5.20.1  Abusive Tax Avoidance Transaction Program

Manual Transmittal

June 20, 2013

Purpose

(1) This transmits revised IRM 5.20.1, Abusive Tax Avoidance Transaction Program.

Material Changes

(1) IRM 5.20.1 title was changed.

(2) IRM 5.20.1.1(1) was revised and a note was inserted to explain a name change by Examination from ATAT to ATTI.

(3) IRM 5.20.1.1(2) ATAT definition expanded.

(4) IRM 5.20.1.1(3) moved to IRM 5.20.1.1(4) and examples of ATAT promotion types added here.

(5) IRM 5.20.1.2 material updated.

(6) IRM 5.20.1.3 title changed and additional material added to describe general sources of ATAT casework.

(7) IRM 5.20.1.3(3) moved to IRM 5.20.1.4.

(8) IRM 5.20.1.4 moved to IRM 5.20.1.5 and additional material added to describe casework directed to ATAT by policy decision.

(9) IRM 5.20.1.5 title changed and additional material added to clarify ways revenue officers can assist in examination investigations and the role of the ATAT Coordinator in receiving and assigning early intervention assignments.

(10) IRM 5.20.1.6 ATAT Collection Coordinator Responsibilities moved to IRM 5.20.1.7. Added new subsection here to clarify Collection's role in promoter investigations.

(11) IRM 5.20.1.7 moved to IRM 5.20.1.10 and ATAT Collection Coordinator Responsibilities moved here and expanded.

(12) IRM 5.20.1.8 added new subsection here to discuss consideration for transferring and assigning ATAT casework within Collection.

(13) IRM 5.20.1.9 added subsection to explain the various inventory reports available to help identify ATAT inventory.

(14) IRM 5.20.10 Prioritization of ATAT work clarified and expanded.

(15) Editorial corrections and changes made throughout.

Effect on Other Documents

This material supersedes IRM 5.20.1, dated July 20, 2010.

Audience

Distribution of this chapter is being made to all Collection employees including supervisory and management personnel in all Area offices. Additionally, distribution is being made to all Appeals offices, all Criminal Investigation offices, and all Counsel offices to enhance cooperation and coordination.

Effective Date

(06-20-2013)

Scott D. Reisher
Director, Collection Policy
Small Business/Self-Employed

5.20.1.1  (06-20-2013)
Overview of Abusive Tax Avoidance Transaction (ATAT) Program

  1. This IRM serves as a quick reference guide for collection procedures on Abusive Tax Avoidance Transactions (ATAT) investigations. It provides an overview of the Collection ATAT program and refers the reader to supporting references. Refer to IRM 4.32, Abusive Transactions, for additional guidance on Servicewide ATAT programs.

    Note:

    In FY 2010, SB/SE Examination created the office of Abusive Transaction and Technical Issues (ATTI) which includes the program formerly know as ATAT. SB/SE Collection continues to use the acronym ATAT for its abusive transactions program.

  2. Definition of ATAT

    An abusive tax avoidance transaction includes the organization or sale of any plan or arrangement promoting false or fraudulent tax statements or gross valuation misstatements, aiding or assisting in the preparation or presentation of a return or other document to obtain tax benefits not allowed by law, and actions to impede the proper administration of Internal Revenue laws. This general definition includes both tax shelters as defined in various sections of the IRC and other types of abusive tax promotions. These strategies may be organized and marketed, often through the internet. The definition is not merely limited to activities that reduce tax liability but may also include transactions that conceal assets and/or income from Collection.

  3. ATAT promotions include, but are not limited to, programs that rely on:

    • False statements about the allowance of tax benefits to participants that are contrary to clearly established law.

    • Intentional manipulation or misapplication of IRC sections to improperly claim tax benefits.

    • Sham arrangements having no economic significance or business purpose other than the avoidance or evasion of tax.

    • Gross valuation misstatements that ascribe a value to an asset or service that is at least twice the correct value and result in a tax reduction.

    • Noncompliance with disclosure requirements of IRC 6111, Disclosure of Reportable Transactions.

    • Noncompliance by material advisors with the list maintenance requirements of IRC 6112 , Material Advisors of Reportable Transactions Must Keep Lists of Advisees, etc.

    • Attempts to impede the proper administration of tax laws.

    • Gross overstatement of withholding or refundable credits to obtain false refunds.

  4. With some schemes and promotions, cross functional Issue Management Teams (IMT) that are integrated with Counsel are established. See IRM 4.32.1.4 for additional guidance. The role of the IMT is to:

    • Develop strategy and guidance for an issue

    • Provide a focal point for an issue

    • Provide a consistent approach for in-process issues

    • Act as a coordination point with other operating divisions, Counsel and within SB/SE.

    A list of current IMTs can be found on the Abusive Transactions website at:http://mysbse.web.irs.gov/AboutSBSE/Exam/at/imt/default.aspx

5.20.1.2  (06-20-2013)
Collection's Role in ATAT

  1. There is an ATAT program in each Collection Field Area with one or more ATAT Coordinators (group managers) who provide oversight and act as a central point of coordination for the ATAT program in their Area. SB/SE Collection Policy supports Area ATAT programs by providing policy guidance, technical assistance and training.

  2. The Collection ATAT program partners with other divisions including SB/SE Examination and LB&I, to assist in the development of abusive scheme promoter investigations and to ensure effective collection action is taken, when necessary, as early as is allowable by law against promoters of, and participants in abusive schemes.

  3. In addition to supporting Exam ATTI programs, ATAT revenue officers are in a position to uncover new or similar abusive schemes and possible promoters in the course of their collection investigations. This information can then be provided to the SB/SE Lead Development Center (LDC) which is the conduit for promoter leads. Procedures for making referrals to the LDC are listed in IRM 5.20.8.1 , Making a Referral to the SB/SE Lead Development Center (LDC).

5.20.1.3  (06-20-2013)
Sources of ATAT Casework

  1. Most identified balance due ATAT cases are a direct result of an examination. Organizational priorities have dictated that the Examination function target, classify, and examine these abusive promotion cases. Continued emphasis on abusive schemes by Examination and other operating divisions has resulted in a steady flow of abusive tax promotion cases into revenue officer inventories.

  2. The Collection ATAT program provides essential support for settlement initiatives related to certain abusive transactions. Groups of taxpayers that have participated in a specific abusive transaction are sometimes offered an opportunity to accept a settlement of the examination issues related to that transaction. The terms of the settlement are specific and the time frame for accepting the settlement offer may be firmly established. The settlements are temporary compliance projects with specific conditions related to the payment of the liability. Collection plays a key role in ensuring those conditions are met. For this type of casework, procedures are established and made available to the revenue officers who are assigned collection referrals..

  3. Refund schemes based on false withholding claims or refundable credits are considered one of the fastest growing abusive schemes. If campus operations fail to stop bogus refunds from issuing, ATAT revenue officers may be contacted to assist with refund recovery. Refund scheme cases are generally identified by the Frivolous Return Program (FRP), which creates an assessment for the falsely claimed credits and contacts SB/SE Collection Policy to coordinate assignment of the resulting ATAT case to the field.

5.20.1.4  (06-20-2013)
Casework directed to ATAT Coordinators by SB/SE Collection Policy

  1. ATAT program support also extends to certain high priority cases that have been identified by Headquarters as casework that is to be assigned to ATAT revenue officers.

    • Taxpayers identified under the Federal Payment Levy Program (FPLP) that meet specific criteria identified in IRM 5.7.9.3.1, Case Transfer to Abusive Tax Avoidance Transaction (ATAT) Group, are designated as ATAT casework.

    • Estate and Gift tax casework is assigned to ATAT revenue officers as of July 2012. This includes modules with Master File Tax (MFT) codes of 51, 52, 53, 54, 77 and 78.

    • In wagering case with an excise tax liability of $75,000 or greater examiners are directed to request the assistance of an ATAT revenue officer to determine collectibility. See IRM 4.24.6.7.3, Excise Examinations with Wagering Issues.

    • In highly technical and specialized probation cases, the Advisory probation liaison will issue an Other Investigation (OI) to an ATAT collection group if one or more of the criteria listed in IRM 5.1.5.17Role of Abusive Tax Avoidance Transaction (ATAT) Collection Groups are met.

5.20.1.5  (06-20-2013)
Coordinating Early Intervention with Other Functions

  1. Referrals for ATAT RO involvement can come from SB/SE Collection, Examination, LB&I, FRP, Counsel, Criminal Investigation or any other functions within the Service. Examination procedures direct revenue agents to consult, coordinate and cooperate with ATAT revenue officers during the examination phase when circumstances warrant. Collection support in the form of early intervention can save time and provide both functions with valuable leads. An early exchange of information assists the revenue officer with preparing a collection strategy and expedites the collection process.

  2. Early Intervention is a request for the assistance of an ATAT revenue officer, usually originating from the Examination function, in advance of an assessment. The revenue officer assists Examination in one or more of the following ways:

    • To evaluate collection potential

    • To assist in possible jeopardy situation

    • To explain payment options to taxpayers

    • To assist with the development of a promoter investigation

    • To share leads on income and assets located

    • To research ongoing or prior collection activities that could provide important context to the investigation.

  3. In all ATAT early intervention case assignments, the ATAT Coordinator is the central contact point for examiners and Examination group managers. Examiners conducting promoter or participant investigations or needing Collection assistance on any ATAT case should contact the local ATAT Coordinator through their Group Manager. A list of ATAT Coordinators can be located on MySB/SE at:http://mysbse.web.irs.gov/Collection/toolsprocesses/CollATAT/contacts/19487.aspx .

  4. The ATAT Coordinator will assign the case based on established work plan priorities to a revenue officer. If a revenue officer is expected to charge over 30 minutes of time working with an examiner, a Compliance Initiative Program (CIP), CIP-Other, will be opened on ICS. A CIP authorizes revenue officers to work cooperatively with examiners, maintain a history of actions taken, and charge time to the case.

  5. The Examination function may refer other ATAT cases through the Area ATAT Coordinator for appropriate routing and assignment.

5.20.1.6  (06-20-2013)
Assistance on Promoter Investigations

  1. Once a promoter lead is approved by the SB/SE Lead Development Center and assigned to an examiner, Collection Policy sends the local ATAT Coordinator a copy of the approved IRC Section 6700/6701 investigation and posts the memorandum to the ATAT shared server.

  2. Prior to assessment of a promoter penalty, the ATAT Coordinator is responsible for determining if a promoter investigation should be assigned to an ATAT revenue officer. The Coordinator will consult with the local Examination ATTI manager to decide if or how an revenue officer might assist in the investigation. Generally if the promoter or a related entity has a preexisting liability, assignment to an ATAT revenue officer is warranted.

  3. The ATAT Coordinator will ensure assessed promoter penalties in their area are assigned to ATAT revenue officers. SeeIRM 5.20.1.7, Collection ATAT Coordinator Responsibilities, for instruction on using the ENTITY system to identify these penalties in the Area queue.

  4. See IRM 5.20.8, Abusive Tax Avoidance Transactions, Promoter/Preparer Investigations, for more information on promoter investigations.

5.20.1.7  (06-20-2013)
Collection ATAT Coordinator Responsibilities

  1. The Collection ATAT Coordinator is responsible for ensuring that ATAT cases are controlled and transitioned properly from Examination to Collection. Their responsibilities include:

    1. Providing a central Collection point of contact for Area employees for Collection/Examination ATAT issues.

    2. Coordinating collection support for examinations involving ATAT taxpayers.

    3. Ensuring appropriate assignment and routing of cases from Examination to Collection. This may include monitoring cases after the closing of an examination and prior to assessment, and securing and delivering appropriate documents from examination files to Collection groups on cases identified for field assignment.

    4. Ensure Area ATAT cases are properly sub-coded at the time they are identified and assigned.

    5. Act as a resource person for Collection employees working ATAT investigations.

    6. Foster cooperative efforts between Collection, Examination and Criminal Investigation.

    7. Liaison for technical and case related ATAT issues between SB/SE analysts and revenue officers.

    8. Provide a central Collection point of contact for appropriate assignment and routing of cases from Appeals to Collection.

    9. Conduct periodic reviews of queue and Examination Stat 90 listings to identify ATAT inventory for prompt assignment to the field.

    10. Identify and monitor the status of Special Compliance Program (SCP) designations for collection employees working ATAT cases. SeeIRM 5.20.2.2, Special Compliance Program Designation, for additional information.

    11. Serve as a subject matter expert and assist with training within the Area on emerging ATAT issues.

5.20.1.8  (06-20-2013)
Assigning Cases within Collection

  1. The ATAT Coordinator is the central contact point for brokering cases within Collection. Although all revenue officers may work collection cases involving ATAT schemes, a Collection group manager may initiate a request to their Area’s ATAT Coordinator to transfer these cases to an ATAT group. The ATAT Coordinator will determine whether to accept case transfer based on workload priority and case appropriateness. If the case is not accepted for transfer, the ATAT Coordinator may offer the assistance of an ATAT revenue officer in working the case.

  2. Cases with an ATAT sub-code may be worked by a general program revenue officer. However, as defined in IRM 5.20.1.10,Prioritization of ATAT Work, ATAT promoters, Compliance Impact – High Profile ATAT cases, Refund Recovery or Exam Referrals on settlement offers generally should remain assigned within the ATAT program. The local ATAT Coordinator will determine whether to keep a case within the ATAT program or work with the general program to assign the case.

    Example: When a taxpayer relocates outside the geographic area covered by the ATAT group, the ATAT Coordinator will ensure any investigation of assets in the taxpayer’s original location is concluded. The ATAT Coordinator will generally transfer the case to the local ATAT Coordinator where the taxpayer resides. The local ATAT Coordinator will determine whether to assign the case to an ATAT revenue officer or work with a local general program group manager to assign the case to a general program revenue officer. Similarly, the ATAT Coordinator issuing an Other Investigation (OI) to research a taxpayer’s assets may be routed to the local ATAT Coordinator. The local ATAT Coordinator will either assign the OI to an ATAT revenue officer or work with a local group manager to assign the OI to a general program revenue officer.

    .

5.20.1.9  (06-20-2013)
ATAT Inventory Reports

  1. ATAT inventory can not be directly assigned through the ENTITY system. Coordinators must use other tools to identify and assign ATAT inventory. Balance due ATAT cases, resulting from an ATTI examination, can be identified using the reports listed below. ATAT Coordinators should regularly check these reports to ensure high priority work is assigned to the field in a timely manner. Refer to the ATAT SharePoint for instructions on how to obtain access to these reports.

  2. The Exam Closed Case Status 90 Report is a report that is pulled by Exam Planning and Special Programs (PSP). Collection Policy receives the stat 90 listing quarterly and has the list run against Integrated Data Retrieval System (IDRS). The report is pulled using Exam ATAT project and tracking codes and can facilitate the identification of closed Exam/LB&I ATAT cases with collection issues. Contact SB/SE Collection Policy ATAT analysts to arrange for access to the ATAT shared server where the reports are stored. The ATAT Coordinator may also contact their local PSP office to request an Area STAT 90.

  3. ATAT Exam Project Code List identifies ATAT balance due accounts using exam project codes. Exam uses these codes to identify examinations from special projects, including those connected with Abusive Transactions. These codes can be found on TXMOD for modules with a deficiency that is the result of an ATAT examination.

    EXAMPLE: 424R 09292009 0.00 20094008 19277-272-20000-9 SOURCE-CD>40 SPCL-PROJ>0996

    Using a query, found on the Entity Module Management system, modules with ATAT exam project codes can be identified. The stored query, which includes all ATAT Exam Project codes, can be found under the name "ATAT Project Codes" . This listing can be run for all ATAT open or queue modules in the area. Additional IDRS research is necessary as the query is modular and there are often additional assessments not appearing on the query that would convert a low priority case into a higher priority .

  4. ATAT Penalty Code List is a list of all ATAT related penalty modules in active and queue inventories which can also be secured using the Entity Module Management system. A query has been saved using the name "ATAT Civil Penalty Codes" . This query includes all of the penalty reference numbers for penalties related to ATAT schemes.

5.20.1.10  (06-20-2013)
Prioritization of ATAT Work

  1. Risk scores have been identified for ATAT casework in order to assist in the assignment of priority cases to revenue officers. However these scores are not always reflected in automated collection systems. Collection will prioritize and work ATAT cases in the following order:

    1. ATAT Promoters – A balance due account for a taxpayer involved in an abusive tax avoidance transaction who is the subject of an approved IRC 6700 or 6701 investigation, will be the highest priority cases for revenue officers. Promoter/preparer penalty (IRC 6700/6701) cases should receive the same priority as cases with risk level 100.

      Note:

      The ATAT Coordinator is responsible for determining if a preassessed promoter investigation should be assigned to an ATAT revenue officer after consulting with the Exam ATTI manager. See IRM 5.20.8.3 , Coordination with the Examination Function, for more information.

    2. Compliance Impact – High Profile ATAT Cases – Any case involving promoter associates, promoter trustees, other close involvement with the promoter, and any cases with unpaid balance of assessments in excess of $1 million are considered of the highest priority work for revenue officers. These cases should receive the same priority as cases with risk level 100.

    3. Refund Recovery - If the case requires the use of jeopardy procedures in order to recover fraudulent refunds the case should receive the same priority as cases with risk level 100.

    4. Exam Referrals connected to a specific settlement offer - These compliance initiatives have limited time frames and are established to encourage voluntary compliance. It is critical all necessary and appropriate actions be taken timely and coordinated with the referring operating division. These cases should receive the same priority as cases with risk level 101.

    5. Large Dollar ATAT Cases – Large dollar cases, for ATAT purposes, are those with unpaid balance of assessments in excess of $100,000 (IMF cases). These cases should receive the same priority as cases with risk level 103.

    6. Lower dollar ATAT cases - Lower dollar cases, for ATAT purposes, are those with unpaid balance of assessments less than $100,000 (IMF case) that are not whipsawed. These cases should receive the same priority as cases with risk level 201.

    7. Estate & gift tax cases are assigned based on the systemic risk score assigned to each case.


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