Part 5. Collecting Process

Chapter 20. Abusive Tax Avoidance Transactions (ATAT)

Section 1. Abusive Tax Avoidance Transactions Program Overview

5.20.1  Abusive Tax Avoidance Transactions Program Overview

5.20.1.1  (07-20-2010)
Overview of Abusive Tax Avoidance Transactions (ATAT) Program

  1. This IRM serves as a quick reference guide for collection procedures on Abusive Tax Avoidance Transactions (ATAT) investigations. It provides an outline of actions for specific investigative actions and refers the reader to supporting references.

  2. Definition of ATAT

    An abusive tax avoidance transaction is generally a specific tax transaction or promotion that reduces tax liability by taking a tax position that is not supported by tax law. 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. A list of specific ATAT promotions can be found on the Abusive Transactions website at http://abusiveshelter.web.irs.gov/AbusivePromotions/ATIssuesInitiatives.htm .

  3. Issue Management Teams (IMTs)

    With some schemes and promotions, cross functional Issue Management Teams (IMTs) that are integrated with Counsel are established. 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

    • Provide, as needed, communication throughout the organization

    • Act as a coordination point with other Operating Divisions, Counsel, and within SB/SE

    • Act as a significant force for program delivery

    • Develop alternative resolutions

    A list of current IMTs can be found on the Abusive Transactions website at http://abusiveshelter.web.irs.gov/AbusivePromotions/Issue%20Management%20Teams/IssueManagement.htm .

5.20.1.2  (07-20-2010)
Collection’s Role in ATAT

  1. Collection’s role in ATAT is extremely important in ensuring future compliance with tax laws. Early intervention in examination investigations will also help ensure collectibility issues are addressed up front, and enforcement taken as early as is allowable by law on this segment of taxpayers.

    Collection plays a key role in working 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 is firmly established. Often the settlement has specific conditions related to the payment of the liability and Collection plays a key role in ensuring those conditions are met. In these cases, specific Collection procedures are established and distributed.

    Announcement 2005-80 identifies twenty-one abusive transactions eligible for the program. Specific information on this initiative can be found on the Abusive Transactions website at http://abusiveshelter.web.irs.gov/2005_80/2005_80%20Ann.htm .

  2. In addition to supporting open examinations and initiatives, Collection will provide support for the ATAT program by referring schemes identified during the course of an investigation to the Lead Development Center (LDC). Procedures for making referrals to the LDC are listed in IRM 5.20.8.1.

  3. Collection support also extends to certain high priority cases that have been identified by Headquarters as casework that needs to be assigned to ATAT revenue officers. For example, taxpayers identified under the Federal Payment Levy Program (FPLP) that meet one or more of the following criteria are designated as ATAT casework and should be assigned to the Area’s ATAT Group:

    • Three or more in-business or out of business related entities identified

    • Any of the responsible parties has outstanding Trust Fund Recovery Penalty assessments from three or more entities

    • Case has a foreign component

  4. Refer to IRM 4.32.3.3, Collection, as the main section where all ATAT issues from other functions are addressed and cross-referenced.

5.20.1.3  (07-20-2010)
Overview – Coordination with the Examination Function

  1. Almost all identified balance due ATAT cases identified in Collection are a direct result of an examination. Organizational priorities have dictated that the examination function target, classify, and examine these abusive promotion cases. As a result, increased volumes of abusive tax promotion cases are expected to come into the revenue officer inventories.

  2. Examiners consult with collection employees during their examinations and when needed, are directed to ask for assistance from ATAT trained revenue officers.

5.20.1.4  (07-20-2010)
Early Intervention - Coordination with the Examination Function

  1. The exchange of information between revenue officers and examiners working on ATAT cases can save time and provide both functions with valuable leads. Examiners and revenue officers must work together to coordinate their efforts and ensure the ultimate collection of any penalty or participant tax liabilities that result from promoter investigations. Collection support in the form of early intervention is integral to bringing these taxpayers back into compliance.

  2. If a promoter, participant, or any related entity has an outstanding liability, revenue officers may be able to obtain current financial information useful to examiners. The information obtained by revenue officers may include:

    • Bank information including loan application files

    • DMV information

    • Financial statement information

    • The recent location of a promoter

    • Prior Integrated Collection System (ICS) history documentation

    • Real property search results

    Conversely, when a deficiency is assessed and/or a penalty is asserted by Examination, the case can be assigned to Collection once the taxpayer fails to make full payment. An early exchange of information will assist the revenue officer with preparing a collection strategy and expedite the collection process.

  3. Revenue officers can use information about related entities and potential alter egos or nominees to establish sources of funds that could be available during the collection process. Examiners and revenue officers should review case files together prior to closure in order to convey copies of important documents and information to the revenue officer that might not otherwise be available after closure.

  4. Examiners must coordinate with Collection to ensure that Collection has sufficient information to uphold and collect the penalties assessed as a result of an IRC 6700 investigation.

5.20.1.5  (07-20-2010)
Assigning Cases From Examination to Collection

  1. The ATAT Collection Coordinator is the central contact point for examiners and Examination group managers regarding all early intervention case assignments between Collection and Examination. Examiners conducting promoter or participant investigations or needing Collection assistance on any ATAT case should contact the local ATAT Collection Coordinator through their Group Manager. A listing of ATAT Collection Coordinators can be located on the Abusive Transactions website at http://abusiveshelter.web.irs.gov/AbusivePromotions/CollectionGroups.htm .

  2. The ATAT Collection 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. A CIP authorizes revenue officers to work cooperatively with examiners, maintain a history of actions taken, and charge time to the case.

  3. Any other ATAT cases identified through other means should be routed to the Area Collection Coordinator for appropriate routing and assignment.

5.20.1.6  (07-20-2010)
ATAT Collection Coordinator Responsibilities

  1. The Collection 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 the Collection/Examination ATAT issues/audits.

    2. Coordinating Collection support of Examination audits involving ATAT.

    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. Resource person for Collection employees working ATAT investigations.

    5. Collection/Examination liaison to foster cooperative efforts between work groups.

    6. Elevating ATAT issues to the appropriate SB/SE Analysts.

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

    8. Liaison with Appeals.

5.20.1.7  (07-20-2010)
Prioritization of ATAT Work

  1. All ATAT and Promoter cases should be assigned a risk score in order to assist in the assignment of priority cases to revenue officers. Collection will prioritize and work ATAT cases in the following order:

    1. ATAT Promoters – Any taxpayer involved in an abusive tax avoidance transaction who has also promoted this transaction to other individuals, especially for monetary gain, will be the highest priority cases for revenue officers. These cases should receive the same priority as cases with risk level 100.

    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. Defaulted, unagreed cases, which will also be whipsawed assessments (multiple assessments on different trusts set up by the taxpayer to move and hide assets/funds) are included in this category. These cases should receive the same priority as cases with risk level 100.

    3. 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.

    4. 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.

    5. All Other ATAT cases as identified by the Area ATAT Territory Manager or Collection Coordinator.


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