8.1.8  Employee Tax Compliance

Manual Transmittal

October 17, 2014

Purpose

(1) This transmits revised IRM 8.1.8, Employee Tax Compliance.

Material Changes

(1) IRM 8.1.8 is revised to include various editorial changes.

(2) This update includes changes to conform this chapter to the Plain Language Writing Style Guidelines.

(3) This update adds Appeals Team Manager (ATM) Reviewers for the Appeals Campuses.

(4) This update includes cross reference links to the appropriate Account and Processing Support (APS) Internal Revenue Manuals (IRMs) for this work stream. The APS IRMs will also link to this IRM for Employee Tax Compliance (ETC) source information.

Effect on Other Documents

Supersedes IRM 8.1.8 dated August 31, 2012.

Audience

Appeals

Effective Date

(10-17-2014)

John V. Cardone
Director, Policy, Quality and Case Support

8.1.8.1  (12-06-2011)
Employee Tax Compliance Cases - Background

  1. Employee Tax Compliance (ETC) cases involve an examination or collection activity of Internal Revenue Service (IRS) employees. When a taxpayer employee does not agree with the examination findings, they have the option of exercising their right to an appeal. When working ETC cases, Appeals limits its scope to:

    • Facts of the case

    • Applicable law

    • Appropriate resolution

  2. Appeals is not involved in any potential disciplinary actions.

8.1.8.2  (10-17-2014)
Receiving ETC Cases

  1. All ETC cases are routed from the originating Compliance function to the Account and Processing Support (APS) in Atlanta at the address below using a Form 3210, Documental Transmittal, and identifying it as an employee audit on Form 3198.

    Internal Revenue Service
    Atlanta Appeals Office
    401 W. Peachtree St., NW
    Suite 1455, Stop 1100-D
    Atlanta, GA 30308-3539

  2. For additional information regarding the carding of ETC cases in Appeals, see IRM 8.20.5.19. Upon receipt of the case, APS will:

    • Acknowledge receipt of the case by returning a signed Form 3210 to Compliance

    • Card the case on ACDS

    • Assign the case based on the pre-approved assignment list

    • Send an encrypted message to the Appeals Team Manager (ATM), the Appeals Hearing Officer , and the designated TPP Program Analyst notifying them of the case assignment

      Note:

      These cases may not be assigned to Appeals Hearing Officers that are not on the pre-approved list without prior clearance, due to their sensitive nature.

    • Mail the case file directly to the Appeals Hearing Officer assigned to work the case

  3. The TPP Program Analyst updates the case in ACDS to designate it as an employee audit case using the Special Project Update menu. Cases are generally coded as A1 to denote employee audit. Other codes may be used for special projects on an as needed basis. This code is not visible on the ACDS CASES screen.

8.1.8.3  (10-17-2014)
Working ETC Cases

  1. Only designated Appeals Hearing Officers are assigned these highly sensitive cases. The Appeals Hearing Officer works the ETC case in accordance with IRM 8.7.1, Technical and Procedural Guidelines, renders a decision, and generates the appropriate closing letter(s) to the taxpayer and/or power of attorney. Priority treatment is given to the extent possible.

    Note:

    Due to the sensitive nature of these cases, Appeals Hearing Officers are prohibited from identifying the case in the Notes section of ACDS or in any other way as an employee audit case. The only indication that the case is an employee audit case is a code entered by the TPP Analyst that oversees the ETC IRM.

  2. The Appeals Hearing Officer ensures the complete case is sent for review and approval to the designated ATM reviewer in Field Operations East, Field Operations West, or the Appeals Campuses. The Appeals Hearing Officer sends an encrypted email notifying the Field Operations East, Field Operations West, or Appeals Campuses designated ATM reviewer that a file is being forwarded for review. The statute on the case is noted and any other priorities are discussed in advance of mailing.
    There are ATM reviewers, one in Field Operations East, one in Field Operations West, and two in the Appeals Campuses designated to:

    • Review and approve the case

      Note:

      If the Appeals Hearing Officer is not a direct report to the ATM Reviewer, then the ATM Reviewer may need to send a secure email to the assigned ATM for the ACAP date to be entered.

    • Return the approved closed case to APS in Atlanta, Georgia for processing

    • Input the ACAPDATE on ACDS

8.1.8.4  (10-17-2014)
Requesting Computations

  1. If a computation is needed:

    • Send Form 3608 using secure email to the designated Tax Computation Specialist (TCS) manager. (Notate case is an Employee Audit in the email and on Form 3608.)

    • The designated TCS manager assigns it to one of the approved TCS for Employee Audit cases

    • The TCS prepares the Settlement Computation or Notice of Deficiency

    • When complete, the TCS sends the computations back to the originating Appeals Hearing Officer for review

8.1.8.5  (10-17-2014)
Unagreed Non-Docketed ETC Exam Cases

  1. If the taxpayer does not agree with the Appeals determination, the Appeals Hearing Officer:

    • Completes an unagreed ACM and CARATS record

    • Requests TCS prepare a Notice of Deficiency to be included in the case file, along with envelopes, transcripts with the most recent address, and a power of attorney

    • Send Form 3608 using secure email to TCS manager that is designated for Employee Audits on the TCS assignment grid. This grid is located on the TCS web site under "AO & ATM Resources" .

    • Notate the case is an Employee Audit in the email subject line and on Form 3608.

    • See IRM 8.17.4.4.4 for specific instructions on how to request an SND preparation from TCS.

  2. The case goes to the designated ATM reviewer Field Operations East, Field Operations West, or Appeals Campuses who:

    1. Approves the case

    2. Signs the Notice of Deficiency

    3. Send a secure email to the reviewing Appeals Hearing Officer's ATM to input the ACAPDATE on ACDS

    4. Routes the case to the Atlanta APS office

  3. Atlanta APS mails the letter by certified mail and monitors the 90-day period. If petitioned, Atlanta APS forwards the case to Counsel for answer. Appeals statute guidelines apply at all times.

8.1.8.6  (10-17-2014)
Unagreed Non-Docketed ETC Timely CDP Cases

  1. If the taxpayer does not agree with Appeals determination in a ETC timely Collection Due Process (CDP) Case:

    1. The Appeals Hearing Officer completes a Form 5402, an ACM and CARATS record

    2. The Appeals Hearing Officer prepares a Notice of Determination, along with envelopes and transcripts with the most recent address to the taxpayer and the power of attorney

  2. The case goes to the designated ATM reviewer in Field Operations East, Field Operations West or the Appeals Campuses who:

    1. Approves the case

    2. Signs the Notice of Determination

    3. Inputs the ACAPDATE on ACDS

    4. Routes the case to the Atlanta APS office

  3. Atlanta APS mails the Notice of Determination by certified mail and monitors the 60-day period. If petitioned, Atlanta APS forwards the case to Counsel for answer. If not petitioned, Atlanta APS will send the case to Memphis Campus APS for back end processing and closing.

  4. If the taxpayer signs waiver Form 12257 indicating agreement with Appeals determination in a timely requested CDP hearing:

    1. The Appeals Hearing Officer completes a Form 5402, an ACM and CARATS record

    2. The Appeals Hearing Officer prepares a Letter 4382, acknowledging receipt of the waiver, along with envelopes and transcripts with the most recent address to the taxpayer and the power of attorney

  5. The case goes to the designated ATM reviewer in Field Operations East, Field Operations West or the Appeals Campuses who:

    1. Approves the case

    2. Signs the Form 12257 and Letter 4382

    3. Inputs the ACAPDATE on ACDS

    4. Routes the case to the Atlanta APS office

      Note:

      Atlanta APS will send the CDP case for closing to Memphis Campus APS for back end processing and closing.

8.1.8.7  (10-17-2014)
Unagreed Non-Docketed ETC CDP Cases That Require An Equivalent Hearing

  1. If the taxpayer is provided with an equivalent hearing in an ETC case (because the taxpayer did not timely request a CDP hearing):

    1. The Appeals Hearing Officer completes Form 5402, an ACM and CARATS record

    2. The Appeals Hearing Officer prepares a Decision Letter, whether the outcome is agreed or unagreed, along with envelopes to the taxpayer and the power of attorney

  2. The case goes to the designated ATM reviewer in Field Operations East, Field Operations West or the Appeals Campuses who:

    1. Approves the case

    2. Signs the Decision Letter

    3. Input the ACAPDATE on ACDS

    4. Routes the case to the Atlanta APS office

      Note:

      Atlanta APS will send the equivalent hearing case to Memphis Campus APS for back end processing and closing.

8.1.8.8  (10-12-2007)
Docketed ETC Cases

  1. If the taxpayer files a petition, Atlanta APS forwards the case to Counsel. After the court makes a determination, the case is sent back to Atlanta APS for closing from ACDS.

8.1.8.9  (10-17-2014)
Closing ETC Cases

  1. To close the ETC case after Appeals consideration and approval by the designated ATM reviewer, Atlanta APS will :

    • Close ACDS

    • Update the Audit Information Management System (AIMS) status to AIMS Status 21

    • Mail the closing letter to the taxpayer and/or POA

    • Process and close the case in accordance with IRM 8.20.7

    • Forward all ETC cases to Compliance at the following address:
      Internal Revenue Service
      Attn: Technical Services
      31 Hopkins Plaza
      Baltimore, MD 21201


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