5.7.6  Trust Fund Penalty Assessment Action

Manual Transmittal

August 05, 2013

Purpose

(1) This transmits revised IRM 5.7.6, Trust Fund Penalty Assessment Action.

Material Changes

(1) Minor editorial changes have been made throughout the text.

(2) Updated IRM 5.7.6.1.7(3) with guidance for issuance of Letter 1153W when revenue officer agrees with protest and added a reminder to determine if TC 130 should be reversed if all periods are conceded.

(3) Updated IRM 5.7.6.1.8 with guidance that Letter 1153W cannot be issued after a protest is forwarded to Appeals.

Effect on Other Documents

This material supersedes IRM 5.7.6, dated December 7, 2012. This IRM revision incorporates Collection Interim Guidance Memorandum SB-SE-05-1212-085, Interim Guidance for Letter 1153W, Proposed Trust Fund Recovery Penalty Rescission Notification, dated 12-03-2012.

Audience

Small Business/Self-Employed Collection Employees

Effective Date

(08-05-2013)

Scott Reisher
Director, Collection Policy

5.7.6.1  (08-27-2010)
Taxpayer's Response to Letter 1153(DO)

  1. After Letter 1153(DO) and Form 2751, Proposed Assessment of Trust Fund Recovery Penalty, have been properly delivered (IRM 5.7.4.7, Notification of Proposed Assessment), the responsible party has 60 days (75 if the letter was addressed outside of the United States) from the date of the mailing of the notice or the date of personal delivery to respond.

    A protest is timely if it is postmarked or mailed by certified or registered mail, so that the mailing date can be proven, on or before the 60th day (75th day if the letter was addressed outside of the United States) after the date the Letter 1153(DO) was mailed or personally delivered. A private postage meter stamp is not evidence of when a request for appeal was mailed; it merely establishes when it was stamped.

    In determining the timeliness of the appeal, the guidelines in IRC 7503 should be followed which state in part:

    When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday.

    Allow an additional 5 days beyond the response period allowed in the Letter 1153(DO) to enable the Service to receive and process all timely mailed requests.

  2. The responsible party can take the following actions in response to Letter 1153(DO):

    • Agree to the assessment by signing Form 2751

    • Appeal the proposed assessment

    • Provide no response

  3. The ATFR application will not allow you to proceed until one of the following actions occurs:

    • The 60-day (or 75-day) time period expires

    • Form 2751 is signed (which waives the 60-day restriction on notice and demand if signed by the taxpayer — IRM 5.7.4.7(2) and (3))

    • A protest letter is received

    • A jeopardy assessment is being made

  4. In all cases regardless of the taxpayer’s action, the revenue officer will complete TFRP (Trust Fund Recovery Penalty) processing and forward the case to Advisory, Control Point Monitoring (CPM) not later than 30 calendar days after the required response period allowed in the Letter 1153 (DO), (60 days after the date the Letter 1153 (DO) was mailed or personally delivered, 75 days if the letter was addressed outside of the United States). In the event that an employee is unable to meet the 30-day time period, he/she shall document the reason for the delay in the ICS history.

5.7.6.1.1  (08-27-2010)
No Response (Unagreed) Cases

  1. If the taxpayer fails to respond to Letter 1153(DO) within 60 days after the mailing or personal delivery date, (75 if the letter was addressed outside of the U.S.) plus five days to allow the Service to receive and process all timely mailed protests, then the case is considered unagreed.

  2. For regular assessments, follow the procedures in IRM 5.7.6.2 for requesting assessment of the TFRP. For cases requiring quick or prompt assessment action, follow the procedures in IRM 5.7.6.3.

    Note:

    Quick assessment action should be taken when there are less than 30 days remaining on the ASED; prompt assessment action should be taken when immediate collection action is needed on the account.

  3. Follow the procedures in IRM 5.7.7.2, Pre-Assessment Payment, for processing payments received from the responsible party prior to the actual assessment of the TFRP.

  4. If the taxpayer is unable to full pay the proposed assessment, follow the instructions in IRM 5.15.1, Financial Analysis Handbook, to determine the appropriate case resolution based on an analysis of the taxpayer's financial condition. This may include a pre-assessed CNC or pre-assessed installment agreement or, if appropriate, taking the necessary actions to have the TFRP account assigned via ICS.

5.7.6.1.2  (08-27-2010)
Agreed Cases

  1. If the taxpayer agrees to the assessment by signing Form 2751, prepare Letter 1155(DO) and deliver the letter to the responsible person no later than 14 calendar days after receipt of the signed Form 2751. Prepare the letter using the ATFR application whenever possible. Document the case file with an explanation if Letter 1155(DO) is delivered more than 14 days after receipt of the signed Form 2751.

  2. Input the date the Form 2751 was signed onto the ATFR application.

  3. For regular assessments, follow the procedures in IRM 5.7.6.2 for requesting assessment of the TFRP. For cases requiring quick or prompt assessment action follow the procedures in IRM 5.7.6.3.

    Note:

    Quick assessment action should be taken when there are less than 30 days remaining on the ASED; prompt assessment action should be taken when immediate collection action is needed on the account.

  4. Unless the responsible person has filed bankruptcy, request full payment from the responsible person when he or she agrees to the assessment by signing Form 2751.

    Note:

    Contact Insolvency for advice on how to proceed on cases where the responsible person has filed bankruptcy. See IRM 5.7.4.8.3, Responsible Party in Bankruptcy, for information on ensuring a timely proof of claim is prepared for these cases.

  5. Follow the procedures in IRM 5.7.7.2, Pre-Assessment Payment, for processing payments received from the responsible party prior to the actual assessment of the TFRP.

  6. If the taxpayer is unable to full pay the proposed assessment, follow the instructions in IRM 5.15.1, Financial Analysis Handbook, to determine the appropriate case resolution based on an analysis of the taxpayer's financial condition. This may include a pre-assessed CNC or pre-assessed installment agreement or, if appropriate, taking the necessary actions to have the TFRP account assigned via ICS.

5.7.6.1.3  (12-07-2012)
Appealing the Proposed Assessment

  1. Letter 1153(DO) advises the responsible party of his or her appeal rights. The form that the appeal must take is based on the dollar amount of the proposed assessment.

  2. Letter 1153(DO) also advises the responsible party that they may contact the revenue officer within ten days of the Letter 1153(DO) if:

    • They don't agree with the proposed assessment.

    • Have additional information to support their case.

    • Wish to try to resolve the matter informally.

      Note:

      In order to preserve their appeal rights, the responsible party must mail (or fax, if applicable) a written appeal within 60 days of the mailing or personal delivery of the letter (75 days if the letter is addressed to the responsible party outside of the United States). If the revenue officer does not agree with the information submitted informally, then the revenue officer should advise the taxpayer that they must follow the appeal procedures included in the Letter 1153(DO).

  3. TFRP cases are also eligible for Fast Track Mediation (FTM). This program is designed to expedite case resolution since the entire process normally takes 30-40 days to complete. Additional information can be found in Publication 3605, Fast Track Mediation - A Process for Prompt Resolution of Tax Issues. Publication 3605 should be provided to the taxpayer to explain the FTM process.

    Note:

    Fast Track Mediation involves Appeals employees serving as mediators and facilitating settlement discussions while jurisdiction of the case is still with Collection. The prohibition against ex parte communications between Appeals employees and originating function employees does not apply to FTM because the Appeals employees are not acting in their traditional Appeals settlement role. Ex parte communications, such as a private caucus between the Appeals mediator and Collection employees during the course of the mediation session, is permissible under the ex parte communication rules. Part of the role of the mediator is to meet separately with each side in order to bring about a resolution.

  4. The ASED is only extended for cases where the taxpayer files a proper appeal within the allowable time period; FTM has no impact on the ASED or the regular appeals procedures. Advise the taxpayer that even if they choose FTM, they must continue to follow the procedures in Letter 1153(DO) by filing the appropriate request within 60 days of issuance of the Letter 1153(DO) if they wish to have the case considered by the Appeals office in case the FTM is not resolved in their favor.

  5. Both the taxpayer and the revenue officer must agree to mediate. The taxpayer must have completed a Form 4180, Report of Interview with Individual Relative to Trust Fund Recovery Penalty or Personal Liability for Excise Tax, and supplied all requested back-up documentation related to the trust fund recovery penalty investigation. To initiate the FTM process, the revenue officer will complete a Form 13369, Agreement to Mediate, and a brief summary of issues in memorandum form and forward the documents to Appeals within three days of securing the taxpayer's signature.

  6. If the parties do not reach an agreement, then the case will be forwarded to Appeals through Advisory if the taxpayer followed the instructions in Letter 1153(DO) regarding the formal appeal process. The case will then be assigned to a different Appeals officer. If the taxpayer did not follow the formal appeal process, the case should be forwarded for assessment. The taxpayer may still file a claim for refund after assessment if appropriate payment has been made.

  7. If the revenue officer agrees with the information that was submitted informally or if the parties reach an agreement through the mediation process, then the revenue officer should change the determination by following the procedures in IRM 5.7.6.1.7.

  8. If the revenue officer does not change the determination based on the information submitted informally, he or she should advise the taxpayer to follow the formal protest procedures outlined in Letter 1153(DO) in order to protect his/her appeal rights.

  9. If the amount of tax liability proposed for the period is:

    Dollar Amount Type of Appeal
    $25,000 or Less Small Case Request
    More than $25,000 Formal Written Protest

    Note:

    If one tax period is more than $25,000 the taxpayer must submit a Formal Written Protest.

  10. IRM 5.7.6.1.4 contains the guidelines on the information that the taxpayer should include in a Small Case Request. IRM 5.7.6.1.5 contains the information that the taxpayer should include in a Formal Written Protest. The responsible party should submit any additional information or documentation that he or she wants the Settlement Officer/Appeals Officer to consider.

    Note:

    Usually appeals of penalty cases involve issues of responsibility and/or willfulness or how the penalty was calculated.

5.7.6.1.4  (04-13-2006)
Small Case Request

  1. The potentially responsible party should submit a Small Case Request in duplicate and should include:

    • A copy of the Letter 1153(DO) or the responsible party's name, address, Social Security number, and any other identifying information.

    • A statement that the responsible party wants an Appeals conference.

    • A list of issues the responsible party disagrees with and an explanation of why he or she disagrees.

5.7.6.1.5  (04-13-2006)
Formal Written Protest

  1. The potentially responsible party should submit a Formal Written Protest in duplicate and should include:

    • The responsible party's name, address, and Social Security number.

    • A copy of the Letter 1153(DO) or date and number of the letter.

    • A statement that the responsible party wants a conference.

    • The tax periods involved (from Form 2751).

    • A list of issues the responsible party disagrees with and an explanation of why he or she disagrees.

      Note:

      The following statement must be added to declare that the information submitted in this item is true: "Under penalties of perjury, I declare that I have examined the facts presented in this statement and any accompanying information, and, to the best of my knowledge and belief, they are true, correct, and complete."

    • If applicable, the law or other authority the responsible party is relying on to support his or her arguments along with an explanation of what the law is and how it applies.

  2. If an authorized representative (Form 2848, Power of Attorney and Declaration of Representative, or a properly written power of attorney or authorization is acceptable) prepares and signs the protest for the responsible party, he or she must substitute a declaration stating:

    • That he or she submitted the protest and accompanying documents.

    • Whether he or she knows personally that the facts stated in the protest and accompanying documents are true and correct.

5.7.6.1.6  (12-07-2012)
Receipt of Protest

  1. If the responsible party responds to Letter 1153(DO) within the appropriate time frames (see IRM 5.7.3.6.2, Impact of Letter 1153(DO) on Assessment Statute, and IRM 5.7.6.1(1)), review the request within 10 days of receipt to determine if the information is complete as discussed in IRM 5.7.6.1.4, Small Case Request, or IRM 5.7.6.1.5, Formal Written Protest.

    Note:

    A protest filed within the appropriate time frame is considered timely even if it is incomplete. Retain the protest mailing envelope (or original faxed document) so the timeliness of the protest can be determined. Stamp the protest with the date it was received and document receipt of the protest in the ICS case history. If a protest is timely filed in a case in which Letter 1153 (DO) was properly delivered before the expiration of the ASED, the ASED will not expire before 30 days after Appeals’ final administrative determination or 90 days after the date of the mailing or delivery of the Letter 1153 (DO), whichever is later.

    Note:

    A timely filed protest that is signed by a representative, who has either failed to submit a power of attorney or submitted a defective one, is considered timely. This original filed protest is still valid even if the responsible party later decides to represent him/herself.

  2. If the information in the protest is incomplete, contact the taxpayer/representative to inform him/her that any defects in the protest should be corrected. If the responsible party does not provide a perfected protest prior to the end of the 30-day period to complete TFRP processing and forward the case to Advisory CPM, the revenue officer should still follow the procedures in IRM 5.7.6.1.8. Appeals will accept jurisdiction of a TFRP protest even if all information as outlined in IRM 5.7.6.1.4, Small Case Request, or IRM 5.7.6.1.5, Formal Written Protest, is not included in the protest.

  3. The responsible party is not entitled to appeal the proposed TFRP if he/she did not file a timely protest. Refer to instructions contained in IRM 5.7.6.1 to determine whether the protest is timely. If the taxpayer’s protest is untimely, the employee handling the proposed TFRP assessment will:

    1. Contact the taxpayer to notify that the protest was late and the Service will assess the TFRP;

    2. Advise that the taxpayer may file Form 843, Claim for Refund and Request for Abatement, once the TFRP is assessed;

    3. Not transmit the case to Appeals;

    4. Assess the trust fund recovery penalty.

5.7.6.1.6.1  (12-07-2012)
Review of TFRP Protest for New Information

  1. The revenue officer will review the taxpayer protest to determine if the taxpayer has raised new information. New information is information that was not previously discussed with or raised by the taxpayer, or not previously investigated and documented by the revenue officer.

    Example:

    A revenue officer conducts a Form 4180 interview with a taxpayer who states he did not sign checks for the business. Subsequent to the Form 4180 interview, the revenue officer documents a review of a sampling of checks and determines that the individual did sign checks for the quarters of the proposed TFRP. The taxpayer submits a protest stating that he did not sign checks for the business. This is not new information.

    Example:

    A taxpayer submits a protest stating that he was not willful because the business did not have funds to pay the taxes. The revenue officer had previously documented that the taxpayer allowed payments to other creditors in preference to the taxes. This is not new information.

    Example:

    A taxpayer submits a protest that states he was out of the country for a sustained period during the liability periods, and had not previously shared this information with the revenue officer. This is new information that may require additional investigation by the revenue officer.

5.7.6.1.6.2  (12-07-2012)
Protest Does Not Include New Information

  1. If the taxpayer protest does not identify new information requiring additional investigation by the revenue officer, the revenue officer will:

    1. Document receipt of the protest in the ICS history with a statement that the taxpayer protest was received on (date), did not contain new information and the case is being forwarded to the group manager for review prior to transmission to Advisory.

      Caution:

      Due to ex parte communication rules the revenue officer should not make any commentary in the ICS or ATFR histories regarding the merits of the protest and should not prepare any memorandum discussing the issues or the basis for the original assertion recommendation. (See Revenue Procedure 2012-18, Ex Parte Communications between Appeals and other Internal Revenue Service Employees.)

    2. Input the "Protest Received" date on ATFR.

    3. Submit the TFRP case file for managerial review.

      Note:

      The manager must ensure that no prohibited ex parte communications are included in the TFRP case file or the case history before approving the transmittal of the case to Advisory.

      Example:

      A revenue officer received a protest from a taxpayer protesting a proposed TFRP. The revenue officer determined the protest did not contain any new information, and documented receipt of the protest in the ICS case history with a statement that the case would be forwarded for managerial review prior to submission to CPM. The revenue officer did not violate the ex parte communication rules in transmitting the administrative file to Appeals as no history discussing the merits of the issues raised in the taxpayer’s protest were documented in the ICS case history.

5.7.6.1.6.3  (12-07-2012)
Protest Includes New Information

  1. If the taxpayer protest includes new information requiring additional investigation by the revenue officer, the revenue officer will:

    1. Document receipt of the taxpayer protest in the ICS history and only the facts concerning the new information requiring additional investigation.

    2. Input the protest received date on ATFR.

    3. Conduct additional investigation of the new information as appropriate, and document the ICS history with the investigation actions and results of the investigation. The revenue officer will complete the additional development within the 30-day period to complete TFRP processing. In the event that an employee is unable to meet the 30-day time period, he/she will document the reason for the delay in the ICS history.

  2. If the additional investigation results in a decision by the revenue officer to concede all or a portion of the assertion, follow the procedures in IRM 5.7.6.1.7, Revenue Officer Agrees With Protest.

  3. If the additional investigation does not result in a decision by the revenue officer to concede, follow procedures in IRM 5.7.6.1.8, Revenue Officer Disagrees With Protest.

5.7.6.1.7  (08-05-2013)
Revenue Officer Agrees With Protest

  1. If the information that the responsible party submits changes the revenue officer's determination on the case, the revenue officer may concede the case in whole or in part. See IRM 5.7.6.1.8, Revenue Officer Disagrees With Protest, for the procedures to follow if the revenue officer does not change his or her determination based on the information that was submitted with the protest.

  2. To make the appropriate change on Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, input the protest received date on ATFR and change the responsibility to partial or none for each period. The TFRP should then be re-calculated and the applicable forms updated. Group manager approval must be secured on an amended Form 4183.

  3. When the decision is made to reverse all or a portion of the periods on Letter 1153(DO), the revenue officer will take the following actions:

    • Document ICS history with the facts supporting the decision to reverse the prior recommendation.

    • Amend Form 4183 on ATFR and submit the TFRP case file for managerial review and approval.

    • After group manager approval of the amended Form 4183, generate Letter 1153W, Proposed Trust Fund Recovery Penalty Rescission Notification, using ATFR for the applicable periods no longer recommended for assertion.

    • Issue Letter L1153W and a copy of Letter 1153(DO) to the taxpayer. Retain a copy of Letter 1153W in the TFRP case file.

    • If the assessment recommendation is reversed for all periods, the TFRP file should not be forwarded to CPM. Retain the information in the business case file.

      Note:

      Letter 1153W cannot be issued after a protest has been forwarded to Appeals.

    Caution:

    Due to the clarification on ex parte communication with Appeals contained in Revenue Procedure 2012-18, Ex Parte Communications between Appeals and other Internal Revenue Service Employees, which applies to communications that take place after May 15, 2012, it is important that revenue officers document ICS regarding the determination factors only for those periods being conceded. The revenue officer should not make any comments in the ICS or ATFR histories regarding the merits of the protest for the periods not conceded and should not prepare any memorandum discussing the issues or the basis for the original assertion recommendation.

    Note:

    If Letter 1153W is issued, it will nullify Letter 1153(DO) for the periods listed on Letter 1153W, and there will be no effect on the Assessment Statute Expiration Date (ASED).

  4. If a responsible party protests the entire assessment and:

    IF: THEN:
    the revenue officer concedes the case in part make the appropriate changes per IRM 5.7.6.1.7(2), issue Letter 1153W for the conceded periods only, and follow the procedures in IRM 5.7.6.1.8 for the portion of the TFRP that is still being protested
    the revenue officer concedes the case in whole make the appropriate changes per IRM 5.7.6.1.7(2) and issue Letter 1153W

  5. If the taxpayer is only protesting part of the assessment and the revenue officer agrees with the information submitted, the revenue officer will make the changes on Form 4183 as indicated in IRM 5.7.6.1.7(2), issue Letter 1153W for the tax periods being conceded, and attempt to secure the taxpayer's signature on the updated Form 2751.

    Example:

    An RO conducts a TFRP investigation, secures managerial approval of Form 4183, and issues Letter 1153(DO). After issuing Letter 1153(DO), the RO receives a protest with additional information that results in a decision by the RO to reverse the original assessment recommendation in part. The RO documents ICS, addressing only the information related to the periods being conceded, prepares an amended Form 4183, and submits the TFRP case file for managerial review and approval. Following managerial approval of the amended Form 4183, the RO generates and issues Letter 1153W to the taxpayer for the periods being conceded only. The RO follows guidance in IRM 5.7.6.1.8, Revenue Officer Disagrees With Protest, to transmit the non-conceded periods to Advisory.

    Reminder:

    If the TFRP will not be assessed on any periods, the TC 130, Entire Account Frozen from Refunding, which is systemically generated following the input of Letter 1153 delivery date on ATFR, must be reviewed to determine if reversal of the TC 130 is appropriate. The TC 130 may remain appropriate on an individual account, as there may be additional pending TFRP assessments from a different business or related sole proprietor liabilities. If none of these circumstances are present, initiate action to input TC 131, Reversal of TC 130 Refund Freeze.

5.7.6.1.8  (08-05-2013)
Revenue Officer Disagrees With Protest

  1. If the information that the responsible party submits does not change the revenue officer's determination on the case, or if the responsible party protests the entire assessment and the revenue officer only concedes the case in part, the revenue officer will:

    1. Secure managerial concurrence of decision.

    2. Attempt to make telephone contact with the taxpayer to explain the results of the additional investigation.

    3. Document the ICS history, notating if contact was made with the taxpayer and the details of the discussion.

    4. If the revenue officer is unable to make contact with the taxpayer within a reasonable time period, the revenue officer will forward the TFRP case file to the group manager.

  2. Upon receipt of the TFRP case file, the group manager will take the following actions:

    1. Review the file to determine that the assessment is fully supported and the case file contains all the necessary documents, and document this review action in ICS.

    2. Review the TFRP case file and ICS history to determine if any new information has been sufficiently addressed and documented.

    3. If the new information requires additional investigation, the group manager will return the TFRP file to the revenue officer.

    4. If the new information has been sufficiently addressed and documented, and the revenue officer was unable to make telephone contact with the taxpayer, the group manager will prepare a letter to the taxpayer that identifies the new information and a brief summary of the results of the additional investigation.

    5. Document issuance of the letter to the taxpayer in the ICS history, and place a copy of the letter in the TFRP case file.

      Note:

      The group manager must ensure that no prohibited ex parte communications are included in the TFRP case file or the case history before approving the transmittal of the case to Advisory. If the case history contains commentary that is determined to violate the ex parte communication rules, the manager will take appropriate action, which could include sharing the information with the taxpayer, or following ICS history removal procedures detailed in IRM 5.1.10.7, Case Histories.

  3. After group manager approval, the revenue officer will take the following actions:

    1. Send Letter 1154(DO) to the responsible party and enter the date in ATFR.

    2. Generate and print Form 2749, Request for Trust Fund Recovery Penalty Assessment, and Form 3210, Document Transmittal.

      Note:

      If the taxpayer submits a timely appeal do not make a quick assessment. (See IRM 5.7.3.6.2(2).)

    3. Input the "2749 to CPM" date onto ATFR

    4. Forward the case file, with the printed Form 2749 and supporting documents, including the protest mailing envelope (or original faxed document) in the appropriate case file tabs, (Document 9708), to Advisory. Advisory will review the file for completeness and forward to Appeals. Revenue Officers are NOT to send the case file directly to Appeals.

    Example:

    A revenue officer received a protest from a taxpayer protesting a proposed TFRP. The revenue officer documented the ICS case history that the protest contained new information. The revenue officer conducted an additional investigation of the new information and determined that the recommendation to assert the TFRP remained appropriate for three of the four quarters originally recommended for assertion. The revenue officer amended the Form 4183 on ATFR to remove the quarter no longer recommended for assertion. The revenue officer contacted the taxpayer by telephone to advise the taxpayer of the results of the investigation and documented the ICS history of the contact. The revenue officer did not violate the ex parte communication rules in transmitting the administrative file to Appeals because the additional investigation results were shared with the taxpayer, which was documented in the ICS case history. The revenue officer forwarded the TFRP case file to the group manager, who reviewed it to determine if the new information had been sufficiently addressed and documented and that no prohibited ex parte communications were included in the TFRP case file or the case history before approving the transmittal of the case to Advisory.

    Example:

    A revenue officer received a protest from a taxpayer protesting a proposed TFRP. The revenue officer documented the ICS case history that the protest contained new information. The revenue officer conducted an additional investigation of the new information and determined that the recommendation to assert the TFRP remained appropriate. The revenue officer attempted to contact the taxpayer by telephone to advise the taxpayer of the results of the investigation, but was unable to reach the taxpayer and documented ICS. The revenue officer submitted the TFRP case file to the group manager, who after reviewing the case file to determine if the new information had been sufficiently addressed and documented, issued the taxpayer a letter advising of the final determination, documented ICS, and placed a copy of the letter in the TFRP case file. No ex parte communication rules were violated by transmitting the administrative file to Appeals because the additional investigation results that were documented in the ICS history were shared with the taxpayer in the letter from the group manager.

    Example:

    A revenue officer received a protest from a taxpayer protesting a proposed TFRP. The revenue officer documented the ICS case history that the protest contained new information. The revenue officer conducted an additional investigation of the new information and determined that the recommendation to assert the TFRP remained appropriate. The revenue officer documented the results of the additional investigation, but did not contact the taxpayer by telephone to advise the taxpayer of the results of the investigation and the manager did not send a letter to the taxpayer containing the results of the additional investigation. The revenue officer forwarded the TFRP case file to Advisory for transmission to Appeals. The revenue officer violated the ex parte communication rules because the written communication in the ICS history addressing the new information raised in the taxpayer’s protest was not shared with the taxpayer.

  4. The administrative TFRP case file transmitted to Appeals is not an ex parte communication since it sets forth the boundaries of the dispute between the taxpayer and the Internal Revenue Service and forms the basis for Appeals to assume jurisdiction. The TFRP case file should include all information that supports the original recommendation, as well as any work papers reflecting the manner in which payments have been applied, specifically any payments directed by the taxpayer, court order, etc.

  5. Upon receipt of the TFRP package, Advisory will conduct a technical review of the case file, and if it is complete and acceptable, will forward it to Appeals. (See IRM 5.7.6.1.9)

  6. Letter 1153W cannot be issued after a protest has been forwarded to Appeals.

5.7.6.1.9  (08-27-2010)
Transmittal of Case to Appeals

  1. After receipt of the TFRP file, Advisory will review the case file for completeness and the information available on ATFR prior to transmitting the case to Appeals.

  2. When the case is sent to Appeals, Advisory will:

    1. Enter onto ATFR the date sent to Appeals.

    2. Annotate Form 2749 in red "ASED extended by TBOR 2" and the earliest ASED for cases where a timely protest was filed. This will alert Appeals to any statute situation and alert Advisory of the need to quick assess (IRM 5.7.6.3) if the proposed assessment is sustained by Appeals.

    3. Attach Form 3210 to the case file. Notate "Case under Taxpayer Bill of Rights 2" . The remarks section of Form 3210 must reflect "TFRP Appeal Case - Advisory Review Completed."

    4. Control the case on ICS by creating a case and a Non-Field (NF) OI under the SSN of the potentially responsible person.

  3. Submit related cases (two or more responsible persons for the same corporation) together whenever possible.

    Note:

    For cases where one or more responsible party agrees to the assessment and at least one other party is protesting the assessment, submit all files together to Advisory for cases that are being protested. Since the ASED is not protected for the cases that are not being protested, Advisory will complete the review and will submit the non-protested cases for assessment and will forward the protested cases to Appeals.

5.7.6.1.10  (08-27-2010)
Controlling and Monitoring Appeals Cases

  1. Each territory should establish a system for reviewing decisions made by Appeals to determine whether quality issues exist that need to be addressed. The territory should arrange periodic meetings with Appeals to discuss trends, workloads and other issues of interest. Advisory may also establish a process to follow-up on overage Appeals cases.

  2. If Appeals sends a case back asking for further information, provide the information within 45 calendar days. This date may be extended by mutual agreement. Appeals will retain jurisdiction on these cases if the ASED is held open only by the timely protest. This is to preserve the time in Appeals plus 30 days, under IRC 6672(b).

  3. Once a final determination has been made, Appeals will:

    • Notify Advisory of its decision.

    • Notate their memorandum "ASED expires 30 days from (the specific date Appeals has made their determination)" when applicable.

    Advisory will update ATFR with the date the case was returned from Appeals and the decision (i.e.,No change, Partial Change, or Not Responsible) made by Appeals. Advisory will also make an ICS history entry with the same information and note when ATFR was updated.

    Note:

    If a responsible person has been determined to be responsible for only part of a quarter, the amount of that quarter will have to be changed to reflect the amount specified in the decision by Appeals.

  4. If Appeals does not sustain the original proposed assessment, a new Form 2749 must be printed to reflect the correct TFRP amount based on the decision by Appeals.

  5. Advisory will be responsible for completing any necessary quick assessment action (IRM 5.7.6.3) and ensuring the ASED is protected on these Appeals cases.

5.7.6.2  (08-27-2010)
Revenue Officer Assessment Actions

  1. The revenue officer will generate and print a Form 2749 for each responsible person. The revenue officer will check IDRS to make sure all periods are included on Form 2749.

    Note:

    Do not include any periods for which there is no outstanding trust fund balance.

  2. On Form 2749, the revenue officer will:

    1. Annotate "Bankruptcy" in red on top of the form and provide basic bankruptcy information for cases where the responsible party or the employer has filed bankruptcy.

    2. Verify the correct entity name, address and TIN by using CC INOLE.

      Note:

      Prepare Form 2363, Master File Entity Change, when the information on CC INOLE is not current.

    3. Leave blank the blocks for "Amount of Penalty Assessed," "Assessment Date," and "Identifying Number."

  3. The revenue officer will prepare Form 3210A, enter the "2749 to CPM" date onto ATFR, and forward the case file to Advisory.

    Note:

    Include Form 2750 if a waiver to extend the statutory period to assess the TFRP was secured from the taxpayer. Verify that the form was signed and dated before the ASED expiration by both the responsible person (or authorized representative) and an authorized Service delegate.

  4. If levy information was secured for a responsible party, prepare Form 4844, Request for Terminal Action, so the levy information can be loaded to the IDRS levy file. The name, address, and TIN of the responsible party will be included on the Form 4844, and the Remarks section will contain:

    • Levy source name and address

    • Ending period of current tax year

    • Current IDRS cycle period

    • Wage Earner Code (P-Primary if taxpayer files Form 1040 individually or if the taxpayer files a joint Form 1040 and has the primary TIN; S-Secondary if the taxpayer files a joint Form 1040 and has the secondary TIN)

    • Levy Literal = "RT"

5.7.6.3  (08-27-2010)
Quick and Prompt Assessment Actions

  1. Quick assessment procedures are required when the assessment statute expires within 30 days.

    Note:

    If a timely appeal is received, do not make a quick assessment. (See IRM 5.7.3.6.2(2).) Advisory is responsible for making the quick assessments once the appeals determination is final (IRM 5.7.6.1.10).

  2. Prompt assessment procedures should be used when collection appears to be at risk and the intention is to proceed with collection action immediately following the period for notice and demand.

  3. Do not prompt assess the TFRP if:

    • The taxpayer will be granted or already has an existing undefaulted installment agreement.

    • The assessment will be reported as Currently Not Collectible.

    • There are no distrainable assets or levy sources.

    • No enforcement action is planned.

  4. Quick or prompt assessment for a TFRP may be made only after the taxpayer takes one of the following actions:

    • Signs Form 2751

    • Fails to respond to the Letter 1153(DO) within the appropriate time period

    • Completes the appeal process

  5. Quick and prompt assessments may be submitted as facsimile (fax) requests (IRM 5.7.6.3.1).

    • Note:

      Ensure that the information is submitted to the Manual Assessment Unit at the Ogden SB/SE Compliance Center since only that center is staffed to make these types of assessments.

  6. The initiating office will prepare a separate Form 2859, Request for Quick or Prompt Assessment, for each period that is to be assessed. If one period on Form 2749 must be quick assessed in order to protect the statute, all periods on the Form 2749 must be quick assessed. Complete Form 2859 with all necessary information, including the initiator's name and address. Also include information as to whether the assessment is "agreed" or "unagreed." Managerial approval of Form 2859 is required.

    Reminder:

    Only use "agreed" if the taxpayer signed Form 2751.

  7. For fax assessments, the Ogden Manual Assessment Unit will prepare Form 3552, Prompt Assessment Billing Assembly, and forward it to the initiator. The initiator will immediately deliver or mail certified Parts 3 and 4 of Form 3552, along with Publication 1, to the taxpayer. Notice 960 may also be included with Form 3552 to remind the taxpayer of the procedures to follow in order to file a claim for refund and request abatement of the liability. Multiple Forms 3552 for the same taxpayer may be mailed together. Accounting Control/Services will also forward copies of the Forms 2749 and 3552 to the TFRP unit in Compliance Services Collection Operations (CSCO) for input of the appropriate cross-referencing information and UNLCER information.

  8. Send the TFRP case file to CPM Advisory where it will be maintained until retired to the Federal Records Center (see IRM Exhibit 1.15.28-1 for TFRP records retention information).

5.7.6.3.1  (08-27-2010)
Fax Requests for Quick or Prompt Assessments

  1. For fax requests, the initiating office will fax the following information to the Ogden Manual Assessment Unit:

    • Form 3210, Document Transmittal, listing each manually assessed period, one per line, so the assessment DLN can be written next to the period and faxed back to the originator

    • Parts 1 of Form 2859 (a separate Form 2859 is required for each period)

    • Parts 1 of Form 2749

      Note:

      These forms must be submitted for each separate period that is to be assessed.

  2. Upon receipt, the Ogden Manual Assessment Unit will process the request and fax the Form 3210 to the initiator and provide the 23–C date and the DLN.

  3. After receiving the documents from the initiator and making the assessment, the Ogden Manual Assessment Unit will send a copy of Form 2749 (with the DLN and 23–C date entered) and Form 3552 to the TFRP unit in CSCO for input of the appropriate cross referencing and UNLCE information.

5.7.6.4  (12-07-2012)
Case File Documentation

  1. A completed TFRP case file will consist of the following documents:

    Form/Letter Description
    Form 3210A Document Transmittal for Trust Fund Recovery Penalty Cases
    Form 2749 Request for Trust Fund Recovery Penalty Assessment
    Form 4183 (including page 4) Recommendation Re: Trust Fund Recovery Penalty Assessment
    Form 4180 (or an explanation as to why the form is not included) Report of Interview or Personal Liability for Excise Tax with Individual Relative to Trust Fund Recovery Penalty
    Letter 1153(DO) with proof of mailing, if not personally delivered Letter giving taxpayer 60–day notice of proposed Trust Fund Recovery Penalty (file copy must be dated)
    Form 2751 Proposed Assessment of Trust Fund Recovery Penalty
      Corporate ICS balance due case history
      TFRP Investigation history (ATFR or otherwise)
      Collectibility determination (or reference to history date when collectibility determination was completed if not prepared as a separate document)
      Core documentation items per IRM 5.7.4.2.4, Evidence That May Support Recommendations, or an ICS history stating why not secured or included in the case file

  2. Copies of the following documents, if secured or prepared as part of the TFRP investigation, must also be included in the TFRP case file:

    Form/Letter Description
    Form 433A or Form 433F Collection Information Statement
    Form 2750 Waiver Extending Statutory Period for Assessment of Trust Fund Recovery Penalty
      Photocopies of related Forms 941, Employers Quarterly Federal Tax Return or other tax returns
    Form 9327 Nonassertion Recommendation of Uncollectible Trust Fund Recovery Penalty or of Uncollectible Personal Liability for Excise Tax
    Form 4181 Questionnaire Relating to Federal Trust Fund Tax Matters of Employer
    Letter 1154(DO) Letter advising that protest is being forwarded to Appeals
    Letter 1155(DO) Letter advising taxpayer the Service received taxpayer's consent to assess Trust Fund Recovery Penalty
    Form 2859 Request for Quick or Prompt Assessment
    Form 2644 Recommendation for Jeopardy or Termination Assessment
    Form 3552, Part 5; proof of certified mailing, if not personally delivered, or the taxpayer's copies of Form 3552 (Parts 3 and 4) Prompt Assessment Billing Assembly
    Form 3210 with DLN and assessment date from Campus Document Transmittal

  3. Other information that must be included in the TFRP case file, if it was secured or prepared, includes:

    • Protest letters along with the mailing envelope

    • Documents submitted with a responsible person’s protest

    • Copy of letter issued to taxpayer by the group manager concerning investigation results of new information provided with a protest

    • Back-up documentation for collectibility determinations

    Note:

    Adequate supporting documentation must be contained in the file(s) to fully support all recommendations for assertion. If the core documentation items listed in IRM 5.7.4.2.4, are not included in the case file, document the ICS history as to why they are not included and are not necessary.

  4. Create and maintain a separate TFRP file for each party against whom the TFRP is assessed. If multiple related assessments are made with regard to a single employer, the supporting documentation should be maintained in the key file (Document 9600C) and cross-referenced in the supplemental files (Document 9526). Keep all related TFRP files together whenever possible (see IRM 5.7.6.1.9(3) for situations when not all parties are appealing the assessment).

    Note:

    If there are no responsible parties being assessed the TFRP on a particular account (for example, if all responsible parties were determined to be not collectible), maintain the TFRP files with the balance due case file. Do not submit these files to Advisory.

  5. Include copies of any approved Forms 4183, Forms 9327, as well as any Form 2750 waivers that were secured in the balance due case file.

5.7.6.5  (08-27-2010)
Retrieving TFRP Case Files

  1. TFRP case files are maintained in the Control Point Monitoring unit in Advisory for two years after the assessment. After two years the files are sent to the Federal Records Center where they are destroyed 12 years after assessment (this allows for the CSED plus 2 years for the taxpayer to file a claim for refund (Exhibit 1.15.28-1, Item 41(c)).

  2. Submit requests for TFRP case files to the CPM unit in the office where the assessment was made. If the case file is no longer in the CPM unit, the CPM unit will follow the guidelines in IRM 1.15.4.9 for requesting records from the Federal Records Center using Form 2275, Records Request, Charge, and Recharge.

    Note:

    If you are unsure where the assessment was made, contact your local Advisory office for assistance.


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