Internal Revenue Manual - 8.1.8 Employee Tax Compliance

IRS Resources

Part 8. Appeals
Chapter 1. Appeals Function
Section 8. Employee Tax Compliance

Employee Tax Compliance (ETC) cases involve the audit 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
Appeals is not involved in any potential disciplinary actions.

Only designated AOs are assigned these highly sensitive cases. The AOs work the ETC cases in accordance with IRM 8.7.1, Technical and Procedural Guidelines, render a decision, and generate appropriate closing letters to the taxpayer and/or Power of Attorney. Priority treatment is given to the extent possible.
The AO's Appeals Team Manager (ATM) ensures the complete case is sent to the designated ATM in Field Operations East or Field Operations West for review and approval. He/She sends an encrypted email notifying the Field East or West 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 two ATMs, one in Field East and one in Field West, designated to:
- Review and approve the case.
- Return the approved closed case to APS in Atlanta, Georgia for processing.
- Notify the designated AO's ATM to input ACAPDATE on ACDS.

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's 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 AO for review.

If the taxpayer does not agree with the Appeals determination, the AO:
- Completes an unagreed ACM, and CARATS record, and
- 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.
The case goes to the ATM reviewer Field East or West who:
1. Approves the case.
2. Signs the Notice of Deficiency.
3. Notifies the AO's ATM to input the ACAPDATE on ACDS.
4. Routes the case to the Atlanta Appeals Processing Services office.
The Atlanta APS monitors the 90 days, and if petitioned forwards case to Counsel for answer. Appeals statute guidelines apply at all times. See IRM 8.1.8.2.

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.

Part 8. Appeals