4.90.6  Referrals

Manual Transmittal

August 28, 2013

Purpose

(1) This transmits a Table of Contents and text for IRM Part 4, Examining Process, Chapter 90, Federal State and Local Governments, Section 6, Referrals.

Material Changes

(1) Added references to Field Operations Manager position.

(2) The "Referral Classification Panel" discussion is moved up to precede the "General Procedures" paragraph, for clarity.

(3) References to a Referral Tracking Number are removed from 4.90.6.4(4)

(4) References to LMSB have been replaced with LB&I

(5) Reference to a Designated Identification Number have been removed from 4.90.6.7(1)

(6) 4.90.6.9 has been significantly changed and renamed Application for Award for Original Information (Whistleblower Claim)

(7) Minor editorial changes throughout 4.90.6 as needed.

Effect on Other Documents

This section supersedes IRM 4.90.6, Referrals, dated November 1, 2007.

Audience

This section contains instructions and guidance for all FSLG managers and CPM employees who are responsible for processing Information Items/referrals. It also provides instructions for FSLG compliance employees who serve on the FSLG Classification Panel.

Effective Date

(08-28-2013)

Paul Marmolejo
Director, Federal State and Local Governments

4.90.6.1  (08-28-2013)
Overview

  1. This section provides guidance to Federal State and Local Governments (FSLG) Managers and Specialists for handling Information Items and Referrals received or developed by FSLG. It details procedures on how to review, evaluate and retain information items concerning FSLG entities. These procedures are designed to ensure fair and impartial consideration of information items/referrals in an unbiased and appropriate manner. FSLG uses a three-member referral classification panel to carefully review and consider the potential of each referral received from internal and external sources.

4.90.6.2  (05-31-2006)
Introduction

  1. An information/referral item (referral) is:

    1. A document or other communication (e.g. telephone call) received from a source outside the Service which alleges potential noncompliance with federal the tax laws; or

    2. A document prepared by a TE/GE functional employee or other IRS employee, who identifies current or potential noncompliance discovered during the processing of an assigned case.

  2. Referrals may come from a variety of sources, including but not limited to:

    1. TE/GE agents during the examination or determination process

    2. FSLG Specialists in the performance of their duties

    3. Other IRS functional areas/business operating divisions

    4. The media

    5. Other federal agencies

    6. State and local government agencies and officials

    7. The general public/informants

    8. Members of Congress

    9. The Executive Branch

4.90.6.3  (08-28-2013)
Referral Classification Panel

  1. The Director, FSLG, Field Operations Manager, and the Manager, CPM will establish a Referral Classification Panel "(the panel)" the panel to evaluate the examination or other compliance potential for referrals. The purpose of the panel is to ensure fair and impartial consideration of referrals in an unbiased and appropriate manner. Members of the classification panel will be experienced FSLG employees, e.g., Program Analysts or Managers. The panel may recommend education, compliance activity or rejection based on the facts and circumstances of the referral.

  2. The panel will meet on an as-needed basis in order to evaluate all referrals within 90 days from the date the referral was received in CPM.

  3. The panel will document its findings on Form 13385, FSLG Referral Control Sheet. Each form will include the reason the referral was or was not selected for compliance activity, education or other action.

4.90.6.4  (08-28-2013)
General Procedures

  1. FSLG Specialists should use Form 5666 to prepare a referral, attaching any supporting documentation that provides additional details about potential non-compliance. Instructions for completing Form 5666 are in IRM Exhibit 4.5.1-14. Referrals from all sources should be forwarded to Compliance and Program Management (CPM) immediately for consideration.

  2. FSLG Specialists should not "research" organizations using the internet, IDRS, or other IRS internal sources to develop leads, except as described in 4.90.6.3(3) below. However, they should be alert to organizations in their area that are experiencing compliance difficulties. Leads that Specialists will most often come across when preparing referrals include: informants, customers under compliance action, representatives of other federal, state or local regulatory agencies, IRS employees from other operating units, media stories (radio, television, newspaper, magazine) and similar third party sources. The following table gives examples of situations when a referral is or is not warranted:

    Information Action
    During a compliance check, the organization's representative informs the Specialist that nearby City of X pays a monthly travel allowance to its department heads, which is not included in their compensation. Referral on City of X is warranted.
    Based upon compliance checks of housing authorities, the Specialist believes that housing authorities do not issue Forms 1099 when appropriate. Referral is not warranted. However, the Specialist may elevate a TIP (trend, issue, project) to CPM through the Field Manager for a possible compliance project, outreach effort, etc.
    A Revenue Agent from SB/SE reports to the Specialist that she has talked to three employees of County Y, who indicated that they were not covered by social security taxes. Referral might be warranted. The Specialist may research whether the organization has a section 218 agreement and prepare a referral based upon his or her professional judgement.
    Based upon discussion with representatives from the local work force commission, the Specialist learns that part-time teachers at area schools are classified as independent contractors Referral is not warranted. However, the Specialist may elevate a TIP (trend, issue, project) to CPM through the Field Manager for a possible compliance project, outreach effort, etc.

  3. When preparing Form 5666, the Specialist should include information about the source of the referral and attach news clippings, correspondence from and minutes of discussions with informants, Include any information that is available about the size of the potential problem (class of employee, potential underpayment, etc.). If a referral is appropriate, the Specialist may (but is not required to) research IDRS, the internet, and other sources to determine the organization's EIN, name, address, etc. The Specialist may also use the internet to secure information that verifies an informant or news article's allegations, e.g. securing an audit report from the State Attorney General's Office. The referral package should be as complete as possible to provide the panel enough objective information to determine whether or not to recommend compliance action and to substantiate that the organization was selected for compliance action based on objective information.

  4. Upon receipt of a referral, CPM will:

    1. Complete Lines 1 through 4 of Form 13385, FSLG Referral Control Sheet.

    2. Log the referral into the referral tracking database.

    3. Prepare the referral for review by the panel by gathering information relating to Section 218 agreements, Form SS-8 Determinations, Customer Assistance Case Files, Compliance Check Case Files, etc.; IDRS transcripts such as AMDISA (to verify that there is no current examination), BMFOLI (current filing history), TXMOD or BMFOLT for each quarter of the year (tax modules), BMFOLZ (Past examination results), PMFOL (information returns - Forms W-2/1099 series) and any other IDRS prints that CPM believes will assist the panel.

    4. For future period referrals, the referral will be suspended until the third quarter following the end of the future tax period, which allows for a reasonable time for the taxpayer to file the return and the service to process it. The classification panel will review the referral within 90 days from the end of the suspension period.

  5. The referral will be evaluated for examination or other compliance potential by a panel within 90 days from the date CPM received the referral. The panel will:

    1. Review the referral and accompanying information.

    2. Make a recommendation regarding any further action.

    3. Complete Form 13385, recording the reason for recommending a particular type of action or disposition.

    4. Return the referral to CPM for further assignment or disposition.

  6. If the panel does not select the referral for compliance activity and recommends no further action, CPM will document the reason on Form 13385 and close the referral.

  7. If further action is recommended by the panel, CPM will establish a case and prepare a case file based on the type of action recommended (See IRM 4.90.5.4 and 4.90.5.5) and forward the case file along with the tracking sheet to the appropriate Field Manager. CPM will update the database to reflect the group to which the case is assigned and date the case was forwarded to the field.

  8. The Field Manager will review the file, complete Form 13385, line 8, and assign the referral to a Specialist.

    1. If a referral is surveyed in the field group, it will be returned to CPM for closure. CPM may return the referral to the panel for reconsideration.

    2. Once action on the referral is completed, the Specialist will close out the case using normal procedures based on the type of compliance action taken and close it to CPM. CPM Quality Review will pull Form 13385 and close the referral.

  9. In order to close a referral, CPM will:

    1. Verify that Form 13385 was completed and update it if necessary.

    2. Update the referral tracking database to show the referral is closed.

    3. File a copy of the source documents file along with Form 13385.

4.90.6.5  (08-28-2013)
Classification Procedures

  1. CPM has broad discretion to undertake coordination and to develop procedures to create an active, effective referral program and to provide follow-up on referrals. In general, CPM will do the following:

    1. If the panel determines that a referral has no examination or other compliance potential, then CPM will enter the reason for the rejection on the database and retain the referral and tracking sheet.

    2. If a referral with compliance activity potential cannot be immediately assigned because of workload considerations or because the referral covers a future period, the referral will be maintained in a compliance follow-up file in CPM.

    3. Referrals from other IRS functions, other than those involving fraud, may be closed during screening.

    4. Referrals from SB/SE or LB&I or other units outside of FSLG for collateral examinations will be expedited and will be fully coordinated with the Director, FSLG, prior to responding to the requesting party. CPM will also provide a response to an originating office when it appears the originating office needs feedback in order to complete its own compliance activities.

    5. Referrals that do not involve FSLG issues will be forwarded to the appropriate function. These referrals will be input into the referral database as a disposal of referral to the appropriate function.

4.90.6.6  (08-28-2013)
Controls, Tracking and Reports

  1. The FSLG referral recordkeeping system will allow management to track all referrals. This will document, in a uniform and systematic manner, when the referral arrived and its movement through the system, including, specifically:

    1. The source of the referral

    2. Where the evaluation of the utility of the item was made

    3. Who made the decision

    4. The rationale for the decision

    5. How the decision was implemented, and

    6. The current location of the referral

  2. Each referral must be retrievable for three years from the disposal date.

  3. CPM is responsible for all components of this system. CPM will:

    1. Maintain the Database to track the receipt and disposition of all referrals.

    2. Ensure that all decisions relating to case selection or non-selection (including the evaluation and disposition of all referrals and source documents, regardless of merit) are documented on Form 13385.

    3. Ensure that Form 13385 is completed accurately, in order to document that evaluation and assignment actions were initiated and completed timely.

    4. Retain all referrals, source documents (a copy of source document if examined; original source document will stay with examination case) and Form 13385. These are retained regardless of the outcome of the selection process. The retained referrals will be stored in a secure filing cabinet and will be retrievable by the name of the organization that is the subject of the referral.

4.90.6.7  (08-28-2013)
Referral Database

  1. The Referral Database contains the following data on each referral received and forwarded:

    1. Name and address of the source (entity/individual that provided the referral) or the name and office symbols of the employee that identified the issue(s) deemed appropriate for referral.

    2. Name, EIN and address of the subject of the referral.

    3. Date of receipt of the referral from an external source, or date of identification of issue(s) deemed by an IRS source to be appropriate for referral.

    4. AIMS Source Code to describe the root source of the referral.

    5. Date the referral was referred to another office.

4.90.6.8  (08-28-2013)
Determining Proper AIMS Source Code for Referral

  1. It is important to properly code each referral in order to document its origin. When a referral is the result of an action by the referring party in carrying out its responsibility, then use the AIMS Source Code for the referring party. The following guidance will assist in determining the proper source code for referrals:

  2. If the Director, FSLG or CPM Headquarters forwards the referral, then use:

    1. Source Code 72, Informant’s Report, if the referral was sent by the general public; or if a news/magazine article was forwarded by a member of the general public via cover letter with comments on the activities reported in the article

    2. Source Code 74, Media Lead, if a news/magazine article was forwarded by a member of the general public via cover letter without comments on the activities reported in the article

    3. Source Code 62, Headquarters Referral, if Form 5666/memorandum was prepared by Director, FSLG, or CPM as result of determination letter case or private letter ruling request

  3. If the referral comes from a Member of Congress, then use:

    1. Source Code 68, Congressional Referral, if a Member of Congress originates or initiates the referral (regardless of intermediary source, e.g., Headquarters)

    2. Source Code 74, Media Lead, if a news article is forwarded by a Member of Congress without comments on the activities reported in the article

    3. Source Code 68, Congressional Referral, if a news article is forwarded by a Member of Congress with comments on the activities reported in the article

  4. If the referral comes from The Executive Branch (the President, the Vice President, any employee of the executive offices of the President or Vice President, a Cabinet Secretary, the Commissioner of Social Security, the Director of National Drug Control Policy, the Director of Management and Budget, or the U.S. Trade Representative):

    1. IRC 7217 prohibits Executive Branch influence over taxpayer audits and other investigations, and requires the reporting of violations to the Treasury Inspector General for Tax Administration (TIGTA). Any employee receiving an information item originating from the White House or any Executive Branch office should immediately contact the local TIGTA office, and should also report the item to his or supervisor or the Director, Government Entities, for a determination as to the applicability of IRC 7217 and necessary action. See IRM 1.54.1.9.1(3)

    2. In addition to contacting TIGTA, employees, managers, and executives should elevate information about the occurrence of such a contact through the chain of command for informational purposes, but no action should be taken on the request.

    3. Source Code 80, Executive Branch Referral, should be used as the source code for receipt of the referral.

  5. If the referral comes from another federal agency, (e.g. Justice Department, Department of Labor), or State Attorney General or other state/local government agency as a result of the governmental agency carrying out its responsibility, then use the Source Code for the appropriate governmental agency.

  6. If the referral comes from Appeals, Communications & Liaison, Small Business/Self-Employed, Criminal Investigation, Wage & Investment, Large Business & International, and other TE/GE functions as a result of the functions carrying out their tax related responsibilities, then use the Source Code for the IRS function.

  7. For all other referrals, see Document 11308, AIMS Source Codes.

4.90.6.9  (08-28-2013)
Referral Involving Form 211 Application for Award for Original Information

  1. All Whistleblower Claims will follow the procedures outlined in IRM 4.90.6.3, IRM 4.90.6.4, IRM 4.90.6.5, and IRM 4.90.6.6.

  2. If the panel concurs that an examination is not warranted, the Form 11369, Confidential Evaluation Report on Claim for Award, will be completed by the SME and signed by the SME and the CPM manager. The Whistleblower Claim must be returned to:

    Internal Revenue Service
    Whistleblower Office Ogden
    1973 N. Rulon White Blvd.
    MS 4110
    Ogden UT 84404

  3. If the panel concurs that an examination is warranted, the SME in CPM will ensure that the examination file consists of the following information for the Field Specialist:

    1. Form 211, Application for Award for Original Information and Instructions

    2. Form 11369, Confidential Evaluation Report on Claim for Award and Instructions

    3. Evidence provided by the Whistleblower

    4. Tax return(s)

    5. IDRS prints

    6. Confidential envelope for case return to CPM

  4. When the Field Specialist has completed the examination, the administrative

    1. The Whistleblower claim file should be included in the exam case file in a sealed confidential envelope provided by CPM, and should contain the Forms 211 and 11369, instructions, and the evidence provided by the claimant.

    2. The administrative file should not contain any whistleblower information. It should only contain the tax returns, IDRS prints, and the IRPTRR spreadsheet that was provided by CPM.

  5. The SME will send the award claim file to the Whistleblower Office (WO) to remove the ICE Indicator. Once the ICE Indicator has been released by the WO at the Ogden Campus, the SME will close the administrative file to the GE Closing Unit.


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