5.1.12  Cases Requiring Special Handling

Manual Transmittal

September 20, 2012

Purpose

(1) This transmits revised IRM 5.1.12, Cases Requiring Special Handling.

Material Changes

(1) References throughout to Collection Field function (CFf) changed to Field Collection (FC) except as it appears in other documents.

(2) Added several new sections to IRM 5.1.12.2 to incorporate Interim Guidance Memorandum titled, Identity Theft Transaction Codes and Processing, control number SBSE-05-0612-048, dated June 27, 2012.

(3) Updated references to Identity Theft and Incident Management (ITIM) to Identity Protection Program throughout IRM 5.1.12.2.

(4) Revised IRM 5.1.12.2.2.1 for clarity and included guidance to check ENMOD for identity theft transaction codes

(5) Revised IRM 5.1.12.2.2.1.1 to include step-by-step instructions for inputting the identity theft transaction codes and preparing Form 3870 in instances of taxpayer alleged identity theft.

(6) Added IRM 5.1.12.2.2.1.2 to include guidance on IRS identified identity theft.

(7) Added IRM 5.1.12.2.2.1.3 to include guidance on Form 3870 preparation and routing.

(8) IRM 5.1.12.2.2.1.1 renumbered to IRM 5.1.12.2.2.1.4. Added guidance on taxpayers claiming financial hardship.

(9) Added IRM 5.1.12.2.2.1.6(4) to include new routing to SB/SE Designated Identity Theft Adjustment (DITA) team for Form 4844.

(10) Renumbered IRM 5.1.12.2.2.1.3.1 to IRM 5.1.12.2.2.1.6.1. Revised instructions for completing Form 4844 and included new source codes.

(11) Renumbered IRM 5.1.12.2.2.1.3.3 to IRM 5.1.12.2.2.1.6.3. Revised for clarity and to change references to "transaction date" to "secondary date" .

(12) Added IRM 5.1.12.2.2.1.7 to provide guidance on reversal of TC 971 AC 522.

(13) Renumbered IRM 5.1.12.2.2.1.4 to IRM 5.1.12.2.2.1.8. Revised to include guidance on reversal of TC 971 AC 501 and TC 971 AC 506.

(14) IRM 5.1.12.2.2.1.5 renumbered to IRM 5.1.12.2.2.1.9. Deleted chart and referred revenue officer to IRM 10.5.3.2.2.

(15) Revised IRM 5.1.12.2.2.4 for clarity.

(16) Updated IRM references in IRM 5.1.12.3(3).

(17) Updated web link for disaster information in IRM 5.1.12.3(4).

(18) Incorporated SBSE-05-0811-074, Interim Guidance Memorandum Regarding Recording of Collection Interviews, in IRM 5.1.12.4(3).

(19) Included address for Foreign Insurance Companies Advisory and Insolvency advisors in IRM 5.1.12.14(3)(a).

(20) Included web link for Foreign Insurance Companies Advisory and Insolvency advisors in IRM 5.1.12.14(3)(b).

(21) IRM 5.1.12.19.1.1(3), updated IRM reference regarding Taxpayer in the Employee Protection System Database.

(22) IRM 5.1.12.19.1.1(4) , updated IRM reference regarding Armed Escort to Contact a Taxpayer.

(23) IRM 5.1.12.20.1(4) added clarification for processing hardship direct deposit manual refunds.

(24) IRM 5.1.12.20.1.6, added guidance to contact Collection Campus Liaisons (CCLs) to assist with preparation and processing of Form 5792, Request for IDRS Generated Refund.

(25) IRM 5.1.12.23.3 additional details provided for processing taxpayer requests to have backup withholding (BWH) discontinued.

(26) IRM 5.1.12.25, updated link to MCAR coordinator contact page.

(27) IRM 5.1.12.26, Treasury Enforcement Communication System (TECS), moved in its entirety to IRM 5.1.18.14.

(28) IRM 5.1.12.26, Form 1127, Application for Extension to Pay Due to Financial Hardship, added, incorporating IG SBSE-05-0512-050, Reissuance of Procedures for Processing Form 1127 Applications for Extension of Time for Payment of Tax Due to Undue Hardship, including associated Exhibits 5.1.12-4, -5 and -6.

(29) Exhibit 5.1.12-3, Field Collection Processing of Form 5792, updated.

(30) Editorial corrections made throughout.

Effect on Other Documents

This material supersedes IRM 5.1.12 dated July 2, 2010. This IRM incorporates IGM-SBSE-05-0811-74, Interim Guidance Memorandum Regarding Recording of Collection Interviews, IGM-SBSE-05-0512-050, Reissuance of Procedures for Processing Form 1127 Applications for Extension of Time for Payment of Tax Due to Undue Hardship, and IGM-SBSE-05-0612-048, Identity Theft Transaction Codes and Processing.

Audience

The target audience is revenue officers and other collection caseworkers in SB/SE Collection.

Effective Date

(09-20-2012)

Scott Reisher
Director, Collection Policy
Small Business/Self Employed

5.1.12.1  (09-20-2012)
Overview — Cases Requiring Special Handling

  1. This IRM provides instructions and guidelines for working cases which require special handling. The procedures are written specifically for revenue officers ;however, employees in other organizations and functions may also refer to these procedures if appropriate.

  2. Follow the appropriate procedures when you are working the specific type of case shown below:

    • Identity Theft

    • Disaster/Emergency Relief

    • Taxpayer Request to Record an In-Person Interview

    • Authorized IRS e-file Provider

    • Income Tax Assessed Against a Child

    • Household or Agricultural Employee

    • Taxpayer in High Assault Risk Area

    • Innocent Spouse

    • Non-Petitioning Spouse

    • Child Support Obligation (CSO)

    • Taxpayer Exempt from Taxation for Religious Reasons

    • Insolvent Financial Institutions — Provisions of the IRS-RTC/FDIC Agreement

    • Foreign Insurance Company

    • Political Activity

    • Criminal Probation

    • Math or Clerical Error

    • Non-Receipt of Refund Check

    • False Refund Claim

    • Manual Refund

    • Refund Offset

    • U.S. Tax Court Subpoena

    • Backup Withholding

    • Indian Tribal Governments

    • Mutual Collection Assistance Requests (MCARs)

  3. Refer to IRM 5.1.8.7, Courtesy Investigations Requiring Special Handling, for guidance on Courtesy Investigations which require special handling.

  4. Elevate any questions or concerns regarding these IRM procedures through your group manager (GM).

    Note:

    GMs must direct any procedural questions or concerns to the appropriate Area contact for possible referral to Headquarters.

5.1.12.2  (09-20-2012)
Identity Theft

  1. IRS operations, such as resolving duplicate returns or engaging in various compliance activities that target unreported income, have an effect on victims of identity (ID) theft. When these situations occur, the innocent taxpayer must provide the IRS documentation to establish that he or she is a victim of ID theft. Inconsistent documentation standards may cause unnecessary burdens on taxpayers attempting to resolve adverse tax situations caused by ID theft.

  2. The IRS has established the Identity Protection Program with responsibility for an agency-wide Enterprise Strategy comprised of three components — outreach, victim assistance, and prevention. The IRS has also established the Identity Protection Specialized Unit to work with identity theft victims to resolve their issues. Click on this link for general information about ID theft: http://irweb.irs.gov/AboutIRS/bu/pipds/pip/itim/idtheft/default.aspx

  3. Refer to IRM 10.5.3, Identity Protection Program. It provides the following:

    1. information about the Identity Protection Program including information on identity theft policy, procedures, and resources

    2. guidance on Service policy regarding the Personally Identifiable Information (PII) data loss risk assessment process

    3. notification procedures for individuals who are at high risk of identity theft following the loss of PII

  4. This IRM provides Field Collection and Field Collection functions procedures for working with taxpayers who are victims of ID theft, working with taxpayers who commit ID theft, and handling security breach incidents.

  5. Refer to IRM 21.9.2, Accounts Management Identity Theft, for information about how Customer Accounts Services employees handle problems relating to Taxpayer Identification Number (TIN) issues caused by ID theft.

5.1.12.2.1  (09-20-2012)
Standard Identity Theft Documentation Requirements

  1. To reduce the burden on taxpayers, the IRS has established standard documentation requirements for resolving cases that involve ID theft.

  2. Request documentation to establish that the taxpayer was a victim of ID theft when a taxpayer alleges that he or she was a victim of ID theft.

  3. Request the following documentation to establish that the taxpayer was a victim of ID theft:

    • Authentication of identity, and

    • Evidence of identity theft.

5.1.12.2.1.1  (09-20-2012)
Substantiation Documentation

  1. Substantiation documentation must be legible and accurately associated with the correct taxpayer.

  2. Collect substantiation documentation in a timely, accurate, and secure manner.

  3. Apply stringent safeguards when storing and retaining substantiation documentation. Store the substantiation documentation along with the case file.

  4. Secure and handle substantiation documentation and information in the same manner as other sensitive taxpayer personal information.

5.1.12.2.1.1.1  (09-20-2012)
Who Can Substantiate Identity Theft?

  1. Accept substantiation documentation from the taxpayer or someone who has power of attorney for the taxpayer pursuant to Form 2848.

5.1.12.2.1.2  (09-20-2012)
Authentication of Identity

  1. Secure a copy of a valid U.S. federal or state government-issued form of identification to authenticate identity.

    Example:

    Driver's License, State Identification Card, Social Security Card, Passport, etc.

    Note:

    The following link provides a list of acceptable primary and secondary forms of ID accepted as proof of identification: http://www.fedidcard.gov/viewdoc.aspx?id=109

5.1.12.2.1.3  (09-20-2012)
Evidence of ldentity Theft

  1. Secure a copy of one of the following as evidence of identity theft:

    • Police Report, or

    • Form 14039, Identity Theft Affidavit.

5.1.12.2.2  (09-20-2012)
Identity Theft Case Resolution

  1. Resolve the case in an appropriate manner according to the following procedures depending on whether:

    1. the taxpayer establishes that he/she was a victim of identity theft,

    2. the Service employee determines identity theft occurred,

    3. the taxpayer does not establish that he/she was a victim of identity theft, or

    4. the taxpayer committed identity theft.

5.1.12.2.2.1  (09-20-2012)
Taxpayer is a Victim of Identity Theft

  1. Advise the taxpayer to take the following actions when he or she reports being a victim of identity theft:

    1. contact the local police and file a police report

    2. contact the Federal Trade Commission and file a complaint

    3. notify the three major credit bureaus to post a fraud alert

    4. submit identity theft substantiation documentation within 30 day deadline

    5. refer to http://www.irs.gov/ Keyword "Identity Theft" or "ID Theft" for additional information

  2. Prior to inputting an identity theft transaction code (TC) 971 Action Code (AC), review Integrated Data Retrieval System (IDRS) command code (CC) ENMOD to prevent inputting a duplicate TC 971 Action Code on the same tax period.

  3. Review the case history for outstanding enforcement activity that may need to be corrected, i.e., levies, liens, and bankruptcy claims.

  4. See IRM 5.12.2.25, Identity Theft, for additional procedures regarding Notices of Federal Tax Lien.

  5. See IRM 5.9.5.12, Identity Theft, for additional procedures regarding taxpayers in bankruptcy.

5.1.12.2.2.1.1  (09-20-2012)
Taxpayer Alleges Identity Theft

  1. Instances of identity theft can either be alleged by the taxpayer, or other third party such as taxpayer representative or bankruptcy trustee.

  2. Below are step-by-step instructions for inputting the identity theft transaction codes and preparing Form 3870 in instances of taxpayer alleged identity theft.

    Step TC 971 Action Code Employee Actions Notes
    1 TC 971 AC 522 PNDCLM Request input of TC 971 AC 522 with source code PNDCLM using Form 4844 if taxpayer alleges they did not earn income or return not filed by them and has not yet provided supporting documentation. The Secondary Date field will reflect the tax year of the identity theft incident. Use Form 4844 to request input of the TC 971 AC 522 PNDCLM and forward to SB/SE Designated Identity Theft Adjustment (DITA) team. See IRM 5.1.12.2.2.1.3(3) for contact information.
    2   Review CC ENMOD and determine if the following conditions exist:
    1. There is a posted/unreversed TC 971 AC 501/ 506 or TC 971 AC 522 Source Code INCOME, MULTFL,INCMUL, NOFR, or OTHER and

    2. The posted transaction falls within the three year period as described in IRM 10.5.3.2.1 and

    3. The allegation relates to a previously reported incident as described in IRM 10.5.3.2.1.

    If above criteria is met, input TC 971 AC 522 with source code NODCRQ and skip step 3. Substantiation documentation is not required. If above criteria is not met, provide taxpayer a 30 day deadline to provide substantiation documentation.
    The Secondary Date field will reflect the tax year of the identity theft incident. Use Form 4844 to request input of the TC 971 AC 522 NODCRQ and forward to DITA team.
    3 TC 971 AC 522 with source code INCOME, MULTFL, INCMUL, NOFR or OTHER. Request input of TC 971 AC 522 with appropriate source code when complete and legible substantiation documentation is received from taxpayer. If taxpayer does not provide documentation by deadline provided, reverse the TC 971 AC 522 with TC 972 AC 522 source code NORPLY. Use Form 4844 to request input and forward to DITA team. Continue with collection action following regular collection procedures.
    4   Conduct research to determine if identity theft occurred. For example, check Accurint, IRPTR, etc. If a paper tax return was filed, compare signature on tax return to signature on Form 14039. If after review it is determined that identity theft did not occur, reverse the TC 971 AC 522 with TC 972 AC 522 source code NOIDT. Use Form 4844 to request input and forward to DITA team.
    5 TC 971 AC 501 Prepare Form 3870 to correct taxpayer’s account. Notate on Form 3870 to input TC 971 AC 501. TC 971 AC 501 is input when account has been corrected.
    6   If the taxpayer's case is fully resolved and no issues remain, send Letter 4222, Notice of Case Resolution, to victim prior to closing case on ICS.  

5.1.12.2.2.1.2  (09-20-2012)
IRS Identified Identity Theft

  1. During the normal course of business, a Service employee may determine that identity theft occurred and the case is not yet resolved. In most instances the employee will attempt to secure the substantiation documentation from the taxpayer (evidence of identity theft and authentication of identity).

  2. If the employee is unable to secure the substantiation documentation (for example, taxpayer is deceased), or the taxpayer is unwilling to provide the substantiation documentation because they are receiving the benefit of the refund from the identity theft return, the procedures for IRS identified identity theft will be followed.

    Example:

    The refund due to the identity theft return was issued to the bankruptcy trustee. The trustee negotiated the check and applied it to debts of the taxpayer. Since the taxpayer received the benefit of a debt reduction due to the issuance of the refund on the identity theft return, the taxpayer may not want to provide the substantiation documentation.

    Step TC 971 Action Code Employee Actions Notes
    1 TC 971 AC 522 IRSID Request input of TC 971 AC 522 with source code IRSID using Form 4844 if IRS employee determines identity theft occurred. Note: See Privacy, Governmental Liaison & Disclosure (PGLD) memo, PGLD-10-1211-01, for input instructions. Programming changes were not completed timely. The Secondary Date field will reflect the tax year of the identity theft incident. Use Form 4844 to request input of the TC 971 AC 522 with source code IRSID and forward to DITA for input.
    2 TC 971 AC 506 Prepare Form 3870 to correct taxpayer’s account. Notate on Form 3870 to input TC 971 AC 506. TC 971 AC 506 is input when account has been corrected.
    3   If the taxpayer's case is fully resolved and no issues remain, send Letter 4222, Notice of Case Resolution, to victim prior to closing case on ICS.  

5.1.12.2.2.1.3  (09-20-2012)
Form 3870 Preparation and Routing

  1. If it is determined that the taxpayer is a victim of identity theft, Form 3870 is prepared to correct the victim’s account. The following guidelines should be followed when preparing Form 3870:

    1. Prepare Form 3870 and write Identity Theft in Item 11, Reason for Adjustment, in bold letters.

    2. Include specific instructions on actions needed to correct the account. For example, state that TC 150 in amount of $XX is return filed by identity thief. Indicate if there are any estimated tax payments that were made by the victim-taxpayer that should remain on the account or if a refund generated by the identity theft return was offset to another tax liability.

    3. Indicate on Form 3870 if contact is needed when adjustment is completed. For example, there is a balance due on the correct return secured from the taxpayer-victim and revenue officer will continue with collection actions after assessment. Function completing adjustment will alert collection employee when adjustment is completed.

    4. Attach the following documentation to Form 3870:
      - Copy of substantiation documentation (evidence of identity theft and authentication of identity). Maintain copy in case file.
      - NUMIDENT – Obtained by requesting MFTRA type U
      - Original return, if secured from victim-taxpayer

    5. Do not attach IDRS prints.

    6. Request input of TC 971 AC 501 or AC 506 on Form 3870. TC 971 action code will be input when account is corrected.

    7. Forward Form 3870 to appropriate function for adjustment based on type of assessment.

    8. Incomplete referrals will be rejected.

  2. The completed Form 3870 is routed based on the type of assessment that needs to be adjusted.

    1. Audit reconsideration – Prepare Form 3870 and route based on the exhibits in IRM 4.13.7-3 and IRM 4.13.7-4. This includes a return filed under the taxpayer’s social security number by an identity thief and a subsequent audit assessment made by Examination.

    2. AUR reconsideration – Prepare Form 3870 and route based on IRM 4.13.7-6. This includes a return filed under the taxpayer’s social security number by an identity thief and a subsequent AUR assessment.

    3. SFR/ASFR (Brookhaven/Fresno) - Prepare Form 3870 and route based on IRM 5.1.15.4.3.

    4. Identity Theft Return – This is a return that was filed under the taxpayer’s social security number by an identity thief. Prepare manual Form 3870 (Other template in ICS) and forward to DITA if there is not a subsequent Audit or AUR assessment. The Form 3870 must be mailed, rather than faxed or sent electronically to DITA, if an original return is attached.

  3. The contact information for the new SB/SE Designated Identity Theft Adjustment (DITA) team is as follows:

    E-mail Address Fax Number Mailing Address
    *SBSE CCS DITA 267-941-1425 Internal Revenue Service
    DITA Mail Stop 4-G20.500
    2970 Market St
    Philadelphia, PA 19104

5.1.12.2.2.1.4  (09-20-2012)
Collection Activity in Identity Theft Cases

  1. If there is a balance due not attributable to identity theft, collection activities, including the appropriate use of enforced collection action, are not prohibited when a taxpayer has established that he/she was a victim of identity theft.

    1. Be sensitive to the adverse impact that being a victim of identity theft may have upon a taxpayer and his/her ability to pay.

    2. Consider temporarily suspending the account until the identity theft incident is resolved in cases where you determine the identity theft will have an adverse impact on the taxpayer’s ability to pay.

    3. Request input of a TC 470 CC 90 along with a request for abatement if the module will be fully abated creating no remaining balance due.

      Note:

      Caution should be used to ensure collection activities are taken only on balance due modules not attributable to identify theft.

  2. If the taxpayer claims financial hardship as a result of a tax-related identity theft issue, prepare and submit Form 911/Form e-911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order). If the taxpayer requests to contact Taxpayer Advocate Service directly, advise the taxpayer to call 1-877-777-4778 toll-free, or go to http://www.irs.gov/advocate/.

5.1.12.2.2.1.4.1  (09-20-2012)
Assessment is a Result of Identity Theft

  1. Cases in inventory will not be blocked from automated levy action.

  2. Manually block the case from levy by requesting the appropriate IDRS input if the assessment is a result of identity theft.

  3. See IRM 5.11.7.2.6, Blocking or Releasing FPLP Levy.

5.1.12.2.2.1.4.2  (09-20-2012)
Assessment is Not a Result of Identity Theft

  1. Do not manually block the case from levy if the assessment is not a result of identity theft.

  2. Continue with normal collection procedures if an unpaid balance will remain on any module(s).

    Example:

    If a taxpayer has an unresolved BAL DUE that is not a result of identity theft, it is appropriate to continue collection action on the correct BAL DUE owed by the taxpayer while resolving the identity theft issue(s).

5.1.12.2.2.1.5  (09-20-2012)
ID Theft Action Codes

  1. The Identity Protection Program developed and implemented identity theft indicator codes to centrally mark and track identity theft incidents. Each indicator is input as a Transaction Code (TC) with Action Code (AC) and displayed on Integrated Data Retrieval System (IDRS) command code ENMOD of the affected taxpayer's account. Refer to IRM 10.5.3.2.2, Identity Theft Incident Tracking Indicators, for a comprehensive list of all identity theft transaction codes.

  2. Request input or reversal of the identity theft transaction code according to the following procedures.

    Note:

    When the identity theft victim is the secondary SSN on a joint account, the identity theft indicator is input on the secondary SSN. Identity theft indicators are not input on the primary SSN in these instances. If both primary and secondary taxpayers are victims, place the indicator on both SSNs.

5.1.12.2.2.1.6  (09-20-2012)
ID Theft Action Code Input Procedures

  1. Check the Master File via CC ENMOD to review for identity theft action codes.

  2. If a previous identity theft incident was substantiated, the taxpayer does not need to send in substantiation documentation in order to re-substantiate. See the chart in IRM 10.5.3.2.2.1(8), Taxpayer-Identified Identity Theft Affecting Tax Administration, to determine whether to collect substantiation documentation.

  3. Use Form 4844, Request for Terminal Action, to request input of the identity theft action code.

  4. Forward completed Form 4844 to SB/SE Designated Identity Theft Adjustment (DITA) team for input.

5.1.12.2.2.1.6.1  (09-20-2012)
Completion of Form 4844

  1. The ID Theft Action Code is input on the entity instead of being input to the applicable modules, so ensure that you follow these procedures to accurately complete Form 4844.

  2. Complete the applicable blocks of Form 4844 including the following:

    1. "EIN or SSN"

    2. "Name control"

    3. "MFT code"

    4. "Periods."

      Note:

      Do not write the individual applicable period(s) in the "Periods" block. Instead, write "0000" in the "Periods" block to signify the entity.

    5. "Name of taxpayer"

    6. "Remarks"

  3. Follow the procedures below in IRM 5.1.12.2.2.1.6.3 for entering the tax period ending date(s) in the Secondary Date (SECONDARY-DT) field.

  4. Follow the procedures below for completing the miscellaneous fields and the "Remarks" block.

5.1.12.2.2.1.6.2  (09-20-2012)
Miscellaneous Fields

  1. The miscellaneous field has three parts:

    • BOD / Function (Business Operating Division / Function)

    • Program Name

    • Tax Administration Source (Tax Admin Source)

  2. Request input of the required miscellaneous field information in the "Miscellaneous Field Input" block of Form 4844.

  3. Use the following codes to complete the first two miscellaneous fields:

    1. BOD = "SBSE"

    2. Program Name = as applicable, enter "CFBALDUE" or "CFDELRET"

      Note:

      Insert "CFBALDUE" if you have a combination BAL DUE/DEL RET case.

  4. Use the codes displayed in the following table to complete the third miscellaneous field (Tax Admin Source):

    TC 971 AC 522 Tax Admin Source Codes
    Code Usage
    (1) PNDCLM The taxpayer makes an allegation of identity theft. The taxpayer has not yet provided supporting documentation as required by IRM 10.5.3 .2.1 (Form 14039 or police report and personal identification).
    (2) NODCRQ No documentation is required from the taxpayer if the taxpayer alleges identity theft and the following conditions exist:
    1. There is a posted/unreversed TC 971 AC 501/ 506 or TC 971 AC 522 Source Code INCOME, MULTFL,INCMUL, NOFR, or OTHER and

    2. The posted transaction falls within the three year period as described in IRM 10.5.3.2.1 and

    3. The allegation relates to a previously reported incident as described in IRM 10.5.3.2.1

    (3) IRSID During the normal course of business, the IRS suspects identity theft occurred and the case is not yet resolved.
    (4) INCOME Acceptable substantiation documentation received from the taxpayer. Identity theft due to an underreporting of income.
    (5) MULTFL Acceptable substantiation documentation received from the taxpayer. Identity theft due to two or more tax returns filed by multiple individuals using the same number.
    (6) INCMUL Acceptable substantiation documentation received from the taxpayer. Identity theft due to both underreporting of income and multiple filings.
    (7) NOFR Acceptable substantiation documentation received from the taxpayer. Identity theft due to the victim (rightful taxpayer) not having a filing requirement.
    (8) OTHER Acceptable substantiation documentation received from the taxpayer. Identity theft which cannot be identified as related to any existing Tax Administration Source types.

  5. Enter these codes into the miscellaneous field separated by a space.

    Example:

    For an identity theft incident that has an income related tax administration impact for SB/SE Field Collection (FC), enter the following in the miscellaneous field:

    Miscellaneous Field Input
    S B S E   C F D E L R E T   I N C O M E

5.1.12.2.2.1.6.3  (09-20-2012)
Secondary Date Field

  1. Request input of the secondary date field information in the "Secondary Date Field" block of Form 4844.

  2. The secondary date (SECONDARY-DT>) will contain the tax years that are affected by the identity theft. Use MMDDYYYY format of the tax year affected by the identity theft incident.

    Example:

    If a taxpayer substantiates identity theft and the year under collection is TY 2005, the SECONDARY-DT field input would be:

    Secondary Date Field Input
    1 2 3 1 2 0 0 5

    Example:

    If a taxpayer substantiates identity theft and the years under collection are TY 2005 and TY 2006, the SECONDARY-DT field input would be:

    Secondary Date Field Input
    1 2 3 1 2 0 0 5

    Secondary Date Field Input
    1 2 3 1 2 0 0 6

  3. Complete Form 4844, Request for Terminal Action, to request input of the identity theft action code and forward to DITA within 48 hours.

5.1.12.2.2.1.6.4  (07-02-2010)
Remarks Block

  1. Include the following in the "Remarks" block of Form 4844 "Input TC 971 AC XXX under ENMOD."

  2. Enter any other key pertinent information about the case in the "Remarks" block.

    Example:

    "received valid Driver's License and affidavit"

5.1.12.2.2.1.7  (09-20-2012)
ID Theft Action Code TC 971 AC 522 Reversal Procedures

  1. TC 972 AC 522 includes processes to close identity theft allegations when the IRS determines that identity theft has not occurred or in situations where the taxpayer fails to provide identity theft supporting documents as described in IRM 10.5.3.2.1.

  2. To facilitate effective identity theft case tracking and reporting, use the following Administration Source Fields in certain circumstances, dependent upon the facts and circumstances of the case. The following table provides the Source Codes, their descriptions and Secondary Date Fields needed for IDRS input of TC 972 AC 522.

    Term/Acronym Description: Administration Source Code Secondary Date Field
    Identity Theft has NOT occurred (NOIDT) In the course of resolving an identity theft issue, the employee assigned determines no identity theft occurred. Will match the tax year of the TC 971 522 PNDCLM or TC 971 AC 522 IRSID as applicable.
    The taxpayer did not provide supporting documents (NORPLY) This code is used to close a suspended case when the taxpayer fails to provide the requested supporting documentation within the time specified by the employee assigned. Will match the tax year of the TC 971 522 PNDCLM.

5.1.12.2.2.1.8  (09-20-2012)
ID Theft Action Code TC 971 AC 501 and AC 506 Reversal Procedures

  1. In some instances it may be necessary to reverse a TC 971 AC 501 or TC 971 AC 506 Identity Theft action code. Reversal may be necessary because of any of the following reasons:

    1. The taxpayer requests reversal.

    2. There was a keying or internal error in the input of the action code.

    3. The original identity theft claim was fraudulent.

    4. The action code has an internally identified negative affect on the taxpayer.

    5. There are other reasonable circumstances not listed above.

  2. Use Form 4844, Request for Terminal Action, to request the input of TC 972 with the action code 501 or 506.

  3. Complete the miscellaneous fields with any applicable, specific information for detailed reporting. The miscellaneous field has three parts:

    • BOD / Function (Business Operating Division / Function)

    • Program Name

    • Reason

  4. Request input of the required miscellaneous field information in the Miscellaneous Field Input block of Form 4844.

  5. Use the following codes to complete the first two miscellaneous fields:

    1. BOD = "SBSE"

    2. Program Name = as applicable, enter "CFBALDUE" or "CFDELRET"

      Note:

      Insert "CFBALDUE" if you have a combination BAL DUE/DEL RET case.

  6. Use the codes displayed in the following table to complete the third miscellaneous field (Reason):

    Reason Field Codes and Descriptions
    Code Description
    (1) TPRQ Taxpayer Request
    The taxpayer requests the 971 to be reversed. The taxpayer may feel that the issue has been resolved or it is no longer needed and is impacting him/her negatively.
    (2) IRSERR Keying Error or Other Internal Mistake
    The 971 was due to a typographical mistake or another internal mistake and should be reversed.
    (3) IRSADM Internally Identified Negative Impact
    The 971 is causing a negative impact on another internal process or system, and should be reversed to discontinue any negative impact.
    (4) FALSE Fraudulent ID Theft Claim
    The original identity theft incident claim was determined to be fraudulent.
    (5) OTHER Unclassified

  7. Complete the miscellaneous fields for TC 972 in the same format as for TC 971.

5.1.12.2.2.1.8.1  (09-20-2012)
Secondary Date Field — TC 972

  1. The 972 will also use the SECONDARY-DT field to indicate which 971 which will be reversed. When the 972 is applied, enter the tax year in the SECONDARY-DT field to designate the 971 which should be reversed.

  2. Use MMDDYYYY format of the tax year affected by the identity theft incident.

5.1.12.2.2.1.9  (09-20-2012)
Other ID Theft Action Codes

  1. The Service developed additional Servicewide identity theft action codes for input on IMF to more effectively track identity theft incidents. These codes are explained in IRM 10.5.3.2.2, Identity Theft Incident Tracking Indicators.

  2. Refer to IRM 10.5.3.2.2 and become aware of the function of these codes to facilitate effective analysis of each collection case.

5.1.12.2.2.2  (09-20-2012)
Identity Theft Hotline

  1. The Service has established a toll-free Identity Theft Hotline specifically to receive non tax-related identity theft calls. The Identity Theft Hotline provides assistance for individuals who believe they may be a victim of identity theft, whether they have tax-related or nontax-related identity theft issues.

  2. The Identity Theft Hotline toll free number is 1-800-908-4490.

5.1.12.2.2.2.1  (09-20-2012)
Non Tax-Related Identity Theft

  1. Refer any taxpayer to the Identity Theft Hotline at 1-800-908-4490 when the taxpayer needs assistance regarding non tax-related identity theft with no known tax administration impact.

5.1.12.2.2.2.2  (09-20-2012)
Tax-Related Identity Theft

  1. Continue to work all tax-related identity theft issues in your inventory that have an impact on tax administration and do not refer such a case to the Identity Theft Hotline.

    Note:

    If you are contacted by a taxpayer who is a victim of identity theft, and there is no open case on the taxpayer, whether it is tax-related identity theft or non tax-related identity theft, you may refer the taxpayer to the Identity Theft Hotline.

5.1.12.2.2.3  (09-20-2012)
Taxpayer is Not a Victim of Identity Theft

  1. Follow normal collection procedures if the taxpayer does not establish he or she was a victim of identity theft.

  2. If a TC 971 action code was input, then request reversal using TC 972.

5.1.12.2.2.4  (09-20-2012)
Taxpayer Committed Identity Theft for purposes of Tax Evasion

  1. Develop the case as a fraud referral if the taxpayer performed identity theft by using a different TIN(s) for purposes of tax evasion.

  2. Review IRM 25.1.8, Fraud Handbook, Collection Field Function.

  3. Contact the local Fraud Technical Advisor (FTA) for any necessary assistance.

5.1.12.2.3  (09-20-2012)
Personally Identifiable Information — Security Breach Incident

  1. Follow the procedures in IRM 5.1.3.7.2, Personally Identifiable Information, when a loss of Personally Identifiable Information (PII) occurs and creates a security breach incident.

5.1.12.3  (09-20-2012)
Disaster Assistance and Emergency Relief Overview

  1. This section contains disaster assistance and emergency relief operating guidance for Field Collection (FC) employees.

  2. As applicable, see IRM 25.16, Disaster Assistance and Emergency Relief, IRM 25.16.1, Program Guidelines, and IRM 25.16.1.8 , Small Business/Self-Employed (SB/SE) General Procedures and Wage and Investment (W&I) General Procedures - Overview.

  3. Refer to the following subsections as applicable:

    • IRM 25.16.1.8.17, Overview of Disaster Relief Operating Procedures for Collection Field Function (FC)

    • IRM 25.16.1.8.18, CFf Management Guidelines for Response to Disasters

    • IRM 25.16.1.8.19, General CFf Operation Procedures

    • IRM 25.16.1.8.20, Managing Revenue Officer Inventory in Disaster Areas

    • IRM 25.16.1.8.21, Revenue Officer Inventory with "–S Freeze"

    • IRM 25.16.1.8.22, Soft Contact

    • IRM 25.16.1.8.23, Summons Enforcement

  4. Go to: http://mysbse.web.irs.gov/supportingsbse/outcomact/outreach/disaster/default.aspx for disaster information.

  5. Go to: http://www.tris.irs.gov/fema/ for a listing of IRS assistance determinations by year.

5.1.12.3.1  (05-20-2008)
Disaster Freeze Codes

  1. There are two types of disaster freeze codes, the –O freeze and the –S freeze. Both freezes are established systemically for a specific period of time and for location(s) identified by postal zip code(s).

    1. The –O freeze provides systemic penalty, interest, and compliance relief and stops most compliance notices.

    2. The –S freeze will perform the same functions as the –O freeze but does not provide automatic compliance relief and will not stop generation of notices.

5.1.12.3.2  (05-20-2008)
Case Activity

  1. Cases remain in status 26 when the -O freeze is input. Group managers (GMs) may move cases out of revenue officer (RO) inventory into hold files pending the release of the -O freeze.

  2. Taxpayer contact is restricted on all –O freeze cases during the specified freeze period unless exigent circumstances apply, e.g., jeopardy condition, statute expiration, etc.

    Note:

    If the taxpayer initiates contact during the freeze period, interaction is permissible but agreements are voluntary and not enforceable for the period the -O freeze remains in effect.

5.1.12.3.2.1  (05-20-2008)
Soft Contact

  1. See IRM 25.16.1.8.22, Soft Contact.

  2. Make a soft contact to determine if:

    1. the taxpayer is still affected by the disaster after the implementation of an –S freeze or after the release of an –O freeze, and/or

    2. voluntary commitments have not been met upon conclusion of the freeze.

    Note:

    It may be appropriate to consider a "Currently not Collectible" closure or a delay in collection activity for a specific period in such cases.

  3. Resume collection activity, as appropriate, only after determining that the taxpayer is not currently materially affected by the disaster.

5.1.12.4  (09-20-2012)
Taxpayer Recording of Interviews

  1. The taxpayer has the right under IRC § 7521, Procedures involving taxpayer interviews, to make an audio recording of an in-person interview. Under Notice 89-51, 1989-17 I.R.B. 21, ten calendar days advance written notice from the taxpayer is required.

  2. If the taxpayer does not provide ten calendar days advance written notice, then you have the option to either permit the recording or to set a new date for the interview. The taxpayer must supply his/her own means of recording. The recording can be by tape, stenography, or other means. Taxpayers have no right to make a video recording, and it is IRS policy to not allow video recordings.

  3. The taxpayer or representative does not have the right to record a telephone interview, with or without the Service's knowledge. If a taxpayer begins to record a conversation during a telephone call, and you are aware of it, advise the taxpayer or representative that the recording must be stopped. If the recording is not stopped, politely terminate the call, and document your case history accordingly.

5.1.12.4.1  (09-20-2012)
Agree with the Request

  1. Agree to the request to record an interview subject to the following provisions:

    1. Group manager(GM) approval received prior to accepting the request.

    2. Equipment is available and operational for the Service to produce its own recording.

    3. The recording takes place in an Internal Revenue Service office.

  2. When the recording equipment and/or a suitable location are not available, postpone and reschedule the meeting until the necessary equipment and a suitable location are available.

5.1.12.4.2  (09-20-2012)
Deny Requests for Video or Film Interviews

  1. Deny any request to videotape or film an interview.

  2. Attach a copy of the taxpayer's written request to film or videotape the interview to the case file.

5.1.12.4.3  (09-20-2012)
When to Interrupt the Recording

  1. The GM may stop an audio recording when the taxpayer’s behavior is clearly disruptive of the normal collection process.

  2. Attach a copy of the taxpayer's written request to make an audio recording of the interview to the case file.

  3. Note in your case history that your GM stopped the recording.

  4. Attach a copy of the recording to the case file.

5.1.12.4.4  (09-20-2012)
Audio Recording Procedures

  1. Arrange for your GM to be present at all times when a recording is being made.

    Exception:

    Arrange for another Service employee to be present if your GM is not available.

  2. Identify yourself, the date, time, place, and purpose of the meeting at the outset of the recording.

  3. Ask each participant in the meeting to do the following:

    1. identify themselves

    2. state their role in the proceeding

    3. acknowledge and consent to the making of an audio recording.

  4. Announce and identify additional participants when they arrive or when they leave during the meeting.

  5. Describe any written records presented during the proceeding in sufficient detail to make the verbatim recording a meaningful record when matched with the other documentation contained in the case file.

  6. State that the proceeding is completed and the recording is ended at the conclusion of the meeting.

  7. Turn the recording equipment off at the conclusion of the meeting.

  8. Attach a copy of the written request and the recording to the case file.

5.1.12.4.5  (05-20-2008)
Transcript of Recording

  1. Transcribe all or part of the recording when necessary to make the verbatim recording a meaningful record which can be matched with the documentation contained in the case file.

  2. The taxpayer may obtain a duplicate of the recording or a copy of our transcript of the interview provided the taxpayer pays for the cost of the reproduction or transcript in advance.

5.1.12.5  (05-20-2008)
Authorized IRS e-file Provider — Monitoring and Suitability

  1. The IRS performs monitoring and suitability checks on Authorized IRS e-file Providers. Monitoring may include reviewing IRS e-file submissions, investigating complaints, scrutinizing advertising material, checking adherence to electronic filing signature requirements, examining files, observing office procedures, and conducting suitability checks. Suitability checks are performed continuously regarding compliance issues.

  2. See IRM 3.42.10, Authorized IRS e-file Providers.

  3. See IRM 4.21.1, Monitoring the IRS e-file Program.

  4. Make a referral to the Andover Campus when you believe there are suitability issues regarding a Provider that need to be addressed:

    1. Send a suitability referral via e-mail to "*IRS E~Helpmail " .

    2. Use secure e-mail, as appropriate.

  5. Make a referral when you believe an e-file Provider requires monitoring.

    1. See IRM 4.21.1.4(2), Referrals .

    2. Exhibit 4.21.1-15, IRS e-File Monitoring Referral and Follow Up, contains the referral form template.

5.1.12.6  (09-20-2012)
Income Tax Assessed Against a Child

  1. IRC § 6201(c), Compensation of Child, permits IRS to treat certain income tax assessed against a child, to the extent of the amount attributable to income included in the gross income of the child solely by reason of IRC § 73(a), Treatment of amounts received , if not paid by the child, as having also been properly assessed against the parent.

  2. Refer to IRC § 6201(c) and the related regulations for the authority to assess against a child and to treat such assessment as having been properly made against the parent.

  3. Attempt to collect income tax assessed against a minor child from the minor child. Use good judgment when collecting from the income/assets of a minor child.

  4. Attempt to collect income tax assessed against a minor child from the parent only if you are unable to directly collect it from the minor child.

  5. Do not assess any amount of unpaid estimated tax required to be paid under IRC § 6654(b), Failure by individual to pay estimated income tax, or IRC § 6655, Failure by corporation to pay estimated income tax.

    Note:

    Area Directors and Campus Directors are not allowed to assess any amount of unpaid estimated tax required to be paid under IRC § 6654 or IRC § 6655.

  6. Base any assessments on tax returns of the minor child rather than estimates.

5.1.12.7  (09-20-2012)
Household or Agricultural Employee

  1. Follow normal BAL DUE processing to collect tax on the wages of household or agricultural employees.

  2. To help prevent future delinquencies, ensure that taxpayers know about voluntary withholding of income tax from the wages of household and agricultural employees. .

  3. Follow these procedures if taxpayers' employees want their employers to withhold tax from their wages:

    1. assist the taxpayer in preparing Form W–4 , Employee’s Withholding Allowance Certificate , and

    2. furnish the taxpayer with a copy of Circular E, Employer’s Tax Guide, for the taxpayer to deliver with Form W–4 to the employer.


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