8.20.7  Closing Procedures

Manual Transmittal

October 03, 2014

Purpose

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

Background

During Fiscal Year 2013, the Account and Processing Support (APS) Internal Revenue Manuals (IRM) were reorganized to incorporate all APS Guidance for Carding Actions into IRM 8.20.5, Interim Actions into 8.20.6, and Closing Actions into 8.20.7. The crosswalk of where each section was copied from and moved to in each APS IRM chapter is available in the revision identified below:

  • IRM 8.20.5 Revision Date November 5, 2013

  • IRM 8.20.6 Revision Date September 11, 2013

  • IRM 8.20.7 Revision Date November 13, 2013

Material Changes

(1) The following Exhibits are added to provided the reader with quick reference for general acronyms, ACDS Codes and acronyms, AIMS Codes and acronyms, and IDRS and CFOL Codes and acronyms referenced within this IRM:

Exhibit Number Exhibit Title
Exhibit 8.20.7-8 General Acronym Definitions Included in IRM 8.20.7
Exhibit 8.20.7-9 Appeals Centralized Database System (ACDS) Acronyms and Codes Included in IRM 8.20.7
Exhibit 8.20.7-10 Audit Information System (AIMS) Acronyms and Codes Included in IRM 8.20.7
Exhibit 8.20.7-11 integrated Data Retrieval System (IDRS) and Corporate Files On-Line (CFOL) Acronyms Included in IRM 8.20.7

(2) The title of this IRM is changed from General Closing Procedures, to Closing Procedures.

(3) Revision includes editorial and formatting changes made throughout to improve readability and comply with Plain Language Writing Style.

(4) Removed all references to Collection Due Process Tracking System (CDPTS) as Appeals no longer uses this system.

(5) 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 must refer to this IRM as their primary source for guidance on closing Appeals cases.

(6) 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 upon receipt.

(7) IRM 8.20.7.1, a reminder is added to the introduction to clarify that policy and procedure guidance owned by the originating Business Operating Division will not be duplicated within IRM 8.20.7 but will be cross-reference when appropriate.

(8) IRM 8.20.7.1, (6) is added to establish the requirement for the APS TE to use PEAS Suspense and document the PEAS Case Activity Record as appropriate. (8), (11), and (14) are also added.

(9) IRM 8.20.7.2.2.4, updated location of guidance for procedures on AQMS selected cases with a related case with a different Work unit number (WUNO).

(10) IRM 8.20.7.2.2.6, added a note to clarify APS AQMS refile procedures for Non-Collection cases.

(11) IRM 8.20.7.2.5, AQMS Reviewed Cases Returned to APS for Correction (NEW), added to provide guidance for this process.

(12) IRM 8.20.7.4, Expedite Processing for Certain Large Dollar Cases >$100,000 (8.2.1.12.2), is updated and (6) and (7) are added

(13) IRM 8.20.7.4.1, Quick Assessment Requirements is added to provide guidance for APS to provide their manual interest computation to the taxpayer in compliance with IRC 6631, Notice Requirements.

(14) IRM 8.20.7.5, Form 3210, Document Transmittal Follow-up Requirement is added.

(15) IRM 8.20.7.6, Procedures for Shipping Personally Identifiable Information (PII) is added.

(16) IRM 8.20.7.7, Form 5403 Instructions to APS Worksheet is updated to clarify process when Report Generation Software (RGS) is used for the computation. Subsections have been updated with cross-references, links, and tables. (7) is added to further clarify why a Counsel Settled case may not include a Form 5403 Instruction Worksheet and how APS must document the PEAS Case Activity Record on these cases.

(17) IRM 8.20.7.7.1, Item Adjustment Codes and Credit Reference Codes , is a new section provided to include links to various types of returns processed by APS as well as links to source IRMs for information related to Account Resolution, IMF, BMF, and International return processing.

(18) IRM 8.20.7.7.2, General Individual Master File (IMF) Credit Reference and Item Reference Codes, is added to provide specific information for the most common Credit Reference and Item Reference Numbers.

(19) IRM 8.20.7.7.5, Refundable Credit Adjustments (8.17.5.2.12), is updated with a table for the CRNs and their Definition.

(20) IRM 8.20.7.7.6, Item Reference Numbers for Estate Tax and Gift (E&G) Tax (8.17.5.2.3), is updated to clarify the use of Estate and Gift tax Item Reference Numbers (IRN).

(21) IRM 8.20.7.7.7, Reference Number 321 for Personal Holding Company Tax (8.17.5.2.8) is moved into this section.

(22) IRM 8.20.7.7.8, Restricted Interest and Special Processing Cases (8.17.5.2.9) includes (4) to provide guidance on IRC 6631, Notice Requirements.

(23) IRM 8.20.7.8, Integrated Automation Technology (IAT) is added.

(24) IRM 8.20.7.9, Integrated Data Retrieval System (IDRS) Command Code Job Aid is added.

(25) IRM 8.20.7.10.1, Forms Prepared in Appeals Cases includes a Reminder for APS to transmit a duplicate Original Closing Agreement for compliance with retention guidelines.

(26) IRM 8.20.7.11, AIMS CC: AMCLSA General Processing (8.2.1.12.1), is renamed to differentiate between AIMS General Processing and Non-AIMS General Processing. (2) is added to clarify that APS TE's must review both the AIMS and TXMODA to identify and resolve any account conditions which would cause their account closing to be incorrect or delayed due to an unpostable condition.

(27) IRM 8.20.7.11, AIMS CC: AMCLSA General Processing (8.2.1.12.1), also contains 3 new subsections to provide guidance on Non-AIMS Adjustment processing requirements, and the APS TE responsibility for ensuring the taxpayer's account is processed to conclusion to reflect the final disposition, issuance of the balance due notice, or issuance of the refund, whichever is appropriate.

(28) IRM 8.20.7.12, Bankruptcy Examination Case Closing Procedures is reorganized and updated.

(29) IRM 8.20.7.13, Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures (8.11.1.1.9), is updated and reorganized. (9) is added to provide guidance on the PEASE Suspense and Monitoring requirement.

(30) IRM 8.20.7.14, Claim Case Closings, is updated to clarify PEAS inventory priority for large dollar overpayments. Subsections also include additional guidance for ensuring the taxpayer's refunds are released timely, and Claim Disallowance Letters are issued appropriately.

(31) IRM 8.20.7.15, Closing Agreements (CA) (8.2.1.17) is updated.

(32) IRM 8.20.7.16, Collection Appeal Program (CAP) Case Closing Procedures (8.24.1.4) is updated to incorporate changes based on Internal Guidance Memorandum AP-08-0514-0002.

(33) IRM 8.20.7.17, Collection Due Process (CDP) Overview of Back-End Processing (8.22.3.1), includes new subsections to clarify the PEAS Suspense and Monitoring requirements for all Non-AIMS account adjustments and account updates. Subsections are reorganized to provide a logical flow of information. Installment Agreement procedures are updated and reorganized. Instructions are included for entry of TC 971 AC 280 when a determination letter is issued.

(34) IRM 8.20.7.17.8, CDP Rapid Response Appeals Process (RRAP) APS Closing Procedures (8.22.3.6) is updated.

(35) IRM 8.20.7.17.9.1, ACS Notification of CDP and EH Closures Via Eefax (8.22.3.7.1) is added.

(36) IRM 8.20.7.17.14.2.1.1, Automated Substitute for Return (ASFR) Program (8.22.3.11.3.1.1) includes a "Reminder" to clarify that a tax abatement processed after the Assessment Statute Expiration Date (ASED) has expired cannot be reversed.

(37) IRM 8.20.7.17.17.1.3, Automated Offer in Compromise (AOIC) - Accepted CDP OIC's, is updated.

(38) IRM 8.20.7.17.17.2.2, ACDS and IDRS Inputs for Rejected CDP OICs (8.22.3.12.2.1), includes guidance for the input of TC 481 and a Caution is added.

(39) IRM 8.20.7.17.17.4, Sanitized TDS or MFTRAX Transcript (8.22.3.12.4) is updated to remove the list of specific items the ATE will redact, and insert a link to IRM 5.8.8.6, Required Actions Prior to Closing an OIC as an Acceptance.

(40) IRM 8.20.7.18, Conversion of Tax Return Cases and subsections are updated to remove outdated information and provide links to applicable source IRMs.

(41) IRM 8.20.7.19, Criminal Investigation Division (CID) Master File "-Z" , or "Z-" Freeze is a new section added to provide guidance for APS.

(42) IRM 8.20.7.21.2, Dismissed for Lack of Jurisdiction Case Closing (8.4.1.30.4), is updated with procedures on how to access the United State Tax Court (USTC) web site.

(43) IRM 8.20.7.21.6, Sealed Case is a new section added to provide guidance for APS.

(44) IRM 8.20.7.27, Estate Tax and Gift Tax Case Closing, and subsections are updated and reorganized.

(45) IRM 8.20.7.27.7, Gift Tax MFT 51/MFT 54 Item 422 and Item 425 Entries, is added.

(46) IRM 8.20.7.28, Excise Tax IRC 4251 - Direct Assessment, is updated and includes guidance for processing Telephone Excise Tax Refund (TETR) adjustments, and a new subsection 2 for MFT 40 Ultimate Purchaser Claims.

(47) IRM 8.20.7.29, Fast Track Mediation Case Closing Procedures (8.26.3.8.1) is reorganized.

(48) IRM 8.20.7.30, Fast Track Settlement (FTS) SB/SE Cases ,is reorganized.

(49) IRM 8.20.7.32.1, FBAR Closing - Premature Referral (8.11.6.8.1)(6) is updated to replace the P.O. Box with a street address.

(50) IRM 8.20.7.34.4, Identify Theft - Additional References is added to provide quick reference to applicable IRMs.

(51) IRM 8.20.7.36.1, Innocent Spouse/CDP Case Closing (25.15.12.16.2) is updated to clarify that a CDP case which is for the Requesting Spouse, must be forwarded to Florence Campus APS for closing. This distinction is made throughout the IRM.

(52) IRM 8.20.7.37, Installment Agreements (IA) (8.22.3.11.1), is updated to include cross-references to source IRMs for IA command codes, additional guidance for processing all types of IAs, and the requirement to input TC 971 AC 043 when appropriate.

(53) IRM 8.20.7.43, Non-Filer Barred Refund Statute Expiration Date (RSED) Overpayment Cases is updated to remove outdated examples and include links to applicable IRMs for quick reference.

(54) IRM 8.20.7.45, Offer in Compromise (OIC) Non-CDP Cases (8.23.6.2), is updated to clarify and streamline APS procedures and remove instructions for making an alternative agreement when a Non-CDP OIC is rejected or withdrawn in compliance with AJAC guidelines.

(55) IRM 8.20.7.46, Penalty Appeal (PENAP) Case Closing Procedures (8.11.4.1.8), is updated and includes a requirement for APS to close their IDRS Control Base upon posting of the adjustment(s).

(56) IRM 8.20.7.47, Petitioning/Non-Petitioning Spouse Case (8.4.1.34), is updated to clarify ACDS update and closing guidance, provide instruction for entry of Item 57 on Form 5403 when Item 56 SA is selected, and provide procedures when the originating function did not properly process the non-petitioning spouse SND under their jurisdiction.

(57) IRM 8.20.7.47.5, MFT 31 Spousal Assessments Additional References is added to provide quick referenced to applicable IRMs.

(58) IRM 8.20.7.49, Reference Returns (8.2.1.12.3), is moved from the Non-Docketed Case Processing section and is not a separate subsection.

(59) IRM 8.20.7.50, Statutory Notice of Deficiency (SND) 90-Day/150-Day Case Closing, is reorganized and updated with additional guidance.

(60) IRM 8.20.7.53, Tax Exempt and Government Entity (TEGE) Cases, is updated to include correct addresses and mandatory account monitoring procedures.

(61) IRM 8.20.7.54, Termination and Jeopardy Assessment Case Processing (8.7.1.6.5), is updated.

(62) IRM 8.20.7.55, Transferee/Transferor Case Closing (8.7.5.11), is updated.

(63) IRM 8.20.7.56, Trust Fund Recovery Penalty (TFRP) Cases (8.25.3.5), is updated.

(64) IRM 8.20.7.57, Unpostables, is a new section which includes guidance and procedures for APS. This section includes clarification for mandatory account monitoring responsibility, online research resources, and explains the APS Unpostable Team Procedures.

(65) IRM 8.20.7.57, Unpostables is a new section added to provide APS with guidance and procedures for monitoring account adjustments and correcting unpostable transactions.

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

(67) Exhibit 8.20.7-1, Form 5403, Appeals Closing Record (Instructions) is updated to remove outdated information and add updated information.

Effect on Other Documents

This IRM supersedes IRM 8.20.7 dated November 13, 2013.

Audience

Appeals

Effective Date

(10-03-2014)

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

8.20.7.1  (10-03-2014)
Introduction to Closing Procedures

  1. Account and Processing Support (APS) is responsible for the following closing actions:

    • Processing Master File (MF) and Non-Master File (NMF) account updates and adjustments for all docketed and non-docketed cases in the Appeals work streams

    • Closing Audit Information Management System (AIMS) controls

    • Updating and closing Appeals Centralized Database System (ACDS)

    • Updating and closing Partnership Control System (PCS)

    • Updating Automated Offer In Compromise (AOIC)

    • Updating Innocent Spouse Tracking System (ISTS)

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

  3. Closing procedure details vary based on the type of case being processed, 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.

    Reminder:

    Policy and procedural guidance owned by another BOD will not be duplicated within the Appeals Account and Processing Support (APS) IRM's, but will be cross-referenced when appropriate.

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

    • Update and close ACDS

    • Confirm critical data fields for Appeals Inventory Validation Program (AIVP)

    • Date and mail closing letters (if applicable)

    • Transmit Form 5402, Appeals Transmittal and Case Memorandum and attachment(s) per ATE instruction

    • Update and close AIMS Control

    • Analyze IDRS transcript to identify account status and take all necessary adjustment/update actions

    • Identify and resolve Master File Freeze Codes when release of the refund or notice is appropriate

    • Process and monitor Non-AIMS Adjustments until posted

    • Update Tracking Systems (AOIC, ISTS)

    • Process Appeals/Counsel/Tax Court final decision on taxpayer's account(s)

    • Follow Disclosure Guidelines

    • Transmit Administrative File and account adjustment documents

    • Submit cases selected for Appeals Quality Measurement Systems (AQMS) to designated reviewer

    • Update and close Processing Employee Automated System (PEAS)

  6. When the APS TE completes a processing action and can take no further action on the case until adjustment verification is received, or the input transaction posts, they must properly notate the PEAS CAR, and place the case in PEAS Suspense for the appropriate timeframe. PEAS also has a Follow-up Date option which is recommended for the most efficient inventory management. The APS TE must determine the appropriate Follow-up Date based upon the reason they are placing the case in PEAS Suspense.

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

    • Bankruptcy IRM 8.20.7.12

    • Civil Penalty IRM 8.20.7.13

    • Claims IRM 8.20.7.14

    • Closing Agreements IRM 8.20.7.15

    • Collection Appeal Program (CAP) IRM 8.20.7.16

    • Collection Due Process (CDP) IRM 8.20.7.17

    • Conversions IRM 8.20.7.18

    • Department of Justice (DOJ) IRM 8.20.7.20

    • Docketed IRM 8.20.7.21

    • e-file IRM 8.20.7.22

    • Early Referral IRM 8.20.7.23

    • Earned Income Credit (EIC) and Earned Income Tax Credit (EITC) Recertification Program IRM 8.20.7.24

    • Employee Tax Compliance (ETC) IRM 8.20.7.25

    • Employment Tax IRM 8.20.7.26

    • Estate Tax & Gift Tax (E&G)IRM 8.20.7.27

    • Excise Tax including Dyed Diesel Fuel Penalty IRM 8.20.7.28

    • Fast Track Mediation (FTM) IRM 8.20.7.29

    • Fast Track Settlement (FTS) SB/SE IRM 8.20.7.30

    • Fast Track Settlement (FTS) TE/GE IRM 8.20.7.31

    • Foreign Bank and Financial Accounts (FBAR) Penalty IRM 8.20.7.32

    • Freedom of Information Act (FOIA) IRM 8.20.7.33

    • Identity Theft (IDT) IRM 8.20.7.34

    • Individual Retirement Account (IRA) IRM 8.20.7.35

    • Innocent Spouse (INNSP) IRM 8.20.7.36

    • Installment Agreements (IA) IRM 8.20.7.37

    • IRC 7430 Administrative Cost IRM 8.20.7.38

    • Joint Committee IRM 8.20.7.39

    • MFT 31 Separate Assessments IRM 8.20.7.40

    • Manual Refund IRM 8.20.7.41

    • Non-Docketed IRM 8.20.7.42

    • Non-Filer Barred Refund IRM 8.20.7.43

    • Non-Master File IRM 8.20.7.44

    • Offer In Compromise (OIC) IRM 8.20.7.45

    • Penalty Appeal (PENAP) IRM 8.20.7.46

    • Petitioning/Non-Petitioning Spouse IRM 8.20.7.47

    • Premature/Improper Referrals IRM 8.20.7.48

    • Statutory Notice of Deficiency (90/150-Day) Letter IRM 8.20.7.50

    • Tax Equity and Fiscal Responsibility Act (TEFRA) IRM 8.20.7.51 and IRM 8.20.7.52

    • Tax Exempt and Government Entity (TEGE) IRM 8.20.7.53

    • Termination and Jeopardy IRM 8.20.7.54

    • Transferee/Transferor IRM 8.20.7.55

    • Trust Fund Recovery Penalty (TFRP) IRM 8.20.7.56

    • Unpostables IRM 8.20.7.57

  8. 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.

    • The ACAP action is required for all CLS and INT processing actions submitted to APS for processing.

    • The ACAP entry generates a PEAS unassigned record for the Processing Team Manager who assigns the case to an APS TE.

  9. 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 3210, Document Transmittal. See IRM 8.21.2, Account and Processing Support (APS) Statute Responsibility , for guidance on APS Tax Examiner (TE) statute verification responsibilities.

  10. Each administrative file may contain the following items:

    • Appeals generated forms, letters, waivers, notices, and Form 5402, Appeals 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.

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

    • Taxpayer Identification Number (TIN)

    • Taxpayer Name

    • Tax Period

    • Tax Adjustment Amount

    • Penalty Adjustment Amount

    Note:

    If the case has never been assigned to an ATE and there is no Appeals Time Applied, a Form 5402, Appeals Transmittal and Case Memorandum will not be included with the case.

  12. 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, Appeals Transmittal and Case Memo 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.

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

    • Tax

    • Penalty

    • TIN

    • Tax period

    • Taxpayer name

  14. The ATE will prepare a Form 5402 on Non-Docketed cases and Docketed Appeals Settled Cases. When the Form 5402, Appeals Transmittal and Case Memo provides instructions to send a copy of the Form 5402 and ACM back to the Compliance Function, make a copy of the Form 5402, Appeals Transmittal and Case Memo and Appeals Case Memo (ACM) and retain the originals in the administrative file. Several work streams i.e. IC and CIC case types among others, require the ATE forward the Form 5402 and ACM to the Compliance Function and in these cases, APS will not have instructions to forward the Form 5402.

  15. General Form 5402 distribution procedures are detailed below:

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

    2. Use Form 3210, Document Transmittal, for the purpose of transmitting ACM Feedback Copies which list the name control and TIN of each case for which PII is being transmitted. Follow existing Form 3210, Document 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 3210, Document Transmittal, in a separate binder to verify the feedback was sent to the address designated by the ATE on the Form 5402, Appeals Transmittal and Case Memo.

      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:"

  16. The employee who is responsible for 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, Appeals Closing Record.

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

  18. 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 Tax Court Case

    • 18 - TEFRA key/other Department of Justice (DOJ) case Claims Court

    • 19 - TEFRA key/other Department of Justice (DOJ) District Court/Bankruptcy

    • 20 - Premature Referral/Returned to Campus Function

    • 21 - Premature Referral/Returned to Compliance Technical Services

    • 30 - Transfer

    • 40 - Reassigned

    • 42 - Docketed Appeals Jurisdiction

    • 43 - Docketed Counsel Jurisdiction (Trial Prep)

    • 45 - Reference/Team Member Closing

    • 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, Appeals Inventory Validation Process .

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  (10-03-2014)
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  (10-03-2014)
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 AIMS controls are closed as appropriate. The entire administrative file is forwarded by APS to the AQMS Reviewer.

      Reminder:

      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 closed 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  (10-03-2014)
AQMS 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

    • Trust Fund Recovery Penalty (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 (suspense and monitor 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, Appeals Transmittal and Case Memo
    • Print, complete and attach the AQMS coversheet 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 3210Document 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, Document Transmittal 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 and/or field function as appropriate. 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  (10-03-2014)
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 suspense 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 (CAR) 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  (10-03-2014)
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.

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

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

    • Update the ACKCLS FROMDATE upon receipt of the Form 3210, Document Transmittal acknowledgement received from the Campus Files Function to avoid cases aging on the ACDS ACKCLS follow-up report during the AQMS review timeframe.

8.20.7.2.2.4  (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, Appeals Transmittal and Case Memo, 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.

8.20.7.2.2.5  (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.

8.20.7.2.2.5.1  (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.

8.20.7.2.2.6  (10-03-2014)
AQMS Refile Procedures for Non-Collection Cases

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

    Note:

    If Appeals has been alerted to forward the closed case to a function other than Campus Files, the APS TE will prepare a Form 2275RECORDS REQUEST, CHARGE AND RECHARGE, as well as the applicable Form 3210, Document Transmittal(s)

    .

  2. When the APS Tax Examiner (TE) 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, Attachment Alert or Form 10023, Attachment Alert, etc. and attach it to the front of each return.

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

    • Ship Form 5403, Appeals Closing Record 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.

8.20.7.2.2.7  (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, Appeals Transmittal and Case Memo 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

    • ATCL/ATE issue folders

    • 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.

8.20.7.2.3  (10-03-2014)
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

    • 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  (10-03-2014)
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

    • 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

    6. Time span and time applied are appropriate

8.20.7.2.5  (10-03-2014)
AQMS Reviewed Cases Returned to APS for Correction (NEW)

  1. AQMS reviewed cases requiring account correction(s) will be returned to APS.

  2. AQMS will:

    • Email the Potential Error Report (PER) to the APS Director

    • Ship the administrative file to the APS Office to the attention of the PTM or Tax Examiner

    • Notify the PTM if PTM is not co-located with the TE, and transmit the administrative file to the TE

  3. APS will:

    • Verify the ASED for each tax period requiring correction

    • Import and Assign as a New Case on PEAS, do not reopen the closed PEAS case, and ensure the correct ASED is reflected for each tax period to be corrected as required by the AQMS Potential Error Report (APERT)

      Exception:

      Reopening a new PEAS record for AQMS corrections, is different from other Post Closing procedures outlined in IRM 8.20.10.6.2.3, Import and Assign where the prior PEAS Record is reopened.

    • Identify the case as a Post Closure case by using the PEAS Feature Code PC

    • Process the correction(s) to the taxpayers' account as identified by AQMS

    • Document the PEAS Case Activity Record to reflect actions taken and apply direct time

    • Place case in PEAS Suspense and monitor adjustments until fully posted

    • Notify PTM when account corrections have posted

    • Close case on PEAS and send to campus files or refile as appropriate

8.20.7.3  (10-03-2014)
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 Cases IRM 4.4.18.5 and send a copy of the following forms:

    • Form 5402, Appeals Transmittal and Case Memo

    • Appeals Case Memorandum (ACM)

    • Settlement Computations

    • Agreement or Decision Document

    • Form 2859, Request for Quick or Prompt Assessment

    • 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  (10-03-2014)
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.

  2. 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).

  3. 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 20.2.8.7, 870 Waiver Interest Suspension Periods and IRM 4.4.25.2.1, Agreed Unpaid Deficiencies Greater Than $100,000 for additional information.

  4. 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.

  5. Managerial review is mandatory for each tax periods with an adjustment greater than $100,000

  6. PEAS Fields are identified as follows:

    • PEAS Type = CLS

    • PEAS SubType:
      SP for normal interest
      RI for restricted interest
      NR for net rate netting

    • PEAS Feature Code:
      MR for a Manual Refund
      Blank for a Quick Assessment

    • Priority:
      Statute — Imminent Statute
      >100k — Deficiency over one hundred thousand dollars but less than one million dollars
      >1m — Deficiency over one million dollars but less than ten million dollars
      >10m — Deficiency over ten million dollars
      TAMRA — Refund of overpayment plus interest due within 120 days after the courts' decision becomes final

    • Priority Date — date associated with the priority or date identified by management as the priority date. For example, if the priority is statute, the priority date is the earliest statute date for the returns included in the PEAS case. If the priority is expedite, the priority date is determined by management.

    • PEAS Suspense - use the appropriate Suspense Code

    • Document the PEAS Case Activity Record (CAR) with applicable information to clearly address special case issues or contacts made to resolve questions or problems associated with accurate processing of the case.

      Example:


      PEAS CAR entry on 12/15/2013 — Form 2285 included with the administrative file was incomplete/incorrect. Contacted TCS Jane Doe via email 12/15/2013 and confirmed via telephone to request a corrected Form 2285. Follow-up date 12/22/2013. (PEAS Suspense Code S10)
      PEAS CAR entry on 12/21/2013 — Corrected Form 2285 received and Quick Assessment (MAAS) prepared and submitted with a 12/30/2014 23C Date. Follow-up date 12/30/2014. PEAS Suspense Code S09)

  7. The APS TE will place the case in PEAS Suspense for monitoring until the required account adjustment verification is received.

  8. APS will monitor all manual assessments and manual refunds until DLN verification of the transaction is received.

8.20.7.4.1  (10-03-2014)
Quick Assessment Requirements

  1. The APS Tax Examiner prepares the Form 2859, Request for Quick or Prompt Assessment which requires a complete manual re-computation of the interest for the account. The interest transaction code (TC) and interest amount are entered in Item 17 using Transaction Code (TC) 190 (manually computed interest not restricted), or 340 (manually computed interest restricted).

    Note:

    IRC 6631, Notice Requirements applies to this adjustment action since the interest has been manually calculated instead of computer generated. When the IDRS programming computer generates the interest, the schedule of interest is automatically included with the adjustment notice mailed to the taxpayer. This computer generated notice which includes the interest schedule, meets the IRC 6631, Notice Requirements.

  2. When a manual interest computation is required, IRC 6631 applies. The tax examiner who manually calculates the interest, must also prepare Letter 3535, Interest Computation Cover Letter and associate the ACT Report 490 Activity Summary for mailing to the taxpayer.

  3. Letter 3535, Interest Computation Cover Letter can be accessed via the IRS publishing web site, or ACDS APGolf.

    Access Point for Letter 3535 Procedure Steps
    IRS Publishing Website From the IRS Web Home Page:
    1. Click on the Forms, Pubs, and Docs tab (left side of the screen)

    2. Scroll down to Media and Publications IR Web site (MYM&P)

    3. Click on the Forms/Pubs/Products Repository - electronic publishing catalog of all IRS published products

    4. In the Product Catalog Information, under the View by Product Number section, select Product Type "Letter"

    5. In the Enter product number field, type 3535

    6. Click submit

    7. The Letter 3535 Product Information Page will open

    8. Under the Electronic Availability section, click on the current revision hyperlink

    9. A "fillable" pdf of Letter 3535 will open on your screen

    10. Complete the entries as appropriate for the case

    ACDS From the ACDS Homepage:
    1. Click on the APGolf tab

    2. In the Select Category drop down menu (left side of the screen) click on Closing

    3. Under the Select Form/Letter menu, scroll down to and then select Letter 3535 Interest Computation

    4. Within the Forms/Letters Generator - Select A Case screen, enter the WUNO and all other appropriate search criteria

    5. Complete the fill-in form and under the Signature Block click on the radio button for Other, enter you name and your title

    6. In the Enclosures section, enter Interest Computation Report

    7. Identify cc recipient if applicable

    8. Click on the Generate Letter/Form button

    For additional information on the requirement to provide manual interest computations to the taxpayer, see IRM 20.2.8.3(14) Manual Computations.

  4. See IRM 4.4.25.11, Quick Assessment Procedures, CCP or Campus Examination Procedures for additional guidance of preparation of the Form 2859, Request for Quick or Prompt Assessment.

8.20.7.5  (10-03-2014)
Form 3210, Document Transmittal Follow-up Requirement

  1. See IRM 21.1.7.11.4, Suspense Copies, Form 3210, Document Transmittal, for procedures on monitoring and acknowledgement follow-up requirements.

8.20.7.6  (10-03-2014)
Procedures for Shipping Personally Identifiable Information (PII)

  1. The Shipping Policy for PII Documents is located at: http://publish.no.irs.gov/mailtran/piihardcopy.html

  2. Employee Toolkit Shipping Procedures for Personally Identifiable Information (PII)

8.20.7.7  (10-03-2014)
Form 5403 Instructions to APS Worksheet

  1. Form 5403 Instructions to APS Worksheet is completed by the ATE or TCS who prepares the settlement computation. The Form 5403 Instructions to APS Worksheet provides specific account adjustment information for 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 actions:

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

    • On an Appeals Settled case, when the Form 5403 Instructions to APS Worksheet has not been included within the administrative file, APS will request the Form 5403 Instructions to APS Worksheet via secure e-mail, from the ATE.

    • If RGS is used for the computation, instead of entering the Item 15 Reference Number information on the Form 5403 Instruction Worksheet, the ATE or TCS may print either the RGS Form 5403, Appeals Closing Record or the RGS Form 5344, Examination Closing Record and attach one of them to the Form 5403 Instructions Worksheet. The Form 5403 Instructions Worksheet has a line to indicate that the RGS Form 5403, Appeals Closing Record or Form 5344, Examination Closing Record is attached.

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

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

  3. Counsel Settled cases will most often, not have a Form 5403 Instruction Worksheet included because the Appeals Tax Computation Specialist (TCS) may not have been involved in determining the tax settlement amount. When a tax deficiency amount is settled for a certain dollar amount by Counsel, instead of calculated by identifying each taxable item under consideration, the APS Tax Examiner will not be provided with the item entries for entry in Item 15 of the Form 5403. APS should not submit a request to TCS for a Form 5403 Instruction Worksheet on these case closings.

  4. When the APS TE processes a Counsel Settled case, instead of submitting a request to TCS for a Form 5403 Instruction Worksheet, they will make an entry in the PEAS Case Activity Record to document that they cannot identify Item 15 entries, because the Counsel Settled case did not include a Form 5403 Instruction Worksheet. This PEAS CAR entry will serve to meet the AQMS Standard 8 for Form 5403 Item 15 accuracy.

8.20.7.7.1  (10-03-2014)
Item Adjustment Codes and Credit Reference Codes

  1. Each tax return/tax class has a variety of Item Adjustment Codes and Credit Reference Codes which populate and/or update the associated field on the transcript of account when reported on a filed return, or adjusted during the IRS review, correction, or audit process.

  2. Document 6209, IRS Processing Codes and Information contains a detailed listing of Item Adjustment Codes and Credit Reference Codes for the following types of Tax Returns:

    • Form 706, United States Estate (and Generation Skipping Transfer) Tax Return

    • Form 709, United States Gift (and Generation Skipping Transfer) Tax Return

    • Form 720, Quarterly Federal Excise Tax Return

    • Form 940, Employer's Annual Federal Unemployment Tax Return

    • Form 941, Employer's Quarterly Federal Tax Return

    • Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees

    • Form 944, Employer’s Annual Federal Employment Tax Return

    • Form 945, Annual Return of Withheld Federal Income Tax

    • Form 990, Return of Organization Exempt From Income Tax

    • Form 1040, U.S. Individual Income Tax Return

    • Form 1041, U.S. Income Tax Return for Estates and Trusts

    • Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

    • Form 1120, U.S. Corporate Income Tax Return

    • Form 5329, Return for Individual Retirement Arrangement Taxes

    See http://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209minitoc.htm, Section 8C - Master File Codes, for each code and code definition.

  3. For additional information on account analysis and account codes, see:

    • IRM 21.5, Account Resolution

    • IRM 21.6, Individual Tax Returns

    • IRM 21.7, Business Tax Returns and Non-Master File Accounts

    • IRM 21.8, International

8.20.7.7.2  (10-03-2014)
General Individual Master File (IMF) Credit Reference and Item Reference Codes

  1. The Credit Reference and Item Reference Codes listed below are the most common adjustments on IMF and BMF Income Tax cases:

    Item/Credit Reference Code Definition Type of Change to Tax Account
    764 Earned Income Credit (EIC) Increase Credit Increase
    Posts a (TC 764) refundable credit amount that is first applied to pay any tax deficiency, and is refundable if the remaining credit amount exceeds the final balance due.
    765 Earned Income Credit (EIC) Decrease Credit Decrease
    Posts a reversal (TC 765) of a previously posted EIC TC 764/768. An EIC decrease cannot exceed the total amount of EIC already posted to the account.
    806 W-2 Withholding Tax and/or Excess FICA Contribution Credit Credit Increase
    Posts a (TC 806) refundable credit amount that is first applied to pay any tax deficiency, and is refundable if the remaining credit amount exceeds the final balance due.
    807 W-2 Withholding Tax and/or Excess FICA Contribution Debit Credit Decrease
    Posts a reversal (TC 807) of a previously posted Withholding (WH) TC 806. A WH decrease cannot exceed the total amount of WH already posted to the account.
    886 Taxable Income (TXI) Posts the TXI field in the Return Information Section of a TXMODA. This Item Reference Number is input with a "+" to increase, and a "-" to decrease the current TXI amount reflected on TXMODA and cannot be reduced below zero.
    887 Number of Exemptions Posts the number of Exemptions in the Return Information Section of a TXMODA. This Item Reference Number is input with a "+" to increase, and a "-" to decrease the current number of exemptions reflected and cannot be reduced below zero.
    888 Adjusted Gross Income (AGI) Posts the AGI field in the Return Information Section of a TXMODA. This Item Reference Number is input with a "+" to increase, and a "-" to decrease the current AGI amount reflected on TXMODA. This field can be reduced below zero, and when input, will automatically make an equal adjustment to TXI unless an 886 is input for a different amount, or 0.00.
    • See IRM 8.20.7.7.3, Employee Share of FICA Tip Income (8.7.16.26.1) for additional information.

    • See IRM 8.20.7.7.4, Self-Employment Tax Adjustment (8.7.16.26.6) for additional information.

    • See IRM 8.20.7.7.5, Refundable Credit Adjustments (8.17.5.2.12) for additional information.

    Reminder:

    The APS TE must always verify the Item Reference Numbers (IRN) and Credit Reference Numbers (CRN), their associated amounts, and "+/-" provided on the Form 5403 Instruction Worksheet before inputting the entries on the adjustment document to ensure the entry of the code(s) or amount(s) will not cause an unpostable condition.

8.20.7.7.3  (10-03-2014)
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 5403, Appeals 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. Item Reference Number 891 = unreported tip income for the primary taxpayer

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

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

    4. Item 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, Appeals Closing Record for these cases.

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

8.20.7.7.4  (10-03-2014)
Self-Employment Tax Adjustment (8.7.16.26.6)

  1. Self-employment adjustments for returns posted after December 31, 1985, are updated using reference numbers on the Form 5403, Appeals Closing Record 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 (Formerly FICA) 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 the amount needed to reduce the self-employment income to zero.

  2. The Form 5403, Appeals Closing Record, 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 0.00

    2. Item 13 - Enter 12

    3. Item 15 - Enter appropriate Reference Numbers and amounts

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

8.20.7.7.5  (10-03-2014)
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

    • Pre-Refund Cases (Frozen Refund Cases)

  2. In addition to Earned Income Credit (EIC) and Withholding (WH), the tax account may be adjusted by other refundable credits. The table below identifies the credit reference numbers (CRN), and their definition.

    Refundable Credits, Credit Reference Numbers (CRN), and Definitions

    CRN Definition
    250 Increase (Decrease) In Health Coverage Tax Credit
    252 Increase (Decrease) In Excess Social Security & RRTA Tax (If return posted after 12/31/2006)
    253 Increase (Decrease) In Telephone Excise Tax Refund (TETR) - Tax
    254 Increase (Decrease) In Telephone Excise Tax Refund (TETR) - Interest
    255 Increase (Decrease) In Prior Year Minimum Tax Credit
    256 Increase (Decrease) In Recovery Rebate Credit
    257 Increase (Decrease) In Recovery Rebate Credit
    258 Increase (Decrease) In First Time Homebuyer Credit
    259 Increase (Decrease) In Making Work Pay & Government Retiree Credits
    260 Increase (Decrease) In American Opportunity Tax Credit
    261 Increase (Decrease) In Adoption Credit
    336 Increase (Decrease) In Additional Child Tax Credit
    338 Increase (Decrease) In Recovery Rebate Credit
    766 Increase In Corporation - accelerated AMT and research credit
    766 Increase In Regulated Investment Company Credit on F-2439
    767 Decrease In Corporation - accelerated AMT and research credit
    767 Decrease In Regulated Investment Company Credit on F-2439
    766/767 Used for other credit adjustments as appropriate
    Various Increase (Decrease) In Fuel Tax Credit (see Form 4136 for Fuel Type)

8.20.7.7.6  (10-03-2014)
Item Reference Numbers for Estate Tax and Gift (E&G) Tax (8.17.5.2.3)

  1. Item reference numbers (IRN) for Form 706 Estate Tax Return and Form 709 Gift Tax Return, are provided by the TCS or the ATE who prepare the computations and Form 5403 Instruction Worksheet.

  2. Estate and Gift tax item reference numbers are used to identify adjustments to each specific tax type:

    • 074 - Generation Skipping Tax (MFT 51 and MFT 52)

    • 076 - Net Estate Tax (MFT 52)

    • 077 - Net Gift Tax (MFT 51)

  3. IRN 074 when entered on either an Estate Tax or Gift Tax adjustment will be combined with the IRN 076 or IRN 077 amount to = the TC 300 amount.

  4. IRN 076 is required on all Estate Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered.

  5. IRN 077 is required on all Gift Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered.

  6. The employee who prepares the settlement computation is responsible for completing the Form 5403 Instruction Worksheet. If a Counsel case is received by APS and the Form 5403 Instruction Worksheet is not included, APS can submit a Form 3608, Request for TCS Service to request a Form 5403 Instruction Worksheet.

8.20.7.7.7  (10-03-2014)
Reference Number 321 for Personal Holding Company Tax (8.17.5.2.8)

  1. See IRM 8.17.5.2.9, Reference Number 321 (Personal Holding Company Tax) for additional information.

    Note:

    The Item Reference Number 321 and applicable adjustment amount are entered in Item 15 of Form 5403, Appeals Closing Record.

8.20.7.7.8  (10-03-2014)
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 30-Day or 90-Day 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 20.2, Interest for service-wide guidance and procedures for all "Interest-related" topics.

  4. See IRM 20.2.8.3(14) Manual Computations for information on the requirement to provide the manual interest computation to the taxpayer under IRC 6631, Notice Requirements.

8.20.7.7.8.1  (10-03-2014)
Form 5403, Appeals Closing Record, 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 5403, Appeals Closing Record. 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 5403, Appeals Closing Record.

    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 (PDC) is entered on Form 5403, Appeals Closing Record, in Item 43 to ensure that both transactions do not attempt to post to the account within the same cycle.

    4. 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 must determine if "Non-Restricting TC 340" procedures must be used whenever possible to avoid unnecessarily restricting the module to allow MF to generate future interest calculations on the account.

    See IRM 20.2.8.11, Non-Restricting Transaction Code (TC) 340, for additional information on using a Non-Restricting TC 340.

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

    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.

8.20.7.7.9  (10-03-2014)
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, Appeals Closing Record for these cases.

8.20.7.8  (10-03-2014)
Integrated Automation Technology (IAT)

  1. Integrated Automation Technology (IAT) is available to all IDRS users and use of IAT is mandatory for all APS employees effective October 1, 2014. IAT automates many of the AIMS and IDRS command code input screens, provides real-time analysis of the taxpayer's account to identify account condition(s) which may case an unpostable and auto-populates field entries to reduce keystrokes and eliminate input errors.

  2. For additional information, visit the IAT Home Page.

  3. The following Command Codes (CC) are available via IAT:

    Type of Input Action Command Code
    AIMS and Non-AIMS Adjustments to Tax, Penalty, Item Codes and Reference Codes AMCLS
    ADJ54
    CMODE
    TSCHG
    TSCLS
    AIMS Status AMSOC
    AMSTU
    Control Base Actions ACTON
    Credit Transfers ADD24
    ADD34
    ADD48
    DRT24
    DRT48
    FRM34
    Entity Changes BNCHG
    INCHG
    Installment Agreements IADIS
    IAGRE
    IAPND
    IAREV
    Manual Refund Forms 3753 and 5278 Form Completion Only
    Request or Re-Charge a Return ESTAB
    Stop Computer Generated Refund TC 846 NOREF
    Suspend Notice and Collection Action STAUP
    STATI
    STATB
    Unpostables UPTIN

8.20.7.9  (10-03-2014)
Integrated Data Retrieval System (IDRS) Command Code Job Aid

  1. For a complete listing of AIMS and IDRS Command Codes, their purpose and the applicable field names and descriptions applicable for each CC, click on the link provided. IDRS Command Code Job Aid

8.20.7.10  (10-03-2014)
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 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 1040Form 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 Taxable Return
    Behind last page of return Claim
    4 Current IDRS Research Only include most current research as appropriate for case type
    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

8.20.7.10.1  (10-03-2014)
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-E, Schedule for FICA Tax Adjustment of Wages not Previously Reported - Attach behind the return or to the face of the return.

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

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

    8. 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 Compliance if noted on Form 5402, Appeals Transmittal and Case Memo by the ATE.

    Reminder:

    Since APS no longer creates a Closed Office File, the APS TE must transmit one of the duplicate Original Closing Agreements to the address below, using Form 3210, Document Transmittal , where all Closing Agreements will be retained for 6 years to comply with the Appeals Records Control Schedule retention period.
    Appeals
    Attn: Rhonda Caldwell
    55 North Robinson
    Oklahoma City, OK
    73102-9226

8.20.7.10.2  (10-03-2014)
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. Include copies of applicable enclosures (870-AD, 2504-AD, Form 906 Closing Agreement, Form 872-T, etc) as stated on the closing letter.

8.20.7.10.3  (10-03-2014)
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.

8.20.7.11  (10-03-2014)
AIMS CC: AMCLSA 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, Appeals Transmittal and Case Memorandum is signed and dated

    • Form 5403 Instructions to APS Worksheet, if applicable

    • Form 5403, Appeals Closing Record

    • 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 (signed), Entered Decision, or Defaulted SND as appropriate to legally authorize the account adjustment(s) and closing action(s)

  2. Review AIMS and IDRS prints for each tax period to identify AIMS and Master File freeze codes and account conditions, which require special actions to accurately process the account adjustments.

  3. Verify item and credit adjustments will correctly adjust the respective field on the account without creating an unpostable condition.

    • IRN 886 reduction (-) cannot be for an amount greater than the Taxable Income (TXI) Field Amount currently posted.

    • IRNs for Self Employment Income (SEI) increase cannot cause the total SEI amount to exceed the maximum SEI for the tax period.

    • IRNs for secondary self-employment income, and/or secondary medicare income adjustments cannot be made to an account with a filing status other than Married Filing Joint.

    • CRN 764 cannot increase a refundable credit i.e. Earned Income Credit, to an amount greater than the maximum allowed amount for the respective tax period.

    • CRN reductions cannot decrease an existing credit below 0.00.

    • See http://core.publish.no.irs.gov/docs/pdf/d6209--2014-01-00.pdf for specific information on Transaction Codes, Credit Reference Numbers, Item Reference Numbers, MF Freeze Codes, and Unpostable Codes.

  4. Exhibit 8.20.7-1 provides instructions for completing Form 5403, Appeals Closing Record.

    Note:

    If there are two or more agreements on the case, see IRM 8.20.7.7.8.1, Form 5403, Item 08 Entry When There Are Two Agreements.

  5. Form 2285 is needed for cases involving carry-back adjustments. 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.

  6. Verify the agreement form, settlement computation and Form 5403, Appeals Closing Record all have the same:

    • Tax amount

    • Penalty amount

    • TIN

    • Tax period

    • Taxpayer name

  7. Verify signature and date on Form 5402, Appeals Transmittal and Case Memo.

  8. Ensure there are sufficient copies of Form 5402, Appeals Transmittal and Case Memo 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, Appeals Transmittal and Case Memo remains in the administrative file

    2. copy of Form 5402, Appeals Transmittal and Case Memo is transmitted to the office identified by the ATE.

      Note:

      Follow local procedures for routing Form 5402(s) for Campus cases.

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

  10. Access the Docketed/Non-Docketed Disclosure Spreadsheet http://appeals.web.irs.gov/APS/default.htm applicable 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 in Item 39 on Form 5403, Appeals Closing Record and transmit copies of all required documents to the address provided on the Disclosure Spreadsheet using Form 3210, Document Transmittal.

  11. Monitor account adjustment posting and update/suspense/close PEAS timely in compliance with current APS policy and procedure.

  12. See IRM 21.1.7.11.4, Suspense Copies, Form 3210, Document Transmittal, for procedures on monitoring and acknowledgement follow-up requirements.

8.20.7.11.1  (10-03-2014)
Non-AIMS Adjustments General Closing

  1. Account and Processing Support (APS) also receives cases for closing action which are not controlled on AIMS.

  2. These Non-AIMS adjustment closings are explained within this IRM under each case type:

    • Abatement of Interest Claim

    • Campus Source Claim

    • Collection Due Process

    • Identity Theft

    • Rejected Offer in Compromise

    • Penalty Appeal (PENAP)

8.20.7.11.2  (10-01-2014)
Non-AIMS CC: REQ54/ADJ54

  1. Form 3870, Request for Adjustment is prepared and approved by the ATE/ATM and is submitted to APS for processing Non-AIMS account adjustments via CC: REQ54/ADJ54. The Approving Official Signature authorizes APS to process the account adjustments requested by the ATE.

  2. IRM 2.4.16, IDRS Terminal Input - Command Codes REQ54 and ADJ54 provides detailed item entry instructions and explanations for reference by APS TE's authorized to input Non-AIMS adjustments.

  3. APS must verify the following items when entered by ATE, or complete the following items on Form 3870 as follows:

    • Item 15 Sequence Number, identified by IDRS upon completion of the adjustment input action.

    • Item 16 Blocking Series, 05X, 15X, 18X, 96X, 97X, 98X, 99X.

    • Item 17 Deficiency Interest to Date, MM-DD-YYYY when restricted interest TC 34X is adjusted.

    • Item 18 Source Code, this is a required field for IMF TC 29X adjustments. The Source Code (SC) chooses the beginning explanation appearing on the taxpayer's adjustment notice with the reason code (RC) completing the statement. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Source Code for the Appeals adjustment. The most common SC used for Appeals adjustments is "02" which begins the adjustment notice with "We changed your [YYYYMM]" account to correct your [RC].

    • Item 19 Reason Code, this is a required entry and up to 3 RC's may be input and when a Penalty RC is also appropriate, it is entered in position #4. When multiple RC's are input, enter them in numeric order from lowest number to highest number. RC 099 is used when other RC's do not apply and to complete the notice statement with "Account Information" . See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Reason Code for the Appeals adjustment.

    • Item 21 Hold Code, is entered when appropriate. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Hold Code for the Appeals adjustment.

    • Item 23 Priority Code, is entered by APS and must be used when certain conditions exist on the module. The most common PC used on Appeals non-AIMS adjustments is "1" . See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Priority Code for the Appeals adjustment.

    • Item 24 Posting Delay Code, is entered by APS when the adjustment is input in during the current cycle, but the posting of the transactions must be delayed from 1-6 cycles. A PDC is only entered when needed.

    • Item 25 Source Document (SD) Attached, this is a required entry.
      "Y" , means the SD will be submitted to files for association with the REQ54/ADJ54 Form 5147, IDRS Transaction Record
      "N" means no SD "NSD" will be submitted to files
      "R" , means the SD is being retained by the input function

    • Item 29 TC No. is where the Transaction Code(s) being adjusted are entered along with the increase or decrease dollar amount for each respective TC entered on the associated row i.e. 291, 161, 271, 341, etc.

    • Item 29 Ref. No. Item Adjustment is where the IRN(s) being adjusted are entered along with the increase or decrease amount for each respective IRN i.e. 888, 886, 889, 878, 887, etc.

    • Item 29 Ref. No. Credit Adjustment is where the CRN(s) being adjusted are entered along with the increase or decrease amount for each respective CRN i.e. 807, 765, 338, 256, 257, etc.

    • Item 30 Remarks is used to identify any other specific information needed to complete the adjustment i.e. Refund Statute Control Date (RFSCDT), TCB-DT, and other information not specifically provided an item entry.

    • Item 31 Complete as appropriate.

  4. A Form 8485, Assessment Adjustment Case Record can be prepared by APS, based on the Form 3870 provided by the ATE, to process the Non-AIMS account adjustments if additional fields are needed since the Form 3870 only allows for 4 TC Numbers to be entered.

  5. The APS TE must verify that their adjustments have posted to the account before closing the PEAS record. PEAS Suspense must be used as appropriate. See IRM 8.20.10, Account and Processing Support - Processing Employee Automated System (PEAS), for additional information.

  6. All adjustments AIMS and Non-AIMS must have the Adjustment Source Document associated with the administrative file as well as a copy of the Adjustment Source Document sent to Campus Files for association with the Form 5147, IDRS Transaction Register when Item 25 SD = "Y" .

    Exception:

    Non-AIMS Adjustments input with "NSD" in CC: ADJ54 Remarks, do not require that the Adjustment Source Document be sent to files because the Form 5147, IDRS Transaction Register will not print out for the Files Operation to associate with the Source Document.

  7. The adjustment source document must be placed on top of the return or if no return is present, on top of the case closing package serving as the administrative file under Appeals jurisdiction.

8.20.7.11.3  (10-03-2014)
Final Disposition of the Taxpayer's Account Balance

  1. When a case is decided or determined with finality, by Appeals, Counsel, or the United States Tax Court (USTC), the APS Tax Examiner is responsible for taking the following actions:

    • Analyze each tax account to identify Master File (MF) Freezes or other account conditions which may impact the current account adjustment(s)

    • Identify the appropriate processing codes to use when processing the adjustment(s) to avoid an unpostable condition, and or a delay in the release of the refund or notice to the taxpayer

    • Process the legally authorized account adjustment(s) on each respective tax period, which, upon posting will result in the final settlement of the taxpayer's account.

  2. When the taxpayer's account after posting of the adjustment(s) results in a balance due, a notice to the taxpayer is computer generated unless a hold code 2, 3, or 4 is input with the adjustment transaction(s).

  3. When the taxpayer's account after posting of the adjustment(s) results in a credit balance, IDRS will (in most cases) offset the credit to any outstanding balance due account(s) for the taxpayer, and then refund the remaining credit with applicable overpayment interest unless a hold code 2 is input with the adjustment transaction(s).

  4. A Hold Code should only be used when appropriate. When the APS TE uses a Hold Code for a specific reason i.e., to hold a credit balance until the credit can be offset to an outstanding balance, the APS TE must ensure that upon completion of the transfer action, the Hold Code is released to allow final settlement of the taxpayer's account.

  5. When the taxpayer's accounts require manual processing of the offset of credit to an outstanding balance due account, the tax examiner performing the account adjustment(s) must ensure that their action fully resolve the taxpayer's accounts before the PEAS record is closed.

8.20.7.12  (10-03-2014)
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. The bankruptcy automatic stay does not prohibit assessments that are allowed to be immediately assessed absent a bankruptcy. The Trust Fund Recovery Penalty (TFRP) and most excise taxes do not involve deficiency procedures and are immediately assessable. See IRM 8.25.1.2, Trust Fund Recovery Penalty (TFRP) Authority for additional information.

8.20.7.12.1  (10-03-2014)
Identifying Bankruptcy Cases (8.7.6.9.1)

  1. The ATE will identify a bankruptcy case on Form 5402, Appeals Transmittal and Case Memo.

  2. The following conditions identify a bankruptcy filing:

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

    • "-V" freeze or a "-W" freeze for CCs 81 and 84 on TXMODA

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

    • "E/BNK" Status Code on ACDS which is defined as "Inactive, TP in Bankruptcy"

8.20.7.12.2  (10-03-2014)
Bankruptcy 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. 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 Statutory Notice of Deficiency (SND) must be issued prior to the existing ASED.

    Reminder:

    A bankruptcy filing does not suspend the ASED.

    • Agreed cases, 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.

    • Unagreed field sourced cases are returned to Compliance Technical Services (CTS) as directed by the ATE for monitoring and statute control.

    • Unagreed campus sourced cases are returned to the originating campus as directed by the ATE for monitoring and statute control.

8.20.7.12.3  (10-03-2014)
Bankruptcy - Agreed Closing Procedure (8.7.6.9.3)

  1. Form 5402, Appeals Transmittal and Case Memo, Form 5403, Appeals Closing Record, and closing letter are forwarded to APS by the ATE. The ATE will identify the correct ASED for APS in Item A on the Form 5403, Appeals Closing Record.

    Caution:

    The agreed assessment must be processed timely to ensure posting of the assessment prior to the ASED identified by the ATE. APS must use Quick Assessment procedures if the ASED will expire in 60 days or less.

  2. APS will otherwise use general closing procedures to complete the case processing.

8.20.7.12.4  (10-03-2014)
Bankruptcy - Unagreed Case Processing/Closing (8.7.6.9.5)

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

    • Issue the SND using Letter 1384, Notice of Deficiency provided by the ATE.

      Note:

      The SND MUST be issued within the normal statute of limitations.

      Reminder:

      When a SND is issued on a bankruptcy case, the case will not be placed in SND suspense but instead the case is forwarded according to the ATE instruction.

    • Return field sourced cases to Compliance Technical Services (CTS).

    • Return campus sourced cases to the originating campus function.

    • Close ACDS using Closing Code = 05, Defaulted SND.

    • If Compliance established the AIMS Controls, use CC: AMSTUB to update AIMS controls to appropriate AIMS Status.

    • Field Examination Technical Services are updated to AIMS Status 21

    • Campus Cases are updated to AIMS Status 20

    • If Appeals established the AIMS Controls, use CC: AMSOCA to remove the record from the AIMS database via Disposal Code (DC) 33.

  2. If, the taxpayer files an objection to the Government’s claim during the time the case is in the ATE's active inventory, , the ATE will stop working the case, identify the Counsel or the Department of Justice Office address where the administrative file must be sent after issuance of the notice, and forward the case to APS for the following actions:

    • Issue a SND using the Letter 1384, Notice of Deficiency prepared by the ATE. The filed will not be suspended.

    • Close ACDS using CLOSINGCD = 19.

    • Close AIMS via CC: AMCLSA using Form 5403, Appeals Closing Record:
      Use the "Copy" Blocking Series 79X,
      Item 12 = TC 300 0.00
      Enter Closing Code 19 in Item 811.

    • Attach a copy of the face of the return and Form 2275, Records Request, Charge and Recharge, to the Form 5403, Appeals Closing Record.

      Reminder:

      The office and address where the administrative file is transmitted to must be included on Form 2275, Records Request, Charge and Recharge.

    • Form 2275 is forwarded to Campus Files for association with the Form 5147, Transaction Record to identify that the administrative file has been "recharged" to either Counsel or the Tax Division, U.S. Department of Justice.

    • Transmit the administrative file to the Counsel Office or Department of Justice Office identified by the ATE, using Form 3210, Document Transmittal.

8.20.7.12.5  (10-03-2014)
Bankruptcy - Dismissed Docketed Case Closing Procedure (8.7.6.5.5.2)

  1. Certain docketed cases may be dismissed by the Tax Court due to lack of jurisdiction.

  2. Bankruptcy Code IRC 362(a)(8), states that a case may not be filed with the Tax Court if the automatic stay is in place due to a bankruptcy filing.

  3. To identify these cases, the typical wording from the court on its order of dismissal will state "On (MM-DD-YYYY), respondent filed a Motion To Dismiss for Lack of Jurisdiction, on the ground that the petition was filed in violation of the automatic stay imposed under 11 U.S.C.§362(a)(8). Respondent states in the motion to dismiss that petitioners do not object to the granting of the motion. ORDERED that respondent's Motion To Dismiss for Lack of Jurisdiction is granted and this case is dismissed for lack of jurisdiction."

  4. APS will not process the assessment on these cases.

  5. Docketed cases that are dismissed due to this reason must be returned to the originating function to monitor the bankruptcy. When the automatic stay is lifted or terminates, the originating function will make the assessment at the appropriate time or send the case back to Appeals as a new docketed case if the taxpayer repetitions the Tax Court.

  6. Field sourced cases will be returned to Compliance Technical Services Bankruptcy Coordinator. http://mysbse.web.irs.gov/exam/tip/bankruptcy/contacts/12268.aspx

  7. Campus sourced cases will be sent back to the campus functional unit that issued the SND.

    • Automated Under Reporter (AUR) http://serp.enterprise.irs.gov/databases/who-where.dr/aur-bankruptcy-coordinators.htm

    • Automated Substitute for Return (ASFR) http://serp.enterprise.irs.gov/databases/who-where.dr/asfr-contacts.htm

    • Correspondence Exam (CORR EXAM) Search Page for Originating Correspondence Exam Location.

  8. To return the case to the originating function, APS will take the following actions:

    Processing Steps for Dismissed Docketed Bankruptcy Cases

    Step Action
    Update AIMS or Close AIMS:
    Compliance Status (21)
    or
    Close AIMS with Disposal Code 33.
    If the campus functions, established the case on AIMS, update the AIMS controls to Status 21 using CC: AMSTUB.
    If Appeals established the AIMS control, close the AIMS control via CC: AMSOCA and Disposal Code "33" Erroneous AIMS Account.
    Close the ACDS database ACDS is closed using CC 21 unless the ATE has charged time on the case, then use CC 08.
    ACDS NOTE field Enter a remark in the NOTE field that the case is being returned to either the Exam Technical Services coordinator or the campus function (ASFR, AUR, CORR EXAM) that issued the stat notice. In the NOTE field, place the name of the function and the address where the case is being sent.
    Make a copy of the statutory notice of deficiency (SND) Make a copy of the SND and any other document that may be necessary in the event a protective assessment must be processed by APS. Associate these documents with the Form 3210 follow-up for receipt verification. Once the receiving office acknowledges receipt of the file, the documents associated with the Form 3210 must be shredded in compliance with PII protection measures. The receipted Form 3210 is maintained in compliance with the Appeals Records Control Schedule guidance.
    Prepare Form 3210, Document Transmittal Complete Form 3210 following the instructions below. Place one copy of Form 3210 on the outside of the case file and place one copy inside the case file.
  9. Complete Form 3210, Document Transmittal in the following manner:

    1. In the "To" field, place the name and address of the Exam Technical Services coordinator or the name and address of the appropriate campus function where the file is being returned as identified by the ATE.

    2. In the "Remarks" field, place the following text "Tax Court petition filed in violation of the bankruptcy automatic stay" .

    3. In the body of the Form 3210, Document Transmittal place the exact name of the taxpayer as it is listed on the stat notice and list the tax year or years as listed on the SND.

    4. Below the listing of the taxpayer's name and tax year, place the following text:

    • "APPEALS HAS NO JURISDICTION" .

    • "The U.S. Tax Court has dismissed this petition due to lack of jurisdiction" .

    • "This case is being returned to the originating function due to an erroneous Tax Court filing. The automatic stay provisions of bankruptcy code section 362(a)(8) preclude a debtor from filing a petition with the U.S. Tax Court until the stay is lifted or is terminated. The stay in this case remains in effect. The taxpayer may re-file a valid Tax Court petition upon the lifting or termination of the stay. The bankruptcy should be monitored so that the assessment is made at the appropriate time. " .

  10. Complete the remaining fields of Form 3210, Document Transmittal as appropriate.

    Figure 8.20.7-1

    This image is too large to be displayed in the current screen. Please click the link to view the image.

8.20.7.13  (10-03-2014)
Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures (8.11.1.1.9)

  1. This section provides procedures for processing both pre-assessed and post-assessed Civil Penalty (CVPN) Appeals.

  2. When a CVPN case is submitted to APS for processing, APS must identify if the CVPN module(s) have already been created or if the Appeals determination will require the CVPN module be established.

  3. There are several CVPN codes which carry an Assessment Statute Expiration Date (ASED) and for those cases, ASED protection and assessment time frames apply. The ATE will validate the ASEDs upon receipt and assignment of the case. Upon closing, the ATE will also enter the ASED for each period on the respective closing document.

  4. When a Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties (Rev. 12–2013) is used, the ATE will complete the following items:

    • If the CVPN adjustment does not have an ASED, the ATE will check the box in Item 4 "Check if no ASED"

    • If the CVPN adjustment does have an ASED, the ATE will enter the ASED in Item 6 "Statute date (mandatory) (mmddyyyy)"

    .

  5. A pre-assessed CVPN Appeals determination, will likely require that the MFT 13 or MFT 55 CVPN Module be established for each period being closed.

  6. A post-assessed CVPN Appeals determination, will likely require that the existing MFT 13 or MFT 55 CVPN module be adjusted for a partially sustained or full allowed case, or closed with a TC 290 0.00 when the Compliance determination is fully sustained.

  7. Post-assessment CVPN cases are generally submitted to Appeals as a PENAP case, (Ogden PENAP work stream).

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

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

    2. Review closing documents for special instructions

    3. Review and update ACDS with the closing information according to the Form 5402

    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 by the ATE in the Route To: field on the Form 5402, Appeals Transmittal and Case Memo

    Note:

    APS will process all miscellaneous civil penalties covered by the Civil Penalty Module (CPM) system through IDRS, using the customized Form 5402, Appeals Transmittal and Case Memo and Form 8278, Computation and Assessment of Miscellaneous Penalties, as the source document.

  9. All Non-AIMS adjustments must be monitored until they are posted to the account. When the CVPN adjustment(s) is input, place the case in PEAS Suspense with a follow-up date for no later than the applicable 23C Date.

8.20.7.13.1  (10-03-2014)
Abusive Transaction IRC §6707A Penalty Closing Procedures (8.11.7.1.4)

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

  2. Depending on the resolution, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties when prepared by the ATE, is processed by APS.

    1. If the Abusive Transaction Penalty is fully or partially sustained, assess per Form 8278 using TC 240 and Penalty Reference Number (PRN) 648, Failure to Disclose Reportable Transaction with Return (Form 8886).

  3. The following closing codes apply to the Abusive Transaction Penalty WUNO:

    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
  4. If there is a related income tax work unit, regular closing codes and procedures apply.

  5. Use general closing guidelines for additional ACDS updates required at closing.

8.20.7.13.2  (10-03-2014)
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. 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
  4. APS will send a copy of the Form 5402, Appeals Transmittal and Case Memo and ACM to the Compliance location identified by the ATE in the remarks section.

8.20.7.13.3  (10-03-2014)
Return Preparer Penalty Closing Procedures (8.11.3.5)

  1. Return Preparer Penalties are closed the same as other civil penalty cases 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, Assessment and Abatement of Miscellaneous Civil Penalties when prepared by the ATE, is processed by APS.

    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, Appeals Transmittal and Case Memo to Compliance per the instructions on the Customized Form 5402.

  4. APS will assess or abate the penalty per the ATE prepared Form 5402, Appeals Transmittal and Case Memo 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 (for IMF) or MFT 13 (for BMF) account has not been established, APS will need to use IDRS CC: MFREQD to create a dummy module.

8.20.7.14  (10-03-2014)
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

8.20.7.14.1  (10-03-2014)
Agreed or Defaulted 90-Day Cases Involving Claims Expedite the Processing of Large Dollar Cases (8.7.7.10.2) (8.7.7.10.3)

  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 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:

    • Account and Processing Support (APS) - APS will expedite the closing of a "large dollar" overpayment case, as" flagged" by the ATE. APS will assign the case on 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.

8.20.7.14.2  (10-03-2014)
Abatement of Interest Claim Cases (8.7.7.13.3 & 8.7.7.13.4)

  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, Appeals Transmittal and Case Memo, an ACM, and Form 3870, Request for Adjustment for each abatement of interest claim. Claims for abatement of interest for actions involving Appeals employees must be approved and signed by the appropriate Appeals 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, Closing Letter - Agreed Cases by regular mail.

    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.

  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 table 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:

    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
    1. RevsdTAX - enter the negative amount approved for abatement, e.g. fully sustained will have $-0-.

    2. DDAMTDIS - enter only the amount disallowed, e.g. full disallowance reflects the full amount of the claim and full allowance reflects $-0-. Partial allowance reflects the difference between the DDAMTCL and the RevsdTAX.

  7. The APS TE must resolve all freeze codes on the taxpayer's account to ensure that any refund due to the taxpayer is released and refunded timely.

  8. Use PEAS Suspense when an account adjustment must be monitored until fully posted.

  9. Upon completion of the account adjustment and verification that the appropriate refund amount has been released to the taxpayer, remove the case from PEAS suspense and close PEAS.

8.20.7.14.3  (10-03-2014)
Methods and Examples for Computing Interest Abatement

  1. See Exhibit 8.20.7-7, for guidance on processing an Interest Abatement case which can be submitted to APS as a partial (interim) or a final determination closing.

8.20.7.14.4  (10-03-2014)
Claim Cases - Campus Source

  1. Campus claims are normally not controlled on AIMS.

    Note:

    If AIMS controls have been established process the closing via CC: AMCLSA using Form 5403, Appeals Closing Record.

  2. When AIMS controls have not been established, process the adjustment to IDRS using Non-AIMS CC: REQ54:

    1. Form 3870, Request for Adjustment or Form 8485, Assessment Adjustment Case Record .

    2. Form 5402, Appeals Transmittal and Case Memo.

  3. A separate Form 3870 or Form 8485 is needed for each tax period being adjusted.

  4. Date and mail one of the following closing letters, prepared by the ATE:

    • Letter 2681, Appeals Full Disallowance After Previous Claim Disallowance

    • Letter 2682, Appeals Full Claim Allowance

    • Letter 2683, Appeals Partial Disallowance After Previous Claim Disallowance

    ,.

    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.

  5. These cases are not held for suspense.

  6. 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. e.g. 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, Waiver of Statutory Notification of Claim Disallowance was not signed. The ATE will prepare the appropriate closing letter and provide the appropriate closing instructions on Form 5402, Appeals Transmittal and Case Memo. 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).

8.20.7.14.5  (10-03-2014)
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


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