8.20.7  General Closing Procedures

Manual Transmittal

November 13, 2013

Purpose

(1) This transmits revised IRM 8.20.7, Account and Processing Support (APS) General Closing Procedures.

Material Changes

(1) Revision includes numerous editorial and formatting changes made throughout.

(2) Revision has replaced the terms: Appeals Officer, Settlement Officer, hearing officer, AO and SO with the term Appeals Technical Employee or the acronym ATE throughout the document to reference the Appeals Technical Employee (ATE) assigned to make the Appeals determination on the respective taxpayer's case.

(3) This IRM revision incorporates all "APS-specific" guidance and procedure for closing Appeals cases and has been excerpted from the Appeals Part 8 source IRMs. APS employees should refer to this IRM as their primary source for guidance on closing Appeals cases.

(4) Guidance for APS to process original delinquent returns has been removed, the ATE will receive and submit any original delinquent returns to the Campus Remittance Function for processing.

(5) A link to Interim Guidance Memorandum Control No. AP-25-0313-01 has been inserted in the Innocent Spouse section and will be updated to the appropriate IRM reference during the next revision.

(6) Exhibit 8.20.7-1Form 5403, Appeals Closing Record Instructions has been updated with additional Priority Code entry instructions and erroneous closing codes have been removed.

(7) To provide APS employees with one source of reference, IRM 8.20.7 has been restructured to move closing guidance for all types of Appeals cases from various workstream specific IRMs. The table below provides a crosswalk from the revised 8.20.7 to the prior source IRM location of the guidance. In addition, for this revision only, to provide a historical trail, we are providing a crosswalk to the prior source IRM location in the section title of the current location.

Crosswalk of New IRM 8.20.7 Sub-Section and Source IRM Sub-Section

Current IRM 8.20.7 Sub-Section Number Source IRM
8.20.7.2.3 AQMS Standard 8 Collection Cases 8.1.7.4.7
8.20.7.2.4 AQMS Standard 8 Non-Collection Cases 8.1.7.3.8
8.20.7.3 Balance Due > $10 Million Additional Closing Requirements 8.7.11.13 (3) & 8.2.1.18
8.20.7.4 Expedite Processing for Certain Large Dollar Cases >$100,000 8.2.1.12.2
8.20.7.5.1 Employee Share of FICA Tip Income 8.7.16.26.1
8.20.7.5.1.1 Unreported Tip Income (FICA) 8.17.5.2.6
8.20.7.5.2 Self-Employment Tax Adjustment 8.7.16.26.6
8.20.7.5.3 Refundable Credit Adjustments 8.17.5.2.12
8.20.7.5.4 Restricted Interest and Special Processing Cases 8.17.5.2.9
8.20.7.5.5 Railroad Retirement Tax 8.7.16.26.1
8.20.7.5.6 Reference Numbers 076 Estate Tax and 077 Gift Tax 8.17.5.2.2
8.20.7.5.7 Reference Number 320 Accumulated Earnings Tax IRC Notification 8.7.1.3(2)A-D
8.20.7.5.8 Reference Number 321 for Personal Holding Company Tax 8.17.5.2.8
8.20.7.6 Administrative File Closing Assembly Order 8.2.1.13
8.20.7.7 General Processing 8.2.1.12.1
8.20.7.8 Bankruptcy Examination Case Closing Procedures 8.7.6.9
8.20.7.8.1 Identifying Bankruptcy Cases 8.7.6.9.1
8.20.7.8.2 Bankruptcy Examination Case Closing Procedures 8.7.6.9.2
8.20.7.8.3 Bankruptcy Filed ON or AFTER 10/22/1994 - Agreed Closing Procedure 8.7.6.9.3
8.20.7.8.4 Bankruptcy Filed BEFORE 10/22/1994 - Agreement Received 8.7.6.9.4
8.20.7.8.5 Bankruptcy - Unagreed Case Processing/Closing 8.7.6.9.5
8.20.7.8.6 Bankruptcy - Docketed Cases 8.7.6.5.5.2
8.20.7.9 Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures 8.11.1.1.9
8.20.7.9.1 Abusive Transaction Penalty Closing Procedures 8.11.7.1.4
8.20.7.9.2 IRC §6707A Penalty Closing Procedures 8.11.7.6.6
8.20.7.9.3 Accelerated International Penalty Case Closing Procedures 8.11.5.8.2
8.20.7.9.4 Return Preparer Penalty Closing Procedures 8.11.3.5
8.20.7.10.1 Agreed or Defaulted 90-Day Cases Involving Claims 8.7.7.10.2
8.20.7.10.2 Abatement of Interest Claim Cases 8.7.7.14.5 & 8.7.7.14.7
8.20.7.11 Closing Agreements 8.2.1.17
8.20.7.11.1 Closing Agreement Returns and Files 8.13.1.5.2.3
8.20.7.12 Collection Appeal Program (CAP) Case Closing Procedures 8.24.1.4
8.20.7.12.1 Accounts Management CAP Cases 8.24.1.2.6 (6)
8.20.7.12.2 Automated Collection System (ACS) CAP Cases 8.24.1.2.5 (5)
8.20.7.13 Collection Due Process (CDP) Overview of Back-End Processing 8.22.3.1
8.20.7.13.1 ACDS Entries: CDP, EH, RJ and CDPTD 8.22.3.3
8.20.7.13.1.1 ACDS Closing Codes 8.22.3.3.1
8.20.7.13.1.2 ACDS Dates and Action Codes 8.22.3.3.2
8.20.7.13.1.2.1 CDP Default: CLOSING CD = 05 8.22.3.3.2.1
8.20.7.13.1.2.2 CDP Waiver Form 12257: CLOSING CD = 04 8.22.3.3.2.2
8.20.7.13.1.2.3 CDP or EH Closed With Form 12256 Withdrawal: CLOSING CD = 16 8.22.3.3.2.3
8.20.7.13.1.2.4 CDP or EH Closed as a Disregarded Hearing Request: CLOSING CD = 13 8.22.3.3.2.4
8.20.7.13.1.2.5 CDP or EH Closed as a Premature Referral: CLOSING CD = 20 8.22.3.3.2.5
8.20.7.13.1.2.6 EH Closure: CLOSINGCD = 14 (sustained) or cc 15 (not sustained) 8.22.3.3.2.6
8.20.7.13.1.2.7 Retained Jurisdiction: CLOSINGCD = 14, 15, or 16 8.22.3.3.2.7
8.20.7.13.1.2.8 CDPTD: CLOSINGCD = 14, 15, or 16 8.22.3.3.2.8
8.20.7.13.2 Closing CDP Cases on CDPTS 8.22.3.4
8.20.7.13.2.1 Determine the TC 521 Date 8.24.3.4.1
8.20.7.13.2.2 How To Input TC 521 or TC 522 Date 8.22.3.4.2
8.20.7.13.2.3 Inputting TC 522 for Disregarded and Non-Processable Hearing Requests 8.22.3.4.3
8.20.7.13.3 Closing ACS-originated Control Bases on CDPTS at Stage 13 8.22.3.5
8.20.7.13.4 CDP Bankruptcy Case Closing Procedures 8.7.6.2.10
8.20.7.13.5 CDP RRAP APS Closing Procedures 8.22.3.6
8.20.7.13.6 CDP Closing Actions for the Case File 8.22.3.7
8.20.7.13.6.1 ACS Notification of CDP and EH Closures 8.22.3.7.1
8.20.7.13.6.2 Revenue Officer Notification of CDP and EH Closures 8.22.3.7.2
8.20.7.13.7 CDP Closing Letters 8.22.1.3
8.20.7.13.7.1 CDP Equivalent Hearing: Decision Letters 8.22.1.3.4
8.20.7.13.7.2 CDP/EH Withdrawal Acknowledgement Letter 8.22.1.3.5
8.20.7.13.7.3 CDP/EH OIC Acceptance Letter 8.22.1.3.6
8.20.7.13.7.4 Form 12257 Waiver Closing Letter 8.22.1.3.7
8.20.7.13.7.5 Retained Jurisdiction Closing Letter 8.22.1.3.8
8.20.7.13.8 CDP Timeliness Determination (CDPTD) Closing Procedures 8.22.1.4
8.20.7.13.9 CDP Notices of Determination (NOD) Default Closing Procedures 8.22.1.5.2
8.20.7.13.10 CDP Case Tax Court Decision Closing Procedure 8.22.3.9
8.20.7.13.10.1 CDP Appealed Tax Court Decision Closing Procedures 8.22.3.9.1
8.20.7.13.10.2 CDP Assessment of Civil Penalties under IRC 6673 Closing Procedures 8.22.3.9.2
8.20.7.13.10.2.1 CDP Statute of Limitations for Assessing Costs Under Section 6673(b)(2) 8.22.3.9.2.1
8.20.7.13.11 CDP or EH Collection Alternatives and Reporting an Account Currently Not Collectible 8.22.3.11
8.20.7.13.11.1 Currently Not Collectible 8.22.3.11.2
8.20.7.13.11.2 CDP or EH Adjustments 8.22.3.11.3
8.20.7.13.11.2.1 Tax Adjustments 8.22.3.11.3.1
8.20.7.13.11.2.1.1 Automated Substitute for Return (ASFR) Program 8.22.3.11.3.1.1
8.20.7.13.11.2.2 Penalty Adjustments 8.22.3.11.3.2
8.20.7.13.11.2.3 Abatement of Interest Under IRC 6404(e) 8.22.3.11.3.3
8.20.7.13.13 CDP Premature Referral 8.22.3.10
8.20.7.13.14.1 CDP OIC Processing: Accepted OICs 8.22.3.12.1
8.20.7.13.14.1.1 Accepted OICs - COIC Investigated 8.22.3.12.1.1
8.20.7.13.14.1.2 Accepted OICs - Appeals Considered 8.22.3.12.1.2
8.20.7.13.14.2 Rejected CDP OIC Processing 8.22.3.12.2
8.20.7.13.14.2.2 ACDS and IDRS Inputs for Rejected OICs 8.22.3.12.2.1
8.20.7.13.14.3 Withdrawn OIC 8.22.3.12.3
8.20.7.13.14.4 Sanitized TDS or MFTRAX Transcript 8.22.3.12.4
8.20.7.13.14.6 AOIC Closing Procedures for a Potential Default Case 8.23.6.1.4 and new 8.23.6.2.7
8.20.7.13.15 CDP Case Closing Actions 8.22.3.2
8.20.7.13.16 CDP Cases Chosen for AQMS Review 8.22.3.8
8.20.7.16.1 Docketed Cases: Appeals Campus and Appeals Field Closing 8.4.2.8
Basis for Settlement Reached but No Signed Decision Document for Docketed Campus Cases 8.4.2.6.2
8.20.7.16.2 Dismissed for Lack of Jurisdiction Case Closing 8.4.1.30.4
8.20.7.16.3 Dismissed for Lack of Jurisdiction for Assessment of Less than the Notice of Deficiency Amount 8.4.1.30.3
8.20.7.16.4 Dismissed for Lack of Prosecution Case Closing 8.4.1.30.5
8.20.7.16.5 Docketed Personal Holding Company Tax Cases 8.4.1.32.2
8.20.7.23.1 Excise Tax - Preparing Form 1331 8.7.10.13
8.20.7.23.2 Dyed Diesel Fuel Penalty Case Closing 8.7.10.11.6
8.20.7.24 Fast Track Mediation Case Closing Procedures 8.26.3.8.1
8.20.7.25.1 Fast Track Settlement (FTS) SB/SE Closing Package 8.26.2.15.2
8.20.7.25.2 Fast Track Settlement (FTS) SB/SE Closing Procedures (8.26.2.15.1 combined with 8.26.2.15.3
8.20.7.26 Foreign Bank and Financial Accounts (FBAR) Penalty Case Closing Procedures 8.11.6.8
8.20.7.26.1 FBAR Closing - Premature Referral 8.11.6.8.1
8.20.7.26.2 FBAR Closing - Pre-Assessment Case 8.11.6.8.2
8.20.7.26.3 FBAR Closing - Post-Assessment Case 8.11.6.8.3
8.20.7.28.2 ID Theft Return Related Adjustment-Taxpayer Didn't File 8.6.5.6.2 (1)
8.20.7.28.3 ID Theft Return Related Adjustment-Multiple Returns Filed 8.6.5.6.3 (1)
8.20.7.29 Individual Retirement Account (IRA) Closing Procedure 8.7.10.18.1
8.20.7.30 Innocent Spouse Case Closing Overview 25.15.12.26
8.20.7.30.1 Innocent Spouse/CDP Case Closing 25.15.12.16.2
8.20.7.30.3 Innocent Spouse APS Statute Responsibility 25.15.12.26.2
8.20.7.30.4 Innocent Spouse Preliminary Closing Procedures 25.15.12.26.3
8.20.7.30.6 Innocent Spouse Unprocessable Requests for Relief and Requests Not Meeting Basic Requirements (No Consideration) 25.15.12.26.5
8.20.7.30.7 Innocent Spouse Invalid Joint Election 25.15.12.26.6
8.20.7.30.9 Innocent Spouse Relief Denied in Full 25.15.12.26.8
8.20.7.30.10 Innocent Spouse Relief Partially Allowed 25.15.12.26.9
8.20.7.30.11 Innocent Spouse Pre-Assessment Cases 25.15.12.26.10
8.20.7.30.12 Innocent Spouse AIMS Closings 25.15.12.26.11
8.20.7.30.14 Innocent Spouse Inputting TC 972 25.15.12.26.13
8.20.7.30.15 Innocent Spouse Form 12810 Procedures 25.15.12.26.14
8.20.7.30.16 Innocent Spouse CSED Will Expire in 10 Months 25.15.12.26.15
8.20.7.30.17 Innocent Spouse Special Processing Instructions 25.15.12.26.16
8.20.7.30.18 Innocent Spouse Reconsideration Closing Procedures 25.15.12.28.11
8.20.7.31 Installment Agreements (IA) 8.22.3.11.1
8.20.7.31.1 Installment Agreement (IA) APS General Information 8.22.3.11.1.1
8.20.7.31.2 Installment Agreement in a CDP Case - APS Processing Information 8.22.3.11.1.2
8.20.7.32 IRC 7430 Docketed Case — ACDS Update Request 8.7.15.1.3 (3)
8.20.7.32.1 IRC 7430 Administrative Cost Case Closing 8.7.15.1.7
8.20.7.33.1 Non-Docketed JC Case Closing Procedures 8.7.9.10.1(3)-(7)
8.20.7.34 MFT 31 Separate Assessment Module Overview 25.15.12.19
8.20.7.34.1 MFT 31 Conditions 25.15.12.19.1
8.20.7.34.2 MFT 31 Split/Transfer Accounts 25.15.12.19.2
8.20.7.34.4 MFT 31 Exam/Appeals/AUR modules 25.15.12.19.4
8.20.7.36.1 Agreed Pre 90-Day Case Processing Procedures 8.2.1.12
8.20.7.36.1.1 Reference Returns 8.2.1.12.3
8.20.7.36.1.2 Closing the Case on ACDS 8.2.1.12.4
8.20.7.39 Offer in Compromise (OIC) Non-CDP Cases 8.23.6.2
8.20.7.39.1 Counsel Review of Accepted OIC 8.23.6.2.1
8.20.7.39.2 Year-End OIC Acceptance Processing 8.23.6.2.2
8.20.7.39.3 Collection Originated OIC Acceptance Procedures 8.23.6.2.3
8.20.7.39.3.1 AOIC Closing Procedures for Accepted Offer 8.23.6.2.3.1
8.20.7.39.3.2 Validating Accepted Offers on AOIC 8.23.6.2.3.2
8.20.7.39.4 Collection Originated Withdrawn OIC Procedures 8.23.6.2.4
8.20.7.39.4.1 AOIC Closing Procedures for a Withdrawn Offer 8.23.6.2.4.1
8.20.7.39.5 Collection Originated Rejected OIC Procedures 8.23.6.2.5
8.20.7.39.5.1 AOIC Closing Procedures for Rejected Offers 8.23.6.2.5.1
8.20.7.39.5.3 OIC Fast Track Mediation (FTM) WUNO Closing Procedures 8.26.9.2.2.4
8.20.7.39.6 Examination Originated DATL OIC Cases 8.23.6.3
8.20.7.39.6.1 Non-Examination Originated DATL OIC Cases 8.23.6.3.1
8.20.7.39.6.2 Examination Originated OIC Acceptance Procedures 8.23.6.3.2
8.20.7.39.6.4 Examination Originated Rejected OIC Procedures 8.23.6.3.4
8.20.7.40.1 IRC §6673 Penalty Closing Procedures 8.11.8.1.1
8.20.7.41 Penalty Appeal (PENAP) Case Closing Procedures 8.11.4.1.8
8.20.7.42 Petitioning/Non-Petitioning Spouse Case 8.4.1.34
8.20.7.42.1 Non-Petitioning Spouse Assessed on MFT 31 8.4.1.34.1
8.20.7.42.4 Closing ACDS on Non-Petitioning Spouse Case 8.4.1.34.4
8.20.7.44.3 Statutory Notice of Deficiency (SND) Disposition of Agreed or Defaulted SND Cases Involving Claims 8.2.2.15.1
8.20.7.45 Tax Equity and Fiscal Responsibility Act (TEFRA) Investor Case Closings 8.19.6.11
8.20.7.45.1 ACDS Processing 8.19.6.18.1
8.20.7.45.2 Closing the CIC Corporation, Joint Committee or Other Corporate Specialty Investor Case 8.19.6.20
8.20.7.45.2.1 Closing Package 8.19.9.9.6
8.20.7.46 Tax Equity and Fiscal Responsibility Act (TEFRA) Defaulted Cases (No Petition Filed) 8.19.12.11
8.20.7.46.1 Closing the Case after FPAA Defaults 8.19.12.11.2
8.20.7.46.2 Petition to the U.S. Court of Federal Claims or a U.S. District Court 8.19.12.13
8.20.7.46.3 Authorization to Send Administrative File 8.19.12.13.1
8.20.7.46.4 Preparing Administrative File and Closing Package 8.19.12.13.2
8.20.7.46.5 Closing the TEFRA Case 8.19.12.13.3
8.20.7.46.6 Preparation of Key Case Administrative File 8.19.12.13.4
8.20.7.46.7 Tried Cases or Counsel Settlement 8.19.13.2.13 (2) & (10)
8.20.7.46.8 Tax Court Decision Appealed 8.19.13.2.14 (2), (10), (11)
8.20.7.46.9 Final Decision from Appeal of Tax Court Decision 8.19.13.2.15 (2), (9), (10)
8.20.7.46.10 Closing Docketed TEFRA Cases 8.19.13.2.16 (2), (3), (5)-(10)
8.20.7.46.11 Department of Justice TEFRA Cases 8.19.13.3 (2), (3), (10) & (11)
8.20.7.46.12 Closing the Case 8.19.11.8.3
8.20.7.47.1 Employee Plans Exempt Organizations (EP/EO) Examination Taxable Returns 8.7.8.1.2
8.20.7.47.2 EP and EO Case Closing Procedures 8.7.8.10
8.20.7.47.2.1 EP and EO Determination Case Closing Procedures 8.7.8.10.2
8.20.7.47.2.2 EP and EO Revocation Case Closing Procedures 8.10.8.10.3
8.20.7.47.2.3 EP and EO Examination Cases 8.7.8.10.4
8.20.7.47.2.4 EP and EO Exhibits 8.7.8–1 thru 8.7.8–9
8.20.7.48 Termination and Jeopardy Assessment Case Processing 8.7.1.6.5
8.20.7.48.1 Notice of Deficiency Involving Termination Assessment under IRC 6851 (Termination of Taxable Period) 8.17.4.23
8.20.7.49 Transferee/Transferor Case Closing 8.7.5.11
8.20.7.49.1 Transferee Cases Interest Computation 8.7.5.6.2
8.20.7.49.1.1 Form 1296, Assessment Against Transferee or Fiduciary 8.7.5.6.3
8.20.7.49.1.2 Closing an Agreed Transferee Case 8.7.5.8
8.20.7.49.1.3 Transferee Assessments 8.7.5.9.6
8.20.7.49.1.4 Jurisdiction of Tax Court 8.7.5.10
8.20.7.49.1.5 Transferee Transferor Exhibits 8.7.5–1 thru 8.7.5–8
8.20.7.50 Trust Fund Recovery Penalty Cases 8.25.3.5
8.20.7.50.1 TFRP Closing Actions-Fast Track Mediation (FTM) Appeals 8.25.3.5.1
8.20.7.50.1.1 TFRP FTM WUNO Closing Procedures 8.26.10.2.2.4
8.20.7.50.2 TFRP Closing Actions-TBOR2 (pre-assessment) Appeals 8.25.3.5.2
8.20.7.50.2.1 TFRP TBOR2 Cases for Appeals Quality Measurement System (AQMS) Review 8.25.3.5.2.1
8.20.7.50.3 TFRP Closing Actions-Jeopardy Assessment Reconsiderations 8.25.3.5.3
8.20.7.50.4 TFRP Closing Actions-Claims and Claim Reconsiderations 8.25.3.5.4
8.20.7.50.4.1 TFRP Claim and Claim Reconsideration Cases for AQMS Review 8.25.3.5.4.1
Exhibit 8.20.7-4 Innocent Spouse - ACDS Statute Date/Code Table 25.15.12-1
Exhibit 8.20.7-5 Sources of Information and IDRS References 8.22.3–1
Exhibit 8.20.7-6 How TC 521 Determination Date Was Made 8.22.3-2
Exhibit 8.20.7-7 APS Instructions - Method and Example For Computing Interest Abatement 8.7.7-1

Effect on Other Documents

This IRM supersedes IRM 8.20.7 dated May 2, 2013. This IRM supersedes the Account and Processing Support (APS) closing guidance contained within the workstream specific IRMs listed in the table included within the material changes.

Audience

Appeals

Effective Date

(11-13-2013)

Susan L. Latham
Director, Policy, Quality and Case Support

8.20.7.1  (11-13-2013)
Introduction to Closing Procedures

  1. Account and Processing Support (APS) is responsible for processing account adjustments and closing a variety of different Appeals work streams, including Non-Docketed Cases which have been Appealed, as well as Docketed Cases closed from Counsel. Appeals cases can originate from Compliance Examination or Collection, as well as from Campus Operations. The procedures contained within this IRM Chapter have been updated to include all Automated Information Management System (AIMS), Non-AIMS, Civil Penalty, Automated Offer In Compromise (AOIC), Innocent Spouse Tracking System (ISTS), Collection Due Process Tracking System (CDPTS), and Appeals Centralized Database System (ACDS) Closing guidance.

  2. The term Appeals Technical Employee (ATE), used throughout this IRM, is defined in IRM 8.1.1-1.

  3. Closing procedure details vary based on the type of case being processes, the presence or absence of Audit Information Management System (AIMS) Controls, the Master File Tax (MFT) Code, and final disposition of the case.

  4. In addition to researching the Appeals specific IRM's, APS TE's must also research the appropriate non-Appeals IRM's for general Integrated Database Retrieval System (IDRS), AIMS, and account processing guidance. Non-Appeals specific IRM guidance is owned by the originating Business Operating Divisions (BOD's) and must be referenced as the source information to ensure that all users adhere to the same policy and procedure throughout the Service. Policy and procedural guidance owned by another BOD should not be duplicated within the Appeals Account and Processing IRM's, but may be cross-referenced when appropriate.

  5. Actions that generally apply to every case closed from Appeals:

    • ACDS Update and Closing

    • Appeals Inventory Validation Program (AIVP)

    • Closing Letters (if applicable) must be dated and mailed

    • Form 5402Appeals Transmittal and Case Memorandum and attachment(s) must be transmitted per ATE instruction

    • AIMS Control Update and Closing

    • Non-AIMS Adjustments must be processed and monitored for posting

    • Tracking Systems (AOIC, CDPTS, ISTS) must be updated

    • Appeals/Counsel/Tax Court final decision must be processed and posted to the taxpayer's account(s)

    • Disclosure Guidelines must be followed as appropriate

    • Administrative File and account adjustment documents must be transmitted as applicable

    • Cases selected for Appeals Quality Measurement Systems (AQMS) must be submitted for review

    • Processing Employees Automated System (PEAS) must be properly documented and closed

  6. Types of Appeals Specialized Case Closings and Account Adjustments:

    • Bankruptcy IRM 8.20.7.8

    • Civil Penalty IRM 8.20.7.9

    • Claims IRM 8.20.7.10

    • Closing Agreements IRM 8.20.7.11

    • Collection Appeal Program (CAP) IRM 8.20.7.12

    • Collection Due Process (CDP) IRM 8.20.7.13

    • Conversions IRM 8.20.7.14

    • Department of Justice IRM 8.20.7.15

    • Docketed IRM 8.20.7.16

    • e-file IRM 8.20.7.17

    • Early Referral IRM 8.20.7.18

    • Earned Income Credit (EIC) and Earned Income Tax Credit Recertification Program IRM 8.20.7.19

    • Employee Tax Compliance IRM 8.20.7.20

    • Employment Tax IRM 8.20.7.21

    • Estate Tax & Gift Tax IRM 8.20.7.22

    • Excise Tax including Dyed Diesel Fuel Penalty IRM 8.20.7.23

    • Fast Track Mediation IRM 8.20.7.24

    • Fast Track Settlement IRM 8.20.7.25

    • Foreign Bank and Financial Accounts (FBAR) Penalty IRM 8.20.7.26

    • Freedom of Information Act (FOIA) IRM 8.20.7.27

    • Identity Theft IRM 8.20.7.28

    • Individual Retirement Account (IRA) IRM 8.20.7.29

    • Innocent Spouse IRM 8.20.7.30

    • Installment Agreements (IA) IRM 8.20.7.31

    • IRC 7430 Administrative Cost IRM 8.20.7.32

    • Joint Committee IRM 8.20.7.33

    • MFT 31 Separate Assessments IRM 8.20.7.34

    • Manual Refund IRM 8.20.7.35

    • Non-Docketed IRM 8.20.7.36

    • Non-Filer Barred Refund IRM 8.20.7.37

    • Non-Master File IRM 8.20.7.38

    • Offer In Compromise (OIC) IRM 8.20.7.39

    • Penalty Appeal (PENAP) IRM 8.20.7.41

    • Petitioning/Non-Petitioning Spouse IRM 8.20.7.42

    • Premature/Improper Referrals IRM 8.20.7.43

    • Statutory Notice of Deficiency (90/150-Day) Letter IRM 8.20.7.44

    • Tax Equity and Fiscal Responsibility Act (TEFRA) IRM 8.20.7.45 and IRM 8.20.7.46

    • Tax Exempt and Government Entity (TEGE) IRM 8.20.7.47

    • Termination and Jeopardy IRM 8.20.7.48

    • Transferee/Transferor IRM 8.20.7.49

    • Trust Fund Recovery Penalty IRM 8.20.7.50

  7. The Appeals Team Manager (ATM) will enter the ACAPDATE on the Appeals Centralized Database System (ACDS) prior to forwarding the case to Account and Processing Support (APS) for closing actions.

  8. Upon receipt of the case, verify that the Assessment Statute Expiration Date (ASED) is correctly reflected on both ACDS and AIMS (when applicable) and ensure that the file contains all returns identified for the Work Unit (WUNO) per ACDS and Form 3210Document Transmittal. See IRM 8.21.2 for guidance on APS Tax Examiner (TE) statute verification responsibilities.

  9. Each administrative file may contain the following items:

    • Appeals generated forms, letters, waivers, notices, and Form 5402Appeals Transmittal and Case Memorandum (ACM)

    • Statute Extension form(s)

    • Form 5403 Instruction Worksheet

    • Form 3870Request for Adjustment prepared and signed by the ATE

    • Interest Related Forms and Worksheets

    • Counsel generated forms, letters, settlement computations and transmittal.

    • Tax Court Entered Decision or Order Entered document and/or settlement computations.

    • Compliance generated forms, letters, waivers, notices and work papers.

    • Integrated Data Retrieval System (IDRS) and AIMS prints utilized by other IRS and Appeals personnel to perform their job duties throughout the casework cycle.

    Note:

    The ATE is responsible for organizing the administrative file contents in a logical and chronological order prior to submitting the case to their Appeals Team Manager (ATM) for review and approval.

  10. In docketed cases, verify that the decision document, settlement computation and Form 5403Appeals Closing Record all have the same:

    • Taxpayer Identification Number (TIN)

    • Taxpayer Name

    • Tax Period

    • Tax Adjustment Amount

    • Penalty Adjustment Amount

  11. All Non-Docketed cases must contain the ACDS computer generated Form 5402, Appeals Transmittal and Case Memorandum. Verify that signatures have been entered on Form 5402 or other transmittal document. If signatures are missing, contact the ATE. Once signatures have been provided and verified, enter the date the case and administrative file is closed from ACDS in the upper right corner of Form 5402.

  12. In agreed non-docketed cases, verify that the signed and executed agreement form, settlement computation and Form 5403, Appeals Closing Record, all have the same:

    • Tax

    • Penalty

    • TIN

    • Tax period

    • Taxpayer name

  13. When applicable, Form 5402 provides instructions to send a copy of the Form 5402 and ACM back to the Compliance Function, make a copy of the Form 5402 and Appeals Case Memo (ACM) and retain the originals in the administrative file. Form 5402 and ACM general distribution procedures are detailed below:

    1. Make a copy of the Form 5402 and ACM and mark "FEEDBACK COPY" on the copy of the Form 5402.

    2. Mark "ADMINISTRATIVE FILE COPY" on the original Form 5402 and include it and the original ACM in the administrative file.

    3. All documentation containing Personally Identifiable Information (PII) must be transmitted via Form 3210Document Transmittal. In a high volume office the Form 5402 and ACM Feedback Copies can be batched and submitted to the appropriate office weekly. In a lower volume office, each Form 5402 Feedback Copy may be transmitted individually. Local procedures should be implemented based on efficiency, accuracy and mail cost savings.

    4. Form 3210Document Transmittal, used for the purpose of transmitting ACM Feedback Copies must list the name control and TIN of each case for which PII is being transmitted. Follow existing Form 3210Document Transmittal suspense and follow-up guidance to verify the PII is received by the designated recipient and the acknowledgement copy is returned timely. In addition, maintain a copy of the Feedback Loop Form 3210Document Transmittal, in a separate binder to verify the feedback was sent to the address designated by the ATE on the Form 5402.

      Caution:

      Do not send the administrative file to the address on the Form 5402 line identified as "APS Mail/FAX Form 5402 and ACM To:"

  14. The employee who is processing the AIMS adjustments must review the Fed/State Disclosure criteria to determine if the IRS has an existing Fed/State Disclosure Agreement applicable to the taxpayer based on their address at the time their return was filed. The link to the Docketed and Non-Docketed Disclosure spreadsheets and the Disclosure Codes is available on the APS web page at http://appeals.web.irs.gov/APS/default.htm. Follow the Docketed or Non-Docketed Disclosure guidance provided for the state in which the taxpayer lived at the time they filed their return. If there is an existing Fed/State Agreement in place for the State and type of tax return being processed, the spreadsheet will identify the type(s) of documents you must copy and include in the Disclosure Package. The spreadsheet will also provide the address to which the Disclosure Package must be mailed. All documents containing PII must be transmitted via Form 3210 Document Transmittal . Each time you perform a disclosure, you must document the taxpayer's account by entering the applicable State Disclosure Code in Item 39 on Form 5403.

  15. If Compliance sends a disk containing the work papers, RAR, etc., leave the disk in the administrative file.

  16. Valid ACDS Closing Codes:

    • 03 - Agreed Pre-Ninety

    • 04 - Agreed Statutory Notice of Deficiency/Non-Filer

    • 05 - Defaulted Statutory Notice of Deficiency

    • 08 - Agreed Docketed

    • 10 - Settled by Counsel

    • 11 - Dismissed for Lack of Jurisdiction

    • 12 - Dismissed for Lack of Prosecution

    • 13 - Unagreed Pre-Ninety/CDP Disregarded Request/Section 6330(g)

    • 14 - Claim Fully Disallowed/OIC Rejected/Penalty Appeal Fully Sustained

    • 15 - Claim Fully Allowed/OIC Accepted/Penalty Appeal Fully Abated

    • 16 - Claim Partially Allowed/OIC Withdrawn/Penalty Appeal Partially Abated

    • 17 - Tried by Counsel

    • 18 - TEFRA key/other DOJ case Claims Court

    • 19 - TEFRA key/other DOJ District Court/Bankruptcy

    • 20 - Premature Referral

    • 21 - No Appeals Hours/Returned to Technical Services

    • 30 - Transfer

    • 40 - Reassigned

    • 42 - Docketed Appeals Jurisdiction

    • 43 - Docketed Counsel Jurisdiction (Trial Prep)

    • 45 - Reference, TM Close

    • 98 - Reject Corrected

    • 99 - Removed

8.20.7.1.1  (05-02-2013)
Appeals Inventory Validation System (AIVP)

  1. A closing validation is required on all Appeals Cases using the Validation System on ACDS. The ATE first conducts a validation and submits the case for approval. Once the ATM has approved the case, it is then routed to the APS TE for an additional validation. Detailed explanations of these validations are discussed in IRM 8.10.3.

8.20.7.2  (05-02-2013)
Appeals Quality Measurement System (AQMS) Review

  1. AQMS relies on a statistically valid sample of closed cases in completing the quality review of the Appeals process. AQMS selects cases for review by setting a unique skip interval of closed cases for each area on ACDS. These individual skip intervals are monitored throughout the year and are adjusted accordingly by AQMS.

  2. The validity of the statistical sample is critical to AQMS and the receipt of selected cases directly impacts the ability to achieve a statistically valid sample. In order to ensure the validity of the reviews, the Director, AQMS periodically sends a report of cases selected but not received to the Director, APS for appropriate follow-up.

8.20.7.2.1  (11-13-2013)
Automated AQMS Coversheet

  1. When APS closes a case on ACDS and the case is selected for AQMS Review, an automated partially completed AQMS Coversheet will appear on the screen indicating where to send the case for AQMS Review. See Exhibit 8.20.7-2 for a sample of the AQMS Coversheet which auto-populates with the name of the AQMS Reviewer and his/her office location.

  2. The APS employee closing the case will:

    • Print, complete and attach the AQMS Coversheet to the front of the case file.

    • Process the case and make applicable copies as outlined below for the different types of processing required, i.e., closed by APS on ACDS but not processed by APS, or closed by APS on ACDS and processed by APS.

8.20.7.2.2  (11-13-2013)
Cases Selected for AQMS Review

  1. Three types of cases will be identified for AQMS review:

    1. Cases closed on ACDS but not processed by APS - These cases are normally Collection cases. See IRM 8.20.7.2.2.1 for instructions on closing Collection cases selected for AQMS Review.

    2. Cases closed on ACDS and processed by APS - These cases are normally non-Collection cases on AIMS but may include some Collection cases that require APS to process account adjustments. When a case is selected for AQMS review, the case will be identified via the AQMS Coversheet (Exhibit 8.20.7-2) and a six-digit number listed on the AQMSSELECT line located on the case summary card. After APS has processed the adjustments, verified that all adjustments have posted to the account, and closed AIMS controls as appropriate, , the case will be forwarded by APS to the AQMS Reviewer.

      Note:

      APS must suspense and monitor the case until all required Appeals adjustments, credit transfers, etc., are posted to the account(s) before submitting the case to AQMS.

    3. Cases closed for trial preparation and forwarded to Area Counsel - These cases will not be part of the AQMS selection process until they are finally closed. Although these cases are closing with closing code 43, which moves the case to Part 3 on ACDS, this is an interim action, not a final closing action. When a Part 3 case is finally closed on ACDS and selected for AQMS review, the automated AQMS Coversheet will be generated. The case summary card will show a six-digit number generated/displayed at the AQMSSELECT line area. The case will then be closed using the applicable procedures for the case type.

8.20.7.2.2.1  (11-13-2013)
Cases Closed on ACDS But No Tax, Penalty, or Interest Adjustments are Processed by APS

  1. The following are specific types of cases in which APS does not process the adjustments:

    Type of Case Action
    Collection:
    • Offer in Compromise (OIC)

    • Collection Due Process (CDP)

    • Equivalent Hearing (EH)

    • CDP and EH

    • CDP with OIC

    • CDP with liability issue or penalty appeal

    • TFRP (also see additional instructions below)

    • TFRP Claim

    • Collection Appeal Program (CAP)

    • Print, complete and attach the AQMS Coversheet to the front of the file.

    • Process all required Appeals account updates (Hold the case until all account updates are posted i.e., credit transfers, TC 481, 521, 571 etc..., before submitting the case to AQMS).

      Note:

      EH Cases with Related CDP Cases Selected for Review - Attach the EH AQMS Coversheet generated on the AQMS selected case to the CDP case and annotate "EH selected for AQMS review forward to AQMS upon final closure of the related CDP case" .

    Trust Fund Recovery Penalty (TFRP)
    • Print, complete and attach the AQMS Coversheet to the front of the file.

    • Send the original Trust Fund Recovery Penalty case directly to the AQMS Reviewer with a copy of the Appeals generated documents and applicable adjustment document(s).

    • At the time the case file is sent to the AQMS Reviewer, send the original adjustment document(s) with a completed Form 2275Records Request Charge and Re-Charge , along with copies of all necessary documents listed below, to the Collection contact/office in order to implement the Appeals settlement.

    • Normally, the file sent to Collection will include copies of the following:
      - ACM
      - Form 5402
      - Determination Letter/Waiver Forms
      - Other Closing Letters and Agreement Forms
      - A copy of the ATE's Case Activity Record and CASES Case Summary Card stapled to the left side of the file.

    TFRP TBOR2 cases in which the ASED will expire within 30 days from the date the ATM signed Form 5402
    • Print, complete and attach the AQMS cleverest to the front of the file.

    • Fax Form 5402 and Form 2749Request for Trust Fund Recovery Penalty Assessment(s) to Technical Services Advisory (TSA) at the fax number listed in the "To" box on the Form 5402.

    • Request verification of the assessment from Technical Services Advisory (TSA) before submitting the case to AQMS

    • Upon receipt of the assessment verification from TSA, associate the faxed request for assessment from APS (acknowledged F-3210, F-2749, F-5402) to TSA, and the faxed verification of the assessment from TSA, with the case file to be reviewed so AQMS has the information needed to complete their review.

    Note:

    AQMS will review the case on a priority basis and forward it to Collection expeditiously, so there should be no significant delay in returning the files to Technical Services Advisory. AQMS also must confirm during their review that Appeals took the appropriate action to timely request the assessment in TFRP TBOR2 cases with short ASEDs. Since these quick assessments do not post to IDRS for several cycles, APS must include their original fax request for the assessment as well as the assessment verification document(s) returned by TSA. If the assessment request from APS to TSA is submitted by other than a fax, the signed acknowledgment copy of Form 3210 Document Transmittal, is required to determine the date on which APS requested the assessment.

    Dyed Diesel Fuel
    • Send the original case file to the originating function.

    • Send the AQMS Coversheet and copies of the file to the AQMS Reviewer.

  2. Form 3210 Procedures for Returning cases after AQMS review: When the APS Tax Examiner closes a case type identified above for AQMS Review, the following procedures apply:

    • Complete Form 3210 Document Transmittal for the AQMS Reviewer to use when shipping to the recipient. Ensure the proper address, return information and your return address is notated with your name, phone and fax numbers as the releasing official.

    • Prepare a separate Form 3210 Document Transmittal for each recipient, if the case requires multiple recipients.

    • Sign and address the Form 3210 Document Transmittal as the Releasing Official. Send all 4 parts of the Form 3210 Document Transmittal to the AQMS Reviewer.

    • Ship the case to the AQMS Reviewer with all Form 3210s in an envelope/file folder notated "Form 3210" and the Reviewer's name.

      Note:

      If there are any potential errors, the AQMS Reviewer may return the case to the originating APS office for corrective action.

    Form 3210 Part Purpose
    Part 1 For the recipient(s) records
    Part 2 For the AQMS Reviewer to retain for his/her records.
    Part 3 For the recipient(s) to acknowledge receipt of the case and return to the originator
    Part 4 For the AQMS Reviewer to return to the APS TE upon shipment of the case to the recipient(s). In addition, the AQMS Reviewer will provide a copy of the UPS Shipping Receipt listing the UPS tracking numbers or submit Form 12634 (Routing Sheet) when tracking is not applicable.

    Note:

    The return of Part 4 of Form 3210 along with a copy of the UPS shipping receipt from the AQMS Reviewer will provide notification of the date the AQMS Reviewer shipped the case to the recipient(s). Perform Form 3210 Document Transmittal follow-up as needed after receipt of those documents.

  3. Upon completion of the AQMS review, the AQMS reviewer will use the Form 3210 Document Transmittal prepared by APS to transmit the case to the campus files function. If APS did not provide the Form 3210 Document Transmittal for AQMS to transmit the reviewed file to the campus files function, AQMS will return those files to the originating APS office.

8.20.7.2.2.2  (11-13-2013)
AQMS Cases Closed on ACDS and Processed by APS

  1. When identified as an AQMS selected review case, the following actions will be taken:

    1. Attach the automated AQMS Coversheet to the file. See Exhibit 8.20.7-2.

    2. Process all required Appeals adjustments (APS must hold the case until all required Appeals adjustments, credit transfers, etc., are posted on the transcript before sending the case to AQMS).

    3. Make the required copies for the applicable AQMS TE/TCS packages (See Exhibit 8.20.7-3 for a listing of required documentation when a manual interest computation is prepared.)

    4. Attach the ATE's Case Activity Record and the CASES Case Summary Card to the Form 5403 Appeals Closing Record or appropriate closing document and also attach the AQMS Coversheet to the front of the file.

    5. Recharge the file to the AQMS Reviewer assigned to the case at the time of closing. Prepare a Form 2275 Records Request, Charge and Recharge including the AQMS Reviewer's name and office address on the Form 2275 for case tracking purposes. Include a copy of Form 2275 Records Request, Charge and Recharge with the case when it is forwarded to AQMS.

8.20.7.2.2.3  (11-13-2013)
Controlling Cases Shipped to AQMS Reviewers

  1. Take the following actions on ACDS for cases selected for AQMS review:

    • Update the LACTION field in CASES to QXXX, with XXX equal to the AQMS Reviewer's POD initials.

    • Prepare Form 3210 Document Transmittal when sending the case to the AQMS Reviewer and monitor the Form 3210 Document Transmittal, suspensed copy to verify receipt of the acknowledgement copy returned by AQMS.

    • LACTION To Date - Enter the date the case is sent to the AQMS Reviewer.

    • LACTION From Date - Enter the date the Form 3210 Document Transmittal acknowledgment is received from the AQMS Reviewer.

8.20.7.2.2.4  (05-02-2013)
Shipping Cases to the AQMS Reviewer

  1. Each Area Office has specific AQMS Reviewers assigned based on the type and grade of the case. The AQMS Reviewer's name and POD are found on the generated selection sheet.

  2. Use the following instructions for the shipment of cases to the AQMS Reviewer:

    1. Forward the AQMS selected case along with all related cases to the attention of the AQMS Reviewer listed on the AQMS Coversheet.

    2. Enter the AQMS Reviewer's name and office location on the Form 3210 Document Transmittal, and annotate "AQMS REVIEW - NOT FOR CARDING BY APS" .

    3. List the AQMS selected case along with the related cases (if applicable) on the Form 3210 Document Transmittal.

    4. Add the AQMS Reviewer's name on the shipping envelope/boxes to facilitate easy identification of the work.

    5. For non-Collection cases, include copies of various documents for the AQMS TE/TCS Reviewers. Refer to Exhibit 8.20.7-3 for details.

8.20.7.2.2.4.1  (05-02-2013)
Ten Box Rule

  1. Ten Box Rule - for large cases, such as Appeals Team Case Leader (ATCL) cases, if there are ten (10) or fewer boxes, send the AQMS Reviewer all boxes associated with the AQMS selected case and the related case(s) (if applicable). If there are more than ten (10) boxes, contact the AQMS Reviewer prior to shipping the boxes, This will allow the AQMS Reviewer to determine how many of the boxes are needed for review purposes.

8.20.7.2.2.5  (11-13-2013)
AQMS Refile Procedures for Non-Collection Cases

  1. The AQMS Reviewer will send all non-Collection cases to the Campus Files identified by the APS TE on the Form 3210 Document Transmittal, prepared by APS for AQMS.

  2. When the APS Tax Examiner closes a case identified for AQMS Review, the following procedures apply:

    • Make necessary copies for the AQMS TE/TCS packages. See Exhibit 8.20.7-3 for details.

    • Prepare Form 9856, Form 10023, etc. and attach it to the front of each return.

    • Prepare Form 2275 recharging the returns to the appropriate AQMS Reviewer.

    • Ship Form 5403 to the Campus with Form 2275 attached.

    • Attach a copy of Form 2275 with the renumbered DLN to the front of each Form 9856 or Form 10023. The AQMS Reviewer will remove this Form 2275 prior to shipping the case to Campus Files to avoid the return of the case to them. Case file assembly procedures must be followed for multiple returns.

    • Complete Form 3210 Document Transmittal, for the AQMS Reviewer to use when shipping the case to Campus Files. Ensure the proper Campus address, return information, refile DLN and your return address are notated with your name, phone and fax numbers as the releasing official.

    • Sign and address the Form 3210 Document Transmittal, as the Releasing Official. Send all 4 parts of the Form 3210 Document Transmittal, to the AQMS Reviewer. See the table in IRM 8.20.7.2.2.1 (2) for information on the purpose of the four parts of Form 3210 Document Transmittal.

    • Ship the case to the AQMS Reviewer with all Campus refile Form 3210s in an envelope/file folder notated "Campus Refile Form 3210s" and the Reviewer's name.

      Note:

      If the appropriate Forms(s) are not attached to the returns and/or the Form 3210s are not included, the AQMS Reviewer will return the case to the originating APS office for refile action. In addition, if there are any potential errors, the AQMS Reviewer may return the case to the originating APS office for corrective action.

8.20.7.2.2.6  (05-02-2013)
ATCL Cases Selected for AQMS

  1. The following is a general list of items (not all-inclusive) that are required by the AQMS Reviewer for ATCL cases selected for AQMS Review. This information is in addition to the packages needed by the AQMS TCS Reviewer and the AQMS TE Reviewer, which are separate lists with different information required for each package. See Exhibit 8.20.7-3.

    • Tax returns for selected case (e.g., Form 1120, Form 1139, Form 1120X)

    • Form 5402 with Appeals Case Memorandum (ACM) and Schedule of Adjustments

    • Agreement Forms (e.g., Form 870-AD, Form 906 Closing Agreement, etc.)

    • Joint Committee information (e.g., Letter, Spreadsheet, etc.)

    • Tax computations/settlement computation/BNA Disk (if applicable)

    • TCS binder or folder (if available)

    • 30-day Letter/RAR/IE RAR/Engineer/Financial Products/Economist's Reports/Transmittal Letter

    • Protest and Rebuttal to Protest

    • Statutory Notice of Deficiency/Petition/Answer/Decision Document (if applicable)

    • ATCL correspondence files/Work Plan/Inventory Management Schedule

    • Issue folders of ATCL/ATE

    • Related case files/information (if applicable)

    Note:

    Cases are selected for AQMS Review based on the WUNO. Therefore, the items required by the AQMS Reviewer for a particular work unit number (WUNO) may be contained in another case file (e.g., key case, later cycle for the same taxpayer and/or a related taxpayer). If this situation applies to the case selected for AQMS review, the related case information must also be furnished to the AQMS Reviewer.

8.20.7.2.2.7  (05-02-2013)
Related Cases with a Different WUNO

  1. Send related cases with a different WUNO to the AQMS Reviewer. The Reviewer will determine if the case file forwarded to AQMS contains sufficient information for conducting a review. In general, the AQMS Reviewer needs all items that were produced by the ATE, such as Form 5402, ACM, settlement computation, Appeals correspondence/issue files, etc. for the AQMS selected case as well as what was received from the originating function (e.g., tax returns, administrative/workpaper files obtained from the Revenue Agent, Revenue Officer or Service Center). Complete case file information also includes the Appeals case files for any cases related to the case selected for AQMS review.

  2. Examples of related cases include:

    Type of Case Types of Related Cases
    Non-Collection Cases
    • Flow Through Entities such as Partnerships, S Corporations, Trusts/Estates

    • Examinations of Individuals and Corporations with proposed offsetting, whipsaw and other types of issues

    • Employment Tax Cases

    Collection Cases
    • OICs filed during CDP cases and the related CDP case

    • Related CDP lien and levy cases

    • Timely CDP and related Equivalent Hearing cases

    • Related officer files for TFRP cases

    • Related OIC files (i.e., if husband and wife have separate offers, AQMS needs the related file)

  3. Contact the AQMS Reviewer for clarification if any questions arise as to which specific related case(s) should be sent with the AQMS selected case.

8.20.7.2.3  (11-13-2013)
AQMS Standard 8 Collection Cases (8.1.7.4.7)

  1. Standard 8 measures the following actions taken by APS employees on Collection cases:

    • Compliance with processing procedures for CDP/EH, OIC, CAP and TFRP cases;

    • Accuracy of adjustments; and

    • Appropriateness of time spans.

  2. Standard 8 is rated at the maximum allowable score when the following occurs:

    1. Front-end and back-end processing procedures for Collection cases are correctly applied,

    2. Adjustments are accurately processed prior to sending the case to AQMS, and

    3. APS employee's actions are timely and appropriate.

8.20.7.2.4  (11-13-2013)
AQMS Standard 8 Non-Collection Cases (8.1.7.3.8)

  1. Standard 8 measures the following actions taken by Tax Examiners (TE) and Tax Specialists (TS):

    • Accuracy of interest computations,

    • Accuracy of ACDS Updates,

    • All final closing documents and instructions present,

    • Computational and assessment/abatement procedures followed,

    • Accuracy and timeliness of assessments/abatements, and

    • Appropriate time spans and time applied.

  2. Standard 8 is rated at the maximum allowable score when the following occurs:

    1. Interest is correctly computed by the TE and TS,

    2. ACDS is updated with the revised statute date and tax/penalty/claim amount,

    3. All final closing documents and instructions are in the administrative file,

    4. Proper procedures for assessment/abatements are applied,

    5. Assessments/abatements are completed timely and accurately, and

    6. Time span and time applied are appropriate.

8.20.7.3  (11-13-2013)
Balance Due > $10 Million Additional Closing Requirements (8.7.11.13 (3) & 8.2.1.18)

  1. When a case has a balance due over $10 million, including interest and penalty, APS will follow the procedures in Examining Process - AIMS Procedures and Processing Instructions - Large Dollar CasesIRM 4.4.18.5 and send a copy of the following forms:

    • Form 5402

    • Appeals Case Memorandum (ACM)

    • Settlement Computations

    • Agreement or Decision Document

    • Form 2859

    • Special Handling Instructions

    to the Chief Financial Office Staff at the following address:


    Office of Unpaid Assessment Analysis
    Attn: OS:CFO:R:R:B
    333 W. Pershing Road
    Mail Stop S-2 1035
    Kansas City, MO 64108-4302

8.20.7.4  (11-13-2013)
Expedite Processing for Certain Large Dollar Cases >$100,000 (8.2.1.12.2)

  1. Upon receipt of an Agreed and Unpaid (Income, Gift, Estate and certain Excise Taxes as defined in IRC 6211*) Deficiency >$100,000 case, APS will assign the case on PEAS for expedite processing. The assessment of an agreed and unpaid deficiency* must be posted with a 23C Date prior to the waiver + 30 day date to avoid deficiency interest suspension under IRC 6601(c). If processing the adjustment via CC:AMCLSA will cause the 23C date of the assessment to be later than the waiver + 30 day date, the assessment must be processed via Form 2859Request for Quick or Prompt Assessment in order to avoid suspension of deficiency interest accruals. See IRM 20.2.8.7870 Waiver Interest Suspension Periods and IRM 4.4.25.2.1 Agreed Unpaid Deficiencies Greater Than $100,000 for additional information.

  2. Upon receipt of a Large Dollar Overpayment >$100,000 case, APS will assign the case on PEAS for expedite processing. Expedite processing of Large Dollar Overpayments reduces the amount of credit interest accrual the government must pay under IRC 6611. See IRM 21.4.4, Refund Inquiries, Manual Refunds for guidance on Manual Refund processing.

  3. All tax periods with adjustments greater than $100,000 require managerial review.

  4. APS will monitor all manual assessments and manual refunds until DLN verification of the transaction is received. Place the case in PEAS Suspense for monitoring until required verification is completed.

8.20.7.5  (11-13-2013)
Form 5403 Instructions to APS Worksheet

  1. Form 5403 Instructions to APS Worksheet is completed by the ATE or TCS who prepared the settlement computation. The Form 5403 Instructions to APS Worksheet provides account adjustment information specific to each tax period being submitted for processing and is meant to assist APS in preparing Form 5403 Appeals Closing Record.

  2. The APS TE is responsible for the following:

    • Verify the Form 5403 Instructions to APS Worksheet information is accurate and complete prior to transferring the codes and adjustment amounts to the Form 5403Appeals Closing Record.

    • Analyze and compare the Form 5403 Instructions to APS Worksheet information with the current account transcript to ensure inputting the data will not create an unpostable on the account and will correctly update the taxpayer's account.

    • Resolve discrepancies or omissions upon their discovery.

    • If the Form 5403 Instructions to APS Worksheet is needed, but has not been included within the administrative file, request, via secure e-mail, that a Form 5403 Instructions to APS Worksheet be provided by the ATE.

    • When a case is settled by Counsel for a specific dollar amount agreed to by both parties, TCS is not required to prepare Form 5278Statement - Income Tax Changes or provide amounts to change reference codes since they may not be determinable. On these cases, APS will process the settlement as agreed and not further adjust Item Codes and Reference Code amounts except as needed to avoid an unpostable condition.

    • See IRM 8.17.5.2Form 5403 Instructions to APS Worksheet for additional information.

8.20.7.5.1  (11-13-2013)
Employee Share of FICA Tip Income (8.7.16.26.1)

  1. Employee Share of FICA adjustments due to tip income are entered on the Form 5403Appeals Closing Record using reference number entries in Item 15. The ATE or TCS who prepares the settlement computations provides the correct reference numbers and amounts:

    1. Reference Number 891 = unreported tip income for the primary taxpayer.

    2. Reference Number 892 = unreported tip income for the secondary taxpayer.

    3. Reference Number 898 = unreported tip income for the primary taxpayer that is subject to medicare tax.

    4. Reference Number 899 = unreported tip income for the secondary taxpayer that is subject to medicare tax.

  2. See Exhibit 8.20.7-1 for instructions on preparing Form 5403 for these cases.

  3. See IRM 8.17.5.2Form 5403 Instructions to APS Worksheet for additional information.

8.20.7.5.1.1  (11-13-2013)
Unreported Tip Income (FICA) (8.17.5.2.6)

  1. See IRM 8.17.5.2Form 5403 Instructions to APS Worksheet for additional information.

8.20.7.5.2  (11-13-2013)
Self-Employment Tax Adjustment (8.7.16.26.6)

  1. Self-employment adjustments for returns posted after December 31, 1985 (as well as delinquent returns), are updated using reference numbers on the Form 5403 using reference number entries in Item 15. The ATE or TCS who prepares the settlement computations provides the correct reference numbers and amounts via the Form 5403 Instructions to APS Worksheet:

    1. Reference Number 878 = net increase/decrease of self-employment income for primary taxpayer that is subject to social security tax. The amount entered must not reduce the Primary Taxpayer's Self-Employment Income as currently posted below zero, nor increase it above the maximum amount subject to the social security portion of self-employment tax for the respective tax year.

    2. Reference Number 879 = net increase/decrease of self-employment income for secondary taxpayer that is subject to social security tax. The amount entered must not reduce the Secondary Taxpayer's Self-Employment Income as currently posted below zero, nor increase it above the maximum amount subject to the social security portion of self-employment tax for the respective tax year.

      Note:

      Document 6209 Section 3 Tax Return Information provides a Social Security Tax Rate Table for quick reference of Self-Employment Wage Limitations.

    3. Reference Number 895 = net increase/decrease in self-employment income for primary taxpayer that is subject to medicare tax (there is no maximum amount).

    4. Reference Number 896 = net increase/decrease in self-employment income for secondary taxpayer that is subject to medicare tax (there is no maximum amount).

    5. Reference Number 889 – total net increase/decrease in self-employment tax for both primary taxpayer and secondary taxpayer. If self-employment income is less than $400, Item 15 is left blank. If the adjustment reduces the self-employment income to less than $400, enter whatever amount is needed to reduce the income to zero.

  2. Reference Number 889 is required when Reference Numbers 878 or 879 are entered. If Reference Number 878 or 879 is entered but adjustments made to income did not change the self-employment tax, Reference Number 889 must be entered with a "zero" amount.

  3. The Form 5403 for a no-change case with self-employment income/tax adjustments must still reflect Reference numbers 878 or 879 and 889. Complete as follows for Items 12, 13, and 15:

    1. Item 12 - Enter TC 300 for –0–

    2. Item 13 - Enter 12

    3. Item 15 - Enter appropriate Reference Numbers and amounts.

  4. See IRM 8.17.5.2Form 5403 Instructions to APS Worksheet for additional information.

8.20.7.5.3  (11-13-2013)
Refundable Credit Adjustments (8.17.5.2.12)

  1. See IRM 8.17.5 Special Computation Formats, Forms and Worksheets for additional information on the following topics:

    • Refundable Credit (Prepayment Credit) Adjustments

    • Adjustments to Refundable Credits Not Included in the Statutory Notice of Deficiency

    • Adjustments to Refundable Credits Included in the Statutory Notice of Deficiency

    • Additional Child Tax Credit

    • Advance on Child Tax Credit

    • Earned Income Credit

    • Pre-Refund Cases (Frozen Refund Cases)

    • Credit for Federal Tax Paid on Fuels (Fuel Tax Credit)

8.20.7.5.4  (11-13-2013)
Restricted Interest and Special Processing Cases (8.17.5.2.9)

  1. Restricted interest and/or special processing actions may apply to a variety of case types. APS TE's will perform interest computation and special processing actions as appropriate to each tax period. The TCS prepares the following forms and/or notates the Form 5403 Instructions to APS Worksheet when specific interest provisions apply :

    • Form 2285 Concurrent Determinations of Deficiencies (Increases in Tax) and Overassessments (Decreases in Tax) in Cases Involving Restricted Interest Provisions of the Internal Revenue Code

    • Sequa Worksheet when Revenue Ruling 99–40 applies

    • IRC 6404(g) Interest Suspension Worksheet when applicable on an Individual Master File account.

    • Earliest Notice Date and Amount when IRC 6621 (c) Large Corporate Underpayment Interest applies.

    Note:

    Interest and Special Processing actions required for specific case types processed by APS, i.e. Employment Tax, Estate and Gift Tax, Innocent Spouse, TEFRA, etc... are provided in alphabetic order by topic later in this IRM Chapter.

  2. See IRM 8.17.6 Interest Issues in Settlement Computations for additional information.

  3. See IRM 20.2Interest for service-wide guidance and procedures for all "Interest-related" topics.

8.20.7.5.4.1  (11-13-2013)
Form 5403 Item 08 Entry When There Are Two Agreements

  1. When closing a case with two agreements special processing steps must be taken to ensure both timely assessment and accurate interest application.

  2. To avoid unnecessarily restricting IDRS programming from performing interest computation take the following steps to process each agreement separately whenever possible:

    1. Process the first agreement as a partial assessment and enter the applicable agreement date in Item 08 on Form 5402. This will allow AIMS to remain open, as well as associate the earliest agreement date with the first amount of agreed deficiency.

    2. Once the partial assessment for the first agreement has posted, process the second agreement for the additional deficiency agreed to as the final closing and enter the second agreement date in Item 08 on Form 5402.

    3. When appropriate, the second adjustment for final closing can be input within the same cycle as the partial adjustment as long as the appropriate Posing Delay Code is used to ensure that both transactions do not attempt to post to the account within the same cycle.

    4. The TE must ensure that the total tax posted to the account will not exceed the total amount of tax agreed to by the taxpayer.

    5. If the Assessment Statute Expiration Date (ASED) will not provide enough time to process both the first and the second agreement as two different adjustments, the combined amount of tax from the separate agreements can be assessed as one TC 30X, however, the deficiency interest must be manually computed to ensure accurate application of the agreement date to each respective tax amount. Once the total interest amount in determined, the interest assessment can then be posted with a TC 340. This will set the Master File (MF) "-I" Freeze on the account. The TE should determine if "Non-Restricting TC 340" procedures can be used to allow MF to generate future interest calculations on the account and whenever possible avoid unnecessarily restricting the module.

  3. When closing a case where Appeals secured and assessed a partial agreement (1st Agreement), enter the following on Form 5403:

    1. Item 12 = Final Tax to be assessed according to the second agreement;

    2. Item 800 = Final settlement amount to be assessed PLUS the partial agreement amount previously assessed by Appeals;

    3. Item A - Special Handling Instructions = Enter partial agreement date and amount. If more than one partial agreement, list separately.

    4. Determine if master file can computer generate the interest computation and if not, follow restricted interest computation and assessment actions.

  4. Example: On 1/13/2001, a delinquent return for $2,300 was received on an SFR case. The assessment was made on 2/15/2001. A decision was entered for an additional deficiency of $500. Take the following steps:

    1. Item 12 = $500

    2. Item 800 = $2,800

    3. Item A - Special Handling Instructions = Partial agreement received 1/13/2001 for $2,300

    4. Determine if master file can computer generate the interest computation and if not, follow restricted interest computation and assessment actions.

8.20.7.5.5  (11-13-2013)
Railroad Retirement Tax (8.7.16.26.1)

  1. If the adjustment involves railroad retirement tax, the ATE or ATCL will prepare the information for APS to forward to the Railroad Retirement Board (RRB) at the following address:

    Chief Financial Officer
    Railroad Retirement Board
    844 N. Rush Street
    Chicago, IL 60611

  2. See Exhibit 8.20.7-1 for instructions on preparing Form 5403 for these cases.

8.20.7.5.6  (11-13-2013)
Reference Numbers 076 Estate Tax and 077 Gift Tax (8.17.5.2.2)

  1. See IRM 8.17.5.2 for additional information.

8.20.7.5.7  (11-13-2013)
Reference Number 320 Accumulated Earnings Tax IRC Notification (8.7.1.3(2)A-D)

  1. Except for the items listed below, follow the instructions for completing Form 5403, Appeals Closing Record, when closing a case with Accumulated Earnings Tax (AET):

    1. Item 12 - The amount entered will be the total of income tax deficiency PLUS the AET.

    2. Item 15 - If taxable period is 198509 or prior, enter the amount of AET with Ref. Number 320.

    3. Item 800/801 - Include the Item 12 amount but DO NOT include Ref. Number 320 amount because it would duplicate the AET amount already reflected in Item 12.

    4. Item A - Special Handling Instructions - Check the " Other" box and enter "AET of $ _included in Item 12."

8.20.7.5.8  (11-13-2013)
Reference Number 321 for Personal Holding Company Tax (8.17.5.2.8)

  1. See IRM 8.17.5.2.8 for additional information.

8.20.7.6  (11-13-2013)
Administrative File Closing Assembly Order (8.2.1.13)

  1. When closing an Appeals (non-collection source) case, the APS TE will place the Appeals administrative file in the following order based upon the documents and items included within the file. The list below is not all inclusive but is intended to serve as a guide for the APS TE when closing their case.

  2. The listing below describes the order of documents from the top to the bottom.

    Assembly Order for Non-Collection Cases

    Order Document Type
    1 Current Adjustment Document Adjustment Type
    Form 5403 AIMS Closing Adjustment
    Form 8485 Non-AIMS Adjustment
    Form 3870 Non-AIMS Adjustment
    Form 8278 Civil Penalty Adjustment
    2 Legal Document Filed by Taxpayer Return Type
    Form 1040, Form 1120 Income Tax Return
    Form 709 Gift Tax Return
    Form 706 Estate Tax Return
    Form 940Form 941 Employment Tax Return
    Form 720 Excise Tax Return
    Form 5500 Series Employee Plan/Exempt Organization Return
    Other Tax Return Document and Type Not Specifically Listed or Identified
    3 Attachments to Return Document Type
    Folded in half affixed to front of page 1 Prior Account Adjustment(s) Form 5344Form 5403Form 8485
    Form 2859Form 5792Form 3753
    Affixed to back of page 1 Statute Extension(s) Authority
    Affixed to back of page 1 Power of Attorney Authorization
    Affixed to back of page 1 Form 2285(s)
    Affixed to back of page 1 Restricted Interest Computation(s)
    Behind last page of return Amended Return
    Behind last page of return Claim
    4 Current IDRS Research Only include most current research as appropriate for case type, shred older duplicates
    5 Authority for Adjustment Authority Type
    Agreed/Settled Executed Waiver of Assessment
    Agreed/Settled Claim Allowance/Disallowance
    Decision Entered/Order Entered Tax Court Decision/Order
    Default Statutory Notice of Deficiency
    Dismissed Tax Court Dismissal
    6 Audit Statement Report and Tax Computations
    7 Form 5402 Appeals Transmittal and Case Memorandum
    8 Appeals Closing Letter Signed and Dated
    9 Appeals work papers
    10 Compliance work papers
    11 When multi-period cases are closed, always associate the work papers with the latest deficiency tax period and input a TC 971 AC 057 on each of the other tax periods to cross-reference the location of the work papers.
    Additional assembly guidance for specific forms and case types is provided below

8.20.7.6.1  (11-13-2013)
Forms Prepared in Appeals Cases

  1. Below is a list of forms prepared in different cases but not necessarily in every case. The following guidance is provided for handling these forms.

    1. Agreement Forms with AD Extensions Form 870-AD, Form 2504-AD, etc.) – Send a copy of the agreement form to the taxpayer with the closing letter. Include the original agreement in the administrative file.

    2. Form 5403 - Attach Form 5403 and Form 5403 Instructions to APS Worksheet , on top of the return.

    3. Form 2285 (for Restricted Interest) - Attach original form to reverse side of the front page of return.

    4. Form 1331 or Form 1331-B, Notice of Adjustment - Attach the original to Form 5403.

    5. Form 885-F, Self-Employment Tax Adjustment - Attach behind the return or to the face of the return.

    6. Form 885-T, Adjustment of Social Security Tax on Tip Income Not Reported to Employer - Attach behind the return.

    7. Form 866 and Form 906 (Closing Agreements) - Attach a copy of the closing agreement to each applicable return. Include a copy with the closing letter. Send a copy to Examination for follow-up, if noted on Form 5402.

8.20.7.6.2  (11-13-2013)
Closing Letter

  1. A closing letter is sent to notify taxpayers Appeals has taken final closing actions on their case. At the time of closing, date the closing letter addressed to the taxpayer and distribute it as follows:

    1. Mail the original and one copy to the taxpayer and/or representative as indicated on the Power of Attorney. If there is no Power of Attorney, mail the original to the taxpayer.

    2. Fasten one copy in the administrative file.

8.20.7.6.3  (11-13-2013)
Form 872–A Special Consent to Extend the Time to Assess Tax

  1. If the statute is open under a Form 872-Aand the return is closed no-change, the ATE will prepare a Form 872-T which APS will mail to the taxpayer with the closing letter.

  2. Exercise caution prior to sending a Form 872-T on a no change case. You must ensure carryback years with statutes controlled by the originating year Form 872-A are protected or assessed. The statute date for any carryback returns open under an originating year Form 872-A is 90 days from the date Form 872-T is mailed.

8.20.7.7  (11-13-2013)
General Processing (8.2.1.12.1)

  1. Verify that all required forms and documents necessary for processing and closing the case are included, contain the correct taxpayer name and entity information and include all necessary signatures.

    • Form 5402 signed and dated

    • Form 5403 Instructions to APS Worksheet, if applicable

    • Form 5403

    • Interest related worksheets and forms i.e. (6404(g) Worksheet, Sequa Worksheet, Form 2285, specialized forms required for specific case types and return types, as applicable.

    • Agreement Form, Entered Decision, or Defaulted SND as appropriate to legally authorize the closing action and account adjustment

  2. Complete Form 5403. See IRM Exhibit 8.20.7-1 for instructions on completing Form 5403.

    Note:

    If there are two or more agreements on the case, see IRM 8.20.7.2, Form 5403 When There Are Two Agreements.

    Form 2285 is needed for cases involving carry backs to prior years and on some cases where the IDRS modules are restricted (with Transaction Code 340). The TCS function completes the top portion of the form and will provide APS with all prior Form 2285(s) as appropriate when there have been multiple carry-back transactions posted to the account. APS is responsible for performing the complete module recomputation using ACT/DMI and attaching the interest computation along with the Form 2285(s) behind the front page of the return.

  3. Verify the agreement form, settlement computation and Form 5403 all have the same:

    • tax

    • penalty

    • TIN

    • tax period

    • name

  4. Date and verify signatures on Form 5402.

  5. Ensure there are sufficient copies of Form 5402 or other transmittal, and mark each copy for transmittal to the designated persons. Follow local office procedures for distribution. Generally the distribution of the Form 5402 is:

    1. original Form 5402 remains in the administrative file

    2. copy of Form 5402 is returned to the office that originally worked the case (Examination, Collection, EP, EO). If the case is an employment tax case that originated in Collection, send the copy directly to the Employment Tax Examination (ETE) Coordinator, Collection, for your respective local office.

      Note:

      Follow local procedures for Campus cases.

  6. Affix the completed AMCLSA/REQ54 adjustment document on top of the applicable return. Follow appropriate administrative file procedures for cross-referencing the location of the workpapers.

  7. Access the Docketed/Non-Docketed Disclosure Spreadsheet http://appeals.web.irs.gov/APS/default.htmapplicable to the type of case you are processing to determine if the adjustment meets the Disclosure Criteria. If the Disclosure criteria are met, enter the applicable Disclosure Code on Form 5403 and transmit copies of all required documents to the address provided on the Disclosure Spreadsheet using Form 3210

  8. Follow IRM guidance as appropriate to monitor account adjustment posting and update/suspense/close PEAS timely.

8.20.7.8  (11-13-2013)
Bankruptcy Examination Case Closing Procedures (8.7.6.9)

  1. Bankruptcy cases require unique processing and statute controls. This section explains the APS procedures for closing Appeals bankruptcy examination cases.

  2. If a bankruptcy petition was filed on or after October 22, 1994, the automatic stay does not prohibit assessments that are allowed to be immediately assessed absent a bankruptcy. The trust fund recovery penalty and most excise taxes do not involve the deficiency procedures and are immediately assessable. See IRM 8.25.1.2 Trust Fund Recovery Penalty (TFRP) Authority for additional information.

8.20.7.8.1  (11-13-2013)
Identifying Bankruptcy Cases (8.7.6.9.1)

  1. The ATE should notify APS of a bankruptcy case on Form 5402.

  2. The following conditions will identify a bankruptcy filing:

    • Transaction Code TC 520 with bankruptcy closing codes (CCs 60-67, 81, and 83-89) will appear on TXMOD.

    • –V freeze on transcript or a -W freeze for CCs 81 and 84.

    • "Bankruptcy" on the 1st page of the AMDISA.

    • ACDS will show an "E/BNK" suspension status and a CARATS Action Code BI.

    Note:

    Feature Code "BK" is obsolete

    .

8.20.7.8.2  (11-13-2013)
Bankruptcy Examination Case Closing Procedures (8.7.6.9.2)

  1. Bankruptcy cases require unique processing, statute control and closing procedures.

  2. The ATE will address all Bankruptcy conditions on their case prior to forwarding the case to APS for processing actions whether the case is agreed, or unagreed. For bankruptcies filed on or after 10/22/1994, the Service is not prohibited from making assessments and the ASED is not suspended as a result of the bankruptcy filing. APS must be aware that on Non-docketed cases, the assessment must be made or the SND must be issued prior to the existing ASED.

    Reminder:

    A bankruptcy filing after 10/22/1994 does not suspend the ASED

    1. If the case is being closed agreed, the ATE will identify the date the taxpayer filed bankruptcy.

      Note:

      If the ATE did not identify the bankruptcy date, request clarification from the ATE

    2. Unagreed cases are returned to Examination Technical Services for field Exam sourced cases and campus sourced cases are returned to the originating campus for monitoring and statute control as directed by the ATE.

8.20.7.8.3  (11-13-2013)
Bankruptcy Filed ON or AFTER 10/22/1994 - Agreed Closing Procedure (8.7.6.9.3)

  1. Form 5402 , Form 5403 and closing letter are forwarded to APS by the ATE. On Form 5403, item A should include the following comment: "bankruptcy – assess by (enter statute date)."

    Caution:

    The assessment must be processed within the normal statute of limitations period.

  2. APS will close Pre 90-day cases in which a bankruptcy petition was filed AFTER 10/22/94 using general closing guidance.

8.20.7.8.4  (11-13-2013)
Bankruptcy Filed BEFORE 10/22/1994 - Agreement Received (8.7.6.9.4)

  1. Pre-90-day cases in which a bankruptcy petition was filed BEFORE 10/22/94:

    1. Forward the administrative file and the Form 5402 and attachments to Examination Technical Services or the originating campus function. They will hold the file in suspense until the bankruptcy stay is lifted.

    2. Update AIMS to Status 20 for Examination Technical Services and Status 21 for campus using AMSTUB. Close AIMS if Appeals established the AIMS record.

    3. Update ACDS using general closing procedures.

      Note:

      There is no need to prepare Form 5403 . When the stay is lifted, Compliance will complete Form 5344, Examination Closing Record, using the amounts indicated on Form 5402 and make the assessment.

  2. If Appeals is in possession of the case when the bankruptcy stay is lifted (and an agreement has been received) the ATE will instruct APS to make an assessment (partial or final depending on whether the case is ready for closure). The assessment must be done within 60 days of the stay being lifted:

    1. On Form 5403, Item A, check "quick assessment" box and note "bankruptcy case - stay lifted" .

    2. If an interim (partial) assessment is required, follow instructions in IRM 8.20.6.

    3. Forward copies of Form 5402 and ACM, Appeals Case Memorandum, to Examination Technical Services as identified by the ATE.

    4. Closing Letter 913 may be used to notify the taxpayer of final disposition.

    5. Update ACDS using general closing procedures.

8.20.7.8.5  (11-13-2013)
Bankruptcy - Unagreed Case Processing/Closing (8.7.6.9.5)

  1. When the ATE submits the unagreed case to APS for issuance of the SND, APS will take the following steps:

    1. Issue the SND using Letter 1384 provided by the ATE.

    2. Return field sourced cases to Examination Technical Services and campus sourced cases to the originating campus function (Close ACDS as defaulted SND - CC 05. Update AIMS to status 20 for Examination Technical Services and Status 21 for Campus. Close AIMS if Appeals established the AIMS record).

      Note:

      For cases in which the taxpayer filed for bankruptcy AFTER 10/22/1994, the SND MUST be issued within the normal statute of limitations.

  2. If the taxpayer files an objection to the Government’s claim, the ATE will stop working the case and forward the case to APS for the following action:

    • Issue a notice of deficiency using Letter 1384.

    • Form 5402 will include the address of the Counsel or the Department of Justice office where the administrative file should be sent after issuance of the notice.

  3. When the taxpayer files an objection to the Government’s claim, APS will:

    1. Issue the notice of deficiency when instructed to do so by the ATE (the file will not be suspended).

    2. Close ACDS. CLOSINGCD = 19.

    3. Close AIMS. On Form 5403 use "copy" procedures. Item 811 = 19.

    4. Attach a copy of the face of the return and Form 2275 , Records Request, Charge and Recharge, to the Form 5403 used to close the AIMS record. Form 2275 will be forwarded to the files indicating the administrative file and original return(s) have been "recharged" to either Counsel or the Tax Division, U.S. Department of Justice. The address where the file was sent should be included on Form 2275.

    5. Recharge the case to local Counsel or the Tax Division, U.S. Department of Justice and mail the administrative file to the address indicated by the ATE.

8.20.7.8.6  (11-13-2013)
Bankruptcy - Docketed Cases (8.7.6.5.5.2)

  1. See IRM 8.7.6.5.5.2Docketed Cases for information.

8.20.7.9  (11-13-2013)
Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures (8.11.1.1.9)

  1. When APS receives the case for closing, APS will:

    1. Assign the case to an APS employee on Processing Employees Automated System (PEAS).

    2. Review closing documents for special instructions.

    3. Review and update ACDS with the closing information.

    4. Input the Civil Penalty Account adjustments using IDRS CC:REQ54.

    5. ACTION- enter ACKCLS

    6. RevisedPen - enter the amount of the penalty sustained.

    7. Send feedback to Compliance when an address is provided in the Route To: field on the Form 5402.

    Note:

    APS will process all miscellaneous civil penalties covered by the civil penalty module (CPM) system through IDRS, using the customized Form 5402 and Form 8278, Computation and Assessment of Miscellaneous Penalties, as the source document.

8.20.7.9.1  (11-13-2013)
Abusive Transaction Penalty Closing Procedures (8.11.7.1.4)

  1. Review and process the case file.

  2. The ATE will provide Form 5402 with the revised penalty amounts APS needs to update ACDS.

  3. Depending on the resolution, Form 8278 may be included and will require processing.

    1. If penalty is fully or partially sustained, assess per Form 8278 using TC 240 and applicable reference code.

  4. The following closing codes apply to the abusive penalty work unit:

    Determination Made Closing Code
    Sustained (penalties are not removed) 14
    Abated (penalties are fully removed 15
    Partially Abated (only part of the penalties are removed) 16
  5. If there is a related income tax work unit, regular closing codes and procedures apply.

  6. Use general closing guidelines for additional ACDS updates required at closing. See IRM 8.20.7, General Closing Procedures.

8.20.7.9.2  (11-13-2013)
IRC §6707A Penalty Closing Procedures (8.11.7.6.6)

  1. Review and process the case file.

  2. The ATE will provide Form 5402, Appeals Transmittal and Case Memorandum with the revised penalty amounts APS needs to update ACDS.

  3. Depending on the resolution, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties may be included and will require processing. See IRM 8.11.1.9 for additional information on processing Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties.

  4. The following closing codes apply to the 6707A work unit:

    Determination Made Closing Code
    Sustained (penalties are not removed) 14
    Abated (penalties are fully removed 15
    Partially Abated (only part of the penalties are removed) 16
  5. If there is a related income tax work unit, regular closing codes and procedures apply.

  6. Use general closing guidelines for additional ACDS updates required at closing. See IRM 8.20.7, General Closing Procedures. Update ACDS following general closing procedures outlined in IRM 8.11.1.8, Closing Miscellaneous Civil Penalty Cases.

8.20.7.9.3  (11-13-2013)
Accelerated International Penalty Case Closing Procedures (8.11.5.8.2)

  1. Expedited processing is required for these cases.

  2. All adjustments must be made within 5 business days of receipt of the case in APS.

  3. Use general closing guidelines for additional ACDS updates required at closing. See IRM 8.20.7, General Closing Procedures.

  4. The ACDS Closing Codes for these types of cases are as follows:

    ACDS Closing Code Description
    14 penalty fully sustained
    15 penalty fully conceded
    16 penalty compromised

  5. APS will send a copy of the Form 5402 and ACM to the Compliance location shown in the remarks section.

8.20.7.9.4  (11-13-2013)
Return Preparer Penalty Closing Procedures (8.11.3.5)

  1. Preparer penalties are closed the same as other penalty appeals with the following additions:

    1. Form 5402, Appeals Transmittal and Case Memo, will be included in the closing package from the ATE. It should include information on the revised penalty amounts needed to update ACDS.

    2. Depending on the resolution, Form 8278 may be included and will require processing.

    3. Update ACDS following general closing procedures.

  2. The following closing codes apply:

    Determination Made CLOSINGCD
    Sustained (penalties are not removed) 14
    Abated (penalties are fully removed) 15
    Partially Abated (only part of penalties are removed) 16

  3. Forward copy of ACM and Form 5402 to Compliance per the instructions on the Customized Form 5402.

  4. APS will assess or abate penalty per the ATE prepared Form 5402 and Form 8278 instructions.

    1. Penalties are assessed using TC 240 and the applicable reference code via IDRS CC: REQ54 adjustment.

    2. If the MFT 55 or 13 account has not been established, APS will need to use IDRS CC: MFREQD to create a dummy module.

8.20.7.10  (11-13-2013)
Claim Case Closings

  1. Several types of Claim cases are worked in Appeals.

    • Agreed or Defaulted 90-Day Cases Involving Claims

    • Abatement of Interest

    • Claim Campus Source

    • Claim Field Source

8.20.7.10.1  (11-13-2013)
Agreed or Defaulted 90-Day Cases Involving Claims (8.7.7.10.2)

  1. If, in response to a notice of deficiency, the taxpayer submits an agreement or fails to file a petition within the time provided, a notice of claim disallowance must be issued before the case is forwarded for assessment, unless the taxpayer submits Form 2297, Waiver of Statutory Notification of Claim Disallowance.

  2. The tax law provides for interest on overpayments in respect to any internal revenue tax, in accordance with IRC section 6611. For an examination-sourced case, Appeals will expedite the closing of an overpayment case that meets the “large dollar criteria” - described in IRM 4.4.18, AIMS Procedures and Processing Instructions, Large Dollar Cases and as shown on Exam’s Form 3198, Special Handling Notice for Examination Case Processing. An overpayment case meets the "large dollar criteria" if the total amount of a period’s tax overpayment plus penalties exceeds $100,000.

    Note:

    These procedures do not apply to cases requiring Joint Committee Review. See IRM 8.7.9.5, Appeals Responsibility in Joint Committee (JC) Cases.

    The expedite procedures include the following:

    1. Account and Processing Support (APS) - APS will expedite the closing of a "large dollar" overpayment case, as" flagged" by the Appeals employee. APS will assign the case on Appeals’ Processing Employee Automated System (PEAS) and identify the case as a "high priority" - requiring "expedite processing" . APS will make every effort to process a large dollar overpayment within 30 days of Appeals’ receipt of a waiver form and/or closing agreement.

8.20.7.10.2  (11-13-2013)
Abatement of Interest Claim Cases (8.7.7.14.5 & 8.7.7.14.7)

  1. Under IRC 6404(e)(1), the Service has the authority to abate interest in certain situations.

  2. The ATE will provide APS with an Abatement of Interest customized Form 5402, an ACM, and Form 3870, for each abatement of interest claim. Claims for abatement of interest for actions involving Appeals employees must be approved and signed by the appropriate Area Director.

  3. For abatement of interest claims allowed in full:

    1. Date and send closing Letter 2393, Abatement of Interest - Fully Allowed or Letter 913 by regular mail. See IRM 8.7.7.14.5.

    2. Review the adjustment document (Form 3870) for the appropriate closing codes, based on the ATE's conclusion to fully allow the interest abatement claim - TC 290 $0.00 and TC 341 with the amount of the interest to be abated. Note "Reason Code (RC) 82" on the adjustment form.

  4. For abatement of interest claims allowed in part:

    1. Close as a defaulted disallowance letter, tried case, Counsel settled case, or dismissed from Tax Court. (See below for ACDS closing codes.)

    2. Process the adjustment document with TC 290 $0.00, TC 341 interest abatement amount, RC 81 (partially abated), or RC 82 (fully abated), if the Tax Court decides further abatement if allowed,

    3. Process the adjustment document with TC 290 $0.00, if the Tax Court decides that no further abatement is warranted or the case is closed as a default or dismissal.

      Note:

      A partial abatement of interest must have been done earlier (with TC 341, RC 81) when Letter 2391, Partial Allowance Letter Abatement of Interest was issued. See IRM 8.7.7.14.6(6).

  5. For abatement of interest claims disallowed in full:

    1. Close as a defaulted Letter 2392, Disallowance Letter for Abatement of Interest, tried case, Counsel settled case, or dismissed from Tax Court. (See below for ACDS closing codes.)

    2. Process with TC 290 $0.00, RC 80 on the adjustment document.

  6. Update ACDS for all abatement of interest closings using general closing procedures and the following closing codes:

    1. Closing code information as follows:

      Closing Code Definition
      03 agreed fully allowed abatement of interest non-docketed case - with closing Letter 2393
      05 defaulted disallowance letter for a fully disallowed or partially allowed abatement of interest case
      08, 10, 11, 12 or 17 closing codes for docketed abatement of interest cases
      20 Premature Referral

    2. RevsdTAX - enter the negative amount approved for abatement. (Fully sustained would have $-0-.)

    3. DD AMTDIS - enter only the amount disallowed. Full disallowance reflects the full amount of the claim. Full allowance reflects $-0-. Partial allowance reflects the difference between the DDAMTCL and the RevsdTAX.

8.20.7.10.3  (11-13-2013)
Methods and Examples for Computing Interest Abatement

  1. See IRM 8.20.7.1 (14) for guidance on processing an Interest Abatement case which can be submitted to APS as a partial (interim) or a final determination closing.

8.20.7.10.4  (11-13-2013)
Claim Cases - Campus Source

  1. Campus claims are normally not controlled on AIMS.

    Note:

    Verify if AIMS controls have been established and if so, process accordingly.

  2. Form 5403 is not required for closing unless AIMS controls are open.

  3. Use the following documents to adjust or update the IDRS account:

    1. Form 3870, Request for Adjustment or Form 8485, Assessment Adjustment Case Record (based on local procedures)..

    2. Form 5402, Appeals Transmittal and Case Memo.

  4. A separate Form 3870 or Form 8485 is needed for each period.

  5. Date and mail one of the following closing letters, prepared by the ATE: Letter 2681 , Letter 2682, or Letter 2683.

    Note:

    An Appeals disallowance Letter 2681 or Letter 2683 will contain a reminder that the taxpayer has two (2) years from the date of the statutory claim disallowance letter (usually Letter 105-c or Letter 106-c) to file suit in either the U. S. Court of Federal Claims or a U.S. District Court. Generally, the Compliance Campus has already issued the statutory claim disallowance letter (by certified or registered mail) giving the taxpayer an opportunity to go to Claims Court or District Court. Therefore, send the closing letter by regular mail.

  6. These cases are not held for suspense.

  7. The following are the ACDS entries required at closing:

    1. ACDS Closing Codes

      Closing Code Definition
      14 Full Disallowance
      15 Full Allowance
      16 Partial Allowance

    2. RevsdTax— enter the negative amount approved for abatement/refund. (Full disallowance would be $–0–.)

    3. APPEALS AMTDIS— enter only the amount of the claim disallowed by Appeals.

    Note:

    Follow these procedures for non-AIMS controlled claim cases, if a claim disallowance letter was not previously mailed or Form 2297 was not signed. The ATE will determine the appropriate closing letter and provide the appropriate closing instructions. If the claim case is controlled on AIMS, follow the general procedures for closing AIMS-controlled cases. The ATE could make a determination to secure an agreement form and/or send (by certified or regular mail) a statutory claim disallowance letter (or secure a Form 2297 in lieu of the statutory claim disallowance letter). See IRM 8.7.7.7 and IRM 8.7.7.8 for additional documents that the ATE might prepare to close a claim case.

8.20.7.10.5  (11-13-2013)
Claim Cases - Field Source

  1. Claims for abatement or refund may require the following actions:

    • issuance of a certified letter of claim disallowance;

    • account adjustments/abatements

8.20.7.10.5.1  (11-13-2013)
Claim Closing When AIMS Controls Are Open

  1. For claim cases that came from Examination, the amount of the claim that Examination disallowed will be on the second page of the AMDISA. Close the case on ACDS by following normal closing procedures (docketed or non-docketed). In addition:

    1. RevsdTax - enter the net deficiency or overassessment with a (-) sign.

    2. DDAMTDIS - enter the claim amount disallowed by Appeals. This amount can not be more than the claim amount shown on the second page of the AMDISA. (If a deficiency is to be assessed, enter the full amount of the claim.)

    3. Appeals AMTDIS - enter only the amount of Appeals AMTCLM (claim filed directly with the ATE - hasn't been seen by Exam) which was subsequently disallowed by Appeals. (If a deficiency is to be assessed, enter the full amount of the claim.)

  2. Prepare Form 5403 Appeals Closing Record according to Exhibit 8.20.7-1 to include applicable Claim related entries. The Form 5403 claim entries are:

    1. Item 20 - date Form 2297 was received or claim disallowance letter issued

    2. Item 808 - amount of claim from Examination that Appeals disallowed

    3. Item 809 - amount of claim received directly in Appeals (amount not on 2nd page of AMDISA under Exam Claim Amount Disallowed)

    4. Item 810 - amount in Item 809 that Appeals disallowed

  3. Date and mail the closing letter:

    1. Letter 913 - letter for allowed claims or Form 2297 received

    2. Letter 1363- partial claim disallowance letter sent certified mail

    3. Letter 1364- full claim disallowance letter sent certified mail. The certified claim disallowance letters are not held for suspense.

8.20.7.11  (11-13-2013)
Closing Agreements (8.2.1.17)

  1. APS will maintain original closing agreements as required by IRM 8.13.1.

8.20.7.11.1  (11-13-2013)
Closing Agreement Returns and Files (8.13.1.5.2.3)

  1. Upon approval of the closing agreement, Account and Processing Support (APS) of the Appeals office attaches the original to the taxpayer’s most recent return in the file covering a year to which the agreement pertains. Where a closing agreement may require follow-up action, a copy of the Form 5402, Appeals Transmittal Memorandum ; the ACM; and the closing agreement are sent to the Operating Division office having jurisdiction over the taxpayer by using Form 3210, Transmittal Memorandum. One original of the agreement, together with the Form 4222 Closing Agreement Checklist, is retained in a folder within the Appeals office. The folder should be distinctly labeled with the notation: "Do not destroy until after---." This date is obtained from the reverse side of the closing agreement checklist. These folders should be retained for at least the applicable period. Such folders may be disposed of as appropriate after the retention date expires. See IRM 8.13.1.5.2(2). All returns in the case file covering years to which the agreement pertains will be marked to so indicate and will state the return to which the agreement is attached. Marking on the return should be as follows:

    "Agreement under section 7121, Internal Revenue Code of 1986, Years Affected ___. Closing Agreement attached to return for taxable period ended ___. "

  2. If one or more filed returns of a party to the agreement are not in the file, the campus (or Operating Division office if it is known the returns are there) should be requested on Form 5402 to mark the returns as indicated. See IRM 8.13.1.5.2.3Returns and Files.

  3. If none of the filed affected returns of a party to the agreement are in the file, the transmittal should request that an original signed copy of the agreement be attached to the latest filed affected return.

  4. If one or more parties to the agreement are located in Operating Division areas or territories not served by the campus of the approving Operating Division office, one copy of the closing agreement, Form 5402 , and ACM for each party located in such other Operating Division areas or territories is forwarded by Form 3210, Transmittal Memorandum, to the appropriate campus or to the appropriate Operating Division office, as determined by the ATE.

8.20.7.12  (11-13-2013)
Collection Appeal Program (CAP) Case Closing Procedures (8.24.1.4)

  1. Form 5402-c, Closing Letter, a brief Appeals Case Memorandum and a fax transmittal will be completed by the ATE to return the case to Collection. The critical time restraints may require faxing the documents to the ATM and/or APS. Local procedures will govern.

  2. The ATM will enter the ACAPDATE on ACDS, select the Processing Team Manager responsible for processing the case and immediately forward for closing actions.

  3. The critical CAP time restraints require the closing of a CAP case in APS by the end of the business day following the date the case was received in APS.

  4. Close the case on ACDS using closing instructions as provided by the ATE.

  5. Appeals Centralized Database System (ACDS) type codes are used to track this program:

    ACDS Code Is used for
    CAPLV levies, third party claims to property under 6343(b), taxpayer requests for return of property under 6343(d)
    CAPLN liens, lien issues, denied discharges under 6325(b)(4), denied subordinations under 6325(d)
    CAPSZ seizures
    CAPIA rejected or terminated installment agreements

  6. Closing codes are used under the following circumstances.

    If the Collection Action is Use Closing Code When
    Fully sustained 14 the collection action is supported with no change.
    Not sustained 15 the collection action is completely overturned. For example, closing code 15 would be used when a levy is released and replaced by an installment agreement.
    Partially sustained 16 only minor changes are made in the collection action. For example, if filing of a Notice of Federal Tax Lien is proposed, a minor change would be to give the taxpayer 10 more days to come up with the funds before the lien is filed.
    Closing code 16 is also to be used for situations where the taxpayer presents in Appeals a new acceptable proposal which was not offered to the Collection employee, and which the Collection employee would have accepted had he or she received it.

    Note:

    After filing a CAP appeal, if the taxpayer, or their representative, state they are no longer interested in pursuing the appeal and withdraw their CAP appeal, Appeals should close the case with closing code 14, supporting Collection.

  7. Due to the critical time restraints of CAP cases APS will fax the closing information and documents to Collection using the fax transmittal prepared by the ATE. At a minimum the faxed documents should include:

    • Form 5402–c

    • ACM

    • Closing letter

    • Case Activity Record

  8. For additional information on CAP Case Closing see IRM 8.24.1.2.7


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