4.4.18 Large Dollar Cases

Manual Transmittal

March 03, 2023

Purpose

(1) This transmits a revision for Internal Revenue Manual (IRM) 4.4.18, Audit Information Management System (AIMS) Procedures and Processing Instructions, Large Dollar Cases.

Material Changes

(1) IRM 4.4.18 has been extensively revised throughout. Names of functional areas have been changed to reflect the current organizational structure and the IRM has been reorganized. A summary of significant changes is reflected below:

IRM References Description of Changes
IRM 4.4.18.1 Changed title and information.
IRM 4.4.18.2 Changed title and information.
IRM 4.4.18.3 Changed title and information.
IRM 4.4.18.4 Changed title and information.
IRM 4.4.18.5 Previously IRM 4.4.18.1 and updated see also tags.
IRM 4.4.18.6 Previously IRM 4.4.18.2.
IRM 4.4.18.7 Previously IRM 4.4.18.3 and updated content throughout.
IRM 4.4.18.8 Previously IRM 4.4.18.4.
IRM 4.4.18.8(1) Updated IRM reference.
IRM 4.4.18.9 Previously IRM 4.4.18.5 and updated content throughout.

Effect on Other Documents

This revision supersedes IRM 4.4.18, Large Dollar Cases dated June 11, 2010.

Audience

Large Business and International (LB&I), Small Business/Self-Employed (SB/SE) and Wage and Investment (W&I).

Effective Date

(03-03-2023)

Lori L. Roberts
Director, Technology Solutions
Small Business/Self-Employed Division

Program Scope and Objectives

  1. Purpose: The procedures, which were in this IRM, pertained to the Examination Audit Process. The removed procedures do not pertain to the AIMS Information Technologies (IT) System, which is the subject of this IRM. New IRM references for the procedures previously located in this IRM are listed in the material changes. This section provides general instructions for Large Dollar Cases. The Centralized Case Processing (CCP) procedures remaining in this IRM will be included in the new IRM 4.38.1, Exam Processing, CCP, Organization and Responsibilities.

  2. Audience: The audience for this IRM section will be Examination CCP.

  3. Policy Owner: The Director: SB/SE Technology Solutions who is under the Director, Operations Support.

  4. Program Owner: Examination Systems and Projects, Customer Service.

  5. Program Goals: The goal of this section is to provide information and procedures on processing Large Dollar Cases.

  6. IRM deviations must be submitted in writing to the Director SB/SE Division following instructions from IRM 1.11.2.2.4.3, Internal Management Documents System - IRM Process.

Background

  1. The procedures which were in this IRM, pertained to the Examination Audit Process. The procedures do not pertain to the AIMS IT System, which is the subject of this IRM. New IRM references for the procedures previously located in this IRM are listed in the material changes. CCP procedures remaining in this IRM will be included in the new IRM 4.38.1, Exam Processing, CCP, Organization and Responsibilities.

Responsibility

  1. Headquarter Examination is responsible for all policy and procedures related to CCP.

Related References

  1. The following are related resources:

    • IRM 4.4.25, Audit Information Management System (AIMS) - Validity and Consistency - Quick Assessments.

    • IRM 4.10.8, Examination of Returns - Report Writing.

    • IRM 20.2.1, Interest - Interest Introduction, Standards and Guidelines.

    • IRM 25.6.1, Statute of Limitations - Statute of Limitations Processes and Procedures.

    • IRM 25.6.23, Statute of Limitations - Examination Process - Assessment Statute of Limitations Controls.

Overview

  1. This chapter covers unique processing instructions for large dollar cases. In determining whether a case should be considered a large dollar case, treat each tax period separately.

    Exception:

    Cases over $10 million in deficiency - See IRM 4.4.18.9, Over $10 Million Deficiency.

  2. Large dollar cases are:

    1. Agreed and unpaid deficiencies of $100,000 and greater. IRM 4.4.18.7, Processing Agreed and Unpaid Deficiencies.

    2. Overassessment Cases of $100,000 or more. IRM 4.4.18.8, Overassessment Cases.

    3. Over $10 Million in Deficiency. IRM 4.4.18.9, Over $10 Million Deficiency.

Flagging Large Dollar Cases By Field Groups

  1. All large dollar cases with agreed and unpaid deficiencies or overassessments of $100,000 and greater must be flagged on Form 3198, Special Handling Notice for Examination Case Processing, in the "Expedite Processing" section. In addition the "Over $100,000 Agreed and Unpaid" section of Form 3198 must be completed by the field group. Requirements for CCP and Technical Services (TS) to complete this section have been removed.

Processing Agreed and Unpaid Deficiencies

  1. This section pertains to income, estate and gift, and certain excise taxes with agreed and unpaid deficiencies of $100,000 and greater that are subject to the interest-free waiver period under Internal Revenue Code (IRC) 6601. These procedures do not apply to employment tax returns or delinquent returns secured by Examination after a Substitute for Return has posted.

  2. The "Expedite Processing" section of the Form 3198 must be completed by the field group for all case files with agreed unpaid deficiencies or overassessments of $100,000 and greater. The $100,000 criteria is not cumulative, but is determined per year - See Form 3198. Form 3198 Job Aid.

  3. Due to interest paid on the deficiency or overassessment, these cases must receive expedite processing. Every effort should be made to assess the deficiency within 30 calendar days of the agreement date if the unpaid deficiency is greater than $100,000. In addition, a quick assessment will be necessary only if the 23C Date will not be within 30 calendar days from the agreement date - See IRM 4.4.25, Audit Information Management System (AIMS) - Validity and Consistency - Quick Assessments.

    Note:

    For LB&I cases: If there is an unpaid balance due of $100,000 and greater on an agreed case, the case is referred to Collections. If the case is unagreed, it will close to either TS for Statutory Notice of Deficiency or Appeals.

     

  4. Every effort should be made to forward these cases as expeditiously as possible. The following time frames have been established and should be followed:

    1. The group has 4 calendar days after receipt of the waiver to forward the case for processing.

    2. TS has 8 calendar days to review the case if it was forwarded to them.

    3. CCP has 9 calendar days to input the case for closure if the case has been through TS. If the case did not go through TS, CCP has 17 calendar days.

  5. The quick assessment guidelines found in IRM 4.4.25, Audit Information Management System (AIMS) - Validity and Consistency - Quick Assessments, will be revised as follows for agreed, unpaid deficiencies for income, estate and gift and certain excise taxes:

    • Less than $99,999 - Quick assessment not required.

    • $100,000 and greater - A quick assessment is necessary if the 23C Date will not be within 30 days of the agreement date.

     

    Note:

    For additional guidance for when quick assessment is necessary, See IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues and IRM 25.6.23.7.1, Minimum Time Remaining on Assessment Statute Expiration Date (ASED). For additional information on the 23C Date - See IRM Exhibit 20.2.1-2, Definition of Terms and IRM Exhibit 20.2.1-3, Interest Effective Date Chart for additional information on the 23C Date.

     

    Reminder:

    Regardless of the dollar amount, quick assessments are not required on civil penalty assessments because they do not fit the criteria for agreed, unpaid deficiencies. However, a quick assessment would be required if the civil penalty had an imminent statute date of less than 60 days.

Overassessment Cases

  1. Overassessments of $100,000 or more must receive expedite processing - See IRM 4.4.18.7, Processing Agreed and Unpaid Deficiencies.

  2. Overassessments of $100,000 or more in Correspondence Exam groups in the Campus must be approved by the lead tax examiner or manager and processed within 21 days of receipt.

  3. Overassessments of $10 million dollars or more (including allowable interest) will be refunded using manual refund procedures. See IRM 21.4.4, Refund Inquiries - Manual Refunds and IRM 3.17.79.3.6, Manual Refunds $1 Million or More and $10 Million or More.

Over $10 Million Deficiency

  1. Each year the General Accountability Office (GAO) examines the Internal Revenue Service (IRS) financial statements. As a part of this audit, they review documentation for taxpayers whose balance due (including interest and penalties) is over $10 million dollars.

  2. To adequately review this information, copies of forms related to a balance due adjustment over $10 million are required to be sent to the Office of Unpaid Assessment Analysis.

  3. Follow the processing procedures below when an assessment results in a balance due of $10 million or more. This applies to CCP partial and full closures.

  4. When the assessment for a single tax period, not combined or offset by another tax period, will be $10 million or more, prepare copies of the information listed below.

    1. Definition of assessment for a single tax period includes a combination of:

    • Tax to be assessed (example: Transaction Code (TC) 300 or TC 308).

    • Tax to be abated (example: TC 301 or TC 309).

    • Penalties to be assessed.

    • Interest to be assessed.


    Definition of assessment for a single tax period does not include:
    • Credits on the account.

    • Offsets to be applied to the account from another tax period.

  5. For each tax period, where the balance due (this includes interest and penalties) is $10 million or more, (total unpaid assessment of $10 million or more per tax period) a copy of the following forms must be sent by CCP to the Office of Unpaid Assessment Accounting and Analysis after the case has been closed.

    • Form 4318, Examination Workpapers Index - See IRM 4.10.15.7.8, Workpapers/Adjustments - Administrative.

    • Form 4700, Examination Workpapers - See IRM Exhibit 4.19.13-3 through IRM 4.19.13-5, W&I Form 4700, Examination Workpapers - pages 1-3 and IRM Exhibit 4.19.13-6 through IRM 4.19.13-8, SB/SE Form 4700, Examination Workpapers - pages 1-3.

      Note:

      Form 4318 and Form 4700 are not required for Large Business and International (LB&I).

       

    • Form 4549, Income Tax Examination Changes - See IRM Exhibit 4.10.8-1, Preparation of Form 4549 and Form 4549-A for completion instructions.

      Reminder:

      The Form 4549 must be signed if the case is agreed. Form 4549, cannot be submitted via EFax but can be submitted via email (see email address below). This form is required for each tax period with an unpaid assessment of $10 million dollars or more.

    The forms can be mailed or emailed to :

    Chief Financial Office of Unpaid Assessments and Analysis
    Attn: OS:CFO:R:R:B
    333 W. Pershing Rd.
    Mail Stop S2 1035
    Kansas City, MO 64108-4302
    or
    Email: *IRS Financial Audit (irsfinancialaudit@irs.gov)