4.90.12  Case Closing and Special Handling Procedures

Manual Transmittal

May 10, 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 12, Case Closing and Special Handling Procedures.

Material Changes

(1) 4.90.12.1 Overview has been revised.

(2) 4.90.12.2 The title has been changed from "AIMS Closing Documents Guidelines" to "Standard Time-frames for Closing Cases"

(3) 4.90.12.3 RCCMS reference deleted.

(4) 4.90.12.3.1 Form 5599 is necessary for unagreed cases going to Appeals or partial agreements. Substantial changes made.

(5) 4.90.12.3.3 Deletion requests routing changed.

(6) 4.90.12.4.1 Revised procedures for the completion and submission of Form 2363.

(7) 4.90.12.4.2 Substantially revised the list of noteworthy items on Form 3198-A.

(8) 4.90.12.4.3 Substantially revised procedures for processing Form 5666.

(9) 4.90.12.4.4 Title changed to "Expedited Processing of Large Deficiency or Overassessment Cases" . Procedures revised.

(10) 4.90.12.6 is renamed from "Procedures for Closing Cases on Copy of Return" to "Return Documents." Procedures are provided for examinations closing with original returns or documents in place of the original return.

(11) 4.90.12.8 Deleted reference to exhibit illustrating case file assembly. The exhibit has been deleted.

(12) 4.90.12.8.4 References to Case Selection Survey and Market Segment Checksheet are replaced with FSLG Case Data Form. Revised computer disk handling procedures.

(13) 4.90.12.8.5 Replaced the discussion of original returns with return, copy of return, or return document.

(14) 4.90.12.8.6 Deleted references to Form 5546 (Examination Return Charge Out) and Exhibit 4.90.12-3.

(15) 4.90.12.10 Expanded procedures for AIMS/RCCMS Group Processing Responsibilities

(16) 4.90.12.11 New introductory paragraph describing Delinquent Return and Substitute for Return procedures.

(17) 4.90.12.11.1 Processing Delinquent Employment Tax Returns is completely revised. Subsection 4.90.12.11.1.1 contains procedures for processing delinquent employment tax returns when no TC 150 is present. Subsection 4.90.12.11.1.2 contains procedures for processing delinquent employment tax returns in the event TC SFR was posted.

(18) 4.90.12.11.2 Substitute for Employment Tax Returns is completely revised.

(19) 4.90.12.11.3 Expanded procedures for delinquent Information Returns. Interim Memorandum 49 is incorporated here, in part.

(20) 4.90.12.12.1 Several editorial changes made in the section "Processing Check Payments"

(21) 4.90.12.12.2 Expanded procedures made in the section "Advanced Payments"

(22) 4.90.12.12.3 New section describing procedures for the EFTPS Option to pay deficiencies.

(23) 4.90.12.13 Several editorial changes made. Forwarding of Forms 2848 or 8821 has been reduced from ten to five workdays.

(24) 4.90.12.14 Several editorial changes made. Forms 12175 and 12180 should now be sent by secured E-mail instead of USPS.

(25) 4.90.12.16 Deleted "Case Selection Survey" because the form is obsolete. IRM 4.90.12.16 now describes IRC 3402(d) procedures. Interim Memorandum 47 is incorporated here.

(26) 4.90.12.17 Deleted "Market Segment Program Checksheet" because the form is obsolete. IRM 4.90.12.17 now describes FSLG Case Data Form.

(27) 4.90.12.18 Several editorial changes made. New comment made at 4.90.12.18 (4) suggests that paper and electronic documents contain essentially identical data.

(28) Exhibit 4.90.12-1 "Instructions for Completion of Form 5599" has been substantially revised.

(29) Exhibit 4.90.12-2 "Case File Assembly" has been deleted.

(30) Exhibit 4.90.12-3 "Documents Attached to the Return" has been deleted.

(31) Exhibit 4.90.12-4 "Form 13133, Expedite Processing Cycle" has been deleted.

(32) Exhibit 4.90.12-5 "Case Grading Criteria" is renumbered Exhibit 4.90.12-2.

(33) Exhibit 4.90.12-6 "FSLG Naming Convention for RCCMS" is renumbered Exhibit 4.90.12-3.

(34) Exhibit 4.90.12-7 "FSLG Examination Assembly (Paper or Electronic)" is renumbered Exhibit 4.90.12-4. Comment removed that required 100% paper file for cases with less than ninety days on the statute of limitations.

Effect on Other Documents

This section supersedes IRM 4.90.12, Case Closing and Special Handling Procedures, dated April 1, 2011.

Audience

This section contains instruction and guidance for all Federal, State and Local Governments employees when dealing with case closing procedures, including the disposition of delinquent/ substitute for returns.

Effective Date

(05-10-2013)

Paul Marmolejo,
Director, Federal State and Local Governments

4.90.12.1  (05-10-2013)
Overview

  1. This section contains specific guidelines for Federal, State and Local Governments (FSLG) personnel on how to properly close a completed examination of an FSLG entity. It includes procedures on preparing the required closing documents and properly assembling the case file.

  2. General case closing procedures and guidelines relating to Employment Tax returns of FSLG entities are provided on the following topics:

    1. Standard time-frames for closing cases

    2. Preparing various documents

    3. Processing related returns

    4. Return documents

    5. Delinquent return procedures

    6. Substitute for Return procedures

    7. Processing suspense cases

    8. Case file assembly

    9. Field Manager/Group responsibilities

    10. Remittance processing

    11. Audit Information Management System (AIMS) / Reporting Case Compliance Management System (RCCMS)

    12. Third Party Authorizations

    13. Third Party Contacts

4.90.12.2  (05-10-2013)
Standard Time-frames for Closing Cases

  1. Examinations should generally be closed within the following established time-frames. Any delays or extended periods of inactivity must be adequately documented in the case chronology.

    1. 10 calendar days for the Specialist to close agreed or no-change examinations, starting from the date the agreement is secured or the no-change determination was made.

    2. 20 calendar days for the Specialist to close unagreed examinations, starting from the earlier of the protest date or the 30 day letter default date.

    3. 10 calendar days for the Field Manager to initial and date the case activity record after receipt from the Specialist.

      Note:

      An exception applies to these time-frames for agreed cases with an unpaid amount of $50,000 or more. See IRM 4.90.12.4.4.

  2. The activity record should reflect the date the case is closed by the Specialist and the date the Field Manager approves the case for closure.

4.90.12.3  (05-10-2013)
Preparation of AIMS Closing Documents

  1. The Specialist is responsible for preparing the appropriate closing forms so information about the examination is correctly recorded on AIMS.

  2. On most examinations, Specialists will prepare the RCCMS Closing Records, but the following forms are required on some cases:

    1. Form 5599, TE/GE Examined Closing Record

    2. Form 5596, TE/GE Non-Examined Closings

4.90.12.3.1  (05-10-2013)
Form 5599, TE/GE Examined Closing Record

  1. Form 5599, TE/GE Examined Closing Record, is needed for unagreed cases going to Appeals or processing partial agreements.

  2. For unagreed cases going to Appeals, the Specialist will enter information on Form 5599 as indicated in Exhibit 4.90.12-1.

  3. For a partial agreement, the Specialist will prepare Form 5599 if the partial agreement is to be assessed prior to the full development of other examination issues. This step usually occurs when the assessment of agreed issues in a partial agreement case is processed before the full development and issuance of the 30-day letter that addresses the unagreed issues. Partial agreements can also occur in relation to secured delinquent returns that are being examined. See IRM 4.90.12.11.1.2. A partial assessment paper examination file will be created and sent to CPM Review when Form 5599 is used for a partial agreement. The Specialist will retain control of the examination and the RCCMS case controls. The paper examination file that is sent to CPM will include Form 895 (if necessary), Form 3198-A attached to the outside of the case file, Form 5599, the signed report, and any supporting documentation needed to explain the partial agreement. The Specialist completes only the following fields on Form 5599 in these partial agreement cases:

    1. Check the Partial box at the top of the form

    2. Complete TIN, MFT, Tax Period, Name Control, Name (P7-34)

    3. Tax Liability Adjustment (Item 12)

    4. Disposal Code (Item 13)

    5. Credit and Tax Computation Adjustments (Item 15)

    6. ARDI code

  4. For assistance in determining the correct codes to enter on Form 5599, Specialists should refer to Document 11308, Government Entities Computer Systems Codes. Specialists should refer to the most current version of the document to ensure the correct codes are used.

4.90.12.3.2  (04-01-2011)
Form 5596, TE/GE Non-Examined Closings

  1. Form 5596, TE/GE Non-Examined Closings, is the document used to close non-examined BMF or NMF account(s) (except surveyed claims) off of AIMS. Instructions for completing the form can be found in IRM Exhibit 4.5.1-18. See IRM 4.90.9 for survey instructions.

4.90.12.3.3  (05-10-2013)
Deletion of AIMS Accounts

  1. In cases where an AIMS account has been established in error and the filed return has not been received, the following procedures should be followed to close the case:

    1. Form 5596 should be completed with disposal code 33 entered at the top of the form and block series "10" in the space provided.

    2. Form 10904, Request for Record Deletion from AIMS, should be prepared by the Specialist and approved by the Field Manager. If the account is in Status 12 or higher, the Specialist should include a statement regarding taxpayer contact.

      Note:

      For NMF accounts, the required approval of Form 10904 also rests at the Field Manager level.

    3. Letter 1024-T should be issued if taxpayer contact has been made.

    4. Approved Forms 10904 should be forwarded to CPM at the time of approval or included on the left side of the closed examination case file with other forms that need to be forwarded to other functions.

    5. CPM will input the approved deletion request.

4.90.12.4  (05-10-2013)
Preparation of Other Documents at Case Closing

  1. The Specialist may be required to complete other documents to ensure proper processing of the case by the GE Closing Unit and FSLG CPM. These include:

    1. Form 2363, Master File Entity Change

    2. Form 3198-A, TE/GE Special Handling Notice

    3. Form 5666, TE/GE Referral Information Report

4.90.12.4.1  (05-10-2013)
Form 2363, Master File Entity Change

  1. Form 2363, Master File Entity Change, is used to establish or change accounts on the BMF. For instructions on completing Form 2363, Specialists should refer to IRM 4.4.11.

  2. Specialists conducting an examination of an FSLG entity should complete Form 2363 to reflect any actions taken as a result of the examination. Any errors identified on a Master File entity during the examination should also be corrected using Form 2363.

  3. Common changes requiring a change to the BMF include:

    1. Changes to name and address

    2. Additions or deletions of an entity's filing requirements

    3. Corrections to Employment Code

    Note:

    General guidance for name or address changes is offered in IRM 21.3.8.9.

  4. The completed form should be placed on the left inside of the paper case folder. It will be pulled by CPM, at which point the necessary changes will be input.

    Note:

    Form 2363 should be processed immediately during an examination in which IDRS research reflects there is no BMF filing requirement for the type of return that is being secured/submitted as a delinquent or substitute (e.g. Form 941 or Form 945). Send Form 2363 to CPM via e-mail.

  5. Indicate on Form 3198-A that Form 2363 needs processing or the date it was sent to be processed. Add remarks on RCCMS closing tabs comment section.

4.90.12.4.2  (05-10-2013)
Form 3198-A, TE/GE Special Handling Notice

  1. Form 3198-A should be enclosed in every RCCMS electronic file and attached to every closed paper examination file.

  2. Use Form 3198-A to communicate any instructions or special features of the case. The following list indicates just some of the items:

    1. Mandatory Review (check block and state nature)

    2. Cases closed on the basis of an entity's retained copy, BRTVU, RICS, TRDB, or Form 2275 See IRM 4.90.12.6.

    3. Send all communications per POA (check block)

    4. Unagreed Case (check block)

    5. Forward to Appeals (check block)

    6. Referral (check block)

    7. Closing Agreement (check block)

    8. Prepare/Issue Letter (check block and insert letter number)

    9. Third Party Contact Forms (check block)

    10. Informant Claim (check block)

    11. Suspense (check block; see IRM 4.90.12.7)

    12. Unagreed cases with less than 240 days on the statute of limitations

    13. Agreed and no-change cases with less than 180 days remaining on the statute of limitations

    14. Routing instructions for closures of Compliance Checks

    15. Entity Change Form 2363 prepared (check block)

    16. 6205 Interest Free Adjustment (check block; leave date field blank)

    17. Cases with all assessments under IRC 3509 ; annotate "ASEDR 5" in "Other Instructions" field

    18. Claim Case (check block)

      Note:

      If there is an "A-" freeze on any examined tax module, provide a note that amended returns have been addressed during the examination. See IRM 4.90.7 for further information.

    19. Over $50,000 agreed/unpaid (check block)( see Quick Assessment Procedures below)

    20. Other Instructions may include helpful comments to facilitate the closing process such as: "Forms 4669 Adjustments Allowed by Examination" or "Wage Statements Secured By Examiner" or "Assess Civil Penalty as Indicated on Form 8278 and Form 3645"

4.90.12.4.3  (05-10-2013)
Form 5666, Referral Information Report

  1. Form 5666 is used as an information report or recommending a future year examination. Instructions for completing Form 5666 are provided in IRM Exhibit 4.5.1-14.

  2. The Specialist should prepare Form 5666 in cases where a subsequent year examination is warranted due to certain activities or operations, disclosed during the current examination, that could jeopardize the future compliance of that entity.

  3. Form 5666 is also used to transmit information discovered during the examination relative to a nongovernmental entity to other operating units within the Service.

  4. The Specialist should attach supporting documentation that provides additional details about potential non-compliance, such as Form 4632-C, news clippings, correspondence from and minutes of discussions with informants, and include any information that is available about the size of the potential problem, etc. See IRM 4.90.6.3 for additional information.

    1. The "Referral" box under Special Features must be checked on Form 3198-A to alert the CPM reviewer to pull the documents from the case file and send them to the CPM referral coordinator for further action.

    2. If the referral is not associated with an established FSLG case, e-mail the referral package directly to the CPM referral coordinator after approval by the Field Manager.

4.90.12.4.4  (05-10-2013)
Expedited Processing of Large Deficiency or Overassessment Cases

  1. For purposes of this topic, the term "deficiency" refers to the sum of all deficiencies and penalties for any one taxpayer, for all periods in the case file, without any regard to any offsetting overassessment.

  2. Unpaid, agreed deficiency cases of $10,000 or more (but less than $50,000) must be processed within twenty-two calendar days of the date IRS receives a signed waiver. In the Expedite Processing section of Form 3198-A, check the "Other" block then specify "Unpaid, Agreed Deficiency over $10,000" .

  3. Unpaid, agreed deficiency cases of $50,000 or more are subject to quick assessment. These cases will be subject to manual assessment within twenty-two calendar days of the date IRS receives a signed waiver. In the Expedite Processing section of Form 3198-A, check the "Over $50,000 AGREED/UNPAID" block.

  4. Agreed overassessments of $10,000 or more must be processed within twenty-two calendar days of the date IRS receives a signed waiver. In the Expedite Processing section of Form 3198-A, check the "Other" block then specify "Overassessment over $10,000" .

  5. In order to meet the twenty-two day guideline, it is helpful that these categories of cases close from the group within three workdays.

4.90.12.5  (05-31-2009)
Procedures for Processing Related Returns

  1. Related cases generally should be closed simultaneously with the primary return.

  2. The Specialist may consider closing related cases separately, where issues are not interrelated, and separate closing(s) would avoid unnecessarily long delays in processing no-change or agreed cases.

  3. The Specialist should include copies of all materials necessary to document any adjustment proposed in related case file(s) in the primary case file.

4.90.12.6  (05-10-2013)
Return Documents

  1. All examinations must be closed with a return document.

  2. If there is an original return, then it is the return document. The Specialist must document in RCCMS that the case is closed with an original return. Select the tab "Closing General" , then select the "Closing With" screen, then select #1, "Original Return." Original returns must be closed in paper case files.

  3. If there is no original return, then a BRTVU print, if available, should be used to close an examination. If a BRTVU is not available, the Specialist should use a TRDBV print. If neither BRTVU nor TRDBV are available, (e.g. closing an examination based upon a substitute for return) the Specialist must prepare Form 2275 (Parts A and B only) with "In Lieu of Return" written across the top. Attach a BMFOLR. See IRM 4.5.3.5. Form 3198-A should identify the case file as being closed on the basis of an electronic print. The Specialist must document in RCCMS that the case is closed on an electronic print by selecting the tab "Closing General," selecting the "Closing with" screen, then selecting #3 "Electronic print" or #4 "Paperless Examined." #4 may be used when the case is fully electronic.

  4. The Specialist should verify tax payments and credits claimed on the return. An IDRS transcript should be secured when necessary to determine the true liability.

4.90.12.7  (05-10-2013)
Procedures for Processing Suspense Cases

  1. Case files requiring suspension of action will normally be held in the group until such time as action on the case can resume. Two examples include a request for technical advice, or a request to the Social Security Administration (SSA) for a formal interpretation of a Section 218 Agreement.

  2. The case should remain in Status Code 12 until no further issue development can be completed. Once no further issue development occurs, the AIMS/RCCMS status should be updated to Status Code 38. At the time the response is received and further issue development proceeds, the case should be placed back in Status Code 12.

  3. Prior to suspending the case, the group has responsibility for ensuring that the statute of limitations is protected for at least one year. Refer to IRM 4.90.10 and 4.23.14 for additional guidance.

  4. Upon closing the case, indicate on Form 3198-A a note to update to Status Code 55. Also include a comment to the same effect in the RCCMS closing dialog box.

4.90.12.8  (05-10-2013)
Case File Assembly

  1. Because further technical, administrative and procedural action on cases is sometimes required after a case is closed from the examining Specialist's inventory, it is important that the case be properly organized to assist Field Managers, reviewers, Appeals, processing employees and others who may subsequently become involved with the case.

  2. Adherence to this IRM section will provide a uniform presentation to the next level of review. Each form, report or document listed will not be required in every case. While this listing is not all-inclusive, it will cover most situations. Minor variances from the IRM may be necessary in unusual situations.

  3. The Specialist is responsible for properly assembling the case file and purging all unnecessary documents. Any important telephone discussions or telephone numbers should be detailed on Form 9984, Examining Officer's Activity Record. Once the files are properly assembled, they will be maintained in this manner throughout the closing process.

  4. Guidelines are provided on proper case file assembly for cases closed from the groups. The most commonly used forms and other documents are addressed in this section.

  5. The Specialist should adequately index all supporting documentation in the case files. The Specialist will use the FSLG RCCMS Naming Convention to allow anyone unfamiliar with the case to easily locate workpapers and other important documents in the file.

  6. The FSLG RCCMS Naming Convention is designed so that when files are sorted by name electronically, they will be listed in the standard case file assembly order.

4.90.12.8.1  (05-10-2013)
FSLG RCCMS Naming Convention

  1. The Specialist is responsible for adhering to the procedures for naming electronic documents within, or imported into, RCCMS. This will enable anyone viewing the RCCMS case to easily identify and locate case file documents.

  2. The FSLG RCCMS Naming Convention requires a combination of numbers to be used as prefixes to all file names. The specific prefix used is determined by the location of the document or workpaper in the case file assembly. The first number of the prefix is determined by whether the file would be located on the outside front, inside left, or inside right of a paper case file, using a "1" "2" or "3" respectively. Documents that are required for each quarter should include the tax period in the name.

  3. A second number is only needed for items that begin with the number 3, items assembled on the inside right of a case file. Documents that normally are placed loose on the inside right of a hard copy case file begin with the numbers 30, 31, and 32, followed by a period. Certain documents add a third number starting with 1, 2, or 3.

  4. Refer to the FSLG Naming Convention Spreadsheet exhibit for illustrations of how various types of electronic documents/workpaper files should be labeled or named when posted to the Office Documents folder in RCCMS. The list is not all-inclusive, but should address most situations.

4.90.12.8.2  (05-10-2013)
Case File Folders (Paper Cases)

  1. Generally, one folder will be used for all returns of a given type for each entity.

  2. The Specialist should include in the primary case file copies of all materials necessary to document any adjustment(s) proposed in related case file(s).

  3. In most cases brown folders will be used. Red folders are used on all cases with less than 240 days remaining on the statute of limitations.

  4. Large case files may require more than one folder or may be placed in expanding folders. All folders should be labeled with the entity’s name, EIN, type of return, quarter/period and/or year. Multiple folders should be numbered (1 of 4, 2 of 4, etc.).

4.90.12.8.3  (05-10-2013)
Forms Attached to Outside of Case Folder (Paper Cases)

  1. Forms and documents that assist in the processing and closing of the case should be attached to the outside of the case folder.

    1. Form 895, Notice of Statute Expiration

    2. Form 3198-A, TE/GE Special Handling Notice

4.90.12.8.4  (05-10-2013)
Forms Attached to Left Inside of Case Folder (Paper Cases)

  1. Reports and other information emanating from the examination, which must be forwarded to another function or operating unit, should be attached to the left inside of the case folder. This includes (in descending order):

    1. Form 2363, Master File Entity Change and supporting documentation

    2. Form 5666, TE/GE Referral Information Report and any attached supporting documentation

    3. Informant's information in secured envelope, including Form 211.

    4. FSLG Referral Control Sheet

    5. FSLG Case Data Form

    6. Computer disk, if applicable (multiple disks may be needed).

  2. Any computer disks used for the examination should be placed in an envelope or disk sleeve and stapled to the folder and properly encrypted. Specialists are to ensure that all computer disks are clearly labeled. Disks are only required for unagreed cases going to Appeals, or to store excess data files that cannot be placed in RCCMS due to space limitations. For Appeals cases, the Specialist should be sure to indicate in the activity record that Appeals contact the Specialist for the GERS password in order to access files on the disk.

4.90.12.8.5  (05-10-2013)
Forms and Other Documents Enclosed in the Case File (Paper Cases)

  1. The following forms and other documents are enclosed in the case file in descending order:

    1. Form 5599, TE/GE Examined Closing Record

    2. Form 4665, Report Transmittal

    3. Specialist's rebuttal to taxpayer protest

    4. Taxpayer’s protest, correspondence, a copy of the thirty day letter, a copy of Letter 569, and/or a copy of Letter 570

    5. Waiver and Acceptance Forms (e.g. 870, 2297, 2504, 2504-WC, 3363)

    6. Examination report forms and draft closing letters, including those requiring a signature.

    7. Form(s) 4670, Request for Relief from Payment of Income Tax Withholding, and Form(s) 4669 Statement of Payments Received, if applicable

    8. Return, copy of return, or return document

    9. Information return penalty case file

    10. Form 4318-A, Continuation Sheet for Form 4318, Examination Workpapers Index.

    11. Form 9984, Examining Officer’s Activity Record

    12. Supporting workpapers, indexed and numbered

    13. Prior examination reports and workpapers

    14. Miscellaneous documents; e.g. Special Agents’ Reports, Collateral Reports

4.90.12.8.6  (05-10-2013)
Documents Attached to the Return/Return Document (Paper Cases)

  1. The following form is stapled to the front:

    1. Form 3244-A, Payment Posting Voucher-Examination

  2. The following forms are stapled to the back , facing out:

    1. Form SS-10, Consent to Extend the Time to Assess Employment Taxes

    2. Form 2848, Power of Attorney and Declaration of Representative.

    3. Form 8821, Tax Information Authorization

    4. Amended returns or claims

    Note:

    If the amended return was received directly from the taxpayer during the examination, this should be noted on the Form 3198-A, TE/GE Special Handling Notice attached to the front of the return file.

4.90.12.9  (05-10-2013)
Field Manager Responsibilities

  1. All completed case files must be sent through the Field Manager for closing. If a case requires action by another group prior to final closing, the case should be forwarded via Form 3210, Document Transmittal, directly to that group after approval by the Field Manager and the appropriate status update actions are taken in RCCMS.

  2. The Field Manager will approve the case for closing, ensuring that the final case grade is accurate by completing line 32 of Form 5599 and the corresponding "Grade of Case" fields in RCCMS (i.e., Class, Grade, and Estate fields) on the "Codes" tab.

  3. The Field Manager should initial and date the bottom of Form 9984 to indicate his/her review has been completed.

  4. IRC 6751 requires the Field Manager to provide written approval of a Specialist's decision to assess certain penalties. The written documentation can be part of Form 9984. The following penalties do not require managerial approval:

    1. IRC Section 6651 (Failure to File or Failure to Pay)

    2. IRC Section 6654 (Failure to Pay Estimated Tax for Individuals)

    3. IRC Section 6655 (Failure to Pay Estimated for Corporations)

    4. Any other penalties automatically calculated through electronic means

4.90.12.10  (05-10-2013)
AIMS/RCCMS Group Processing Responsibilities

  1. At the time a case is closed, the group will query IDRS ( AMDISA command code) to ensure that each return being closed has been placed in Status 12, a full AIMS record has been established, and there are no freeze codes on any of the modules.

  2. Field Managers should refer to the FSLG RCCMS Case Closing Desk Guide for appropriate closing procedures, including completion of the "Codes" tab on RCCMS in the "Grades " , "Class" , and "Estate" fields .

  3. The MA should complete a cursory review, including all tabs on the RCCMS record. Once all fields have been validated as complete/accurate, the MA should process the closure to CPM on RCCMS.

  4. Form 3210 should be electronically signed. Include the originator's telephone number. The electronic file of Form 3210 will be sent via e-mail to CPM. One paper copy will be sent with the case. When the case is received in CPM, Form 3210 will be electronically signed and returned to the group via e-mail. When the acknowledgement copy of Form 3210 is received in the group, the previously maintained copy can be destroyed.

  5. The returns and related workpapers will be sent to CPM Review, based on management direction or local procedures. If directed by the Field Manager, the returns and related workpapers will be sent overnight. Otherwise, the returns and related workpapers will be sent by U.S. Mail or other shipping.

4.90.12.11  (05-10-2013)
Delinquent Returns and Substitute for Returns

  1. Employment tax non-filers can be addressed using either Delinquent Return or Substitute for Return (SFR) procedures. Specialists should generally use SFR procedures when conducting examinations and making assessments of non-filed employment tax returns, but may use Delinquent Return procedures when appropriate. However, once SFR procedures have been started, they cannot be changed. The return controlled with an SFR must be processed to final closure. Prior to establishing controls, ensure that the entity has a filing requirement for the type of return being established, e.g. if a Form 945 is being secured or established, use ENMOD to determine there is a filing requirement. If there is none, submit Form 2363 immediately to have the filing requirement added to the entity's account prior to establishing controls on RCCMS.

4.90.12.11.1  (05-10-2013)
Processing Delinquent Employment Tax Returns

  1. Specialists securing delinquent employment tax returns during an examination should refer to IRM 4.23.12 and IRM 4.5.3.16 for general processing instructions.

  2. Before processing a delinquent return, the Specialist should review an account transcript. Procedures for processing a delinquent return depend upon whether or not a TC 150 has posted.

4.90.12.11.1.1  (05-10-2013)
Processing Delinquent Employment Tax Returns (No TC 150)

  1. If no TC 150 has posted, then the Specialist will date stamp the delinquent return. If a date stamp is not available, the Specialist will write in the upper left side margin of the return: "RECEIVED" , the date received, and the Specialist's name and title. Also, the Specialist will write "DELINQUENT RETURN SECURED BY TE/GE" in red on the top margin of the original return. Leave room in the upper right corner so the Campus will be able to enter the DLN. Write in red on the bottom margin of the original delinquent return "TC 599- CC 96" .

  2. Attach a separate Form 3198-A, TE/GE Special Handling Notice, to each return being submitted to indicate if the delinquency penalty should or should not be assessed. Also attach a separate Form 13133, Expedite Processing Cycle, to the front of each return being submitted, noting the following items:

    1. Delinquent Return: Check the box indicating that it is a delinquent return.

    2. Contact Person: This will be the Examining Officer.

    3. If penalties are to be assessed, no notations in the BMF or IMF Penalty boxes are required.

    4. If penalties are not to be assesses, enter an "X" in the BMF or IMF Penalty box for the appropriate penalties not assessed.

    5. If the normal ASED has expired or is within three months of expiration, enter an "X" in the box to the left of "W" Bypass Submissions Processing Statute List.

    6. To prevent tax deposits, withholding, or payments from refunding when the TC 150 posts, place an "X" in the BMF or IMF box to the left of "Hold Credits on Module-Generates TC 570" .

  3. The Specialist will prepare Form 4844, Request for Terminal Action, to close collection controls and suppress notices requesting the return.

    1. Write "TC 599 CC 96" in the "Remarks" section of the form. Explain why the action is requested.

    2. Digitally sign Form 4844 and forward to CPM for input.

  4. If a payment is secured, prepare a Form 3244-A, Payment Posting Voucher-Examination, for each delinquent return. Post the payment as TC 610, Remittance with Return. Attach the copy of Form 3244-A to the delinquent return. The original Form 3244-A is sent with the payment for processing.

  5. Submit original delinquent return packages to the Campus indicated below. The following forms are required:

    1. Form 13133 Expedite Processing Cycle

    2. A current BMFOLT or IMFOLT showing no return posted

    3. Form 4844 Request for Terminal Action

    4. Form 3198-A Special Handling Notice

    5. Form 3244-A Payment Posting Voucher, if necessary

    6. Form 3210 Document Transmittal

    Send returns secured without remittance to: Internal Revenue Service
    1973 North Rulon White Blvd.
    Mail Stop 6052
    Ogden, UT 84404
    Send returns secured with remittance to: Internal Revenue Service
    1973 North Rulon White Blvd.
    Mail Stop 1999
    Ogden, UT 84404
    Send excise tax returns to: Internal Revenue Service
    201 West Second Street
    Mail Stop 281
    Covington, KY 41019
    Send foreign tax returns to: Internal Revenue Service
    Ogden Service Center
    P.O. Box 409101
    Ogden, UT 84409
  6. If the delinquent return will be part of the examination, then the Specialist will make a copy of the return for the case file and establish the AIMS record via RCCMS by completing the following steps:

    1. In the "Validate for:" field, select "Establish" and make sure there is a check mark in the "Update AIMS" box.

    2. Update the following fields:
      --"Return Received" date under General tab
      --"Statute Date" under General tab
      --"Source Code" to "44 Delinquent Return" under Codes tab
      --"Push Code" to 020 Delinquent Return under Codes tab
      --"Reason for Request" enter "Delinquent Return Secured by FSLG"

    3. "Save and Close"

    4. Highlight the activity in the List View pane. From Actions menu, select "Request Establishment" and synchronize. The AIMS record will establish once the Field Manager approves the action.


  7. The examination may not be closed from the group until the TC 150 posts and a full AIMS record is established.

4.90.12.11.1.2  (05-10-2013)
Processing Delinquent Employment Tax Returns After TC 150 SFR Posts

  1. When delinquent returns are secured and the SFR TC 150 has already posted, the examiner will need to determine the accuracy of the submitted returns by auditing them. Follow the procedures in IRM 4.90.12.11.2 if AIMS records are not yet established.

  2. If the Specialist accepts the delinquent return without making additional adjustments, prepare Form 2504, Form 4666, and Form 4668 to reflect the amounts shown on the delinquent return. Taxpayer signature is not necessary because it matches the amounts reflected on the signed delinquent return. Note: On Form 3198-A indicate "Case is agreed based on taxpayer signature on delinquent return." Prepare Form 2275 with BMFOLR as the return document and attach a copy of the signed delinquent return. The examination will be closed using normal closing procedures. See IRM 4.23.12.3.

  3. If the Specialist does not accept the delinquent return without making additional adjustments, then it must be processed as a partial assessment unless it indicates zero tax liability. In this situation, partial assessment procedures are not required. If partial assessment procedures are not required, skip to paragraph (4) below.

    1. Prepare reports matching the submitted delinquent returns and send them along with copies of the delinquent returns, Form(s) 5599, and Form(s) 3198-A to the Field Manager for processing of the partial assessment. The Field Manager will forward the partial assessment package through CPM to the GE Closing Unit.

    2. Complete partial assessment in RCCMS.

    3. Once the corrected figures are determined, prepare a report for any adjustments not reported on the delinquent returns. The case will then be processed using regular agreed and unagreed procedures depending on whether or not the taxpayer signs the report.

    4. Prepare Form 3198-A. In the Other Instructions section, enter "SFR TC 150 Posted - Process Delinquent Return(s) as Final Closures."

  4. If the taxpayer submits a delinquent return to the Specialist, follow the procedures in IRM 4.23.12.3.2. The secured return will be incorporated into the final audit report. Also, even though the delinquent return is not being processed, the receipt of a valid return does start the running of the statute of limitations. See IRM 4.23.12.3.3. Follow the appropriate procedures below depending on whether or not the returns are correct or if they need to be adjusted.

  5. Master File must be updated to show a delinquent return was secured after an SFR TC 150 was posted. Form 3177 must be completed as follows:

    1. Enter an "X" in the box marked "Other" at the bottom of the form.

    2. Enter "TC 971 AC 013 Return Received Date MM/DD/YYYY" on the line next to the "Other" box.

    3. Forward Form 3177 to the CPM IDRS Analyst via encrypted E-mail.

4.90.12.11.2  (05-10-2013)
Substitute for Employment Tax Returns

  1. FSLG Specialists generally use SFR procedures when conducting examinations and making assessments of non-filed employment tax returns. Specialists establishing controls using SFR procedures may refer to IRM 4.23.12 and IRM 4.5.3.16.6 for general instructions.

  2. Before establishing an SFR, the Specialist should conduct IDRS research to ensure no return has posted to the Master File module. Research and print a current INOLES, AMDISA, and BMFOLI/IMFOLI for each non-filed return to determine if a TC 150 is present. If TC 150 is present, SFR procedures will not be used. Establish an AIMS record and complete the examination using regular examination procedures.

  3. If there is no TC 150 present, request establishment of the return period(s) for AIMS on RCCMS.

    1. In the "Validate for" field, select "Establish" and make sure to place a check mark in the "Update AIMS" box.

    2. Complete all fields in RED with an asterisk. The following is specific information for these fields:
      "Source Code" to "25- Substitute for Return" under Codes tab
      "Alpha Day" to "EE No Return Filed" under Codes tab
      "Push Code" to "036 Substitute for Return (Computer Generated TC 150)" under Codes tab
      "Reason for Request" enter "Exam-SFR"
      "Save and Close"
      Highlight the activity in the List View pane. From Actions menu, select "Request Establishment" and synchronize.

  4. Conduct the examination, determining the proper amount of wages, withholding, and taxes. Prepare the reports and complete the examination using normal closing procedures for either agreed or unagreed cases.

  5. A current AMDISA print should be included in the Office Documents folder to show the AIMS record is fully established. Prepare Form 2275 with BMFOLR as the return document.

  6. If the taxpayer submits a delinquent return, follow the procedures in IRM 4.90.12.11.1.2 to incorporate the delinquent return into the final audit report. Even though the delinquent return is not being processed, the receipt of a valid return does start the running of the statute of limitations. See IRM 4.23.12.3.3.

  7. The Specialist should consider fraud potential, in consultation with the Field Manager and the FSLG Fraud Coordinator.

4.90.12.11.3  (05-10-2013)
Delinquent Information Return Procedures

  1. During employment tax examinations, Specialists frequently identify information returns that were not furnished or filed. This subsection provides various procedures to be followed .

4.90.12.11.3.1  (05-10-2013)
Delinquent Forms 1099 Identified in Examinations

  1. When conducting an examination, if the Specialist determines that the taxpayer failed to file required Forms 1099, the Specialist should secure the delinquent Forms 1099. The Specialist should require the payer to furnish the delinquent returns to payees and file them with the Specialist. In the alternative, the taxpayer should submit substantiation that the returns have been filed electronically through the Filing Information Returns Electronically (FIRE) system. If a payer refuses to file the delinquent returns, information return penalties should be considered using the rates for intentional disregard.

  2. The payer should be given a reasonable time, e.g. 30 days, to prepare the delinquent information returns, furnish them to the payees, and file the information returns with the Specialist or through the FIRE system.

  3. Specialists securing delinquent paper Forms 1099 should refer to IRM 4.23.8.10.4 for detailed processing instructions. The delinquent Forms 1099 should be sent to the address identified in IRM 20.1.7.6 for "BMF" (other than Large Business and International):
    Internal Revenue Service-Stop 31
    201 W. Rivercenter Blvd.
    Covington, KY 41011

  4. If the taxpayer files the delinquent returns electronically through the FIRE system, the Specialist should secure substantiation of the transmission to include in the workpapers. The FIRE system sends an e-mail to the filer that contains the FILE STATUS and "Count of Payees" included in the file. A FILE STATUS of either "Good, Not Released" or "Good, Released" indicates that the file is, or will be, released for mainline processing. Files uploaded to FIRE are held for ten days to afford the taxpayer an opportunity to correct them, if necessary. A copy of this e-mail verification may serve as sufficient substantiation to be included in the workpapers.

  5. Specialists should attach copies of secured delinquent paper returns to the workpapers. Scanned or electronic copies should be named "34.1005.1096 & 1099. DELINQ. YYYY" (where "YYYY" represents the year of the returns submitted.

  6. Specialists should prepare Forms 5666 for consideration by SB/SE when delinquent Forms 1099 have high tax potential for income tax underreporting.

4.90.12.11.3.2  (05-10-2013)
Delinquent Forms W-2/W-2c Secured by Specialist During Examination

  1. Specialists securing delinquent paper Forms W-2, W-3, W-2c, or W-3c should refer to IRM 4.23.8.10 and 4.23.10.14 for processing instructions.

  2. If the taxpayer files the delinquent Forms W-2, W-3, W-2c, or W-3c electronically through the Social Security Administration Electronic Wage Reporting (EWR) system, then the Specialist should secure documentation from the taxpayer verifying the transmission. After submitting the file, the taxpayer can print the "Confirmation Receipt-Your File was Received" page and submit this to the Specialist as documentation of the transmission. The confirmation receipt includes the Wage File Identifier (WFID) and should be included in the workpapers as sufficient filing substantiation.

  3. Specialists should prepare Forms 5666 for consideration by SB/SE when delinquent Forms W-2 have high tax potential for income tax underreporting.

4.90.12.11.3.3  (05-10-2013)
Delinquent Forms W-2/W-2c Not Secured by Specialist

  1. If Forms W-2, W-3, W-2c, or W-3c are not obtained from the employer, the Specialist will notify the employer that the returns must be filed with the GE Closing Unit at the address on Form 4668 by the due date prescribed, or a civil penalty may apply. If the employer chooses to file the delinquent forms electronically through the EWR system, then they should send a copy of the Confirmation receipt to the GE Closing Unit at the address on Form 4668 to avoid any possible information return penalty.

  2. If the taxpayer still refuses to file the delinquent forms after the Failure to File and Failure to Furnish penalties were determined to be applicable, consider developing the penalty in case of intentional disregard under IRC 6721(e) and IRC6722(e). The taxpayer's appeal rights are post-assessment. The taxpayer will not be able to appeal the penalties until Forms W-2, W-3, W-2c, or W-3c have been filed.

  3. The Specialist should attach a list of employees who should receive Forms W-2 or W-2c to Form 4668. The list should provide :

    1. Worker's name

    2. SSN

    3. Amount of adjustment to total compensation, social security wages, and Medicare wages

    4. Related employment tax adjustments

    If the case is fully electronic, the file should be named "31.F4668.EE LIST" so that it is readily identified by CPM and the GE Closing Unit.

  4. The GE Closing Unit will create a tickler file containing:

    1. Copy of Form 4668 for each year examined

    2. List of employees who did not receive Forms W-2 or W-2c

    3. Form 3198-A from the case file

    If an employer fails to file the required Forms W-2, W-2c, W-3, or W-3c with the GE Closing Unit by the required due date, the GE Closing Unit will return the tickler file flagged as a "Penalty Case Referral" to CPM.

  5. CPM will address the Civil Penalty case files associated with delinquent Forms W-2, W-2c, W-3, or W-3c not secured during FSLG examinations.

4.90.12.11.3.4  (05-10-2013)
Delinquent Forms W-2/W-2c Secured by Specialist after an Examination is Completed

  1. If delinquent Forms W-2, W-2c, W-3, or W-3c identified on Form 4668 are provided to the Specialist after the case is closed to CPM, it is the responsibility of the Specialist to forward copies of these items (whether in paper format or electronic) in order to prevent information return penalties from being processed in the year following the calendar year during which the examination concluded.

  2. Paper copies should be mailed to the GE Closing Unit:
    Internal Revenue Service
    300 East 8th Street
    MS 4097 AUS
    Austin, TX 78701

  3. Electronic files or validation of e-filing through the Social Security Administration Electronic Wage Reporting (EWR) system should be E-mailed to the GE Closing Unit .

4.90.12.11.3.5  (05-10-2013)
Procedures for Failure to File Form W-2 (Unagreed Case)

  1. When the Specialist recommends assessment of penalties for failure to file and failure to furnish Form W-2 involving reclassification of workers to employee status and the case is unagreed, the appropriate Information Return Penalty package will be prepared. When neither Form 1099 nor Form W-2 was filed, follow the procedures in IRM 4.23.8.10.3.

4.90.12.12  (05-10-2013)
Remittance Processing Procedures

  1. The following procedures should be followed for processing payments.

4.90.12.12.1  (05-10-2013)
Processing Check Payments

  1. Upon receipt of a payment, the Specialist should prepare Form 3244-A. Complete a separate Form 3244-A for each tax year and class of tax involved. See Exhibit 4.4.24-2 Preparation of Form 3244-A for detailed instructions.

  2. Checks should be made payable to "United States Treasury" . If the payee section is blank or illegible, it must be over-stamped "United States Treasury" .

  3. The Specialist will transmit the payment(s) and related Form(s) 3244-A to Ogden via Form 3210 within 24 hours. All payments must be double-wrapped (with the payment placed in a security envelope inside of the overnight mail envelope) and marked or delivered via overnight traceable method. (A receipted copy of Form 3244-A may be used in lieu of Form 3210 only for payments which are hand-carried to a local remittance processor. This occurrence is not common.)

  4. Form 3210 should be prepared in triplicate. Two copies should accompany a payment being sent to the processing center. If the payment applies to more than one tax period, the breakdown should be on Form 3210. The payment should be stapled to the front of Form 3244-A, and sent with Form 3210 by overnight mail.

  5. The mail service tracking number should be included on Form 3210. Form 3210 should also include taxpayer name, TIN, tax return form number, payment amount, and check number. Copies of all forms should be retained in the case file. Electronic copies may be imported to RCCMS.

  6. If a remittance must be held overnight, it must be stored securely in a locked container.

  7. The sender must establish a control to ensure delivery of tax receipts. The control must include amounts of taxpayer receipts by TIN, correlated to the package tracer information.

  8. The remittance package will consist of the payment(s), Form(s) 3244-A, and Form 3210. Send the package to the Ogden address shown below.

  9. Copies of Form 3244-A are not required to be attached to the return document in a paper case file as long as electronic copies are in the RCCMS file. However, if a paper case is going to Appeals, attach Form 3244-A to the return document.

  10. To comply with the concept "segregation of duties" copies of Form 3210, 3244-A, and the checks should be faxed (or scanned/e-mail) to the employee's manager. The manager will approve the copies and alert the employee to transmit the originals to Ogden. Maintain a log at the managerial level. The Specialist should maintain a separate log of Forms 3210.

  11. Submission processing centers must return acknowledgement copies of transmittals to originators within five workdays. The Specialist must follow up with the processing center within ten workdays if payment packages have not been acknowledged.

4.90.12.12.2  (05-10-2013)
Advanced Payments

  1. Payments of less than $100,000 secured as "Advance Payment on Deficiency" (TC 640) - secured as part of an audit should be sent (overnight delivery) with Form 3244-A via Form 3210 to:

      Internal Revenue Service
    1973 North Rulon White Blvd.
    Receipt & Control Operations Manager
    Mail Stop: 1999
    Ogden UT 84404

  2. Payments of $100,000 and more secured as "Advance Payment on Deficiency" (TC 640) - secured as part of an audit require additional steps. E-mail a copy of Form 3210 to &CTR ODN Ogden Tellers. The payment should be sent overnight with Form 3244-A via Form 3210 to:

      Internal Revenue Service
    1973 North Rulon White Blvd.
    Receipt & Control Operations Manager
    Mail Stop: 2003
    Ogden, UT 84404

4.90.12.12.3  (05-10-2013)
EFTPS Option

  1. Taxpayers have the option to pay deficiencies using EFTPS (Electronic Federal Tax Payment System). Although not required, EFTPS streamlines payment processing.

  2. Payments will post to IDRS within days if the taxpayer uses EFTPS. Verify the payments have posted to the proper periods on IDRS. Before closing the case from the group, document Form 9984 that EFTPS payments posted properly.

4.90.12.13  (05-10-2013)
Third-Party Authorization/Power of Attorney

  1. Accountants, attorneys, enrolled agents or other representatives from whom a taxpayer has requested assistance on tax problems, may submit inquiries to the Internal Revenue Service. The third parties expect a reply to these inquiries so the problem can be explained to the taxpayer. To authorize this third-party reply, the representative may submit a Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization .

  2. A Specialist should forward the completed form to the appropriate Centralized Authorization File (CAF) unit within five workdays of receipt.

    1. The Specialist should annotate the form with his/her name, telephone number, function, and date.

    2. Completed Forms 2848 and 8821 can be faxed or mailed to the CAF unit. The mailing addresses and fax numbers are provided in the instructions for either form.

    3. The case chronology record should be annotated to indicate that the form was forwarded to the CAF unit.

    4. A copy of Form 2848 or 8821 should be attached to each return, with a notation "faxed to CAF unit" and the date it was faxed.

  3. Additional information about third party authorization/power of attorney can be found in IRM 4.23.3.8 and IRM 21.3.7.

4.90.12.14  (04-01-2011)
Third Party Contacts

  1. In general, Specialists will receive information directly from the taxpayer under examination; contacts with third parties are made when the Specialist is unable to obtain the information from the taxpayer or when it is necessary to verify the information provided by the taxpayer. The provisions of IRC 6103(k)(6) and corresponding regulations apply to all third party contacts.

  2. In addition, for third party contacts made for the purpose of collecting or determining a tax liability, IRC 7602(c) requires the IRS to:

    1. Provide advance notice to the taxpayer that contacts may be made

    2. Periodically provide a list of all contacts to the taxpayer

    3. Provide a list of contacts to the taxpayer upon request

  3. Before contacting third parties for any information, Specialists will issue the taxpayer Publication 1 and document the case file.

  4. See IRM 4.10.1.6.12for definitions and additional information.

4.90.12.14.1  (05-10-2013)
Recording Third Party Contacts

  1. When a third party contact is made, the employee should complete Form 12175, Third Party Contact Report.

    1. See IRM 4.10.1.6.12.4.3 for specific requirements regarding reprisal determinations.

    2. The employee who makes a third party contact is responsible for complying with these provisions regardless of which function has control of the case.

  2. The following information should be included on Form 12175:

    1. Taxpayer TIN

    2. Name control

    3. Identification (badge) number of the employee making the contact

    4. Master File tax codes and tax periods for all periods associated with the contact (An AIMS MFT code must be used. MFT 99 will not work for this purpose.)

    5. Date of the contact

    6. Name of party contacted, if known. If unknown, use a descriptive term such as neighbor, business associate, etc. DO NOT include the address or telephone number of the third party.

  3. When Form 12175 is completed:

    1. Send the form to the FSLG Third Party Contact Coordinator daily or as soon as possible via secured E-mail.

    2. Place a copy in the RCCMS case file

    3. Document the activity record to show the action was taken

4.90.12.14.2  (05-10-2013)
Authorized Third Party Contacts

  1. When a taxpayer authorizes third party contacts, complete Form 12180 and send to the FSLG Third Party Contact Coordinator via secured E-mail.

4.90.12.15  (05-10-2013)
Specialist Referral System

  1. For returns outside the Specialist's area of expertise, examiners should verify filing and consider managerial involvement to determine audit potential. If audit potential exists, examiners should ensure these issues are examined by a Specialist or with Specialist assistance. For support external to FSLG, the Specialist Referral System is required. It is found at https ://srs.web.irs.gov/.

  2. The identification of issues outside FSLG jurisdiction and request for assistance should be made as early in the examination as possible. The Field Manager’s first contact with a support group to obtain a staffing commitment is through use of the Specialist Referral System. This request should be forwarded to the appropriate area at least 60 days prior to the start of the support examination. Support Areas will normally respond to the request directly to the primary group within 15 calendar days of receipt.

4.90.12.15.1  (05-10-2013)
Referrals to Employee Plans

  1. As part of a package audit, the Specialist must determine whether or not an organization has a 403(b), 457, or Social Security Alternative Plan with any potential compliance problem that warrants a referral to Employee Plans. Employee Plans developed Form 4632-C to assist in FSLG Specialists making this determination. If a referral is indicated or if the Specialist has a question about a pension issue, then the Specialist should contact the EP Area 403(b)/457 Coordinator to discuss the potential issue(s).

    1. If the EP Area 403(b)/457 Coordinator recommends a concurrent examination, the Specialist should complete a request for an EP Specialist using the Specialist Referral System and provide a copy of the Form 4632-C if requested. The case should not be closed until a response is received.

    2. If the EP Area 403(b)/457 Coordinator believes that a concurrent examination is not necessary but that future compliance action may be appropriate, then the Specialist should complete Form 5666 and attach Form 4632-C, which will be included in the closed examination case file. The 403(b)/457 Coordinator's recommendation should be documented in the case file and a copy of Form 4632-C may be used as a workpaper.

    3. If the EP Area 403(b)/457 Coordinator believes there is no, or a de minimis, compliance issue, then the Specialist should document the 403(b)/457 Coordinator's recommendation in the case file. Form 4632-C may be used as a workpaper.

  2. If a referral is not warranted, then completion of Form 4632-C is not mandatory. However, Form 4632-C asks the basic questions necessary to determine whether or not a referral is warranted. A completed Form 4632-C provides documentation that the Specialist asked the appropriate questions. Therefore, Form 4632-C can serve as an excellent workpaper related to this issue.

4.90.12.16  (05-10-2013)
IRC 3402 (d)

  1. To properly assess both income taxes under IRC 3402 or backup withholding under IRC 3406, together with any applicable penalties and interest, examiners will follow a modified Partial Assessment procedure when penalties are to be assessed. The procedures described below supplement IRM 4.23.10.16.2.

  2. IRC 3402(d) does not apply to the portion of federal income tax computed using IRC 3509 rates. If only IRC 3509 rates are used, line 12 of Form 4668 "Maximum tax available for abatement under IRC 3402(d)" should contain the word "NONE."

4.90.12.16.1  (05-10-2013)
No Penalties Proposed

  1. The Partial Assessment procedures are not used if penalties are not proposed. The examiner will compute the tax due on Form 4668 or Form 4668-B, based on the net adjustment using amounts from valid Forms 4669. The amount on line 12 of Form 4668 or line 20 of Form 4668-B will reflect the remaining amount of tax available for abatement after the IRC 3402(d) credit has been allowed during the examination. Forms 4666 and 2504 will also show this net figure. The assessment information and the credits and tax adjustments section of the RCCMS closing record will also reflect the net adjustments using amounts from the valid Forms 4669.

4.90.12.16.2  (05-10-2013)
Penalties Proposed

  1. The modified Partial Assessment process must be used if penalties are to be assessed. This is a two-step process which ensures that the gross amount of tax, penalties, and interest are computed and assessed. The IRC 3402(d) credit is allowed only against this gross amount. The two-step process results in the generation of an initial billing notice for the gross amounts shown on Form 2504. The taxpayer will subsequently receive a second notice containing the abatements allowed in the examination upon final processing of Forms 4669 during the closing process. The examiner should discuss the two-step process with the taxpayer using the statement included on Form 4666. This should alleviate taxpayer concerns that Forms 4669 were not properly processed upon receipt of the first notice. See IRM 4.23.10.16.3.

    1. The first step is to create a partial closing record to assess full tax and penalties as reflected on Form 2504 (and/or Form 2504-WC if IRC 3509 rates are not used). In RCCMS, create a Closing Record for the Partial Assessment, following the procedures in the RCCMS Case Closing Guide. On the Closing Record for the Partial Assessment, make sure that the "Partial" box is checked. On the Closing Record, complete just the fields that are necessary for the Partial Assessment: ARDI code, disposal code, assessment information, and credit/tax adjustments. All examination adjustments, including any other employment tax issues other than the IRC 3402(d) items (fringe benefits, IRC 3509, penalties, etc.), are to be included on the Partial Assessment Closing Record. Enter "TC 308" (or "TC 300" if not interest free) for the gross tax amount. Enter the appropriate transaction code for the assessment of penalties based on the gross tax amount. Enter applicable reference fields for all adjustments of social security/Medicare wages and FICA/income tax/backup withholding taxes reflected on Forms 2504 and 2504-WC for the return.

    2. The second step is to create a "full" closing record. The IRC 3402(d) credit and all closing record items will be entered on this "full" closing record. The "Partial" box will not be checked. Enter ARDI, Disposal Code, Examiner's Time, Technique Code, and Specialist's Name. The adjustment on the "full" closing record will reflect only amounts related to the IRC 3402(d) credit-allowed portion. For the transaction code, enter the amount of tax credit allowed based on valid Forms 4669 as a "309" (or "301" if not interest free) and the corresponding reduction in the income tax withholding or backup withholding in the reference number fields. Other sections to complete include related return information, principal issue codes, and employment tax/GE (under additional data).

    3. Specialists should follow the instructions provided in IRM 4.23.10.16.3 to prepare Forms 4666, 4668, and 2504 when IRC 3402(d) applies.

4.90.12.17  (05-10-2013)
FSLG Case Data Form

  1. CPM collects data from the FSLG Case Data Form (FCD). Closed case data will be analyzed in order to determine how productive the case selection criteria are. The same form will follow the case throughout its life. Both CPM and the Specialist are responsible for completing various entries.

  2. The FCD will be completed for Examinations, Compliance Checks, and Information Return Examinations.

  3. The electronic FCD is included within the RCCMS case file.

4.90.12.18  (05-10-2013)
Transition from Paper Files to Electronic Files

  1. The official examination file is modified to allow for full use of the electronic case records within RCCMS. Efficiency of examination case processing improves because duplicate work is minimized. Most closed examinations will no longer require duplicate paper files. There are two exceptions to this rule, in which both paper and electronic must be submitted:

    1. Cases closing to Appeals

    2. Cases that contain certain documents that cannot be forwarded electronically

    See Exhibit 4.90.12-4 FSLG Examination Assembly (Paper or Electronic).

  2. The backup computer disk described in IRM 4.90.12.8 is no longer required, except when the examination is closing to Appeals, or the case has excess electronic files pertinent to the examination that cannot be stored within RCCMS.

  3. Specialists should continue to make comments on RCCMS closing screens indicating whether a paper file will follow the electronic closure.

  4. Specialists should ensure that paper and electronic documents (e.g. Form 3198-A ) contain essentially identical data.

Exhibit 4.90.12-1 
Instructions for Completion of Form 5599

Reflected below are explanations for the line items on the Form 5599 that should be completed by the Specialist, the Field Manager, CPM, or the GE Closing Unit. Although these explanations relate to Form 5599, several of them apply to RCCMS tabs.

TIN (P7-18, Form 5599) (Completed by Specialist) The Taxpayer Identification Number (TIN), i.e., EIN or SSN, will be included on the audit label or must be entered in the left-most position.

MFT (P21-22, Form 5599) (Completed by Specialist) The Master File Tax Code (MFT) or Non-Master File Tax Code (NMFT) must be entered. Refer to Document 11308, Government Entities Computer Systems Codes, for a complete listing of MFTs.

Tax Period (P24-29, Form 5599) (Completed by Specialist) The correct tax period must be entered in YYYYMM format. For Forms 11C and 730, the beginning of the tax period must be entered.

Name Control/Check Digit (P31-34, Form 5599) (Completed by Specialist)
The name control consists of the first four characters of the name, the last name of an individual, or the first partner for partnership returns. No spaces are used except at the end of the name control. If the last name is less than four letters, the remaining positions will be blank.
A check digit is the two alpha characters printed on the examination label that follow the tax period on the first line. If a check digit or name control does not appear on the first print line of the examination label, underline the name control on line two. If the check digit was used to establish the account, the check digit must be used at closing. Enter the check digit in positions 33 and 34.

Name (Item C, Form 5599) (Completed by Specialist)
The name must appear completely and legibly. When entering the name of an individual, enter the last name first, followed by a comma, then the first name and middle initial, if any.

Note:

The total number of characters in a taxpayer name cannot exceed thirty-five. If it does, edit the name to reduce the length.

Penalty Reason Code (Item 02, Form 5599) (Completed by Specialist)
A penalty reason code must be input when penalties are abated. See Exhibit 4.5.2-2.

Note:

A reason code can also be input (but is not required) when a penalty is considered but not asserted, and when a penalty is considered for abatement, but not abated.

Agreement Date (Item 08, Form 5599) (Completed by GE Closing Unit) The agreement date is the date the agreement from the taxpayer was received in the IRS office. This should be a date stamp or a handwritten date initialed by the person receiving the document.

Interest Computation Date (Item 11, Form 5599) (Completed by GE Closing Unit)

Tax Liability Adjustment (Item 12, Form 5599) (Completed by Specialist)
Transaction code (TC) identified as "Code" on Form 5599. The "Code" must be three digits. The increase in tax dollars and decrease in tax dollars may be up to 11 digits. The adjustment penalty, penalties, and interest may also be up to 11 digits.

  a. Data in the Increase or Decrease Tax Dollars, Penalties, and Interest is dependent on the DC used. For DC’s 02, 04-08, 11,13,14,16,18, and 19 these fields must be left blank.
  b. For DC’s 01,15, and 17 a TC 300 should be entered in Tax Liability Adjustment section under Code, and a zero in the Increase in Tax Dollars.
  c. DC’s 03, 09, 10, and 12, may or may not contain an entry.
  d. DC 34 must contain an entry (not zero) in the Tax Liability Adjustment decrease in Tax Dollars, unless an amount is entered in item 12 and/or Item 15, and the net amount may be a decrease in amount due. For example, there is an Increase in Dollars and Increase in a refundable credit in an amount greater than the tax increase.
  e. If DCs are 07, or 11, no Item 12 or 15 entries are allowable.

Valid TCs for Tax Adjustments on Form 5599:
  TC 300 Assesses additional tax or deficiency because of an examination of a tax return. (+)
  TC 301 Abates previously posted tax, due to an examination of a taxpayer return. Frequently used for claims for refund that does not involve net operating loss carry-back. (-)
  TC 304 Adjusts previously posted tentative allowance. (+) TC 295 or TC 305 must be present in the module. TC 304 amount cannot exceed the sum of the TC 295 and/or TC 305.
  TC 305 Abates prior tax assessment for a tentative allowance. (-) Do not use if penalty and interest transaction codes are reflected on transcript.
  TC 308 Assesses additional tax on employment taxes, where interest is restricted due to IRC 6205. (+)
  TC 309 Abates prior tax assessment for a tentative allowance.

Valid TCs for Penalty Adjustments on Form 5599:
  TC 160 Delinquency Penalty Increase
  TC 161 Delinquency Penalty Decrease
  TC 170 Estimated Tax Penalty Increase
  TC 171 Estimated Tax Penalty Decrease
  TC 180 Failure to Deposit Increase
  TC 181 Failure to Deposit Decrease
  TC 234 Daily Delinquency Penalty Increase
  TC 235 Daily Delinquency Penalty Decrease
  TC 320 Fraud Penalty Increase
  TC 321 Fraud Penalty Decrease
  TC 350 Negligence Penalty Increase
  TC 351 Negligence Penalty Decrease

Valid TCs for Interest Adjustments on Form 5599:
  TC 340 Restricted Interest Increase
  TC 341 Restricted Interest Decrease
  TC 770 Allowable Interest Increase
  TC 771 Netted Allowable Interest

Determination of the Tax Adjustment:

It is very important that the person closing the case accurately identify the tax adjustment. The correct tax adjustment is determined by the following formula:

CORRECTED TAX – PREVIOUSLY ADJUSTED TAX = TAX ON FORM 5599

The previously adjusted amount on the report must match the tax liability on the transcript. This tax amount from the transcript is subtracted from the corrected tax liability to arrive at the tax adjustment that will be entered in Item 12 on Form 5599.

Increases in Tax are entered in Item 12 with "+" circled

Decreases in Tax are entered in Item 12 with "-" circled

Disposal Code (Item 13, Form 5599) (Completed by Specialist) One Disposal Code must be entered that best describes the examination results. Refer to Document 11308, Government Entities Computer Systems Codes, for Disposal Code definitions.

Statute Extended to (Item 14, Form 5599) (Completed by Specialist) At the time a valid Form SS–10, Consent to Extend the Time to Assess Employment Taxes, is secured, the Statute Extended to Date must be entered in item 14. The updated statute date must be input on AIMS (by submitting Form 5595, TE/GE Update) before Form 5599 is forwarded for closure off of AIMS. Must be in "MMDDYYYY" format.

Credit and Tax Computation Adjustment (Item 15, Form 5599) (Completed by Specialist) A Credit/Item Reference Number is a three-digit code used to adjust taxpayer information according to the type of examined return. This information should be taken from Forms 4668 or 4668-B. When making any entry in Item 15 of Form 5599 ensure that the "+" or the "-" is identified in the last column. The "+" or the "-" must be circled to ensure that the correct Reference Information or Credit Adjustment is made to the taxpayer account. See Document 6209. Valid Item Adjustment Codes are presented by form number.

Appeals Office Code (Item 16, Form 5599) (Completed by CPM) If the case is going to an Appeals Office, enter the applicable three-digit Appeals Office Code. See Exhibit 4.5.2-6. and Document 6209 for Appeals Office codes.

EO/GE Appeals Issue Code (Item 17, Form 5599) (Completed by CPM) If the case is going to an Appeals Office, enter the applicable three-digit Appeals Issue Code. See Document 11308, Government Entities Computer Systems Codes.

Unagreed Amount (Item 18, Form 5599) (Completed by CPM) If the case is going to Appeals , enter the unagreed amount.

Revenue Base Protection Section (RBP) (Items 20-24, Form 5599) (Completed by Specialist)
Protection of the revenue base includes the work done by FSLG personnel to prevent the release of money from the Treasury to a taxpayer. Items 22, 23, and 24 are to be completed only if Revenue Base Protection applies. The most common example of RBP is the examination of a claim submitted by a taxpayer whose account has no outstanding liability for a claim that has been filed. If they disallow such claims, FSLG Specialists are expending resources to prevent the inappropriate release of money from the Treasury. We measure this valuable contribution by FSLG personnel, through the completion of the Revenue Base Protection section of Form 5599, Items 20-24.
A claim is only considered as RBP if we are preventing money from leaving the Treasury. If an outstanding balance is due on the account, the RBP amount will not be the entire amount of the claim. A calculation must be done to determine how much of the claim qualifies as RBP. Since the taxpayer can be making payments on the outstanding liability while the examination is taking place; the Specialist must make the calculation when the examination is completed.
Not all claims are considered RBP; therefore, a claim Source Code does not have any relationship with RBP. Although the following situations are sometimes called "claims," they do not qualify as RBP:
Audit reconsideration, Source Code 73 (Taxpayer's Request), (if the tax has not been paid). FSLG received credit for this closure when it was originally closed. Therefore, if the audit reconsideration is being referred to Appeals, leave the RBP items blank and enter $1 in Item 18 to get the case through the terminal. Entering the amount of the "audit reconsideration" will cause duplicate results.

Claim Rejection Date (Item 20, Form 5599) (Completed by Specialist)
(a) An entry should not be made if the service center previously allowed the claim.

IF... AND... THEN...
The claim was not previously allowed Form 2297, Waiver of Statutory Notification of Claim Disallowance, signed by the taxpayer, is in the file Enter the completion date of Form 2297 in MMDDYYYY format. Do not send a letter to the taxpayer.
  Form 2297 is not in the file Initiate the appropriate letter notifying the taxpayer that their claim has been disallowed. Enter the date of the letter in MMDDYYYY format.

(b)If a date is entered, the DC must be 01, 03, 07, 10, or 11 and the Source Code must be 30. DC 34 cannot be used. Items 21-24 are required entries for DC 01, 07, or 11. When DC 03 or 10 is used, Items 21-24 and 28 are required entries. Item 28 is needed for DC 07 or 11 if non-revenue issues are involved.

Amount Claimed (Item 21, Form 5599) (Completed by Specialist)

(a) Claim or reduction of tax requested by the taxpayer. If the Source Code is 30; this item is a required entry.
(b) Forms 843, 1040X, 1120X, any amended returns, or written claim requests by taxpayers, are considered claims. The amount from the applicable form must be entered unless the amount is in error. For example, the taxpayer submits a claim for $1,500. In examining the claim, it is discovered that the taxpayer made a computational error and the correct amount is $2,500. A correction must be made to the Amount Claimed field on AIMS to reflect the correct amount. Claims filed during an examination after an audit report has been written are treated as claims. Protective claims are treated as claims. Oral requests for a refund made during an interview or by telephone are not claims.
(c) If the taxpayer submitted a protective claim for $1, when the correct amount of the claim is determined, AIMS should be updated using CC AMSTU to reflect the correct amount. Enter the corrected amount in Item 21 at closing.

Claim Amount Disallowed (Item 22, Form 5599) (Completed by Specialist)

(a) Enter the dollar amount that was protected from leaving the revenue base (a disallowed claim amount). This amount cannot exceed the amount that is entered in Item 21 or in the amount claimed field on AIMS. An entry must not be made if the claim was allowed in full. If this item is entered, Items 20, 21, 23, and 24 are also required for DC 01. For DCs 03, 07, 10 or 11, Items 20-24 are required entries. Item 28 should be completed if non-revenue issues are also involved for DC 03, 07, 10, or 11. If Item 28 is completed, do not include the time entered in Item 23.
(b) If the claim is being referred to Appeals, enter the entire disallowed amount in this field and a negative $1 in Item 18. If the taxpayer is also protesting other issues, enter the protested amount of the other issues in item 18 and the claim amount disallowed in Item 22. See Exhibit 4.5.2-7, Claim Amount Examples, for Item 22 entries.

Claim Hours (Item 23, Form 5599) (Completed by Specialist) Time spent on Revenue Base Protection, will be entered by the Specialist in whole hours only. Specialists must include any hours or fractions of hours spent on non-revenue in Item 28.

Note:

If Item 22 is entered, Items 20, 21, and 24, are also required.

Claim Type (Item 24, Form 5599) (Completed by Specialist)
All claims with examination criteria will be slotted into one of two categories for screening. The examination criteria are divided into two categories: Category A and Category B. Category A criteria are issues that do not meet potential. Category B criteria are issues that do not meet Category A criteria and have a refund of at least $200.00 or more. The allowable alpha codes identify the type of revenue base protection. See Exhibit 4.5.2-8.

Alpha Code Definition
A Abatement of Interest Claims
B Bankrupt/Insolvent Financial Institution Claims
C Carry Back/Carry Forward Claims (Restricted Interest and Tentative Carry Back)
E Excise Taxes Claims
F FICA or Self-Employment Tax Claims
G Grants, Fellowship, or Stipend Claims
H Hardship Claims
I Injured Spouse Claims
J Joint Committee Case Claims
K Disaster Claims*
L Loss Year BMF Return Consolidation Claims
M Tax Exempt Bonds
N Non-Disaster Casualty Losses Over $10,000
O Other Claims
1) Amended Returns
2) 60-Day Statute Pending
3) Constitutional Objection to Income Tax
4) Protested Claims
P Protective Claims
Q RESERVED
R Returns for Estate or Gift Tax Claims
S Savings/Retirement/Investment Plan Distribution Claims
T Tax Treaty Claims
U RESERVED
V Vow-of-Poverty Issue Claims
W WPT Claims
X Examination Requested Immediately by Taxpayer Claims
Y Claims Involving any Terminated Year
Z RESERVED

* Previously "D" was denoted for Disaster Claims; however, when using CC AMAXU, "D" is used to denote an item.

Examiner's Time (Item 28, Form 5599) (Completed by Specialist)
(a) Enter total time spent on non-revenue base protection issues for each return examined. Do not include this time in Item 23. No time should be entered for partially agreed cases.
(b) If the return has been reestablished from Status 90 using CC AMSTUR or returned from Appeals using CC AMSTUB, the total time from both closings must be entered in this field.
(c) An entry is required for all examined returns and is reported in full hours and tenths of hours. The entry must be in the range 0000.1 - 9999.9.

Note:

In cases that involve protection of the Revenue Base only; all time is entered in whole hours in Item 23.


(d) The entry for cases also involving protection of the Revenue Base must only include Revenue Production Time. The protection of the Revenue Base Time is entered in whole hours in Item 23.
(e) An entry is not made for Surveyed Claims, DC 34.

Technique Code (Item 30, Form 5599) (Completed by Specialist)
An entry is required for all examined returns. No entry is made for surveyed claims. Valid codes for this item are:

  1 - Office Interview Examination
  2 - Office Correspondence Examination
  4 - Field Examination

Agent's Grade (Item 31, Form 5599) (Completed by Specialist)
Enter the two-digit grade of the Specialist who closed the case. This is a required entry for all examined returns. An entry is not required for Surveyed Claims. Valid range of grades are 05 through 14.

Case Grade (Item 32, Form 5599) (Completed by the Field Manager)
(a) Field Managers determine grade of case for all returns. The Field Manager will consider both the primary and related returns to determine the grade level. The first position must be 1, the second position must be 1-3 (1 - Grade 11, 2 - Grade 12, 3 - Grade 13), the third position must be 1, and the fourth position must be blank or R. See Exhibit 4.90.12-5.
(b) The related returns are graded to be the same as the primary return, therefore the same three-digit code is used followed by an "R." When other Specialists examine the related entities, each Field Manager grades the separate entities as separate cases and they do not enter the "R."

Examiner's Name (Item 33, Form 5599) (Completed by Specialist)
This item is a required entry for all examined returns. An entry is not required for Surveyed Claims. Enter the last name first, followed by a space and the first initial.

Exam Adjustment Amount (Item 34, Form 5599) (Completed by Specialist)
Exam Adjustment Amount (Item 34, Form 5599) (Completed by Specialist)

Note:

Effective 1/1/1999, this field is no longer used for delinquent returns.

Delinquent Return Code (Item 37, Form 5599) (Completed by Specialist)
(a) Item 37 must always be completed when closing delinquent returns secured during the examination and sent to a campus for processing. This entry gives FSLG credit for a delinquent return pick-up on Report 20.
(b) If the delinquent return is incorporated into the examination, this item must be left blank.
(c) If Item 37 is entered, Item 414 is required and Item 35 requires a $1 amount.
(d) Segregate the closing records of secured delinquent returns by MFT code. For each type of return included in the case file, the Specialist will:
Enter a "T" in Item 37 if there is only one delinquent return.

Note:

If there is more than one delinquent return, enter a "T" on one of the closing records in Item 37.


Enter an "R" in Item 37 on the rest of the closing records having the same MFT code as the closing record marked with a "T."
Example: Eight delinquent returns are secured from a taxpayer - Forms 941 for each quarter of 2007 and 2008 year(s). A "T" should be entered on the closing documents of the latest quarter of the Form 941 return. The balance of the closing documents are marked with an "R."

Fraud Condition (Item 38, Form 5599) (Completed by Specialist)
This item may be blank or contain an entry of "C" (Civil) or "F" (Criminal), or B "Both " .

Special Project Code (Item 40, Form 5599) (Completed by Specialist)
Project Codes are used to identify a Priority Emphasis Program or a referral to Examination Division. Refer to Document 11308, Government Entities Computer Systems Codes for valid Project Codes.

ARDI Code (Item 42, Form 5599) (Completed by Specialist)
(a) Enter a one-digit code in this item for an agreed deficiency under the Accounts Receivable Dollar inventory (ARDI) project. Refer to Document 11308, Government Entities Computer Systems Codes for valid ARDI Codes.
(b) When closing multiple years, and an overassessment from one year will be used to offset an assessment from another year, consider the overassessment as payment secured. "Full Paid" or "Partially Paid" depends on the amount of the overassessment.
(c) The ARDI Code is valid for all FSLG MFT Codes. Valid Disposal Codes are 03, 06, 09, and 12.
Reminder: DC 05 must contain an ARDI Code if an entry is present in Item 34.

Employee Group Code (Item 50, Form 5599) (Completed by Specialist)
The Employee Group Code (EGC) is a four-digit code designating a specific group. An EGC is a required entry on all examined full closures with the exception of disposal code 34 – Surveyed Claims. The following list identifies the EGC used by TE/GE:

EP Examinations 7600 through 7699
EO Examinations 7900 through 7999
GE Examinations 7200 through 7284




CIC Indicator (Item 400, Page 2, Form 5599) (Completed by Specialist) If the examination is a large case examination, as defined in IRM 4.90.13, an "L" should be entered.

International Examiner Time (Item 402, Page 2, Form 5599) (Completed by Specialist)
Percentage of Total Case time reported in Item 28, Page 1, Form 5599.

International Exam Amount (Item 403, Page 2, Form 5599) (Completed by Specialist)
Percentage of Total Audit Results.
RELATED RETURN INFORMATION SECTION (Item(s) 405 – 412) Enter data from primary return.

Related TIN (Item 405, Page 2, Form 5599) (Completed by Specialist)

Related MFT (Item 406, Page 2, Form 5599) (Completed by Specialist)

Related Tax Period (Item 407, Page 2, Form 5599) (Completed by Specialist)

Related Return Alpha Code (Item 408, Page 2, Form 5599) (Completed by Specialist)
P - Primary Return
S - Secondary Return

Installment Agreement Code (Item 412, Page 2, Form 5599) (Completed by Specialist)

Delinquent Return Amount (Item 414, Page 2, Form 5599) (Completed by Specialist)
(a) In order to capture accurate results when FSLG secures delinquent returns, a separate field has been created. Previously this amount was entered in the dual-purpose field, Item 34, Adjustment Amount. Effective January 1999, Item 34 will be used to reflect adjustments to nontaxable returns and Item 414 will be used for delinquent returns secured by FSLG.

(b) For taxable returns, the amount entered in Item 414 must reflect the balance due or refund amount per the return that was forwarded to the campus for posting of the TC 150. If this amount is zero, enter $1 in this field.
(c) For nontaxable returns, enter the amount in Item 414 of the ordinary net income/loss or special allocation items per return forwarded to the campus for posting of the TC 150. If this amount is zero, enter $1 in this field.
(d) If Item 414 is entered, Item 37, Delinquent Return Code must also be entered and vice versa.
(e) If Item 414 is entered, Item 13, Disposal Code must not be 02 or 34.
(f) If there is no balance due/refund due or no change to income/loss, enter $1 in Item 414.

Amended Return Amount (Item 415, Page 2, Form 5599) (Completed by Specialist)
(a) In the past, if a taxpayer filed an amended return with the campus, even if it was due to an ongoing examination, FSLG could not take credit for the adjustment. To accurately capture the Specialist's efforts, Item 415 has been created. This entry is only valid if MF shows that the examination was started before the taxpayer filed the amended return or an original return, if the TC 150 is a Substitute for Return (SFR). Enter the amount of the TC 29X that has posted to MF, if the return was filed as a result of an ongoing examination. A current transcript must be included in the case file supporting the amount entered in Item 415. The TC 42X date must be prior to the TC 29X date.
(b) For taxable returns, enter the amount of the TC 29X, less any credits posted. In most cases this is the balance/refund due.
(c) For nontaxable returns, enter the adjustment amount to income/loss.
(d) Item 415 can be corrected by CC AMAXUO.

Fax Agreement Ind. (Item 416, Page 2, Form 5599) (Completed by Specialist)
Enter a "1" if a FAX agreement has been received.

Principal Issue Codes (Item 701, Page 2, Form 5599) (Completed by Specialist)
Reference Document 11308, Government Entities Computer Systems Codes booklet for a listing. Two-digit entries should be left-justified and "0" should be entered in all unused fields.

Employment Tax/GE (Item 722, Page 2, Form 5599) (Completed by Specialist)
Enter the deficiency or overassessment.

Exhibit 4.90.12-2 
Case Grading Criteria

FSLG Employment Tax Case Grading Criteria
Grade 13 (i) Cases with an annual total tax liability (FICA/Medicare/FIT) in excess of $499,999 (ii) Cases between $100,000 and $499,000 annual liability that meet upgrade criteria (iii) G coded taxpayers with annual compensation in excess of $1.35 Million.
Grade 12 (i) Compliance Checks(ii) Cases with an annual total tax liability (FICA/Medicare/FIT) less than $500,000 that do not meet upgrade criteria(iii) All cases with $100,000 or less annual liability

GS-12 Specialists can work above grade cases for no more than 25% of their inventory (per pay period).

Field Managers should consider the case grading implications of converting a compliance check into an examination. For example, a grade 12 compliance check may be a grade 13 examination due to the taxpayer’s employment tax liability and/or the complexity of its structure.

Exhibit 4.90.12-3 
FSLG Naming Convention for RCCMS

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Exhibit 4.90.12-4 
FSLG Examination Assembly (Paper or Electronic)

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