4.70.6 Classification and Case Assignment (C&CA) Procedures

Manual Transmittal

September 27, 2019


(1) This transmits new IRM 4.70.6. TE/GE Examinations, Classification and Case Assignment (C&CA) Procedures.

Material Changes

(1) This manual replaces the procedures previously located in IRM 4.75.4, IRM 4.75.5, IRM 4.81.11, IRM 4.86.2, and IRM 4.90.6. This revision reflects the modifications to case handling as a result of the May 1, 2017 reorganization of Tax Exempt and Government Entities.

(2) This IRM incorporates the following memorandums from the Director of Compliance Planning and Classification (CP&C):

  • September 15, 2017, Referral Acknowledgment Letter 4426, TEGE-04-0917-0022

  • November 8, 2017, Referrals Procedures TEGE-04-1117-0023

  • November 14, 2017, Non-Exempt Organizations (EO) Referrals Process TEGE-04-1117-0028

  • November 14, 2017, Taxpayer Advocate Service (TAS) Operational Assistance Requests (OAR) TEGE-04-1117-0029

  • November 15, 2017, Whistleblower (WB) ClaimsTEGE-04-1117-0024

Effect on Other Documents

This IRM supersedes and obsoletes:

IRM 4.71.26 Employee Plans Examination of Returns, Case Selection Criteria
IRM 4.75.4 Exempt Organizations Examination Procedures, Case Selection and Delivery,
IRM 4.75.5 Exempt Organizations Examination Procedures, Information Items,
IRM 4.81.2 Tax Exempt Bonds (TEB) Examination Program and Procedures, Examination Selection
IRM 4.81.11 Tax Exempt Bonds (TEB) Examination Program and Procedures, Tax Exempt Bonds Referral Program,
IRM 4.86.2 Indian Tribal Governments (ITG) Procedures, Classification, Case Selection and Referral Procedures and
IRM 4.90.6 Examining Process, Federal State and Local Governments, Referrals.

This IRM supersedes and archives:

Interim Guidance Memorandum, TEGE-04-0819-0043, Referrals with Evidence of Political Activities
Interim Guidance Memorandum, TEGE-04-0917-0022, Referral Acknowledgment Letter 4426
Interim Guidance Memorandum, TEGE-04-1117-0023, Referrals Procedures
Interim Guidance Memorandum, TEGE-04-1117-0024, Whistleblower (WB) Claims
Interim Guidance Memorandum, TEGE-04-1117-0028, Non-Exempt Organizations (EO) Referrals Process
Interim Guidance Memorandum, TEGE-04-1117-0029, Taxpayer Advocate Service (TAS) Operational Assistance Requests (OAR)


Tax Exempt and Government Entities
Compliance, Planning and Classification
Classification & Case Assignment

Effective Date


Sean E. O’Reilly
Compliance, Planning and Classification
Government Entities and Shared Services
Tax Exempt and Government Entities

Program Scope and Objectives

  1. Purpose This manual describes the procedures of the Classification and Case Assignment (C&CA) Procedures in this manual are supplemented by desk guides that explain data entry into the various computer systems. This manual explains how cases come into being, and eventually arrive in the hands of a field agent, or are resolved before ever leaving Compliance, Planning and Classification (CP&C).

  2. Audience Classification and Case Assignment (C&CA) employees

  3. Policy Owner CP&C owns the policies concerning, classification, and case assignment procedures. The Taxpayer Advocate Service is the policy owner for its Operational Assistance Requests. The WBO Office is the policy owner for whistleblower claims.

  4. Program Owner CP&C is the program owner for this manual.

  5. Primary Stakeholders Tax Exempt and Government Entities examination functions (Employee Plans, Exempt Organizations (including Federal State Local/Employment Tax), and Indian Tribal Governments/Tax Exempt Bonds) are directly affected by the procedures outlined in this manual.

  6. Contact Information To recommend changes or make any other suggestions to this IRM section, email *TE/GE IMD SPOC.


  1. On May 1, 2017, TE/GE underwent a reorganization that resulted in the creation of the CP&C functional subdivision under the Government Entities and Shared Services functional division. This reorganization created three areas within the subdivision:

    • Classification and Case Assignment

    • Issue ID and Special Review

    • Planning and Monitoring

  2. Within the C&CA area, the reorganization created the following groups:

    • Classification Group 1 (CL1)

    • Classification Group 2 (CL2)

    • Classification Group 3 (CL3)

    • Classification Group 4 (CL4)

    • Case Assignment (CA)


  1. United States Code Title 26 and Title 31 confer the authority to resolve federal tax issues to the Internal Revenue Service. Policy Statement 4-119, outlines the purpose and objectives of the Tax Exempt and Government Entities examination program.

Roles and Responsibilities

  1. The Director, CP&C is the executive responsible for the classification and case assignment, issue identification and special review, and planning and monitoring programs.

  2. The Manager, C&CA is the program manager for the classification and case assignment program.

  3. Management officials are responsible for:

    • Providing internal controls relating to their group's processes.

    • Communicating the instructions to the employees.

    • Ensuring the employees carry out the instructions.

  4. Employees who work in the C&CA groups are responsible for creating, assigning, and/or resolving cases as outlined per the procedures in this manual.

Program Management and Review

  1. C&CA manages the program through regular reports generated from the Reporting Compliance Case Management System (RCCMS) and other systems connected to RCCMS.

  2. The program is also subject to operational reviews performed by executives and their support staff within Government Entities and Shared Services.

Program Controls

  1. Any interactions with the public, if they occur, will be done in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).


    Additional information may be found on the irs.gov website at www.irs.gov/taxpayer-bill-of-rights.

Terms and Acronyms

  1. The following acronyms and abbreviations appear throughout this IRM:

    Acronym Definition
    AIMS Audit Information Management System
    ASED Assessment Statute Expiration Date
    BOD Business Operating Division
    CA Case Assignment
    C&CA Classification & Case Assignment
    CL1 Classification 1
    CL2 Classification 2
    CL3 Classification 3
    CL4 Classification 4
    CP&C Compliance, Planning & Classification
    EIN Employer Identification Number
    EGC Employee Group Code
    FAC Functional Assignment Coordinator
    GE/SS Government Entities & Shared Services
    ICE Informant Claims Examination
    LB&I Large Business & International
    MFT Master File Tax
    NMF Non-Master File
    OAR Operational Assistance Request
    OIC-DATL Offer in Compromise – Doubt as to Liability
    OSC Ogden Service Center/Campus
    PARC Political Activities Referral Committee
    PBC Primary Business Code
    PCI Political Campaign Intervention
    P&M Planning and Monitoring
    RCCMS Reporting Compliance Case Management System
    SBC Secondary Business Code
    SB/SE Small Business & Self-Employed
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TIN Taxpayer Identification Number
    VSSP Virtual Shelf Stocking Plan
    WB Whistleblower
    WBO Whistleblower Office
    W&I Wage & Investment
  2. The following table provides definitions for the terms identified below:

    Term Definition
    Activities An "activity" is one work unit (tax return, compliance check, etc.). In RCCMS, "activities" are listed on the right-hand side, or "List View" of the RCCMS main screen.
    Case A "case" may consist of one or more "activities," or work units (e.g., multiple tax periods and/or types of "activities" being worked for the same EIN or SSN) and includes materials, such as the tax return, IDRS data, coversheet, classification sheet, case build sheet, etc., that are added to the RCCMS case file. In RCCMS, "cases" are displayed either under a user’s name on the left-hand side, or "Navigation Pane" of the RCCMS main screen. When the "case" name is highlighted in the "Navigation Pane," the "activities" within that case will be displayed in the "List View."
    Case Assignment Group The group within the C&CA function that maintains the shelves of functional inventories to fulfill work orders from field groups.
    Case Assignment Manager The manager of the CA Group, who oversees operations of the CA Group and assigns activities received from the Classification (CL) group to CA Team Members for case building as result of case orders received from FAC.
    Case Assignment Team Member A person in the CA Group within C&CA who builds and assigns compliance activities based on instructions from the CA Manager.
    Classification Groups 1 and 2 (CL1, CL2) The groups within C&CA responsible for handling Affordable Care Act (ACA) whistleblower claims and high profile EO referrals. CL1 manages Whistleblower A (WB-A) and Whistleblower B (WB-B) claims. CL2 manages high profile EO referrals. Both Cl1 and CL2 mange ACA referrals.
    Classification Group 3 (CL3) The group within C&CA that is responsible for receiving all incoming referrals and WB claims, creating Referral Activities within RCCMS, scanning all referral and WB claim documents, processing EO referrals, transferring EP, TEB, ITG and FSL/ET referrals to the CL4 group and sending the scanned WB documents to the CL1 and CL2 groups.
    Classification Group 4 (CL4) The group within C&CA responsible for fulfilling the Virtual Shelf Stocking Plans, as well as evaluating claims, TAS’ Operational Assistance Orders (OARs), and EP, TEB, ITG and FSL/ET TE/GE referrals, and sending them to the shelves for assignment to field groups, as deemed necessary.
    Classification Group Manager The manager of the CL Group, who oversees the daily operations of the CL group
    Classifier Employees within the CL3 Group who review and sort incoming referrals. The CL3 Group also, classifies compliance activities based on instructions received from the CL3 Group Manager.
    Employee Group Code A 4-digit employee group code (EGC), used within Reporting Compliance Case Management System (RCCMS) as part of the RCCMS Assignee Code.
    Field Group (7XXX) A group within TE/GE that conducts compliance actions with TE/GE taxpayers. This IRM uses 7XXX to communicate to the Functional Assignment Coordinator (FAC) if referral/claim activity is currently open in a field group or previously audited by a field group.
    Forms (FXXX/XXXX): This IRM uses FXXX/XXXX to communicate to the FAC that a related return is open in a field group or previously audited by a field group. Generally, on any abatements of penalties/interest, the claim will be assigned to the group that assessed penalties on a Form 941/ Form 5330 or any other returns under the jurisdiction of TE/GE.
    Functional Assignment Coordinator The person designated within a TE/GE function to identify compliance activities on the Shelf to fulfill work orders from field groups.
    Functional Unit (function) The various functions within TE/GE: Exempt Organizations (EO); Employee Plans (EP); Federal, State and Local Governments/Employment Tax (FSL/ET); Indian Tribal Governments (ITG); Tax Exempt Bonds (TEB).
    Group Manager A frontline manager of a field or C&CA group
    IA Immediate Assignment – IA cases are referrals, claims, or any other case that needs to be assigned immediately because it is cross-functional, time sensitive (have a limited shelf life) or have badges of fraud.
    Information Item A document or other communication (including electronic) that is:
    1. Received by the CL3 group from a source outside the Internal Revenue Service (IRS). The information item alleges possible non-compliance with a tax law by an exempt organization, political organization, taxable entity, or individual.

    2. Received by CL3 group from an IRS employee who identifies current or potential non-compliance discovered during the performance of official duties.


      IRC 7217 prohibits Executive Branch influence over taxpayer audits and other investigations. Immediately report any such incidents to the Treasury Inspector General for Tax Administration (TIGTA). See IRM, TE/GE Division Organization and Management, TE/GE Roles and Responsibilities. In addition to contacting TIGTA, elevate the occurrence of such contact up the chain of command for informational purposes.

    Planning and Monitoring Planning and Monitoring (P&M) is responsible for workplan development and monitoring of key business performance measures. P&M incorporates the information received from Issue ID into the workplan and develops inventory-stocking plans, including the number & timing of cases to be classified, built and loaded to the Virtual Shelf.
    Primary Business Code A 3-digit primary business code (PBC), used in Reporting Compliance Case Management System (RCCMS) as part of the RCCMS Assignee Code.
    RCCMS Assignee Code (group) An organizational code within RCCMS that designates a specific function and group using a 3-digit primary business code (PBC), a 5-digit secondary business code (SBC) and a 4-digit employee group code (EGC).
    Referral A complaint (referral) from the public or a federal or state regulatory agency about potential noncompliance by an exempt organization. See Form 13909, Tax-Exempt Organization Complaint (Referral). Also generated by TE/GE employees using Form 5666, TE/GE Referral Information Report.
    Secondary Business Code A 5-digit secondary business code (SBC), used within RCCMS as part of the RCCMS Assignee Code.
    Specialty Coordinator Formerly, the Examinations Program and Review Staff Assistant, now in CP&C.
    Tax Examiners Employees who perform administrative tasks for classifiers.
    Virtual Shelf (the shelf) Functional EGCs within the CA Group where inventory is held pending receipt of work orders from field groups in the various functional units through the FACs.
    Virtual Shelf Stocking Plan (stocking plan) A list of compliance strategies, by function, grade and numbers of activities, developed by P&M and delivered to the Classification and Classification 3 groups to establish activities for delivery to the Virtual Shelf.
    WB-A Claim Category A whistleblower claim that, based on WBO review, has a dispute amount (taxes, penalties, interest, or other amounts) below the $2 million threshold
    WB-B Claim Category B whistleblower claim that, based on WBO review, has a dispute amount (taxes, penalties, interest, or other amounts) above the $2 million threshold. In addition, any WB-A claims whose dispute amount rises to $2 million or more are processed as WB-B” referrals.

Related Resources

  1. For related resources on case classification, selection, and development, please see the following manual sections:

    • IRM 4.5, TE/GE AIMS Manual

    • IRM 4.23, Employment Tax

    • IRM 4.71, Employee Plans

    • IRM 4.75, Exempt Organizations

    • IRM 4.81, Tax Exempt Bonds

    • IRM 4.86, Indian Tribal Governments

    • IRM 4.90, Federal, State and Local Governments (FSLG)

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

    • IRM 25.2, Information and Whistleblower Awards

    • IRM 25.6, Statute of Limitations

  2. Desk Guides provide specific procedures and guidance to C&CA Employees to manage referrals, classify work, and assign cases to the virtual shelf. The following four desk guides are available:

    • Affordable Care Act (ACA) Desk Guide – contains detailed information on handling ACA referrals. Classification Groups 1 and 2 (CL1 and CL2) manage ACA cases.

    • Classification Group 3 (CL3) Desk Guide – contains detailed information on processing all incoming TEGE referrals, as well as information on classifying EO referrals.

    • Classification Group 4 (CL4) and Case Assignment Desk Guide – contains detailed information on classifying casework (e.g., filling stocking reports, classifying claims and other casework), and classifying Employee Plans (EP); Federal, State, and Local Government / Employment Tax (FSL/ET); and Indian Tribal Governments / Tax Exempt Bonds (ITG/TEB) referrals and delivering casework to the field (i.e., Case Assignment (CA)).

    • Whistleblower (WB) Desk Guide – contains detailed information on handling both Whistleblower A (WB-A) and Whistleblower B (WB-B) claims. Classification Group 1 (CL1) manages WB cases.

Program Objectives and Review

  1. The IRS has some main objectives surrounding workload selection:

    1. Selecting cases or compliance strategies that will have 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 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 created to address concerns regarding the separation of classification, workload selection and examination activities.

  3. Classification is the process of determining whether a return should be selected for compliance activities, what issues should be the primary focus of the compliance activity, and the type of compliance activity that should be conducted.

  4. All cases should be classified by C&CA to ensure that adequate internal controls are maintained; the classification procedures that follow provide checks and balances to minimize the potential personal influence of any one employee over the initiation of compliance activities.

  5. C&CA will provide various services to the Exam Managers. These include:

    1. Filling orders for cases

    2. Reviewing and classifying returns

    3. Establishing cases on AIMS

    4. Establishing cases on the TE/GE RCCMS

    5. Processing claims

  6. C&CA reviews and classifies the following types of work:

    1. Stocking Plan Classification

    2. Training Case Order Classification

    3. Referrals

    4. Audit Reconsiderations

    5. Bankruptcy

    6. Claims/Requests for Abatements

    7. Offer In Compromise - Doubt as to Liability

    8. Requests for Abatement Under IRC 4962

    9. Taxpayer Advocate Service Operational Assistance Requests

    10. Whistleblower Claims

Stocking Plan Classification

  1. Upon receipt of a stocking plan from P&M, Classifiers within CL4 will:

    1. Review the stocking plan, queries, and lists of activities.

    2. Conduct additional classification activities (e.g., random number generator) necessary to ensure selection of the proper cases from the pool.

    3. Mark RICS for download, or manually create and establish the numbers and types of activities listed on the stocking plan.

  2. CL4 will discuss any potential problems with the stocking plan, queries, or lists of activities with P&M and II&SR to clarify, as necessary.

    1. CL4 Classifiers research BMF or RCCMS case library to determine if any activity was examined in past three years. If there is recent activity, CL4 communicates with P&M to receive a replacement activity. CL4 processes any return surveyed by a group within the past three years.

    2. CL4 Classifiers may survey erroneously marked stocking plan cases that do not require managerial review or direct closure to status 90. An erroneously marked stocking plan case may also include open Voluntarily Compliance Program (VCP) cases, ACA Hospital Review Cases, and cases where a prior year already exists on RCCMS.

    3. Claims and non-selected referrals require managerial review and must be assigned to the CL4 manager for closure with "All Electronic Indicator" checked in RCCMS (only if fully electronic).


Training Case Order Classification

  1. Training case orders are typically done outside of the Stocking Plan and must be provided to P&M and CL4. Training orders must be received 30 days before the target receipt date.

Referrals Procedures

  1. Tax Exempt/Government Entities (TE/GE) Classification Group 3 (CL3) receives all TE/GE referrals (also called "information items" ) from external and internal sources.

    1. External referrals come from a source outside the IRS, which alleges possible non-compliance on the part of a TEGE entity, political organization, or individual.

    2. Internal referrals come from internal sources: generally, an IRS employee prepares an internal document and forwards it to TE/GE, which identifies actual or potential noncompliance.

  2. CL3 processes referrals for all TE/GE functions, classifies all EO referrals, establishes referrals from all other TE/GE functions (i.e., Employee Plans (EP); Indian and Tribal Governments (ITG); Tax Exempt Bonds (TEB); and Federal, State, and Local Government (FSL)) within the Reporting Compliance Case Management System (RCCMS), and transfers other TE/GE referrals to the other three CL Groups to work.

  3. Employees within the CL3 will:

    1. Evaluate all incoming TE/GE referrals.

    2. Prepare referral check sheets for each referral, if needed.

    3. Indicate the appropriate source code

    4. Create referral activities in RCCMS.

    5. Scan all the referral documents.

    6. Place the scanned documents into the RCCMS referral activities

    7. Identify non-TE/GE misroutes (to be transferred to the appropriate BOD, such as LB&I, SB/SE, or W&I)

    8. Identify EP, ITG, TEB, and FSL/ET referrals to be transferred to CL4

  4. CL3 Group Managers oversee transferring EP, ITG, TEB and FSL/ET referrals to the appropriate RCCMS assignee code listed below:

    Function Primary Business Code Secondary Business Code Employee Group Code
    EP 400 12112 7693
    FSL/ET 400 23116 7241
    ITG 400 24116 7289
    TEB 400 25116 7212

Immediate Assignment Referrals

  1. There are times when, based on facts and circumstances, some referrals may be considered immediate assignment.

  2. See Exhibit 4.70.6-1, Immediate Assignment Referral Criteria, for the list of cases requiring immediate assignment to a group.

  3. When a classifier or tax examiner identifies a referral as an immediate assignment referral and the manager agrees, the classifier or tax examiner:

    1. Converts the referral to a compliance activity within RCCMS

    2. Enters "IA- Referral" in the "Comments" field on the "Codes/Check sheets" tab of the RCCMS compliance activity.

    3. Uploads the case build sheet to the compliance activity.

    4. Sets the RCCMS status code to 60.

    5. Establishes AIMS controls on the compliance activity.

    6. Notifies the group manager when these actions are complete.

  4. Upon full AIMS establishment of the compliance activities, the classifier transfers the compliance activities to the appropriate case assignment functional virtual shelf for selection by a FAC. See Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves, for the correct codes to use.

  5. EO Immediate Assignment Referrals are identified by Project Code 8200.

Acknowledgment Letters

  1. When CL3 Group receives an EP referral from the public, or an EO referral from the public or another governmental entity, issue Letter 4426, Acknowledging Receipt of Information from Third Party about TE/GE.


    Do not issue Letter 4426 if the referral is from an anonymous source. Note: The letter includes the title of the Director, CP&C and the director’s electronic signature.

  2. CL3 employee: Create a Referral activity in RCCMS. Upon creation:

    1. Extract Letter 4426 from the RCCMS documents repository.

    2. Address it to the submitter's address on the referral.

  3. Use the referrals mailing address, below, when preparing the letter: Tax Exempt and Government Entities

    Mail Stop 4910 DAL
    1100 Commerce Street
    Dallas, TX 75242-1027

  4. If the referral is from Congress, address a separate acknowledgment letter with a personalized greeting to each Congress person who signed the referral.

  5. Refer to the Correspondence Manual and Guide to Congressional Correspondence for guidance on how to address a Congressperson.

Stocking Plan – TE/GE Referrals

  1. P&M provides a stocking plan to the group manager when additional cases need to be placed on the virtual shelf to fulfill work plan requirements.

  2. The group manager identifies referrals to fulfill the stocking plan.

  3. Classifiers, and/or others designated by the group manager:

    1. Converts the referral to a compliance activity within RCCMS

    2. Uploads the case build sheet to the compliance activity.

    3. Sets the RCCMS status code to 60.

    4. Establishes AIMS controls on the compliance activity.

    5. Notifies the group manager when these actions are complete.

  4. Upon full AIMS establishment of the compliance activities, the classifier transfers the compliance activities to the appropriate case assignment functional virtual shelf for selection by a FAC. See Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves, for the correct codes to use.

EP, ITG, TEB and FSL/ET Referrals

  1. Upon receipt of the transferred RCCMS files from the CL3 Group, the CL4 Group manager assigns referral activities to classifiers for evaluation.

  2. CL4 Classifiers evaluate referrals and close those without merit to status 90, (final close status), in RCCMS.

Non-Immediate (Routine) EP, ITG, TEB, and FSL/ET Referrals
  1. CL4 classifiers evaluate referrals on a first in first out basis and:

    1. Convert those that warrant compliance action to compliance activities within RCCMS.

    2. Establish AIMS controls.

    3. Upload the functional case build sheet, together with other necessary documents, to the RCCMS case file.

    4. Hold the compliance activity in their inventory until full AIMS establishment.

  2. Upon full AIMS establishment of the compliance activities, the classifier transfers the compliance activities to the appropriate case assignment functional virtual shelf. See Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves, for the correct codes to use.

EO Referrals

  1. CL3 Group Manager oversee the assignment of referrals to classifiers for evaluation.

  2. A triage team within CL3 Group sorts the referrals:

    1. No audit potential (to be created in group 7740).

    2. Audit potential and/or evidence of possible PCI (to be fully classified in group 7741).

    3. Whistleblower (see IRM, Whistleblower Procedures.

Non-Immediate Assignment (Routine) EO Referrals
  1. Referrals that are not considered Immediate Assignment are identified by Project Code 8011. CL3 classifiers:

    1. Classify referrals as they are assigned.

    2. Transfer referrals with audit potential not requiring immediate assignment to the CL3 Group RCCMS assignee code 400-11112-7998.

  2. The CL3 classifier will contact the FAC if they find that there is a prior/subsequent year return, or a related return, currently open for the same organization to determine whether the group will accept the related referral.

  3. Abatement cases involving penalties and/or interest only, and abatement cases for which no taxes were paid, will be designated as high priority cases. Close abatement cases if they meet:

    • There was no prior exam.

    • There is no need to contact the taxpayer

    • IRS is allowing the amount in full.

  4. Classifiers: enter necessary information for the FAC, into the RCCMS activity comment field, for example:

    • Prior / Subsequent Year: "YYYYMM currently in G7XXX" .

    • Related Return: "Return XXX/XXXX currently in G7XXX" .

    • Abatement Cases: "High Priority-Abatement Case" .

Political Activities Referral Committee (PARC)
  1. The PARC is composed of three members selected at random from a pool of all EO Examinations and Ruling and Agreements front-line IR-04 managers. Each PARC member serves for a two-year term and is provided with appropriate training. The PARC’s responsibility is to consider the audit potential of referrals with evidence of impermissible political or lobbying activity in a fair and impartial manner. The PARC members are expected to use their experience, judgment and concern for fairness in making this determination.

Initial Referrals Review Process
  1. Referrals are assigned to classifiers who are responsible for reviewing EO referrals.

  2. If a referral contains any allegation of political or lobbying activity, the classifier will update RCCMS to include UIL Code 50 – Referred as Political. This will allow us to track and provide reporting on all referrals received with allegations of political or lobbying activity.

  3. If the classifier determines that there is evidence of the alleged political or lobbying activity, and that the activity would be impermissible, the referral will be sent to the PARC for further review.

    1. The classifier ensures only appropriate referrals are sent to the PARC.

    2. If the classifier determines the referral doesn’t include evidence of impermissible political/lobbying activity, it won’t be sent to the PARC. For example, if the subject line of the referral or the Form 13909 indicates that the organization is involved in a political campaign or excessive lobbying activities, but the documentation provided in the referral doesn’t support the allegation, the referral wouldn’t be sent to the PARC and would follow the regular classification process for referrals.

  4. The classifier will thoroughly document their decision of whether or not to send the referral to the PARC in RCCMS.

  5. If the referral involves an organization that has an application pending in EO Determinations, the referral may still be sent to the PARC. If the organization is selected for examination, the group manager will coordinate with EO Determinations to determine the status of the organization’s application. If the organization’s application is denied, then an examination by TE/GE wouldn’t be warranted and consideration should be given to the referring the matter to the appropriate IRS operation division. If the organization receives a favorable determination letter, then the referral will be sent to the PARC.

Forwarding Referral File to PARC
  1. Before referrals are forwarded to the PARC for review, the classifier must update the Project Code to 8302 and include the following items in the RCCMS Referral File in PDF format:

    • The referral and all attachments

    • Any other related documentation

    • Additional research including electronic research such as IDRS, Accurint and internet research

    • All applicable returns

    • Referral intake sheet

    • Classification Lead Sheet

    • Any other information collected by the classifier

  2. The classifier transfers the referral to their manager and notifies the manager that it is a PARC referral. The manager reviews the referral along with related documentation and research, to ensure the classifier has considered all available information, and properly documented the RCCMS Referral File, before the referral is forwarded to the PARC. Feedback will be provided to the classifier as needed if the documentation is insufficient.

  3. The referral will be transferred to RCCMS Group 7993. The manager with responsibility over PARC referrals will notify PARC members via email that a referral is ready for review. PARC members will have access to the applicable RCCMS group for reviewing referrals.

PARC Review
  1. Each PARC member will review the referral and assess audit potential based on whether information establishes a "reasonable belief" that warrants further action by the Service. To meet the "reasonable belief" standard, the information needs to:

    • Show that a violation of EO tax laws may have occurred, or

    • Appear likely to lead to the discovery of a violation of EO tax laws upon audit

  2. PARC members conduct an independent review of each case and may make the following recommendations:

    • Selected for Examination

    • Not selected for Examination

    • Selected for Examination (Not - Political)

    • Recommend Future Year Referral

    • Returned to Referrals for additional research

  3. PARC members may determine that additional information is required before a decision can be made about audit potential. In this case, PARC members will route the referral back to the original classifier, via the manager, for additional specified research. The original classifier will treat this "PARC return" as a priority assignment and will return the referral, with additional research, back to the PARC, via the manager, within 10 business days.

  4. PARC members may meet after their respective reviews to discuss the referral. Afterwards, PARC members update RCCMS with their determination(s) and supporting comments. PARC members MUST record their findings in the CCR tab of RCCMS. The COMMENTS subtab in the CLOSING RECORD tab should be marked "see CCR." PARC member narratives in the CCR must document the rationale for determining why an examination is/or isn’t warranted.

  5. At least two of the three PARC members PARC must agree that an examination is warranted before an examination of the entity is recommended. In cases where a majority consensus isn’t reached on how to proceed, PARC members will route the referral back to the original classifier, via the manager, for additional specified research. The original classifier will treat this "PARC return" as a priority assignment and will return the referral, with additional research, back to the PARC, via the manager, within 10 business days.

PARC Sets the Priority
  1. If the case is selected for examination, the PARC will determine whether the referral should be classified as "high priority" or "immediate assignment" and will communicate this priority level to the manager via email. The manager will ensure the appropriate comments are placed in the comment section of the RCCMS record to highlight the priority level for the Functional Assignment Coordinator.

  2. The purpose of this designation is so examination resources will be focused on the most serious evidence of impermissible political/lobbying activities. All referrals are automatically "high priority" unless they should be categorized as "immediate assignment." If the IRS concluded in a prior examination that a 501(c)(3) organization had intervened in a political campaign, the case should be automatically classified as "immediate assignment." The PARC also considers the following seven factors to determine whether it should be categorized as an immediate assignment:

    1. The amount of money expended is measured either in absolute terms or in relation to the organization’s other activities. The greater the amount expended, the more likely the case should be designated as immediate assignment.

    2. The size of the audience exposed to the alleged intervention. The larger the audience, the more likely the case should be designated as immediate assignment.

    3. The significance of the political campaign. The more significant the campaign, such as an election for a national office in a closely contested race, the more likely the case should be designated as immediate assignment.

    4. The frequency of the alleged intervention. The more frequently the organization has been alleged to have intervened, and documentation supports the frequency, the more likely the case should be designated as immediate assignment.

    5. The clearer the references to a specific candidate being supported or opposed the more likely the case should be designated as immediate assignment.

    6. The degree of candidate participation in the alleged intervention the more likely the case should be designated as immediate assignment.

    7. The more the alleged intervention involves soliciting contributions to support the alleged intervention, the more likely the case should be designated as immediate assignment.

Case Routing
  1. After the PARC has completed its activities, the referral is sent back to the manager where further actions based on the PARC’s recommendation are taken.

    1. If the PARC recommends examination, the referral is sent back to the manager in RCCMS for further classification and case building, and once AIMS is established, the case is sent to Case Assignment Group 7992 (EO Virtual Shelf).

    2. If the PARC recommends not selecting the referral, it’s returned to the manager in RCCMS and closed as "not-selected."

    3. If the PARC recommends a future year examination, the case is returned to the manager in RCCMS, who follows the "pending Future Year" procedures. Specifically, the manager will monitor the future year examinations, and return the case to the PARC at the designated future date for reconsideration.

    4. If the PARC requests additional research, the referrals is transferred back to the manager in RCCMS and resubmitted to the PARC once the additional research has been conducted and included in the RCCMS file.

Special Situations
  1. When a referral is received on an organization for a tax year with a Short Statute (less than 18 months):

    • Standard Classification procedures are followed.

    • If the same issue is present in a later tax year, the later tax year may be used.

    • Always consult the manager if there are questions or concerns.

  2. If other special situations arise, consult the manager.

Periodic Quality Review
  1. The manager will conduct periodic quality reviews by selecting and reviewing a sample of referrals with allegations of political/lobbying activities (those with UIL 50 – Referred as Political), as well as a sample of referrals with evidence of impermissible political/lobbying activities (those in PC 8302) to provide reasonable assurance that documentation requirements are met.

Classification Group 4 Procedures

  1. The Classification Group 4 (CL4) is responsible for various classification processes including:

    • Audit Reconsiderations

    • Bankruptcy

    • Claims/Requests for Abatement

    • Offer In Compromise

    • Doubt as to Liability

    • Requests for Abatement Under IRC 4962

    • Taxpayer Advocate Service Operational Assistance Requests (TAS OARs)

Audit Reconsiderations

  1. For details on audit reconsideration requests, see:

    • IRM, Request for Abatement - Audit Reconsideration

  2. CL4 Group assigns the case with a source code of 73, Taxpayer(s) Request(s). If the case is on RCCMS, CL4 Group asks the AIMS Analyst to retrieve the file from the RCCMS Library.


  1. CL4 Group receives notice from Insolvency of all tax exempt (and government) entities that have filed for bankruptcy. See IRM, The Role of Insolvency, for a description of Insolvency responsibilities.

  2. When notified, the bar date is often near expiration. This gives little or no time to do an audit and submit a claim before the expiration of the bar date.

  3. CL4 Group may assign bankruptcy referrals for tax exempt (and government) issues after a bar date has passed or is about to pass. CL4 Group may hold a bankruptcy referral for the subsequent year filing to determine if any new violations may have occurred.

Claims/Requests for Abatement

  1. The Ogden Service Center/Campus (OSC) receives and processes claims. If a claim is received by any other group in TE/GE, send it to OSC for processing. See IRM, EO Claim Procedures.

  2. OSC forwards all claims that can’t be processed by them to CL4 Group. OSC establishes all such claims on AIMS in the Integrated Data Retrieval System (IDRS) before sending to CL4 Group. See IRM

  3. CL4 Group establishes the claim on IDRS if received without an AIMS account.

  4. When an AIMS account is present on IDRS, CL4 Group establishes the claim on RCCMS.

Claims - Statute of Limitations
  1. The taxpayer must file a claim for refund within three years from the date the original return was filed or two years from the date the tax was paid, whichever is later ( IRC 6511). claims:

  2. In the case where no original return was filed but taxes were paid (e.g., withholding, estimated tax payment), a claim is considered timely filed if filed within two years from the date of payment.

  3. Use the following procedure to verify the statute of limitations date for filing

    Step Procedure
    1. If an original return was filed, check the Assessment Statute Expiration Date (ASED) on IDRS by viewing a TXMODA print.
    2. Compare the claim's OSC received date with the ASED.
    1. If the received date is earlier than the ASED, the claim is filed timely.

    2. If the received date is not earlier than the ASED, then check the postmark on the envelope. If the postmark is earlier than the ASED, then the claim is filed timely.

    3. If neither the received date nor the postmark is earlier than the ASED, return the case to the OSC Statute Control Group. CL4 does not have claim disapproval authority.

    3. Check if the claim was signed by the taxpayer:
    If not signed, and the ASED has already passed, return the case to the OSC Statute Control Group. A claim without a signature is not valid.
    4. Print IDRS research (i.e., TXMODA, AMDISA, BMFOLA, BMFOLI, BMFOLR, BMFOLZ, and BMFOLO).
    5. Check TXMODA for transaction code (TC) 976, Posted Duplicate Return. TC 976 creates an -A freeze on accounts when a TC 150, Return Filed and Tax Liability Assessed, is present. -A freeze prevents a refund or offset from posting to the module until an adjustment is made.
    1. If the TC 976 hasn’t posted to the module, make a copy of the claim and send it to the Field Agent Support Team (FAST) for posting.

    2. Assign the claim to the Return Classification Specialist (RCS) for processing.

Net Operating Loss (NOL) or Capital Loss Carry-backs
  1. A Net Operating Loss (NOL) occurs when trade or business deductions exceed income. An NOL lowers taxes in an earlier year, allowing a refund for taxes already paid. Any loss remaining after applying the NOL to preceding years is carried forward to lower taxes in a succeeding year. The taxpayer must use the NOL before applying unused credits.

  2. An NOL arising in taxable years beginning after August 5, 1997 can be carried back 2 years and forward 20 years. Prior to this change, a taxpayer could take an NOL back 3 years and forward 15 years.

  3. Carry-back claims differ from other claims for years beginning after November 10, 1978. An extension of time to file which has been granted does not terminate on the date the return is filed. The claim is valid if filed on or before the extended due date, regardless of the filing date of the original tax return.

  4. The procedure to verify the statute is the same as for other claims except for the extension issue. Use alpha code BB, which represents a Carry-back Update.

  5. Prepare Form 2285, Concurrent Determinations of Deficiencies, when:

    • There is a carry-back of two loss years to one year.

    • There is a carry-back and a general adjustment to the receiving year. See IRM 20.2.9, Interest on Carry-back of Net Operating Loss, for instructions and examples regarding the completion of Form 2285.

Protective Claims
  1. Protective Claims are formal claims or amended returns for credit or refund which are filed normally based on expected changes in a:

    • Current IRC section

    • Current regulation

    • Pending legislation

    • Current litigation

  2. Consider the following as "protective claims" :

    • Claims identified as a pending court case or decision

    • Protective claims for direct and indirect foreign tax credits

    • IRC 403(b) claims

  3. Update AIMS and RCCMS to status 38 for identified protective claims and place in suspense.

Surveyed Claims
  1. If a claim is clearly allowable, Classification CL4 Group surveys the claim as follows:

    1. Obtain approval by the CL4 Group Manager

    2. Stamp the return "surveyed before assignment" if working with paper.


      The manager must approve all surveys before the return is stamped.

  2. If the claim can not be surveyed, the Return Classification Specialist (RCS) will:

    1. Prepare a statement explaining why the claim is being sent to the field. Include all concerns/questions found from the preliminary overview of the claim.

    2. Update AIMS and RCCMS. Note: Examination Special Support (ESS) accepts Statistics of Income Exempt Organizations Return Image Net (SEIN) copies for closing purposes. BRTVU is also acceptable if SEIN is not available.

  3. If there is no AIMS account on IDRS, CL4 Group will create an AIMS account on RCCMS.

  4. In situations where expedited processing is required, (e.g., Taxpayer Advocate case), CL4 Group processes the claim without establishing it on AIMS. This requires managerial approval. Use Form 3870, Request for Adjustment, to process.

  5. See IRM 4.75.16, Case Closing Procedures, for general survey procedures.

Offer In Compromise - Doubt as to Liability

  1. To process an Offer in Compromise - Doubt as to Liability that comes into Classification, see IRM, Offer in Compromise - Doubt as to Liability (OICDATL), for instructions.

Requests for Abatement Under IRC 4962

  1. IRC 4962(a) provides discretionary authority to the Service not to assess, or to abate or refund, certain "qualified" Chapter 42 first-tier taxes if the organization establishes that a taxable event:

    • Was due to reasonable cause;

    • Was not due to willful neglect; and,

    • Has been corrected within the correction period for the taxable event.


      Refer to IRC 4962(c) for substitute language regarding the IRC 4955 tax.

  2. CL4 Groups follows the procedure for claims shown in IRM 4.5.3, TE/GE AIMS Manual, TE/GE AIMS Special Processing Procedures. Agents follow the procedures in IRM, Claims, Requests for Abatement and Audit Reconsiderations - Requests for Abatement under IRC 4962.

  3. If audit controls are not already established upon receipt of the abatement CL4 Group request, establishes the audit controls as follows:

    • If the tax was assessed against a disqualified person or organization manager, establish on NMF (MFT 66, Form 4720-A).

    • If the tax was assessed against a private foundation or exempt organization, establish on AIMS Master File (MFT 50, Form 4720).

  4. If Form 4720-A, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the IRC (MFT 66), reflects assessment of both first and second-tier tax:

    1. Include a Manual Accounting Replacement System (MARS) transcript with the request for abatement, showing the assessment of excise tax against a disqualified person or other related person. The EIN or SSN must be included. Process the second-tier abatement using Form 3870.


      The MARS transcript is for AIMS NMF accounts.

    2. If the request for abatement has a second-tier tax assessment, but does not have an Automated NMF transcript attached, send the request for abatement back to OSC for processing on Automated NMF. Upon receipt of the transcript, process the second-tier tax abatement.

Taxpayer Advocate Service/Operational Assistance Requests

  1. The TAS sends all TE/GE operational assistance requests (OAR) to Classification at *TEGE-CPC-Classification. The TE/GE TAS liaison identifies the proper recipients of the requests.

  2. Upon receipt of an OAR, the liaison checks IDRS and AIMS to see if it is opened in the field. If not, then the liaison checks RCCMS to see if there are prior audits for the period or other periods. The liaison establishes contact with TAS before taking further actions.

  3. For cases open in the field, the liaison:

    1. Emails the field group manager to let them know that the case they currently have is now a TAS OAR case and needs priority attention.

    2. Carbon copies their own manager on the email.

    3. Forwards a copy of the OAR to the field group manager for review and to contact the TAS Advocate.

    4. Completes a portion of Section V on Form 12412 (Liaison Received Date, Liaison Acknowledged date and the Assigned Date to the group).

  4. For cases under audit for another year, the liaison forwards the TAS OAR to the group so that they can work with TAS Advocate on the OAR request. The liaison performs the same procedures as listed above for cases open in the field.

  5. If the case is not under exam, the liaison reviews the case and sees if he/she can make correction. If not, the liaison establishes the case on AIMS/RCCMS (EO only) and forwards to the shelf as Immediate Assignment (IA) to a field group upon full AIMS establishment. See Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves, for the correct codes to use.

  6. An OAR can be resolved without contacting the taxpayer if they provided all of the information needed.


    An audit report shows that the tax was abated by the field agent during the audit but the correct codes weren’t entered at closing to abate the tax, then the classifier can prepare Form 3870 to get the account updated and the tax abated without contacting the taxpayer.


    Before making any such adjustment, the agent must review the prior case documents from the RCCMS library to make sure that the information provided from TAS or taxpayer is accurate.


    All TAS OAR cases require immediate assignment as they are priority cases (exception noted in the next paragraph.) TAS only gives TE/GE a limited time to complete the request.

  7. For penalty abatement requests unrelated to a prior audit where reasonable cause exists, classifiers:

    1. Complete Form 3870.

    2. Email it to the FAST Unit at *TEGE FAST.

    3. Keep the RCCMS case file until notified of the processed Form 3870 and posted adjustment. (

  8. If a classifier resolves the issue without taxpayer contact, he/she completes the rest of Section V and VI of Form 12412. He/she emails it to the TAS case advocate and copies the classifier’s manager, and the liaison. This is now a completed and closed OAR.

  9. If CL4 Group can not resolve the OAR, the classifier establishes it on AIMS and RCCMS to forward to the virtual shelf. The classifier prepares the field guide sheet and CCR for the case and loads it to RCCMS CL4.


    When establishing the case on RCCMS, input a comment in the comment box on Tab 3 of RCCMS as an Immediate Assignment, that this is a TAS OAR needing IA and attention.

  10. When transferring OAR cases, cases with open audits go to the field group working the audit.

Whistleblower Procedures

  1. CL1 and CL2 Groups within C&CA house the Whistleblower (WB) program for TE/GE.

  2. For general guidance on Whistleblower Claims, see IRM 25.2, Information and Whistleblower Awards.

  3. The TE/GE WB Coordinator coordinates the handling of the WB claims. Functional subject matter experts (FSME) will handle the WB claims for their respective functions (EO WB-A, EO WB-B, EP, FSL, ITG, and TEB). Note:


    Under no circumstances will any documents from the WB claim files be included in the RCCMS case files, as these documents must never be commingled.

  4. The TE/GE WB Coordinator:

    1. Monitors e-Trak for new WB claims.

    2. Assigns claims to classifiers or FSMEs.

    3. Monitors status of WB claims and provides status updates to the ICE unit.

Audit Potential

  1. When a CL1 or CL2 classifier determines that a claim may have audit potential, the claim is assigned to an FSME. The FSME performs the following actions in this section.

  2. Upon review of the claim, a debriefing and taint review may be needed. In such instances, see IRM, Debriefing/Interview/Taint Review.

  3. Add the following documents to the WB claim file in the group's WB folder on the share drive:

    • Form TD F 15-05.11, Sensitive But Unclassified (SBU) Cover Sheet.

    • Form 11369, Confidential Evaluation Report on Claim for Award.

    • The appropriate whistleblower (A or B) case instructions.

  4. Create a "New Referral" closing record within RCCMS.

  5. Conduct IDRS research to determine if the entity is under audit for the same or different years.

    If an entity is under audit... Then...
    For the same year
    1. Close the referral.

    2. Send the electronic file to the group manager.

    3. Send a copy to the Functional Assignment Coordinator.

    4. Ask the group to update the source code, as appropriate.

    For a different year WB-A EO Claims: Determine whether to convert the claim to a compliance activity.
    For all compliance activities:
    1. Enter "IA - Referral - prior year in GXXXX" in the "Comments" field on the "Codes/Check sheets" tab within RCCMS.

    2. Upload to RCCMS tax return and internal research performed by classifier.


      Under no circumstances is a classifier to upload documents that will identify the referral as a WB claim.

    3. Establish AIMS controls for the compliance activity.

    4. Notify the appropriate Classification Group manager when AIMS controls are fully established and the case is ready for transfer to the virtual shelf.

    By Tax Exempt Bonds for a bond issue Follow the steps outlined in "For the same year" above.
  6. For selected WB claims not currently under audit, do the following actions:

    Type of claim Action to perform
    WB-A (EO) Claims Transfer the claim referrals to org code 400-11112-7998.
    All other WB claims Close and convert the referral to a compliance activity in RCCMS.


    WB-B claims are immediate assignment. Insert "IA - Referral" in the "Comments" field on the "Codes/Checksheets" tab within RCCMS.

  7. The SME classifier transfers the compliance activity for acceptance to the appropriate CA Group virtual shelf RCCMS assignee code listed in Exhibit 4.70.6-2, Case Assignment Group - Virtual Shelves.

Debriefing/Interview/Taint Review
  1. The FSME contacts TE/GE Counsel to ask for coordination of a "taint review" and debriefing/interview with the WB.

  2. Upon assignment of a Counsel attorney, the FSME:

    1. Sends the entire WB-B file to the designated Counsel attorney.

    2. Schedules a call with the attorney to discuss and decide whether a debriefing/interview of the WB is warranted.

  3. If a debriefing is warranted, the FSME contacts the WB to schedule a conference call with the WB, Counsel and the SME.


    The purpose of the call with the WB is to clarify information provided, to determine if the WB has other information of value or if any of the information provided is tainted.

  4. The FSME completes a Debriefing Check sheet with the WB after the interview and includes it in the WB-B claim file. See IRM

  5. When TE/GE Counsel completes the taint review, the attorney prepares a taint review and risk assessment memo and sends it to the FSME, who includes it in the WB claim file.

  6. The FSME considers the taint review, risk assessment memo and all other information gathered, and prepares a Summary of Taint Review and includes it in the WB claim file.

  7. If an audit is not warranted, see IRM, No Audit Potential.

  8. If an audit is warranted, the FSME places all tainted material in a separate folder labeled "Tainted Material" within the WB claim file folder.

No Audit Potential

  1. CL1 or CL2 classifier completes Form 11369 explaining why the claim was not accepted and sends it to his/her manager, or designee, for concurrence.

  2. For WB-A (EO) Claims, the CL1 Group manager, or designee, either:

    • Returns the signed Form 11369 to the classifier.

    • Holds a further discussion with the classifier, directing a conversion of the referral to a compliance activity.

  3. For all other WB claims, the CL1 or CL2 Group manager, or designee, returns the signed Form 11369 to the classifier.

  4. With the manager’s, or designee’s, concurrence, the CL1 or CL2 classifier:

    • Closes the WB claim referral in RCCMS.

    • Sends the completed Form 11369 to the WBO.

    • Updates e-Trak

    • Notifies WB Coordinator.

  5. The electronic file is retained in the CL1 or CL2 Group's WB folder on the share drive in compliance with existing record retention provisions.

Case Assignment Group Procedures

  1. TE/GE FAC:

    • Receive work requests from field groups.

    • Review the virtual shelf for appropriate compliance activities to fill the requests.

    • Prepare and submit work orders with a list of selected compliance activities to the CA Group manager to fill the group work requests.

  2. Upon receipt of a work order, the CA Group manager assigns the activities to a team member.


    IA cases take precedence over all other case work.

  3. The team member:

    1. Builds the cases with the data listed on the case build sheet.

    2. Notifies his/her manager when done building the cases.

Immediate Assignment Referral Criteria

The following cases are Immediate Assignment cases:


  • Forms 6544 – Requests for cooperating agent/expert witness from Criminal Investigation

  • Referrals with strong indicators of fraud, illegal, or illicit transactions (including terrorism)

  • Specialist Referral System Referrals from LB&I and SB/SE with audit potential only

  • Claims/Partial Abatements with taxes paid for which Classification can’t resolve

  • WB-B cases with audit potential only

  • Department of Labor Referrals-requests for Joint Investigations only

  • OIC-DATL referrals

  • Any other referrals the functions determine warrant Immediate Assignment


    For TAS OARs and OIC-DATL referrals, assign the case to the exam group that originally assessed the tax and/or penalties.

Case Assignment Group - Virtual Shelves

Function Primary Business Code (PBC) Secondary Business Code (SBC) Employee Group Code (EGC)
EO 400 11112 7992
EP 400 12112 7692
FSL/ET 400 23116 7242
ITG 400 24102 7282
TEB 400 25116 7227