" is a facts and circumstances decision that will be made by the EP WB SME.

  9. Situations and issues that the EP WB Coordinator must consider that may result in the case being deemed a "sensitive case" include:

    1. Cases involving high profile individuals (political, entertainer, etc.), companies or issues that will draw media attention.

    2. Cases involving an Indian Tribal Government, or State or Local Government where financial wrongdoing is alleged.

    3. Cases likely to attract Congressional attention.

    4. Cases containing evidence or allegations of financial transactions with, including contributions to, individuals or organizations with known or suspected terrorist connections.

    5. Cases where an informant or person making the referral has indicated that they intend to elevate the issue to Senior IRS Managers or Executives.

    6. Cases involving other factors indicating that review by the EP Sensitive Case Committee would be desirable for reasons of fairness or integrity.

  10. Cases involving a large taxpayer/employer/plan do not automatically make a case a "sensitive case" .

    1. For example, Employee Plans Team Audit (EPTA) cases are not automatically deemed to be sensitive cases because of their size.

    2. The EP WB Coordinator will coordinate with the EPTA Champion prior to making a decision on an EPTA case.

  11. If it is determined that an examination is not warranted, the EP WB SME will prepare Form 11369 and send the entire WB file back to the WB Office.

    Note:

    The Form 11369 requires the approval/signature of the EP WB SME’s manager.

    Note:

    If the case is a "sensitive case" , written approval must also be secured from the Sensitive Case Committee to not examine the case.

  12. If the case is selected for examination, the EP WB SME will contact TEGE Counsel and request assistance in conducting a "taint" review and debriefing/interview of the WB.

  13. When a Counsel Attorney is assigned, the EP WB SME will send an entire copy of the WB case file to the designated Counsel attorney.

  14. The EP WB SME will consult with Counsel to determine whether a debriefing/interview of the WB is warranted.

  15. If a debriefing of the WB is warranted, the EP WB SME will contact the WB and arrange a conference call involving the WB, the EP WB SME and the Counsel attorney.

    Note:

    The purpose of the call with the WB is to clarify the information provided by the WB, determine if the WB has other information of value, and to help determine what, if any, of the information is tainted.

  16. At the conclusion of the call with the WB, the EP WB SME will complete the Debriefing Checksheet. See IRM 4.71.24 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Debriefing Checksheet.

  17. When TEGE Counsel completes the "taint" review, the attorney will prepare a "taint" review and risk assessment memo and send it to the EP WB SME.

  18. The EP WB SME will take into consideration the "taint" review and risk assessment memo and all other gathered information, and will prepare the Summary of EP Taint Review. See IRM 4.71.24 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Summary of EP Taint Review.

  19. If the EP WB SME determines that an examination is warranted, the EP WB SME will:

    1. Ensure that any tainted information is removed from the file before the case is assigned for examination.

      Note:

      The SME will return all tainted information to the WB Office.

    2. Contact the appropriate EP Area Manager to determine which EP examination group should be assigned the case.

    3. Coordinate with the EP Classification Unit to have the appropriate returns established on AIMS/RCCMS.

    4. Send the entire WB case file to the applicable EP examination group manager.

      Note:

      The EP WB SME will include special handling instructions entitled EP Exam Group Form 211 Whistleblower/Informant Category B Claim Case Instructions (Category B instructions) in the Category B WB case file. See IRM 4.71.24 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Category B Instructions.

  20. If the case is selected for examination, it will be controlled using the following codes on RCCMS/AIMS:

    1. Project code 6068 (unless the type of case falls under a special project, such as EPTA , MAP, etc.)

    2. Source code 72

    3. Condition code 016

  21. The EP WB SME has 90 days from the date the case is received from the WB Office to evaluate the case, conduct the debriefing and "taint" review, coordinate with TEGE Counsel, and make the recommendation regarding examination. See the Field Directive from the Deputy Commissioner for Services and Enforcement, dated June 20, 2012, which can be found on Whistleblower Office Intranet page

4.71.24.3.1.1  (03-07-2014)
Special Instructions for Category B Cases That Are Determined to Be "Sensitive Cases"

  1. If the EP WB SME determines the case to be a "sensitive case" warranting a higher level of analysis and oversight, the EP WB SME will convene a Sensitive Case Committee.

    Note:

    The determination of whether or not a case is a "sensitive case" is a facts and circumstances decision that will be made by the EP WB SME.

  2. The Sensitive Case Committee will consist of:

    1. The EP WB SME,

    2. Three Senior EP Managers, and

    3. Other employees deemed appropriate to evaluate and make a decision on the case.

      Note:

      The members of Sensitive Case Committee must not be in the Area or Group where the case will be worked, if an examination is warranted.

  3. The EP WB SME will send a complete copy of the WB case file to each member of the Sensitive Case Committee.

  4. The Sensitive Case Committee will make a decision about compliance activity (examine or survey) and will prepare a memo to document the decision and return all WB material and documents to the EP WB SME.

  5. If the Sensitive Case Committee recommends an examination, the procedures listed in paragraphs (10) through (18) of IRM 4.71.24.3.1 will be followed.

  6. If the Sensitive Case Committee determines that an examination is not warranted,

    1. The Committee will provide written instruction to the EP WB SME to not examine the case, and

    2. The EP WB SME will prepare Form 11369 and send the entire WB file back to the WB Office.

4.71.24.3.2  (03-07-2014)
Category B Whistleblower Claim Procedures for EP Agents

  1. The EP group will receive two files from the EP WB SME:

    1. The examination case file, and

    2. The Category B WB case file.

  2. When the Category B WB case file is received by the EP Examination group and assigned to an agent, the agent should carefully read the Category B Instructions in the WB case file. See IRM 4.71.24 Exhibit 6 at IRM 4.71 - Employee Plans Examinations for an example of the Category B Instructions..

    1. The Category B Instructions provide basic procedures and guidance for EP agents with respect to the WB aspects of the examination.

    2. The Category B Instructions also explain the types of documents that should be contained in the WB case file.

  3. The Category B WB case file should contain the following documentation, as appropriate and relevant:

    • Original WB Form 211 and any attachments.

    • Form 11369 for each taxpayer

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    • Copies of all examined returns, substitutes for return prepared during the examination and/or secured returns prepared by the taxpayer

    • Copy of the examination report and attachments.

    • Special agent’s evaluation report (if applicable) attached to Form 3949

    • Copies of Activity Records

    • Copies of appropriate lead sheets and workpapers

    • Any other information which may assist the WB Office in determining an award amount.

  4. The Category B WB case file requires special protection.

    1. The Category B WB case file must be kept in a locked cabinet.

    2. Document 6441 must be on the outside of the file.

    3. All WB material, documents, interview notes, etc. must be kept separate from the examination case file.

    4. There should be no mention of the WB in the examination case file. Neither the case chronology record (CCR), exam workpapers or any documents in the examination case file or RCCMS should contain any information about the WB.

  5. The EP agent should never let the taxpayer know that there is a WB involved.

  6. If the agent thinks that an interview of the WB is warranted, the agent should contact the EP WB Coordinator for assistance.

    Note:

    TEGE Counsel will also need to be involved if the WB is interviewed; this will be coordinated by the EP WB Coordinator.

  7. At the conclusion of the examination, the EP agent must complete Form 11369. See IRM 4.71.24 3 at IRM 4.71 - Employee Plans Examinations for an example of Form 11369.

    1. Form 11369 must be completed for each taxpayer (with the exception of Forms 1040 that are jointly filed returns).

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    2. The agent must clearly explain how the material provided by the WB affected the examination.

    3. Form 11369 must be approved by the Group Manager.

      Note:

      The WB Office will rely heavily on this form when they make their decision on the amount of the award to be granted to the WB. It is the responsibility of the WB Office to determine whether an award is warranted and to determine the amount of the award. The EP agent will not be involved with this decision; however, the agent’s write-up about the importance and value of the WB information will be critical for the award determination.

  8. At the conclusion of the examination, the Category B WB case file will be mailed in a confidential envelope by the agent to the EP WB Coordinator at:
    IRS
    EP WB Coordinator
    31 Hopkins Plaza, Room 1520
    Baltimore, MD 21201

  9. When mailed, the WB case file should contain the following documentation, as appropriate and relevant:

    • Original WB Form 211 and attachments

    • Form 11369 for each taxpayer

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    • Copies of all examined returns, including substitute for returns (SFRs) prepared during the examination and/or secured returns prepared by the taxpayer

    • Copy of the examination report and attachments

    • Special agent’s evaluation report (if applicable) attached to Form 3949

    • Copies of Activity Records

    • Copies of appropriate lead sheets and workpapers

    • Any other information which may assist the WB Office in determining an award amount.

  10. The EP WB Coordinator will review the WB file for completeness and then send the entire file to the WB Office.

  11. When the examination case is ready to be closed, the examination case should be closed to Mandatory Review.

    1. The agent will attach Form 3198-A to the outside of the case file and select "Mandatory Review" and notate in the space provided that the case is a Category B Whistleblower case.

    2. Other than the notation on Form 3198-A that the exam involves a Category B Whistleblower case, there should be no mention of the WB in the examination case file. Neither the case chronology record (CCR), exam workpapers nor any documents in the examination case file nor RCCMS should contain any information about the WB.

4.71.24.4  (03-07-2014)
Survey or Transfer

  1. If the a decision is made to survey a Category A case at the group level:

    1. The agent will complete items 1 through 8 and 14 of Form 11369 and mail the form with the Category A WB case file to the WB ICE Unit in Ogden.

    2. The exam case file will be closed using the Survey procedures contained in IRM 4.71.7.

  2. If the a decision is made to survey a Category B case at the group level:

    1. The group manager must receive the written approval of the Area Manager.

    2. The group manger must contact the EP WB Coordinator to discuss the reason the case is being surveyed.

    3. The agent will complete items 1 through 8 and 14 of Form 11369 and mail the form with the Category B WB case file to the EP WB Coordinator.

    4. The exam case file will be closed using the Survey procedures contained in IRM 4.71.7.

    5. If the case is a "sensitive case" , written approval must also be secured from the Sensitive Case Committee to not examine the case.

  3. If the case is transferred to another group, the agent will complete items 1 through 8 and 15 of Form 11369 and mail the form to the EP WB Coordinator.

  4. The address of the EP WB Coordinator is:
    IRS
    EP WB Coordinator
    31 Hopkins Plaza, Room 1520
    Baltimore, MD 21201


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