4.87.1  Inventory Management

4.87.1.1  (06-01-2006)
Inventory Overview

  1. Indian Tribal Government (ITG) Specialists have sole responsibility for coordinating federal tax administration as it affects Federally recognized Indian tribes.

  2. While the Indian Tribal Governments office has enforcement authority, it is our objective:

    • to work with tribes to mitigate the need for enforcement

    • to provide education and assistance to help clarify the tax laws and regulations affecting Indian Country (Indian lands, businesses and society)

    • to build and strengthen government-to-government communications as a means to resolve any new or continuing Federal tax concerns

  3. There are over 560 tribes located throughout the United States. They reflect a wide diversity of Native cultures and traditions. Cultural awareness and sensitivity are required to work with each unique tribal community, as well as an awareness of their specific economic, political, and tax situations. ITG places continuous emphasis on understanding its customers and providing service to the tribes.

4.87.1.2  (06-01-2006)
Jurisdiction

  1. The Indian Tribal Governments (ITG) office addresses the unique needs of tribal governments by providing employees with specialized training to ensure consistency of information and support to the tribes.

  2. ITG is the Internal Revenue Service's official mechanism to meet the requirements of Presidential Executive Orders which mandate that federal agencies maintain a government-to-government relationship with tribal entities.

  3. To meet the mandates of the Presidential Executive Orders, ITG should be the first point of contact in dealing with the tribes regarding Federal tax matters. The only exceptions to this rule are routine mailings, notices, and dyed fuel compliance checks.

  4. Although ITG Specialists provide valuable expert knowledge and assistance in many criminal investigations, there may be instances when Criminal Investigation (CI) Special Agents are prohibited from disclosing information to ITG employees. Criminal investigations involving sensitive investigative techniques, pending enforcement actions and/or the use of Federal Grand Juries may significantly limit interaction and information sharing with ITG. Nonetheless, CI recognizes the critically important role ITG performs regarding tribal governments and Federal tax administration, including criminal investigations. Therefore, CI will, to the extent possible, coordinate pertinent tribal government activities and interaction with ITG.

4.87.1.2.1  (06-27-2008)
Anti-Money Laundering (AML)

  1. ITG and the Small Business/Self Employed (SB/SE) Bank Secrecy Act (BSA) field personnel assume joint responsibility for all Bank Secrecy Act and IRC Section 6050I notification, and education activities relating to entities owned by Indian tribal governments. See IRM 4.88.1.6.

  2. Details about notification visits can be found in IRM 22.41.1 and at the Bank Secrecy Act web site, http://sbse.web.irs.gov/FR/BSA/default.htm.

  3. Documentation regarding any education or notification visits to entities owned by Indian tribal governments will be provided to the designated SB/SE Bank Secrecy Act (BSA) Coordinator by ITG Compliance and Program Management staff (CPM). A copy of all appropriate paperwork will be retained in the field group/Specialist file.

  4. ITG and SB/SE personnel should coordinate all education, identification, and BSA examination efforts with the local SB/SA BSA Program Staff and local ITG Manager.

  5. ITG is also responsible for identifying the entities, key contacts, and other information for updates to the BSA Workload Identification, Selection, Delivery and Monitoring (WISDM) Title 31 database.

  6. SB/SE BSA field examiners are responsible for conducting BSA examinations at tribal entities.

4.87.1.2.2  (12-11-2009)
Abuse Detection and Prevention Teams (ADAPT)

  1. ITG formed the first Abuse Detection and Prevention Team (ADAPT) in 2004 to prevent and remedy abusive schemes. A second ADAPT was added during June 2009.

  2. The teams work on issues/cases where tax schemes or abuses have impact across multiple ITG field group areas. Cases that impact only one group area are usually worked by the respective field group.

  3. For the role and coordination of ITG ADAPTs vis-a-vis other TE/GE abuse activities See IRM 4.87.1.14.

4.87.1.2.3  (01-01-2003)
Excise Tax

  1. ITG has responsibility for all wagering tax issues relating to Indian tribal governments and serves as the IRS single point of contact to authorize or make contacts with Indian tribal governments.

  2. The SB/SE Office of Excise Taxes has jurisdiction over all other excise tax issues, but will notify the applicable ITG Manager prior to initiating any examination or outreach activity with an Indian tribal government. See IRM 4.88.1.9 .

4.87.1.3  (06-01-2006)
ITG Work Assignment Defined

  1. The work of ITG field groups varies according to the specific needs of the tribes in each area. While many issues are common to all tribes, there are issues which are regional in nature, or specific to particular tribes. This section provides examples of possible ITG assignments.

  2. A detailed discussion of Tip Rate Determination Agreements (TRDA), Tip Rate Reviews and Reduction Requests and Gaming Industry Tip Compliance Agreements (GITCA) can be found in IRM 4.88.1.8.

  3. A detailed discussion of tax account issues, questions and resolution topics can be found in IRM 4.88.1.13. Examples include:

    • Penalty resolution and/or abatement

    • Explanation of Campus notices

    • Account adjustments

    • Payment tracers and credit transfers

    • Offers in Compromise

4.87.1.3.1  (06-01-2006)
Outreach to Tribes

  1. ITG reaches out to Indian tribal governments to educate them about their rights and responsibilities under Federal tax laws and to improve IRS and Indian government relations. Outreach includes newsletters and educational presentations made to tribes, tribal associations, stakeholder groups, or individuals responsible for the tax administration on behalf of Indian tribes. IRM 4.89.1 provides guidelines for ITG outreach activities.

  2. Examples of outreach topics include:

    • Tip education

    • Title 31 education and follow up

    • Information reporting

    • Gaming Issues

    • Employment taxes

  3. Examples of other contacts between tribes, IRS and others include:

    • Relationship building with tribal or IRS groups

    • Participation in a forum at a gaming conference

    • Speeches to practitioner groups or trade associations

    • Liaison with other IRS divisions, such as contact from a revenue officer on an ITG case assigned to SB/SE Collection

4.87.1.3.2  (06-01-2006)
Issue Resolution

  1. ITG Specialists are responsible for assisting tribes with technical questions or issues. Some answers may be found using normal research channels, such as Lexis and Westlaw. The ITG Research Specialist on the CPM staff can assist with these efforts.

  2. Other issues require coordination with:

    • CPM (Compliance and Program Management)

    • Other IRS Divisions, e.g. SB/SE

    • A person or group outside of ITG or

    • Legal guidance, such as a Private Letter Ruling (PLR) or Technical Advice Memorandum (TAM)

    Note:

    Procedures for preparing and submitting a Private Letter Ruling or Technical Advice Memorandum are in IRM 4.88.1.14 .

  3. ITG uses Knowledge Sharing Groups (KSG) to gather and disseminate information on certain issues and to assist in issue resolution. ITG Specialist contact with a KSG or participation in a KSG can greatly enhance the quality and consistency of information and products for ITG customers.

  4. The ITG Specialist is a knowledgeable and valuable source of information about tribal taxation issues for other divisions or government agencies.

4.87.1.3.3  (06-01-2006)
Compliance Checks

  1. ITG Specialists conduct Compliance Checks to determine that all record keeping and information reporting requirements are met; for example:

    • Employment tax

    • Forms 1099

    • W-2G's

    • Excise tax, or

    • Employee benefits

    • Bank Secrecy Act

    Note:

    For specific procedures for scheduling, conducting, and documenting a Compliance Check See IRM 4.87.1.7.1. and IRM 4.23.3.8.

4.87.1.3.4  (01-01-2003)
Enforcement

  1. Enforcement of tax laws and procedures is part of the function of ITG in its role as tax administrator. While striving to minimize the need for enforcement by working in cooperation with tribal governments through education and outreach, there will be situations where ITG Specialists/Managers will be involved in examination or collection activity.

4.87.1.3.5  (06-01-2006)
Consultation Policy and Other Projects

  1. The initial Indian Tribal Governments office (ITG) design process included input from many tribal representatives and IRS employees. The Indian Tribal Governments office's Consultation Policy continues this dialogue to ensure the organization constantly evolves to reflect the needs of tribes, the Internal Revenue Service, and stakeholders. (See IRM 4.86.1.5.)

  2. In addition, ITG Specialists and Managers are involved with infrastructure design teams, focus groups, Knowledge Sharing Groups and special projects identified by the organization and approved by the ITG Director. These activities reinforce ITG's commitment to be a quality provider of tax administration services.

4.87.1.4  (12-11-2009)
Work Assignments

  1. ITG Includes:

    • 5 field groups

    • 2 Abuse Detection and Prevention Teams (ADAPT)

    • Compliance and Program Management (CPM)

    • Office of the Director

  2. The field groups are aligned to respect tribal affiliations wherever possible and include a Group Manager and several ITG Specialists. Each group is responsible for the tribes located within its geographic boundaries.

  3. The ADAPT groups work nationwide.

  4. The Centralized Support Staff has been eliminated and the positions of that group have been moved into the CPM group.

  5. There may be assignments that benefit from the presence or assistance of an employee from another ITG group. The sharing of information and expertise between groups can improve the overall level of service we provide our customers.

  6. In addition, ITG uses Knowledge Sharing Groups (KSG) to enrich, develop and retain institutional knowledge.

4.87.1.4.1  (06-01-2006)
Indian Tribal Governments Specialist's Assignments

  1. Compliance and Program Management staff classify and assign work to field groups. Each field group decides how to assign work within its territory. For example, the work may be assigned according to state, tribe, expertise, or availability of staff.

  2. ITG Group Managers will maintain a record of work and/or tribal assignments for their respective groups.

  3. Work assignments are made with an emphasis on end-to-end accountability, meeting customer needs and business results.

4.87.1.4.2  (06-01-2006)
Examples of How Work is Received

  1. Work Plan Initiatives may be developed by

    • ITG Compliance and Program Management (CPM)

    • The Director’s office, or

    • By the field office to focus on specific needs or trends discovered through personal contact, newspaper/magazine articles, or database analysis.

  2. ITG field groups have the unique opportunity to provide service to their customers in flexible, creative, and nontraditional ways. ITG encourages tribal representatives and others working in Indian Country (in this context, Indian lands, businesses and society) to contact the local ITG Managers and/or Specialists for assistance or information. Therefore, some of the work of ITG Specialists comes in response to direct tribal requests and requests from other external customers.

  3. An introductory contact with a tribal representative can lead to other areas of outreach or interaction.

  4. Work assignments initiated from external sources such as:

    1. requests from tribes

    2. claims filed, or

    3. information received from other divisions

    are controlled through the CPM function.

  5. Tribal contacts and visitations are subject to the approval process and database maintenance requirements. See IRM 4.87.1.4.5.

4.87.1.4.3  (06-01-2006)
Approval Process

  1. New work assignments are generally classified and assigned to the field groups by CPM. Work assignments assigned by CPM are input into the inventory management database by CPM.

  2. New work assignments initiated by the ITG Specialist, field group, tribe, or others are subject to appropriate managerial approval.

  3. New contacts with a tribe initiated by ITG or other IRS offices will be approved by the Manager prior to contact. The Specialist should E-mail or telephone the Manager for approval, according to local procedure.

  4. ) Work assignments that fall into certain categories, determined by the ITG Work Plan, will be coordinated with CPM prior to starting.

  5. Follow-up contacts regarding the same issue do not require additional approval.

  6. Each group is responsible for adding new assignments to their respective database on the share drive.

  7. The group may start the activity immediately upon adding the new assignment, unless any of the following conditions are present:

    1. Total staff days required to complete the assignment are more than 5 days;

    2. Total projected travel costs are in excess of $1,000; or

    3. Total miscellaneous costs (supplies, publishing, printing, registration) are in excess of $500.

    Note:

    If any of the above situations are present, the new assignment will be initiated only after approval of the ITG Director (excluding CPM assigned work). The Manager should E-mail the ITG Director to advise that the request is pending approval on the database.

4.87.1.4.4  (06-01-2006)
Examination Cases

  1. General TE/GE Examination procedures, including Package Audit, Survey of Returns, Suspense Procedures, and Basic Report Writing, are included in IRM 4.23 and IRM 4.24.

  2. IRM 4.88.1 and IRM 22.41.1 discuss taxation issues and examination procedures with a specific impact on Indian tribal governments.

4.87.1.4.5  (12-11-2009)
Examination Control and Processing

  1. ITG uses two inventory and management control systems called Reporting Compliance Case Management System (RCCMS) See IRM 4.87.1.4.7.7.) and Audit Inventory Management System (AIMS) to control and close examined return case files. ( See IRM 4.87.1.4.7.5. and IRM 4.88.1.3.1, Assignment of Work Operational Guidance)

  2. ITG generally follows the examination case file control and processing procedures in IRM 4.5, TE/GE AIMS Processing.

4.87.1.4.6  (06-27-2008)
Delinquent Returns

  1. The following references should be used when working delinquent returns:

    • IRM 4.5.3.1.3, Government Entities Returns

    • IRM 4.23.12, Delinquent Return Procedures

    • IRM 4.24.9, Miscellaneous Examination Procedures

4.87.1.4.7  (01-01-2003)
Scope of Examination

  1. Many tribal governments are complex entities with multiple subdivisions including various governmental functions and tribal commercial enterprises.

    1. In some instances, different subdivisions have separate taxpayer identification numbers (TIN) and separate, well-defined books and records

    2. In other instances, many subdivisions are operated under one TIN and combined on the tax returns

    Note:

    ITG Specialists, in consultation with their Manager, must exercise judgment as to the scope and depth of the examination procedures to be followed.

  2. Where the examination is initiated due to a specific information item or a specific issue, the scope may be limited at the discretion of the Specialist and Manager.

    1. For example, an information item from a state government indicates that an examination was conducted on a particular department of the tribe and they reclassified some workers from subcontractors to employees. If an examination by ITG is warranted, the scope would appropriately be limited to the employees in that particular department.

  3. The scope should be expanded when there are indications of potential noncompliance.

  4. The factors considered in determining the scope and depth of the examination and the extent of managerial involvement should be clearly documented in the work papers.

4.87.1.4.7.1  (01-01-2003)
Related Enterprise

  1. Enterprises entered into by a tribe can be owned and managed by the tribe. They also can be owned by the tribe, but managed by a management company. It may be necessary to examine more than one entity to determine if the proper amount of tax is paid.

    Note:

    Disclosure rules must be considered and adhered to in cases when more than one entity is examined. Refer to IRM 11.3, Disclosure of Official Information.

4.87.1.4.7.2  (01-01-2003)
Transferring Cases to ITG

  1. Only cases pertaining to Indian tribal governments and/or cases that would normally fall under the current jurisdiction of ITG may be transferred to ITG inventory.

  2. Once a case has been identified for transfer, CPM will be notified. CPM may discuss the transfer with the local ITG Manager prior to initiating the transfer of an in-process case. Consideration will be given to current workload and Specialist availability, statute of limitations, historical data, and policy when transferring an examination case.

  3. CPM will be responsible for contacting the AIMS unit and updating the status codes, as appropriate.

4.87.1.4.7.3  (06-27-2008)
Document Transmittal

  1. All returns sent between ITG groups, CPM, or groups in other divisions should include Form 3210, Document Transmittal. If a case is totally electronic in RCCMS, there is no requirement to use Form 3210, as the case is tracked solely through RCCMS.

  2. Local procedures will be used to establish a system of control and follow up for Form 3210.

4.87.1.4.7.4  (06-27-2008)
Requesting Returns on AIMS

  1. Most tax returns that enter ITG are already established on AIMS. The Specialist, however, must establish those secured by ITG. All activities initiated by ITG Specialists are now directly controlled and established on AIMS through RCCMS.

  2. In the case of Substitutes for Returns on AIMS, Form 5597, TE/GE IMF/BMF/EPMF Request, must be prepared to establish the return on AIMS.

  3. The form must be forwarded to an ITG CPM for input if it has not already been input by a Campus or the closing unit in Dallas.

  4. Instructions for preparing Form 5597 are in IRM 4.5.1, Exhibit 4.5.1-8. Refer to IRM 4.5.1.3, TE/GE AIMS Forms for additional information regarding Form 5597, Group Control Cards, and Requisition problems.

4.87.1.4.7.5  (06-27-2008)
Updating and Correcting AIMS

  1. Nearly all AIMS updates are effected through RCCMS. In the rare event that an ITG account must be processed, updated, or corrected on AIMS, use Form 5595 or Form 5598, as appropriate.

  2. Other procedures for updating and correcting AIMS information are found in IRM 4.5.1.3.

4.87.1.4.7.6  (01-01-2003)
Form 5546, Examination Charge-Out

  1. The Examination Return Charge-Out, Form 5546 , is a computer generated control document containing all information required to process an account on AIMS. Refer to IRM 4.5.1.3, for information regarding the use and function of Form 5546.

4.87.1.4.7.7  (12-11-2009)
Using RCCMS (Reporting Compliance Case Management System)

  1. RCCMS is the inventory control system used for ITG examination cases. Cases will be assigned through RCCMS. Any necessary updates to AIMS will take place through the RCCMS interface with AIMS.

  2. RCCMS updates are performed at all levels of case assignment, by ITG CPM Classifiers and Management Assistants, CPM Reviewers, ITG Specialists and Group Managers. Updates initiated by Specialists must go through the Group Manager for approval before the update is effected.

  3. CPM Management Assistants also act as IDRS operators on RCCMS.

    Note:

    Compliance assignments such as SS-8 determinations, TRDA Solicitation and Monitoring, and Compliance Checks are not controlled on AIMS. These assignments will be controlled on RCCMS, as will all ITG inventory.

  4. There are several types of cases controlled on RCCMS:

    • Cases From CPM Classification These cases flow from CPM to the Field Group Managers on RCCMS, and then get assigned to ITG Specialists on RCCMS. AIMS updates to Status Code 12 -- "Assigned, Taxpayer Contact," from Status Code 10 -- "Assigned, No Taxpayer Contact" -- but no time applied, reflects that they have been transferred to the group.

    • Cases Originated in the Field - These cases will be established on AIMS through RCCMS and updates will be made to AIMS through RCCMS. The cases will normally be in Status Code 12- "Assigned, Taxpayer Contact" if they are currently being worked and field time is being applied.

    • Cases Assigned, Taxpayer Contact - These cases will already be established on AIMS and RCCMS, and will be in Status Code 12. If the case is in Status Code 10, the update will be made through RCCMS

    • Cases Transferred Out - These cases are established on AIMS and RCCMS, and transferred using the applicable codes to ITG CPM Classification in Oklahoma City. The cases' status should reflect that they have been transferred to another group in RCCMS.

    • Cases Transferred In – All cases received by the group should be received from ITG CPM Classification. These cases should arrive in the group already assigned on AIMS and RCCMS. Their statuses (Status Code 10 or 12) reflect that they have been transferred to a Field Group.

    • Cases Closed to Review - These cases are updated on AIMS through RCCMS and transferred to CPM Review using status code 20. The Review function will accept the cases on RCCMS. Form 3210is used only if a paper file exists in addition to the RCCMS file. The case will remain in the group’s organizational code.

    • Cases Returned from Review - These cases will be updated on AIMS and RCCMS, and transferred back using the applicable Command Codes. Their status (Status code 12) should reflect that they have been returned for additional clarification or development.

    Note:

    Anytime a case is updated for any reason, the change must be made in RCCMS, which updates AIMS.

4.87.1.4.7.8  (06-01-2006)
Claims

  1. Requests for Refund or Abatement

    • Definition: A claim, tentative allowance or other request submitted by or for a taxpayer to reduce liabilities previously assessed.

  2. Requests for refunds or abatements include:

    1. Form 843, Form 8849, Form 1120X, Form 1139, or informal claims filed after the due date and showing a decrease in liability;

    2. A letter or other document (informal claim) which contains all the facts necessary to decide that a reduction in tax liability is involved;

    3. A claim for abatement of an excise or employment tax that was assessed as the result of a prior examination.

    Note:

    An amended return that shows an increase in tax over that reported on the original return is not a claim. The statute of limitations should be protected, and the additional tax should be assessed as soon as possible.

  3. Formal claims should have a Source Code of 30, and informal claims have a Source Code of 73, if established on AIMS.

  4. When working claims that involve any employment tax, research IRM 4.23.13, Employment Tax Refund and Abatement Claims.

  5. On excise tax claims, reference IRM 4.24.8, Claims for Refund or Abatement.

  6. Claims should be in a pink folder for closing.

4.87.1.4.7.9  (06-27-2008)
Surveyed Claims

  1. Claims for refund, including amended returns and informal claims, may be surveyed after assignment, if it is determined that the claim issue is clearly allowable in full and the return does not warrant examination.

  2. The Specialist must complete Form 2503, Survey After Assignment – Excise or Employment Tax, to explain why the claim is being surveyed.

  3. Claims may also be allowed without establishing them on AIMS when an amended return is received by the Specialist directly from the taxpayer.

  4. Form 5599, TE/GE Examined Closing Record, is used to make the adjustment to the taxpayer’s account to allow the claim.

  5. The closing tabs in RCCMS must be completed as well.

4.87.1.4.7.10  (06-27-2008)
Claims for Refund and Abatement

  1. Claims for refunds of tax paid or requests for abatement of tax from tribal entities will be routed from the Accounts Management Center through CPM to the ITG Manager/Specialist to consider.

    • For claim assignment procedures see http://www.irs.gov/govt/tribes/topic/index.html for a chart of the ITG workflow.

    • For additional claims examination and processing procedures see IRM 4.5.3 (TE/GE AIMS Special Processing Procedures)

    • Abatement procedures are contained in IRM 4.13, Audit Reconsideration

4.87.1.4.7.11  (06-01-2006)
Claim Disallowance

  1. In cases involving the disallowance of a claim for refund, whether in whole or in part, a notification letter must be issued to the taxpayer. The Specialist prepares the following forms to notify the taxpayer of a full or partial disallowance of the claim:

    1. Form 2297, Waiver of Statutory Notification of Claim Disallowance

    2. Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit

    3. Letter 569 is used with the above forms to notify the taxpayer of the partial or full disallowance of the claim. The Specialist must also prepare the appropriate reports, unless the claim is disallowed in full, and there are no other adjustments.

  2. Other report forms must also be prepared for claims involving employment taxes. Refer to IRM 4.23.10 IRM -- Report Writing Guide for Employment Tax Examinations.

  3. If the taxpayer does not sign Form 2297, Waiver of Statutory Notification of Claim Disallowance, a certified notice of claim disallowance must be issued. Form 3198A, Special Handling Notice For Examination Case Processing, should be used to note that fact.

  4. CPM will prepare the letter for issuance by the Examination Support Unit (ESS) unit in Dallas.

  5. The following letters are used to notify the taxpayer of the full or partial disallowance of their claim:

    1. Letter 905 --For claims partially disallowed

    2. Letter 906 --For claims disallowed in full

    The reason for the disallowance must be included in the letter.

4.87.1.4.8  (12-11-2009)
ITG Compliance Project Guidelines and Procedures

  1. The purpose of the ITG workload selection process is to integrate the information developed through annual compliance analysis, with feedback from employees and from environmental scanning, to determine the optimal methods of identifying examination and compliance check workload in each year’s work plan.

  2. An effective workload selection process should accomplish several key tasks:

    1. Generate work that addresses issues pertaining to non-compliance on a national level

    2. Be data driven, to the fullest extent possible

    3. Be consistent with the balanced measures created by ITG

    4. Ensure fair treatment of each taxpayer by addressing potential horizontal equity issues

    5. Ensure adequate controls are in place in accordance with Servicewide work assignment and approval requirements

    6. Be flexible enough to accommodate Work Plan adjustments e.g., new legislation, and court decisions

    7. Provide the ITG field group managers the flexibility they need to balance local concerns with national priorities.

  3. This section establishes procedures for proposing, developing and implementing compliance projects and analyses.

  4. The ITG workload selection process incorporates information from several sources to ensure workload selection is data driven, consistent with our balanced measures and reflective of our customers’ needs. Some examples of these sources are:

    1. ITG compliance initiatives

    2. ITG compliance analyses

    3. ITG balanced measures

    4. ITG Annual Work Plans

    5. Findings from the annual ITG Customer Satisfaction Surveys

4.87.1.4.8.1  (12-11-2009)
Types of Projects

  1. Compliance Projects

    • General Compliance Initiatives

    • Abusive Tax Avoidance Transaction (ATAT) projects

    • Outreach and Educational initiatives

  2. Compliance Analyses

    • Market segment studies

    • Data analyses that suggest compliance issues on a national basis

4.87.1.4.8.2  (12-11-2009)
Compliance Projects

  1. Definition. A compliance project is designed to address an identified issue, which may or may not be associated with a particular market segment. This type of project is intended to correct a known area of noncompliance through examinations, compliance checks, educational programs, or other activities that may not involve the examination of books and records. Those that involve examinations typically include returns screened for the presence of the targeted issue.

  2. Project Design. The nature of the issue and information available on the issue will necessarily frame how the project is designed. Some issues may be best addressed through an educational initiative. Others may require compliance checks or examinations. The issue may be one that is directly identifiable in an inspection of a return. IRS internal databases will be used for all compliance projects that base selection on return information or generic population criteria. Other identification and selection methods/sources will be utilized when they are available and appropriate. These outside sources may include other IRS operating divisions, federal, state and local agencies, the Internet, and external stakeholders.

4.87.1.4.8.3  (12-11-2009)
Compliance Analyses

  1. Definition. Compliance analyses are initiatives that further the federal tax administration process as it relates to Indian tribal governments. These efforts support the work selection process and include identifying current and emerging issues related to ITG’s mission, providing the ITG field groups with support through analysis of filing and information reporting data, and identifying and prioritizing workload, in concert with the ITG Annual Work Plan.

  2. Project Design. A variety of approaches may be taken to structure a compliance analysis to achieve the desired outcomes. Statistical sampling tools and other research methodologies may be employed to tailor the design of each analysis. Customer surveys, focus groups, listening sessions and feedback from stakeholders in tribal tax administration also may be considered. TE/GE Research and Analysis staff may be consulted for assistance.

4.87.1.4.8.4  (12-11-2009)
General Procedures

  1. Project Generation. Suggestions for projects come from a variety of sources. ITG managers and employees are encouraged to submit ideas for potential compliance projects and analyses. The ITG Knowledge Sharing Groups play an important role in the review and analysis of tax compliance issues and work processes. They may also contribute to the definition and execution of compliance projects. Workload selection projects do not affect the ability of a Group Manager to request approval to generate compliance workload based on his or her experience and knowledge of issues in the field. Also, they do not address the development of work for ITG’s special enforcement program (ADAPT) which focuses on schemes, fraud and illegal income. In all cases, requests must be justified as to their importance, as well as possible negative impact on other work or horizontal equity.

  2. Preliminary Analysis. A fact based justification must be given for any project or analysis. The rationale for pursuing a particular project must be properly documented so stakeholders, including those with oversight responsibility, may have an understanding of the process.

4.87.1.4.8.5  (12-11-2009)
ITG Procedures -- Project Phases

  1. Development Phase. The first phase, the development phase, begins when an issue or set of circumstances suggest the need for further investigation or treatment of a particular aspect of tax administration within ITG jurisdiction. The developmental phase ends when the project or analysis is ready for implementation. In the case of a compliance project it may be when examination cases are sent to the field by CPM, compliance check letters are mailed, the project is abandoned, etc. In the case of a compliance analysis, the end of the developmental phase may be when analysis produces criteria for selecting cases for examinations or compliance checks.

  2. Prepare Preliminary Action Plan.The preliminary action plan represents an outline of the project, and lists all the generic steps to be taken to develop and implement the project. Actions need not be carried out consecutively. Whenever possible, actions should be scheduled to occur simultaneously.

  3. Gather Information. CPM and other appropriate ITG staff, like natural work groups will gather information from available sources:

    • Databases maintained within TE/GE and by other operating divisions

    • TE/GE management reports or historical information

    • Statistics of Income (SOI), TE/GE Research and Analysis.

    • External publications and trade journals

    • Other federal, state and local agencies

    • Conferences and seminars on related tribal or tax administration topics

    • IRS Intranet

    • Advisory and oversight groups

    • External stakeholders

    • Internet

4.87.1.4.8.6  (12-11-2009)
Consider External Stakeholder Input

  1. External stakeholder involvement is an important consideration in the development of any project. ITG may consider seeking outside stakeholder input in the development of strategies to address the project.

4.87.1.4.8.7  (12-11-2009)
Determine the Size, Scope and Methodology of the Project

  1. ITG may have to modify the scope or methodology to accommodate more recent information or to perfect the research strategy.

  2. The methodology of the project can include but is not limited to the following:

    • Examinations

    • Compliance Checks

    • Educational or outreach initiatives

    • Development of training material

    • Drafting technical guidance to both the field and the public

    • Data gathering methods must be clearly spelled out in the project proposal.

4.87.1.4.8.8  (12-11-2009)
Product Preparation

  1. CPM is responsible for preparing any unique products used in the project.

4.87.1.4.8.9  (12-11-2009)
Determine Resource Needs

  1. During planning, CPM will estimate resource needs for the project.

  2. The team will describe the estimated resources needed to execute the project, including hours to be expended by type of employee.

4.87.1.4.8.10  (12-11-2009)
Requests for Assistance from Other Divisions

  1. If necessary, CPM will make a request for technical assistance from other TEGE organizational units or IRS operating divisions.

  2. The memorandum will describe the type of expertise or assistance requested, the approximate length of any detail and the estimated number of hours needed.

4.87.1.4.8.11  (12-11-2009)
Consultation(s) with TE/GE Research and Analysis

  1. TE/GE Research and Analysis may be consulted in projects for assistance with RICS in defining the population, determining an appropriate sample size, drawing a random sample, analyzing results, and ensuring statistical findings are presented in a concise manner.

4.87.1.4.8.12  (12-11-2009)
Run RICS or Other Queries for Analysis

  1. CPM will run any needed data base queries.

  2. CPM may determine through their analysis that the project should include statistical sampling of the entire population. The population from which the sample is selected will determine how far the conclusions can be applied.

  3. CPM may also determine that due to the nature of a compliance initiative, for example, a selected or stratified sample may be more appropriate. The project proposal must include a discussion of the methodology for the samples selected.

  4. The Office of Disclosure will be consulted for advice on the use of information supplied by third party data.

  5. Prior to pulling project returns and assigning them to the groups, CPM should pull a small sample of the returns using the criteria developed in order to validate those criteria.

4.87.1.4.8.13  (12-11-2009)
Update Action Plan

  1. The action plan will be updated to list all of the steps to be taken to develop and implement the project. It should include at least the following items:

    • A projected start date for each phase of the project. (development, implementation, analysis)

    • A projected completion date for each phase of the project.

    • A short description of each necessary action, the person responsible, the estimated start date, and the expected completion date for each action.

4.87.1.4.8.14  (12-11-2009)
Prepare Project Proposal and Brief Director, ITG

  1. All projects require advance approval. Projects will be proposed and approved through a project proposal memorandum. At a minimum, the proposal form must address the following topics:

    • Background and Objectives

    • Market Segment

    • Data Sources

    • Data Security

    • Measures and Analysis

    • Cost/Benefit

    • Time Frames/Action Plan

    • Levels of Approval and Concurrence

    • Signature and Date lines for the Manager, CPM and the Director, ITG

4.87.1.4.8.15  (12-11-2009)
Approval of Project Proposal

  1. Approval beyond the ITG Director may be required If additional staff, resources and cooperation are needed.


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