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Part 4. Examining Process

Chapter 70. TE/GE Examinations

Section 5. Issue Identification and Research

4.70.5 Issue Identification and Research

Manual Transmittal

July 07, 2026

Purpose

(1) This transmits revised IRM 4.70.5, TE/GE Examinations, Issue Identification and Research.

Background

This IRM provides an overview of Tax Exempt and Government Entities (TE/GE) identification and development of compliance activity.

Material Changes

(1) Revised IRM 4.70.5.1, Program Scope and Objectives, to move Program Owner up to be in the order required by IRM 1.11.2.2.4, Address Management and Internal Controls.

(2) Added new IRM 4.70.5.1.4, Program Management and Review, and IRM 4.70.5.1.5, Program Controls, to comply with IRM 1.11.2.2.4. The material from the old 4.70.5.1.7, Program Objectives and Review was moved to these new sections and the old IRM 4.70.5.7 was deleted.

(3) Added new terms, Special Review and Workstream, to IRM 4.70.5.1.6, Terms and Acronyms, and corrected the name of the subsection to agree with the requirements of IRM 1.11.2.2.4.

(4) Made editorial updates throughout the IRM for clarification.

Effect on Other Documents

This supersedes IRM 4.70.5 dated March 7, 2024.

Audience

The primary users of this IRM are TE/GE personnel and others impacted by TE/GE’s shift toward issue-based identification.

Effective Date

(07-07-2026)

Adrian F. Gonzalez
Director, Compliance Planning & Classification
Tax Exempt and Government Entities

4.70.5.1 (03-07-2024)

Program Scope and Objectives

  1. Purpose: This IRM provides an overview of TE/GE identification and development of compliance activities, commonly referred to as the compliance strategy process. The Director, Compliance Planning and Classification (CP&C) is responsible for administering compliance activity development and the governance of the compliance strategy process.

  2. Audience: The primary users of this IRM are TE/GE employees and others affected by TE/GE’s shift toward issue-based identification.

  3. Policy Owner: Director, CP&C.

  4. Program Owner: CP&C is responsible for the administration of the compliance strategy process.

  5. Primary Stakeholders: The primary stakeholders are TE/GE employees.

  6. The TE/GE Compliance Issue Submission Portal opened on November 1, 2017. The TE/GE Compliance Issue Submission Portal is used by all TE/GE employees to submit an issue. The Compliance Issue Portal is a restricted environment used to document issue submission development and store documentation of the compliance strategy process. Together these two sites make up what is commonly referred to as the Portal.

  7. The objectives of TE/GE compliance activity development include:

    1. Providing TE/GE employees with a workload focused on strategic issues while balancing resources.

    2. Providing feedback methods for capturing input on effectiveness of data analyses, issue identification filters, treatment streams, training, and tools, so that strategies can be refined, improved or reconsidered.

4.70.5.1.1 (09-24-2018)

Background

  1. On May 1, 2017, TE/GE formed the CP&C office to streamline and consolidate processes used to identify, research, select and monitor inventory through data analytics.

4.70.5.1.2 (03-07-2024)

Authority

  1. The TE/GE Compliance Governance Board (the "Board" ):

    1. Authorizes the operation of the compliance strategy process.

    2. Governs the identification, selection, assignment, and allocation of resources for all compliance and enforcement activities for TE/GE taxpayers.

    3. Considers proposals from Issue Identification (IID) manager and analysts, resulting from the compliance strategy process.

    4. Approves proposals for implementation or recommends alternative actions based on compliance risk and resource considerations.

  2. The compliance strategy process replaced TE/GE’s former compliance initiative process.

  3. The Board’s charter lists the following TE/GE officials as voting members of the Board:

    • Commissioner, TE/GE

    • Deputy Commissioner, TE/GE

    • Director, Exempt Organizations and Government Entities (EO/GE)

    • Director, Employee Plans (EP)

    • TE/GE Division Counsel

  4. The Board’s non-voting members include:

    • TE/GE Deputy Division Counsel

    • Senior Technical Advisor, TE/GE

    • Director, CP&C - Board Chair

  5. The Board Chair is responsible for presiding over meetings and performing administrative activities (e.g., preparing agendas and meeting minutes).

4.70.5.1.3 (03-07-2024)

Roles and Responsibilities

  1. CP&C’s responsibilities include, but are not limited to, the following tasks:

    1. Aligning compliance work with TE/GE’s strategic goals.

    2. Collaborating across TE/GE functions to improve taxpayer compliance.

    3. Analyzing the Portal submissions.

    4. Developing return selection filters.

    5. Preparing and reviewing compliance strategy and data driven approach proposals for presentation to the Board.

    6. Delivering work to the TE/GE functional offices.

    7. Maintaining the Portal.

4.70.5.1.4 (07-07-2026)

Program Management and Review

  1. The IRS has the following primary objectives surrounding workload selection:

    1. Selecting cases or compliance activities with the highest positive impact on voluntary compliance and tax administration

    2. Selecting work in an unbiased manner without retaliating against, or harassing, a taxpayer (see IRM 4.1.5.1.1, Case Building, Classification, Storage and Delivery Program Background, and Section 1203(b)(6) of the IRS Restructuring and Reform Act of 1998 (RRA 98))

    3. Protecting the confidentiality of the criteria used to select work so taxpayers cannot easily avoid detection

    4. Ensuring fairness and integrity in the enforcement selection process (see IRS Policy Statement 1-236)

  2. CP&C was established to ensure clear separation of classification and workload selection from the exam functions.

  3. Program Reports: Within CP&C, electronic systems are used to house documents related to the compliance strategy process. Access to the systems (e.g., AIMS, RCCMS, Portal) is restricted.

4.70.5.1.5 (07-07-2026)

Program Controls

  1. TE/GE:

    • Ensures that adequate and effective controls are in place during the development, approval, and execution of compliance activities.

    • Provides functional resources to support development of compliance strategies and data driven approaches and take appropriate actions as submissions move through the compliance strategy process.

  2. The Board:

    • Reviews and analyzes program goals.

    • Considers relevant information, including related metrics contained in program reports.

    • Determines whether approved compliance activities should continue, be modified, or be discontinued.

  3. CP&C:

    • Maintains a portfolio of all active and discontinued submissions in the Portal.

    • Submits documentation to the Board for review including:
      a) Proposals for compliance activity from the IID analysts.
      b) Summary reports from P&M.
      c) Periodic feedback on compliance activities from the PMCs and IID analysts.
      d) Recommendations on compliance activity from PMCs.

    • Documents decisions made by the Board.

    • The Director, CP&C reviews IRM 4.70.5 annually to ensure accuracy and promote consistent tax law administration.

4.70.5.1.6 (03-07-2024)

Terms and Acronyms

  1. Classification: The group within the Classification & Case Assignment (C&CA) program in CP&C that is responsible for classifying cases. See IRM 4.70.6, Classification and Case Assignment (C&CA) Procedures, for more information on Classification.

  2. Classifier: A C&CA employee responsible for classifying compliance activity cases.

  3. Compliance Governance Board (the "Board" ): See IRM 4.70.5.1.2, above.

  4. Compliance Activity: A term used to encompass compliance strategies and data driven approach activities approved by the Board. Both compliance strategies and data driven approaches allow TE/GE to identify, prioritize, and allocate resources to encourage compliance of TE/GE taxpayers.

  5. Compliance Issue Portal: A restricted environment used to document issue submission development and store documentation of the compliance strategy process. Access is limited to personnel who screen and score submissions, develop proposals, fulfill data research requests, build cases, stock the virtual shelf, monitor implementation of compliance activities, and those requiring oversight of the compliance strategy process.

  6. Compliance Strategy: A Board approved plan to address a particular area of non-compliance created through development of a Portal submission. Compliance strategies may be comprised of single or multiple treatment streams (a.k.a., workstreams).

  7. Compliance Strategy Process: The project management methodology used by CP&C to develop issues of non-compliance submitted by TE/GE employees into Board-approved compliance activities. The process is comprised of two distinct phases: Submission and Implementation. II&SR manages the Submission Phase and P&M manages the Implementation Phase.

  8. Data Driven Approach: A recurring treatment plan approved by the Board that focuses on well-known and/or documented non-compliance issues that continually contribute to the tax gap. Data driven approaches may result from conversion of a successful compliance strategy or other research efforts.

  9. Exam Director: The functional director for EP Examinations, EO Examinations or Government Entities.

  10. Issue Identification (IID): A group within II&SR that considers issues submitted from all sources in a well documented, systemic way to identify and address the most non-compliant issues among TE/GE taxpayers.

  11. Issue Development Team (ID Team): The team of experts brought together by the IID analyst to participate in the compliance strategy process. This may include other CP&C employees from C&CA and P&M, subject matter experts from other BODs and TE/GE functions (including Knowledge Management (KM)), Communications & Liaison, or Leadership Education and Delivery Services.

  12. Issue Identification and Special Review (II&SR): The program within CP&C that is responsible for issue identification, research and special review.

  13. IID Analyst: The analysts in II&SR, Issue Identification (IID) group that review submissions, develop proposals, and make recommendations of compliance activities to the Board.

  14. IID Manager: The frontline manager of the IID group.

  15. Planning and Monitoring (P&M) Coordinator (PMC): P&M personnel responsible for managing the Implementation Phase of the compliance strategy process. PMCs are assigned to one or more compliance strategies or data driven approaches—from proposal development through the presentation of results and recommendations.

  16. Research: A group within II&SR that is staffed with analysts, economists, and data scientists who provide analytical support throughout compliance activity development and respond to ad hoc data requests, produce relevant data visualizations and develop Artificial Intelligence/ Machine Learning solutions for use across TE/GE operations.

  17. Research Manager: The frontline manager of the Research group.

  18. Special Review: A group within II&SR that is staffed with examiners or revenue agents who are responsible for reviewing closed exam cases for quality and reporting results to the TE/GE functions. The Special Review Program is documented in IRM 4.70.7, TE/GE Examinations, Special Review (SR) and Tax-Exempt Quality Measurement System (TEQMS) Procedures.

  19. Stocking Report: A report prepared by the VSM and sent to C&CA that requests the amount of work to be added to the virtual shelf (work type, grade)

  20. Subject Matter Expert (SME): An individual with specialized knowledge or experience of an issue, part of the tax code, or procedures.

  21. TE/GE Compliance Issue Submission Portal : A site where employees can submit ideas about an area of non-compliance. The compliance strategy process determines if the submission is viable and could be developed into a compliance strategy or data driven approach. Together, with the restricted access TE/GE Compliance Issue Portal, these two sites make up what is commonly referred to as the Portal

  22. Virtual Shelf Monitor (VSM): P&M employee who requests establishment of compliance activity cases in anticipation of functional casework needs.

  23. Work Plan Analyst (WPA): P&M employees designated to provide support on developing submissions and Board approved compliance strategies and data driven approach activities with consideration of the effect on the annual functional workplans.

  24. Workstream: A single or combination of compliance actions implemented to achieve an initiative’s goals. Examples include educational letters, compliance checks and examinations.

  25. Acronyms:

    Acronym Description
    AIMS Audit Information Management System
    C&CA Classification & Case Assignment (program within TE/GE, CP&C)
    C&L Communications & Liaison
    CP&C Compliance Planning & Classification
    CSIS/DDIS Compliance Strategy Information Sheet/Data Driven Information Sheet
    EO/GE Exempt Organizations and Government Entities
    EP Employee Plans
    ICN Issue Control Number
    ID Team Issue Development Team
    IDR Information Document Request
    IID Issue Identification
    II&SR Issue Identification & Special Review (program within TE/GE, CP&C)
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    KM Knowledge Management
    KM Team Knowledge Management Team (individuals within KM)
    P&M Planning & Monitoring (program within TE/GE, CP&C)
    PII Personally Identifiable Information
    PMC Planning & Monitoring Coordinator
    RAAS IRS’ Research, Applied Analytics & Statistics
    RRA 98 Restructuring & Reform Act of 1998
    RCCMS Reporting Compliance Case Management System
    SBU Sensitive but Unclassified
    SHOTs Self-Help Online Tutorials
    SME Subject Matter Expert
    TECU Tax Exempt Compliance Unit
    TE/GE Tax Exempt & Government Entities Division
    VOD Video on Demand
    VSM Virtual Shelf Monitor
    WPA Work Plan Analyst
4.70.5.1.7 (07-07-2026)

Related Resources

  1. TE/GE employees may access the TE/GE Compliance Issue Submission Portal directly or through the TE/GE Connect Homepage.

  2. Users of the restricted TE/GE Compliance Issue Portal use a direct link.

4.70.5.2 (03-07-2024)

Compliance Strategy Process

  1. Part of TE/GE’s mission is to identify the highest potential compliance risks among TE/GE taxpayers and to assign resources to address these potential risks. The compliance strategy process is a component of this approach.

  2. The compliance strategy process is a project management methodology used by CP&C to develop issues of non-compliance submitted by TE/GE employees into Board-approved compliance activities.

    1. The process is comprised of the Submission Phase and the Implementation Phase.

    2. IID analysts serve as project managers for the Submission Phase, which begins with issue submission into the Portal and ends with a Board decision on the developed proposal. PMCs serve as project managers for the Implementation Phase, which begins when a Board-approved compliance activity package is tasked to P&M for implementation and lasts throughout execution of the compliance activity.

  3. During the Submission Phase, the IID Group:

    1. Partners with Research to use internal and external data sources to their fullest potential.

    2. Encourages collaboration and effective use of the KM team and other subject matter experts.

    3. Selects workstreams that will effectively and efficiently impact non-compliance.

    4. Identifies key measures for monitoring success.

    5. Collaborates with P&M to report on the results of each compliance activity and re-evaluate the compliance activities, when needed.

  4. The process considers:

    1. Potential workstreams.

    2. Deployment of resources.

    3. Identification and delivery of training.

    4. Audit tools.

    5. Metrics.

    6. Feedback mechanisms.

4.70.5.2.1 (03-07-2024)

Issue Identification and Special Review

  1. II&SR includes IID analysts and Special Reviewers with various technical backgrounds from the TE/GE functions (EP and EO/GE) and Research analysts, economists, and data scientists.

  2. IID analysts assess the submissions and develop proposals through the compliance strategy process, including:

    1. Documenting all steps taken in the Portal.

    2. Coordinating development of each issue by assembling ID teams with appropriate background, based on the issue submitted.

4.70.5.2.2 (03-07-2024)

Receive Issue Submission

  1. The main goal of the compliance strategy process is to identify areas of potential non-compliance as soon as possible. All employees are encouraged to make submissions when non-compliance may be present in a broader population.

  2. Non-compliance can be identified by:

    • Employees in TE/GE field groups or compliance units

    • Employees working within Voluntary Compliance programs

    • KM team members

    • Other TE/GE employees

  3. The submitter must:

    1. Describe the issue.

    2. Explain how they identified the issue.

    3. Include the tax form related to the issue.

    4. Include the IRC section related to the issue.

  4. The submitter may include attachments to the submission.

    Note:

    Attachments should NOT include Sensitive but Unclassified (SBU) or Personally Identifiable Information (PII).

  5. The Portal automatically generates email notifications at various stages of the compliance strategy process in relation to issue submission.

    1. Submitters are notified by email of their completed submission and on updates throughout the process, specifically when the Portal submission status is changed.

    2. IID Manager is notified of the initial submission to allow the process to proceed.

  6. The Portal is NOT for examination tips, asking questions or requesting IRM or form changes.

4.70.5.2.3 (03-07-2024)

Screening and Scoring of Submissions

  1. The IID manager and KM manager are automatically notified of new Portal submissions.

    1. KM reviews submissions monthly and rejects submissions not associated with a compliance issue (e.g., a suggestion to change a form or process is not a compliance issue).

    2. The IID manager selects the primary function for scored submissions, which prompts the Portal to automatically assign an ICN.

  2. IID manager monitors work portfolios of IID analysts and, as appropriate and based on the score, assigns the submission to the appropriate Issue ID analyst.

4.70.5.2.4 (03-07-2024)

Preliminary Review

  1. IID analyst reviews the assigned submission and sets the status to In Development within the Portal. Specifically, the IID analyst:

    1. Opens the submission.

    2. Reviews the submission and contacts the submitter for additional information, if needed. Reviews the IRC section in the submission for accuracy, making corrections in the Portal as needed.

    3. Decides whether to proceed with preliminary development, combine it with another related submission, or reject the submission.

    4. Records their findings in the Portal.

4.70.5.2.5 (03-07-2024)

Prepare for Open Discussion

  1. IID analyst assembles the ID team, including a researcher and a KM team member, to begin development of the proposal.

  2. IID analyst performs initial research (What is the law? Is the submission a viable violation?) based on scoring priorities. The IID analyst documents their findings within the Portal, including any delays in assembling the ID team or developing a proposal.

  3. IID analyst and the ID team refine the focus and scope to compile an initial recommendation for discussion by the Board, as appropriate. The IID analyst:

    1. Discusses initial research and recommendation(s) with the IID manager

    2. Shares/discusses the initial recommendation with the Exam Director and functional Subject Matter Experts (SMEs) to gather their input.

    3. IID analyst documents all meetings and feedback within the Portal.

4.70.5.2.6 (03-07-2024)

Initial Decision to Continue

  1. IID analyst presents the initial recommendation to the Board for open discussion.

    1. If the decision to continue development is ‘NO,’ development of the issue stops.

    2. If the decision to continue development is ‘YES,’ the IID analyst begins preliminary development of the issue.

    3. If the open discussion by the Board doesn’t take place, the ID team continues development (see IRM 4.70.5.2.7, Proposal Development).

  2. All meetings and feedback are documented within the Portal.

4.70.5.2.7 (03-07-2024)

Proposal Development

  1. IID analyst builds the ID team, including a PMC early in the process to ensure he or she has the requisite knowledge to track implementation of the compliance activity upon approval, and expands the team as necessary (i.e. C&L; other SMEs; RAAS; and WPA).

  2. IID analyst completes the Development Plan and Workstream(s) sections of the Portal with assistance from research analysts or RAAS. See IRM 4.70.5.2.15, Research, for more information on the Research group. Data sources used to prepare the Development Plan and determine the appropriate workstream may include internal sources and external sources.

    Note:

    Some internal IRS information is not readily available because it is not transcribed or is not a searchable field in system databases.

  3. IID analyst and the ID team recommend treatment workstreams (i.e., examinations or compliance checks) and coordinate with the exam function/functional champion to determine the need for strategy specific correspondence, job aids, training or reference materials (e.g., VODs, SHOTs, irs.gov updates, webinars, newsletters, changes to publications) as appropriate.

    Note:

    The proposed workstream may change based on ultimate work type approved by the Board.

  4. IID analyst consults with the WPA to obtain an estimate of resources needed for each workstream.

  5. IID analyst coordinates with other Business Units doing similar work (e.g., LB&I campaign or SB/SE campus program) to avoid duplication of work, maintain consistency across IRS, and to identify any differences between their efforts and those of TE/GE.

  6. IID analyst uses a pro-forma PowerPoint to deliver strategy proposal presentations to the Exam and CP&C Directors to gather feedback and obtain concurrence prior to the Governance Board.

4.70.5.2.8 (03-07-2024)

Functional Exam Director Briefing

  1. The IID analyst delivers a summary of the proposal to the appropriate Exam Director. The synopsis is based on information contained in the Portal which includes:

    • ID team’s plan for identifying the issue

    • The proposed workstream(s)

    • General timeline for implementation of the compliance strategy

    • Training needs and compliance tools required

  2. The ID analyst updates the Portal to:

    1. Include comments made by the Exam Director during the briefing

    2. Display the current status

    3. Complete the briefing information, including the date and meeting attendees.

4.70.5.2.9 (03-07-2024)

Finalize Proposal

  1. After the Exam Director briefing, the IID analyst continues strategy development by working through the other Portal sections.

    1. IID analyst completes the Data Methods.

    2. IID analyst works with P&M (PMC and WPA) and KM to draft Objectives & Measures.

  2. The IID analyst identifies a population and must either prioritize the case list (projected tax, plan assets, etc.) or, if no priority order can be identified, use a sample from the list to meet workplan needs. IID analyst and PMC coordinate with the WPA to recommend a suitable number of cases to work.

  3. The IID analyst finalizes the PowerPoint for the Board presentation. IID analyst coordinates with P&M analysts (e.g., WPA, VSM, PMC) and includes Exam Director’s input to make a preliminary determination based on priority of compliance strategy and proposed placement within the Workplan.

4.70.5.2.10 (03-07-2024)

Board Approval of the Proposal

  1. CP&C Director reviews the proposal before it is presented to the Board.

  2. The IID analyst posts the final PowerPoint proposal presentation to the Board’s SharePoint site (restricted access). Other supporting documents are stored within the Portal, which the Board members have access to.

  3. Board members review the PowerPoint and other proposal documents prior to the monthly Board meeting.

  4. The IID analyst or other ID team member(s) summarize the team’s proposal(s) at the next monthly Board meeting.

  5. Board members ask questions during the presentation and may request additional information be provided at a future meeting.

  6. The proposal becomes a compliance strategy only when the Board approves it.

    1. The Board notifies the function’s designated person within five business days regarding approved compliance activity.

    2. An II&SR representative notifies the Exam Director during the respective CP&C Functional meeting the month following the approval.

4.70.5.2.11 (03-07-2024)

Preparation for Implementation

  1. Based on the approved workstream(s), the ID team works with the functional champion, if assigned, and KM team to identify any relevant tools, training, documents and other information that is available or needs to be developed.

  2. The ID team prepares the compliance strategy package which includes:

    1. A CSIS or DDIS describing the issue and any audit steps to be taken in determining whether the issue exists. If applicable, the cover sheet mentions by name the training and KM resources specifically identified for the compliance strategy.

    2. A case build sheet for C&CA with system codes and instructions for establishing the cases, classification requirements, and documents to be included in the RCCMS case files.

    3. A list of the identified cases.

  3. The IID analyst finalizes the Treatment Plan in the Portal, which includes:

    1. Uploading compliance strategy package documents.

    2. Adding a new Plan Details record with handoff date, which automatically notifies P&M that the compliance strategy treatment plan(s) is (are) ready for implementation. The VSM updates the Portal to input the stocking report and C&CA is notified that case building can begin.

4.70.5.2.12 (03-07-2024)

Evaluation Process

  1. The PMC is responsible for project management of the implementation phase of the compliance strategy process, which includes post-strategy monitoring and periodic updates to the Board.

    1. If an approved compliance strategy needs to be modified, the PMC consults the P&M manager to determine whether the recommended changes need to be presented to the Board for approval.

    2. IID analysts provide technical support to the PMC in their analysis of results and recommendations to the Board.

    3. The PMC provides feedback and metrics to the Board to help them determine whether a compliance strategy should be continued, modified, or terminated.

  2. The Board considers the progress of all implemented compliance strategies. Specifically, they:

    1. Are presented reports on the effectiveness of previously approved compliance strategies, including, but not limited to, the allocation of resources to the portfolio of previously approved and newly approved compliance strategies

    2. Vote on whether it is appropriate to continue, modify (e.g., change to data driven approach), or terminate a compliance strategy based on recommendations from the PMC.

4.70.5.2.13 (03-07-2024)

Research

  1. IID analysts and PMCs can request Research support via the Research section of the Portal.

  2. Researchers provide requested support during all phases of the compliance strategy process and develop, maintain, and execute data driven approach activity development.

  3. Researchers also develop data visualizations and Artificial Intelligence/Machine Learning models to support a variety of TE/GE operations.

4.70.5.2.13.1 (03-07-2024)
Hospital Report

  1. The Affordable Care Act (formally, the Patient Protection & Affordable Care Act, Public Law 111-148) §9007(e)(1) requires reporting to Congress, annually. The annual report includes specific information on private, tax-exempt, taxable, and government-owned hospitals.

  2. Research assists Headquarters, TE/GE by providing summary statistics and trends for the annual report, using data from the Centers for Medicare and Medicaid Services, reporting hospital cost report data for each cost report year, and Form 990 Schedule H data files provided by Statistics of Income.