4.81.2  Examination Selection

Manual Transmittal

October 02, 2012

Purpose

(1) This transmits Table of Contents and text for revised IRM 4.81.2, Tax Exempt Bonds Examination Selection.

Material Changes

(1) The procedures relating to examination selection for Tax Exempt Bonds have been updated to include correspondence examination case selection procedures for Tax Exempt Bonds Compliance and Program Management aimed at assessing the risk of noncompliance . This IRM also provides updated procedures for Tax Exempt Bonds Field Operations case selection and assignment.

Effect on Other Documents

This supersedes IRM 4.81.2 dated November 1, 2008

Audience

TE/GE

Effective Date

(10-02-2012)

Clifford J. Gannett
Director, Tax Exempt Bonds

4.81.2.1  (10-02-2012)
In General

  1. This section sets forth procedures for the TEB classification program through which examinations pertaining to tax-exempt and tax credit (including direct pay) bond transactions are selected in accordance with inventory requirements.

  2. The Tax Exempt Bonds Compliance & Program Management ("CPM" ) function is responsible for the administration and oversight of the classification program. The TEB Classification Coordinator will review the operations of the program and report to the Manager, Compliance & Program Management ("Manager, CPM" ).

  3. The Tax Exempt Bonds Field Operations ("FO" ) function will provide assistance and support to CPM in regards to this program.

4.81.2.2  (10-02-2012)
Implementation of the Annual Workplan Compliance Activities

  1. The annual workplan provides program guidance and direction to all TEB employees with respect to TEB's fiscal year operating priorities in support of the IRS strategic goals.

  2. The annual workplan, in part, initially determines the examination inventory needs based on issues and trends identified from examinations, compliance questionnaires, voluntary resolution programs, outreach activities, and other internal or external sources.

  3. CPM will coordinate the selection and classification of returns to ensure adequate levels of inventory are available to achieve the annual workplan.

4.81.2.3  (10-02-2012)
CPM Case Selection

  1. CPM will initiate correspondence examinations on market segments or emerging issues identified in the annual workplan to assess the risk of noncompliance with the federal tax laws for tax-exempt and tax credit bonds.

  2. Cases selected for CPM examination originate from the following sources:

    1. Information gathering projects and compliance initiatives;

    2. Classification of returns filed by issuers; and

    3. Compliance research from internal and external data sources.

  3. Cases selected for CPM examination will include:

    1. Returns; and

    2. Rebate penalty determinations for late filed Form 8038-Ts.

  4. These examinations may be referred to FO for further development.

4.81.2.4  (10-02-2012)
FO Case Selection

  1. Cases selected for FO examination originate from the following sources:

    1. Information gathering projects and compliance initiatives;

    2. Classification of returns filed by issuers;

    3. In process risk assessment examinations originating in CPM and selected for transfer to FO for further development;

    4. Referrals from other federal agencies, informants, news articles, or internal IRS sources; and

    5. Cases related to current examinations, including examinations of claims.

  2. Cases selected for FO examination will include:

    1. Returns;

    2. Claims for recovery of arbitrage payments;

    3. Information items and referrals; and

    4. Non-return units including, but not limited to, IRC 6700 related cases.

4.81.2.5  (10-02-2012)
Classification

  1. The Classification Coordinator is responsible for reviewing inventory needs to ensure adequate levels of inventory are available to achieve the annual workplan.

  2. In classifying returns as part of a compliance initiative, CPM will select returns for examination by:

    1. Coordinating with the team responsible for formulating selection criteria based on the initiative's objectives and selecting those cases for examination based on established criteria;

    2. Using the selection criteria to mark returns on RICS for download of return information into the Reporting Compliance Case Management System ("RCCMS" ) and establishment on AIMS;

    3. Posting official statements and material event notices obtained from commercial sources, initiative examination checksheets, initiative classification forms, and other initiative documents into the Case File Documents folder of each RCCMS case selected for classification in accordance with the initiative guidelines;

    4. Verifying project codes for those cases not selected for an initiative, but selected for examination;

    5. Updating cases selected for examination to AIMS status 8 and transferring them to the RCCMS Unassigned Inventory Folder of FO groups upon commencement of the initiative for assignment to agents; and

    6. Surveying cases not selected for examination.

  3. In classifying returns for general program work in accordance with the annual workplan, CPM will select returns for examination by:

    1. Formulating selection criteria based on the workplan program requirements and reviewing RICS or other research information to select those cases for examination based on established criteria;

    2. Using the selection criteria to mark returns on RICS for download of return information into RCCMS and establishment on AIMS;

    3. Posting official statements and material event notices obtained from commercial sources, and classification forms into the Case File Documents Folder within each RCCMS compliance activity established for classification;

    4. Verifying project codes of the cases selected for examination;

    5. Updating cases selected for examination to AIMS status 8; and

    6. Surveying cases not selected for examination.

4.81.2.6  (10-02-2012)
Unassigned Inventory Management

  1. At the beginning of each month, the Manager, FO, will request the Classification Coordinator to transfer a specified number of cases to the RCCMS Unassigned Inventory Folder of each FO group by the end of the month. If desired, the Manager, FO may specify each FO group's preference for type of case and location by state in the request.

  2. The Classification Coordinator will select cases to meet FO needs using the following inventory priorities:

    1. In process risk assessment examinations originating in CPM and awaiting transfer to FO for further development;

    2. Referrals;

    3. Classified returns in support of the workplan that meet the criteria specified in the monthly request from the Manager, FO to the greatest extent possible.

  3. Upon verifying the transfer request, the Classification Coordinator will immediately transfer any available in process risk assessment examinations to FO and initiate the selection and establishment of returns to meet FO inventory needs by the end of the month. During the month, the Classification Coordinator will immediately transfer any in process examinations to FO as they become available.

  4. At the end of each month, the Classification Coordinator will complete FO's monthly inventory request by transferring to the RCCMS Unassigned Inventory Folder of each FO group returns classified from referral information and other classified returns in accordance with the inventory priorities defined in paragraph 2 of this section.

  5. Cases surveyed after transfer to FO groups will be closed within RCCMS using the appropriate closing codes. The reason for survey will be noted in the comments section of the Close To dialogue box in RCCMS. Upon closure, the FO Group Manager will also forward such comments directly to the Classification Coordinator. The Classification Coordinator will review the comments of surveyed cases to reassess selection criteria for future classification.


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