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1.4.40  SB/SE Field and Office Examination Group Manager (Cont. 1) 
Workload Planning 
Assigning Returns 
Grade Level of Work for Field Examination Cases  (05-19-2010)
Characteristics of Field Examination Cases

  1. These guidelines apply to all individual returns (non-business and business), fiduciary returns, all types of corporation and partnership returns.

  2. For the purpose of this guidance, a case is defined as the primary return for one year plus other returns, if any, involving interrelated interests and/or transactions that require concurrent examination. The primary return is the return around which related entities and other types of returns revolve, regardless of how and when selected or assigned. Other returns are defined to include returns subsequent and/or prior to the primary return of the taxpayer, as well as returns for related taxpayers for the primary year and subsequent and/or prior years. When the primary return and related returns are examined by the same agent, the related returns will usually (for Management Information System purposes) carry the same grade as the primary return. If related entities are examined by other agents, each group of entities examined by a separate agent will be graded as a separate case under this guide.

  3. This guidance has four parts as follows:

    • PART I: Chart of Case Grading Factors (based on GS–512 Classification Standards)

    • PART II: NAICS Codes

    • PART III: Probable Grade Levels of Cases Based on Type of Industry/Occupation, and Size

    • PART IV: Matrix of Issues that may change determination made in Part I

  4. The case grading guidelines discussed in this IRM are not intended to cover all possible factors that may influence a final case grade. New projects or programs, and other unusual situations that were not present in the sample at the time this guide was developed, will require a group manager to use judgment in grading a case. More reliance must be placed on the case grading factors in Part I for these situations.  (05-19-2010)
Part I — Chart of Case Grading Factors

  1. Part I consists of the position classification standard for the GS–512 RA occupation which forms the basis for determining the grade of a case. The standards have been adapted to evaluate cases rather than positions, therefore, factors such as supervision/guidance have not been included.

  2. The case grading factors listed in the table below should be used for the final grading of cases.

    Part I — Chart of Case Grading Factors
    In arriving at a final grade, all factors do not have to be met, however, normally, more than one of the most important factors is necessary. These are: Accounting Systems and Methods, Issues and Knowledge, Guidelines and Tax Laws, and Scope and Effect.
    GS–11 GS–12 GS–13
    1. Accounting Systems 1. Accounting Systems 1. Accounting Systems
    Independently examines systems which require a basic knowledge of principles/ methods of accounting and auditing as found in a variety of individuals, relatively small businesses, exempt organizations, and simple employee plans. Systems involve a variety of financial operations and accounting methods or specialized accounting practices unique to a particular industry. Use of basic investigative procedures to elicit information and establish facts. In addition to GS–11 characteristics, the following concepts should be involved: Comprehensive knowledge of the principles/ methods of accounting and auditing to plan and conduct independently the complete range of examination and related investigations of a broad range of sizable business operations. Systems involve a variety of complex financial operations and unusual accounting methods or specialized accounting practices unique to a particular industry. Uses investigative skills to analyze incomplete records and reconstruct transactions from third party records. Develop information relative to complex fraud. In addition to GS–12 characteristics, the following concepts should be involved: Mastery of the principles/ methods of accounting, auditing and corporate financial management to plan, coordinate, and conduct examinations of large, complex businesses, including those with substantial subsidiaries, diversified activities multiple partners, and national and international scope and operations. Accounting systems of size and complexity may warrant planning and coordinating the work of others.
    GS–11 GS–12 GS–13
    2. Issues/Knowledge 2. Issues/Knowledge 2. Issues/Knowledge
    Fundamental knowledge of business and trade practices, procedures and conditions to analyze tax returns and related records to determine the reasonableness of deductible items, the reliability of reported income and expenses, including probable earnings in a wide variety of small businesses/industries and similar questions extending beyond the area covered by specific accounting or legal guides. In addition to GS–11 characteristics, the following concepts should be considered: Knowledge of business financial management principles and practices concerning a variety of kinds and sizes of businesses, or specialized knowledge in a particular industry to (1) determine sources of income and verify expenses, (2) judge the propriety of such matters as intercompany transactions, accumulation of surplus, or compensation of officers, (3) examine trust activities and transactions in order to determine unrelated business income or prohibited transactions, or (4) determine items related to pension plans and appropriate deductions. In addition to GS–12 characteristics, the following concepts should be involved: Specialized knowledge of major industries may be required so that expert judgements can be applied to business transactions. Business transactions may include mergers, acquisitions, leverage buyouts, and similar transactions
    GS–11 GS–12 GS–13
    3. Guidelines/Tax Law 3. Guidelines/Tax Law 3. Guidelines/Tax Law
    Guidelines include basic tax laws, agency policies, rules and regulations to determine the taxpayer’s correct tax liability. Guidelines normally are specific to issues, but because of number/variety of issues, research is required to locate precedents. In addition to GS–11 characteristics, cases require research and analysis of the Internal Revenue Code, rulings, court decisions, and agency policies to examine returns where tax law or precedent cases do not directly apply including consideration of judicial decisions and legislative intent in cases involving the adoption of precedents. In addition to GS–12 characteristics, cases require the use of the Internal Revenue Code, rulings, court decisions to resolve problems where there is little or no previous interpretation of statutory provisions. Laws are highly subjective, precedents are non existent, obscure or conflicting and significant tax change or precedent setting issues are involved.
    GS–11 GS–12 GS–13
    4. Scope and Effect 4. Scope and Effect 4. Scope and Effect
    Results of audits affect the taxpayer by requiring corrective action for prior and current tax years and having a deterrent effect for future tax years. The impact may extend to other related taxpayers and/or unrelated taxpayers throughout whole industries. In addition to GS–11 characteristics results of the audit affect the tax liability and, therefore profitability of major business entities and in some instances the treatment of accounting methods and techniques for tax purposes as they are employed throughout whole industries. In addition to GS–12 characteristics, tax results are of major significance which affects the financial condition of many categories of taxpayers involving very large tax responsibilities. Important principles are developed resulting in new precedents.
    GS–11 GS–12 GS–13
    5. Contacts 5. Contacts 5. Contacts
    Generally involve individual proprietor, corporate official, self-professional, most represented by local practitioners. The purpose of contacts is to influence and persuade the taxpayer or representative to comply with requirements, to provide information to resolve outstanding problems and issues or to pay tax liability. Contacts hold strong opposing views. They may be hostile, skeptical or uncooperative requiring the agent to use tact, persuasiveness, and diplomacy to obtain the desired results. In addition to GS–11 characteristics, the following concepts should be involved: Officials of corporations of significant size, public officials, or practitioners of considerable attainment. Prominence of taxpayer presents problem of publicity or attitudes in locality. In addition to GS–12 characteristics, cases involve contacts with persons who are prominent because of their reputation in their field, especially the accounting and tax fields; officials of large businesses with national reputations.  (05-19-2010)
Part II - North American Industry Classification System (NAICS) Listing

  1. The North American Industry Classification System (NAICS) replaced the Principle Industry Activity (PIA) and the Principle Business Activity (PBA) PIA/PBA codes for tax periods 199812 and subsequent for individual returns. These codes appeared on some corporate and partnership returns starting in 1997 due to fiscal year overlaps.

  2. Reference will be made to the appropriate NAICS to determine the class of the case. The primary return NAICS will be the determinant factor for placement in the appropriate class. If no NAICS appears on a return, group managers will determine the proper class based upon a review of the case file. Once a class has been determined, Parts I, III and IV should be used to determine the final grade. See NAICS Codes on AIMS and ERCS, for NAICS classification codes.

  3. The listing below reflects the respective Class Number for individual, business and fiduciary returns:

    •Class 1 – Manufacturing, Construction, Mining

    •Class 2 – Retail, Wholesale, Transportation

    •Class 3 – Services, Farming

    •Class 4 – Financial and Utilities

    •Class 5 – Nonbusiness Individual and Fiduciary  (05-19-2010)
Part III—Probable Grade Levels of Cases Based on Type of Industry/Occupation and Size

  1. The type of business or occupation and its relative size as measured by total assets and/or gross receipts and the dollar criteria for each business type is indicative of the issues encountered, tax law knowledge and accounting complexities normally encountered by revenue agents at the GS–12 and GS–13 levels. Part III is most applicable to the assignment of cases to revenue agents; whereas all four parts of the guide must be used when the case closes and a final grade is assigned.

  2. The following criteria may be used for both case assignment and final grading. Size criteria alone must not be relied upon in arriving at a final grade; more weight should be placed on the case grading factors in Part I. If a case is graded at GS–11 based on industry class and size, and an upgradable issue is identified on the return, the case may be upgraded. See Part IV for the listing of upgradable issues.

  3. The dollar criteria for each industry type was derived from a review of various cases in each class and is indicative of the issues, tax law knowledge and accounting complexities normally encountered by revenue agents at the GS–12 and GS–13 levels.

  4. Determination of industry class for business returns will be made by reference to NAICS codes. Individual and fiduciary returns will be placed in Class 5 (Nonbusiness) unless their primary source of income is from a business. The classes are listed in the table below:

    CLASS 1

    (Manufacturing, Construction and Mining)
    Criteria Probable
    Total Assets $250K to $12M Over $12M
    Gross Receipts $1M to $15M Over $15M
    CLASS 2
    Criteria Probable
    Total Assets $1M to $12M Over $12M
    Gross Receipts $2M to $33M Over $33M
    CLASS 3
    Criteria Probable
    Gross Receipts $3M to $33M Over $33M
    CLASS 4

    (Banking, Insurance and Utilities)
    Criteria Probable
    Total Assets $0M to $115M Over $115M
    CLASS 5
    Cases under this class are graded as GS–11 unless possessing an upgradable issue as listed in Part IV of this Exhibit. If the primary source of income is from wages/salaries, the case will fall under this class even if a Schedule C or F is attached. If the primary source of income is from a business, the case will fall under one of the other classes.  (05-19-2010)
Part IV—List of Upgradable Issues that May Result in an Upgrade for Field Examination Cases

  1. If a case is graded at a GS–11 level based upon Parts I, II and III, and an upgradable issue appears on the return, the case may be upgraded to a GS–12 after consideration of the facts in the case. These same 13 upgradable issues may cause a case to be upgraded from GS–12 to GS–13. However, the decision to upgrade a case to GS–13 is most often a determination that is based on case size and case complexity. Additionally, a 14th upgradable issue called "Unusual Complexity" is included to allow group managers to upgrade a case based upon features, facts and circumstances encountered during a particular examination.

  2. The following table presents 13 upgradable issues which may cause a case to be upgraded from GS–11 to GS–12 and a 14th category "Unusual Complexity."

    Part IV—List of Upgradable Issues that May Result in an Upgrade
     I. Controlled Group
     2. Complex Like Kind Exchange
     3. Liquidation/Reorganization
     4. Foreign controlled (Exclusive of Significant Specialist Involvement)
     5. Valuation issues (Exclusive of Significant Engineering Support)
     6. Financial Products. e.g., commodities, straddles, etc.
     7. LIFO
     8. IRC 263A — Capitalization of Inventory Costs
     9. IRC 482 — Allocation of Income/Deductions among two or more trades/business
     10. IRC sections 741/742/743, Recognition/Character of Gain/Loss & Basis on Sale of a partnership.
     11. Key Case TEFRA
     12. Complex Fraud Development
     13. Sensitive, High-Profile Taxpayer
     14. Unusual Complexity  (05-19-2010)
Procedures for Field Examination Cases

  1. The first step in applying this guide is to relate the return being assigned or graded to the five classes listed in Part III of these guidelines. All income tax cases will be graded. Classification of business returns in Classes 1 through 4 will be determined by reference to the NAICS code listings. If no NAICS code appears on a return, group managers will determine the proper class based upon a review of the case file. Individual and Fiduciary cases will be placed in Class 5 (Nonbusiness), unless it is more appropriate to place the case in another class. Primary source of income for cases in Class 5 is salaries/wages even though a Schedule C or F may be attached to the return.

  2. During case assignment, a group manager will relate all facts known about a case to Parts I–IV. Part III may be most applicable, particularly the size criteria, such as total assets. Specific issues may not be known until the case is fully examined. However, during final case grading all four parts of the guide must be used, especially the case grading factors in Part I. Size criteria alone must not be relied upon for final case grading because normally other factors influence the difficulty of a case.

  3. When assigning a final grade to a case, a group manager will first make reference to Part I of the guide. A general assessment will be made as to how each factor grades out. Normally, more than one of the major factors is necessary to influence the final grade. Following this process, reference can then be made to Parts II, III, and IV of the guide to determine how the size criteria grades out and whether any upgradable issues are present that might influence the final case grade. The objective is to use these four parts of the guide to make a decision on the difficulty of the case.

  4. See IRM, which provides instructions for completing Item 32, grade of case, on Form 5344.  (05-19-2010)
Case Grading for Special Situations for Field Examination Cases

  1. A group manager may use their judgment to change the probable grade of a case before making an assignment. A group manager may suspect that special or complex issues or problems will be encountered in the examination and this is sufficient reason to justify upgrading the probable level of the case. On the other hand, a group manager, in view of the prior agent’s report, etc., may lower the probable grade level of a case on the basis that the scope of the examination will be limited or will only involve continuing and/or recurring issues such as travel and entertainment, repairs, depreciation, etc. These are sufficient reasons to justify assigning a lower grade level to the case.

  2. Special situations that will require judgment in determining case grade are:

    1. Package Examination—Give full credit for developing KEY CASE and all other cases in the package.

    2. Flow-Through/Information Reports (e.g. AIMS control of Related Returns Procedures)—Give full credit if normal range of knowledge and auditing techniques is required to apply a previously identified issue. Give less than full credit if issues have been previously identified and are applied in a mechanical manner with less than normal knowledge requirements.

    3. Subsequent Years—Refer to Flow-Through/Information Reports definition; full credit may be considered if additional issues evolve or are developed in subsequent years requiring a normal range of knowledge and auditing techniques.

    4. Limited Scope—Give less than full credit if examination is so restricted in scope that the normal range of knowledge and auditing techniques is not required. Give full credit for examination of limited scope where normal range of knowledge and auditing techniques is required. (In this situation, the RA usually limits the scope.)

    5. Specialist Involvement—Complexity of the case will include specialist’s involvement; however, final grade will depend on knowledge and auditing techniques required of the RA.

  3. The difficulty of a case cannot be finally determined until the examination is completed. The determinations made prior to examination are not controlling. A group manager’s final determination of the case grade will be made upon completion of the examination. A group manager should note the basis used to downgrade the case within the case file.  (05-19-2010)
Relationship of Guide to Position Management for Field Examination Cases

  1. This guide does not supersede the existing Office of Personnel Management (OPM) standards for classifying internal RA positions. Rather, the provisions of this guide are consistent with the grade level criteria outlined in the OPM standards for the GS–512 series. However, such position classification factors as supervision and guidance received, cannot be measured by this guide. Such factors are primarily related to the technical skills and knowledge demonstrated by an individual RA. The amount and kind of supervision required by a RA on a continuing basis may affect the grade of a position but not the grade of the cases assigned. Under normal supervision, the grade of an RA’s position depends upon a continuing workload of a wide range of cases at a given grade level.

  2. Revenue agents may be assigned a limited number of cases above their grade level for developmental purposes. The assignment of higher or lower level cases for short periods of time, to provide developmental opportunities, or to meet specific operational needs, does not affect the grade level of an RA’s position. Also, cases assigned at one grade level sometimes become significantly more difficult during the examination process. Such assignments often provide adequate developmental experiences. When developmental or priority assignments above the grade level of an RA are completed under closer than normal supervision, or supervisory instructions limit the scope of the examination, the assignment may be considered to be consistent with the RA’s grade.

  3. A group manager and position classifiers must be aware of the distinctions between the grade levels of positions and grade levels of cases assigned.

    1. A group manager is responsible for assigning cases consistent with a RA’s grade level, keeping developmental assignments within reasonable limits, and periodically apprising a RA of the distinctions between the grades of cases and the grades of their positions.

    2. Position classifiers are responsible for making the final determinations on the grade levels of positions and providing advisory services to a group manager on position management and work assignment practices.  (05-19-2010)
Recording Grade of Case on Form 5344, Examination Closing Record for Field Examination Cases

  1. A group manager determines the grade of case for all field examination income tax returns including non-business and business, individual, fiduciary, partnership and all types of corporations, and tax shelter cases. The case grade is entered as a three digit number in item 32 of Form 5344. When a related return is being closed by the same RA who examined the primary return, enter the same three digit code as for the primary return, but followed by an "R" (for related). If related returns are examined by a different RA, each will be graded as a separate case, and the "R" will not be recorded. (See IRM, Case Grading for Special Situations for Field Examination Cases, for guidelines on grading cases with special situations).

  2. In Item 32 of Form 5344, the first digit represents the class of return, the second digit represents the grade of the case at closing, and the third digit which will always be a "1" , has not been assigned a use; however, it must be completed to prevent terminal rejects. (Previously, the third digit was used for case upgrading based on complexities found during the examination).

  3. Referring to Parts I, II, III and IV (IRM through 4): The first digit on Item 32 of Form 5344 is the class number for the industry, occupation, or type of case that most closely resembles the activity on the examined return. The second digit is the second digit of the closing grade; that is, 1 represents GS–11 and below, 2 represents GS–12, and 3 represents GS–13. All four parts of the Case Guidelines for Determining Grade level of Case are needed to make the final grade determination. A "1" will be entered in the third digit for all cases.


    A Form 1065 filed by a taxpayer who raises race horses, has been graded as a GS–12 case by the group manager using all four parts of the Case Assignment and Grading Guide. Item 32 of Form 5344 would be completed as 321 for Class 3 (Services and Farming) and a final grade of GS–12. (remember that the third digit will always be a ‘1 ’). Related returns examined by the same RA who examined the primary return would be coded 321R. Related returns examined by other revenue agents would be coded without the R and graded as a separate case.  (04-05-2017)
Managing Open Inventories

  1. Effective inventory management is critical to all three balanced measures. A group manager should:

    1. Communicate expectations;

    2. Monitor progress;

    3. Guide employee performance;

    4. Improve the effectiveness of audit practices;

    5. Meet procedural requirements;

    6. Maintain an awareness of the status of cases under examination;

    7. Regularly interact with examiners;

    8. Make prompt decisions regarding examination scope;

    9. Facilitate the timely completion of examinations, including discussing the case with the taxpayer or representative to facilitate receipt of requested information if the taxpayer/representative refused to provide it to the examiner; and

    10. Make timely decisions to expand the case to include other years or related taxpayers when applicable.  (05-19-2010)

  1. The starting point of addressing collectibility is conducting a quality audit. Quality Attribute 409 states collectibility should be considered throughout the examination. Examiners' pre-contact responsibility for collectibility potential is described in IRM 4.20.2, Scope Consideration. If collectibility is an issue in an assigned case, a group manager will make the final determination whether to survey the return or to limit the scope/depth of an examination. See IRM 4.20.2 for additional information.  (05-19-2010)
Case Inactivity

  1. A fundamental philosophy of quality responsiveness to our external customers is that they are entitled to the prompt and proper resolution of their examinations. This philosophy also helps minimize the level of overage work in group inventories. The case file should document reasons for significant periods of inactivity. Refer to IRM Exhibit 4.8.3-1, Quality Attributes, for National Standard Timeframes.

  2. While considering and keeping morale concerns in mind, as well as the relationships between examiners, a group manager should utilize transfers of cases between examiners to ensure continuity of case work. Cases should not be allowed to remain inactive for prolonged periods of time. The case file should clearly document reassignment actions taken.  (05-19-2010)
Related Pickup Work

  1. A group manager should strongly encourage and monitor multi-year and related pickup work. This is a specific area in which a group manager can have a key role in inventory management and one in which the use of time can be directly impacted. Quality Attribute 112 states prior/subsequent and related returns should be considered during the examination.

  2. When approving related pickups, risk analysis should be considered to determine if the time required is worthy of the potential return on the investment.

  3. Requisitions for returns and/or controls should be approved by a group manager after reviewing the examiner's reason for requesting the return.

  4. A group manager should ensure that all examiners obtain approval before initiating an examination of a return previously requested for reference and information purposes (Source Code 45). A photocopy of Form 5345-D will be attached to the tax return as a permanent record.  (04-05-2017)
Closing Returns — General

  1. The group manager is responsible for ensuring that quality examinations are conducted. When a case is closed by an examiner, the group manager should review the case to ensure it is procedurally and technically correct. The scope of the review will vary based on the group manager’s knowledge of the specific examiner’s level of experience and work. At a minimum, the group manager must ensure the examiner:

    • Reconciled the time on ERCS to Form 5344.

    • Made the required follow-up attempts to contact the taxpayer if the taxpayer did not respond to the initial contact letter (IRM, No Response/No Show Procedures).

    • Considered and documented prior/subsequent year and related returns.

    • Properly completed and documented the minimum income probes.

    • Considered, applied and documented assertion and non assertion of penalties when applicable.

    • Reconciled the tax and taxable income on the examination report to current TXMODA information.

    • Followed proper procedures to solicit payment if there is an unpaid deficiency and the case is agreed.

  2. The goal is to forward a closed case as quickly as practical and in accordance with the National Standard Timeframes. See IRM, Time Frames in Closing a Case from the Group, and IRM Exhibit 4.8.3-1, Quality Attributes, for additional guidance.

  3. If a procedural or technical deficiency is noted, the case should be returned to the examiner for correction. The group manager should consider sharing the observation with the examiner as formal documentation.

  4. Technical Services may return a case to a group for further development if the case meets the criteria in IRM, Case Return Criteria. Form 3990, Reviewers Report, is generally used to communicate between Technical Services and a group regarding reviewed cases.


    Technical Services' communication (e.g., Form 3990) should be given prompt and appropriate attention. In most instances, the case should be returned to Technical Services within 60 days of receipt in the group. If there is disagreement with the findings of Technical Services, the group manager should discuss the matter with the Technical Services group manager.  (02-03-2015)
Advance Payments/Deposits

  1. The group manager must emphasize to examiners the need to solicit payment in both fully and partially agreed examinations. See IRM 4.20.3, Soliciting Payment, for guidelines for using the tiered interview approach for soliciting payment, securing levy source information, and coordinating with Collection.

  2. An examiner will not solicit payment from a taxpayer until the examination is complete. If an agreement is secured and the taxpayer offers payment prior to closing as a means of stopping the accrual of interest, such payment will be accepted and processed as an advance payment on deficiency. See IRM, Payment Received Prior to Issuance of Notice of Deficiency.

  3. If no agreement is secured and the taxpayer wants to make a remittance prior to closing as a means of stopping the accrual of interest, such remittance will be accepted. Prior to processing the remittance the examiner must determine whether it's a payment of tax or an IRC 6603 deposit. See IRM, Is The Remittance a Payment of Tax or a IRC Section 6603 Deposit? In addition, see Rev. Proc. 2005–18, which provides procedures for taxpayers to make, withdraw, or identify deposits to suspend the running of interest on potential underpayments under IRC 6603.

  4. The group manager must ensure that employees timely transmit remittances to the designated Submission Processing Center shown on the SB/SE Examination website at within 24 hours. Payments over $100,000 require special attention. See IRM, Payments of $100,000 or More.

  5. Agreed unpaid deficiencies or overassessments in excess of $100,000 should close from the group within four calendar days of receipt of the report or waiver. See IRM, Processing Agreed and Unpaid Deficiencies, for additional processing instructions.

  6. "Large dollar" cases require special processing. See IRM 4.4.18, Large Dollar Cases, for definitions and processing instructions.  (02-03-2015)
No Change Closing Procedures

  1. In addition to the steps in IRM paragraph (1) group managers should review the closed case to ensure:

    1. The examiner has prepared the appropriate closing letter(s). The group manager must sign the closing letter before closing the case to CCP. See IRM, No Change and No Liability Cases.

    2. The examiner has followed the procedures in IRM, No Change Report with Adjustments Impacting Other Tax Year(s) Filed, Delinquent or Not Due, when applicable  (02-03-2015)
Agreed Closing Procedures

  1. In addition to the steps in IRM paragraph (1) group managers should review the closed case to ensure:

    1. The examiner has prepared the appropriate closing letter(s). The group manager must sign the closing letter before closing the case to CCP. See IRM, Closing Letters for Agreed Cases.

    2. Penalties have been considered and applied when applicable and managerial approval has been documented under IRC 6751(b). See IRM, Managerial Approval of Penalties, for additional guidance.

    3. The taxpayer(s) has signed the report.

    4. The examiner has date stamped the report.  (02-03-2015)
Partially Agreed Closing Procedures

  1. A group manager should encourage examiners to request partial agreements and solicit advance payment. See IRM, Partially Agreed Cases, for additional processing instructions.

  2. After the partial agreement is processed, the completed case is closed as unagreed.  (04-05-2017)
Unagreed Closing Procedures

  1. It is in the Service's best interest to resolve tax controversies at the lowest possible level. A group manager and examiner are empowered to consider all the facts and taxpayer documentation provided. In addition, materiality and collectibility should be considered in resolving cases.

  2. Examiners must inform their group manager when they believe a case will have unagreed issues (except no show/no response cases). The reason for the case being unagreed should be clearly communicated to the manager.

  3. Unless specifically excluded from Appeals consideration, all cases are eligible to be forwarded to Appeals as long as the taxpayer submits an adequate small case request or formal written protest that includes the information required in Pub 5, Your Appeal Rights and How to Prepare a Protest If You Don’t Agree. The following are specifically excluded from Appeals consideration:

    1. Fewer than 365 days remain on the statute of limitations when the case is received in Appeals (180 days if Appeals previously released jurisdiction of the case and returned it to Examination for additional work). See IRM, Receipt of New Assignment by an Appeals Technical Employee (ATE).


      Examiners should issue a 30-day letter with a minimum of 240 days remaining on the statute of limitations to start the 30-day time period in the event the taxpayer signs a consent. If there are fewer than 240 days remaining on the statute of limitations, examiners should issue Letter 5153, Examination Report Transmittal - Statute <240 Days (Straight Deficiency) (or similar letter depending on the type of closure), to transmit the report and notify the taxpayer additional time is needed for Appeals to consider their case if it is unagreed. See IRM, 30-Day Letters.

    2. Request/claim for abatement of unpaid tax that is not an audit reconsideration, See IRM, Claims for Abatement, Audit Reconsiderations, and Supplemental Reports

    3. Taxpayer disagrees solely on moral, religious, political, constitutional, conscientious, or similar grounds. See IRM, No Appeals Conference or Concession on Certain Arguments.

    4. Fraud cases involving pending criminal prosecution. See IRM, Returning a Case to Examination – ATE.

  4. The group manager must review an unagreed case file and return it to the examiner if:

    1. The issues are not adequately developed. A fully developed case should contain an easy to follow audit trail and the evidence needed to support the adjustments proposed in the examination report. At a minimum, the workpapers should:
      - Address the facts, law and argument for each issue
      - Indicate that any court cases cited by the taxpayer were reviewed
      - Clearly reflect the dollar-amounts allowed and disallowed
      - Contain an alternative position, if applicable

    2. The case is being closed to Appeals and the protest is not adequate.

  5. The group manager's actions must be documented on Form 9984, Examining Officer's Activity Record, or its RGS equivalent.  (04-05-2017)
Unagreed Closing Procedures - RA Group Managers

  1. ) RA group managers are required to make contact in person or by telephone with taxpayers and/or representatives on all unagreed cases to attempt to resolve the tax controversies in order to reach an agreement. If agreement cannot be reached, Fast Track Settlement (FTS) should be offered, if applicable. FTS should not be offered if the group manager has not spoken to the taxpayer and/or representative. See IRM, SB/SE Fast Track Settlement, for additional information.


    The 30-day letter generally should not be issued unless the manager has contacted the taxpayer and/or representative.

  2. If the issues cannot be resolved, a conference is not desired, or FTS is not initiated, the group manager will return the case to the examiner for preparation of a 30-day letter and report.

  3. The group manager must review the unagreed report for accuracy and sign the 30-day letter prior to the issuance of the unagreed report to the taxpayer and/or representative.


    The 30-day letter should not be issued if there are fewer than 240 days remaining on the statute of limitations. See IRM paragraph (3) for additional guidance.  (04-05-2017)
Unagreed Closing Procedures - TCO Group Managers

  1. When a taxpayer has requested their case be sent to Appeals, TCO group managers are required to make contact in person or by telephone with the taxpayer and/or representative to conduct a group manager’s conference and attempt to resolve the tax controversies in order to reach an agreement. If agreement cannot be reached, FTS should be offered, if applicable. FTS should not be offered if the group manager has not spoken to the taxpayer and/or representative. See IRM, SB/SE Fast Track Settlement, for additional information.


    With the exception of no show cases, TCO group managers are strongly encouraged to make contact with taxpayers and/or representatives on unagreed cases closed for issuance of a notice of deficiency.

  2. If the issues cannot be resolved, a conference is not desired, or FTS is not initiated, the group manager will forward the case to Appeals.  (02-03-2015)
Short Statute Cases — 180 Days or Less

  1. The group manager must avoid having short statute cases in group inventory. See IRM, Statute Controls, for guidance.

  2. Returns with 180 days or less remaining on the statute of limitations must be placed in a red folder. This folder will flag the case until it is closed by CCP.  (05-19-2010)
Monitoring Reports Overview

  1. The data for management information reports and tables is derived from the AIMS database. The Tennessee Computing Center produces tables for each area, territory, group and campus examination functions. The data are transmitted monthly to the Detroit Computing Center for additional report generation.

  2. ERCS reports are generated at the group level and are used to monitor case statutes, progress, and status. The group, territory, and Area can generate reports from ERCS. See IRM, ERCS Reports, for more detailed discussion.

  3. A group manager should consult with their territory manager regarding the monitoring tools they are required to use and the frequency for using such tools. Some monitoring tools are optional and others have required use. For example, AIMS Table 4.1 must be worked within 5 days of receipt of the e-mail in the group manager's inbox.  (05-19-2010)
AIMS Tables 36

  1. Table 36, Examination Program Monitoring, provides all levels of management concise analytical information for use in managing the Examination function. The table provides data from AIMS which is used to monitor examinations, inventory, surveyed returns, and accepted returns from classification.

  2. Table 36 shows a group’s accomplishments for the current fiscal year excluding dollar accomplishments. These accomplishments are divided between training and non-training returns. Data is categorized by type of returns such as individual, corporate, partnership, and claims. Table 36 shows cases in Status 10 through Status 90 and contains the following:

    • Inventory aging information

    • Current month closures

    • Hours per return

    • Total claims closed

    • Returns started in current month

    • Mix of returns

  3. This information is grouped into the following categories:

    • Activity Code

    • File Year

    • DIF/DIF Related

    • Local Source

    • Shelters

    • NRP

    • Campus Contacts/IRP

    • Fraud/Enforcement

  4. When analyzing Table 36, it is important to look behind the numbers. The statistics provided by this table provide trends. To understand the trends identified:

    1. High hours per return may reflect the group is pursuing issues which do not warrant the time being expended. Ineffective planning and scheduling practices or poor examination techniques contribute to higher time on cases.

    2. Table 36 also provides the number of prior year returns assigned to the group. By monitoring the "returns beyond cycle" columns, a group manager can adjust the inventory mix to meet the examination cycle and prior year guidelines.

    3. Fraud, joint committee, and other cases are excluded and are categorized on Table 36 as "returns with exclusions."

    4. The differentiation "with or without exclusions" is determined based on source code, status code and project code information. This highlights one important aspect of proper code utilization.

    5. Review the "no time applied" and "program monitoring" columns to monitor priority returns in unopened status.

    6. "Aging time applied" categorizes a group's inventory by months in-process (status 12). Cases "over 12" months should be a relatively small portion of a group's inventory and require the immediate attention of a group manager. An excessive number of cases in either the "6–9" month or "10–12" month category is an indicator of a potential future problem. Consider conducting in-process case reviews when cases are 4–6 months of age with the emphasis on completion of these cases. This will assist in reducing the percentage of overage cases.

    7. When claims are identified in the "Claims on Hand" column, consult Table 8.1 to identify claims which require prompt attention.

    8. There are additional uses for Table 36. A group manager should consult the territory manager on a regular basis to determine monitoring priorities.  (05-19-2010)
AIMS Table 4.1

  1. Table 4.1 is one of the most urgent of the AIMS tables. It must be worked within five days of receipt of the e-mail in the group manager's inbox. It must be dated and initialed by a group manager and a support staff member upon completion. Table 4.1 is a monthly report which lists returns in status codes 05, 06, 08-19, with statute dates that (according to AIMS) have expired or will expire within 180 days.

  2. The PCS also generates a similar statute control report (PCS Report 4–1).

  3. The ultimate responsibility for statute protection rests with a group manager. Accordingly, the Table 4.1 should be reviewed carefully to ensure that all prior year returns are properly accounted for on AIMS. IRM, Procedures for Working Statute Control Report, provides the necessary steps required to work this table. Also see IRM, AIMS Tables 4.1 and SC 4.0.  (05-19-2010)
Other AIMS Tables

  1. A description of other AIMS Tables may be found in IRM 4.4.27, Reports.  (05-19-2010)
NQRS and EQRS Reports

  1. The Examination Quality Measurement Staff (EQMS) reviews a statistically valid area level sample of closed SB/SE cases against the quality attributes. NQRS is a parallel system to EQRS and is used to collect data from EQMS reviews. NQRS data is used to provide quality scores for field and office examination that are included as a component of the Business Results measurement.

  2. The EQMS is responsible for providing quarterly reports of quality results at the area and national levels. NQRS provides various standard reports that can be accessed by users at the area, territory and group levels; however, data is not available below the territory level. Territory data is not statistically valid, but may be used as indicators in quality improvement efforts. Reports and data should be generated using 12-month periods in order to provide the best comparative analysis. NQRS trends and corrective measures requiring attention will generally be covered at territory meetings. Inquiries involving NQRS quality data/interpretation and requests for presentations should be made by the territory manager to the EQMS program manager.

  3. NQRS reports are additional tools to assist a group manager in the development of examiners and in the accomplishment of quality examinations. A group manager should involve examiners in identifying improvement opportunities for attributes that necessitate corrective action. This is a good forum for sharing expertise and experience among all examiners in a group.

  4. Group managers can secure current NQRS reports for their territory and Area from NQRS. Password requests to access the system should be submitted using an Online 5081, Automated Information System (AIS) User Registration/Change Request. Instructions for requesting passwords and information on reports are available on the Embedded Quality page at

  5. EQRS reports can be generated at the group level. EQRS provides a group manager the ability to generate reports on the results of the reviews that have been entered into the system. These reports can be used to:

    1. Share the results of individual reviews with employees;

    2. Compile the results of multiple reviews during a rating period for use when preparing an employee's mid-year review or annual performance appraisal provided that the reviews have been shared timely with the employee;

    3. Identify the top-scoring and bottom-scoring quality attributes within your group; and

    4. Compare the group results to territory, Area and National NQRS results.  (05-19-2010)
PCS Reports

  1. Partnership Control System Reports — PCS has a variety of reports available for use by Campus personnel, Area coordinators, and field groups. Refer to IRM 4.29.4, PCS Reports, for a list of the reports.

  2. Report 4–4, TEFRA One-Year Assessment Statute Date List — Lists all records on the PCS with a TEFRA one-year assessment date on the investor record. Key case information for linkage records are reflected on the report.


    It would be rare for an SB/SE group to have a TEFRA investor return in the group. Generally, investors worked in the group for non-TEFRA issues are routed to the Campus CTF after a partial assessment. The RA should coordinate closure with the Technical Services TEFRA coordinator if the RA issues a RAR for both the non-TEFRA and TEFRA issues so PCS controls can be removed before closure at the terminal.  (05-19-2010)
ERCS Reports

  1. IRM 4.7.6, Reports, provides information on all ERCS reports and their uses. The reports a group manager will generally use at the group level are listed below. See IRM 4.7.6 for additional reports.

  2. Statute Expiration Reports — IRM

    • Pending Statute Report — IRM

    • 895 Report — IRM

    • Examination Returns Control System (ERCS), Statute of Limitations - IRM 4.7.3

  3. Inventory Reports — IRM

    • Overage Report (IVL) — IRM

    • Status Report — IRM

    • Unassigned Inventory Report — IRM and Unassigned Inventory by TSC — IRM

    • Overage Requisition Report — IRM

    • Alpha IVL (Inventory Validation Listing) — IRM

    • Agent Analysis (4502) — IRM

    • Closed Case Report — IRM

    • In Transit Status Report — IRM

  4. Time Analysis Reports — IRM

    • High Time Report — IRM

    • Case Time Analysis — IRM

    • DET/Non-DET Analysis — IRM

    • Inactive Case Report — IRM

    • Daily Time Report — IRM

    • Status 12 with No Time Applied Report —IRM

  5. Monitoring Reports — IRM

    • Prior Year Report — IRM

    • Previously Closed Returns — IRM

    • Fraud Report — IRM

    • Returns by Source Code — IRM

    • Returns by Activity Code — IRM

    • Returns by Project Code — IRM

    • Work Awaiting Approval — IRM

    • Returns Related to a Specific Return Report — IRM

  6. Activity Code Count Report — IRM The Activity Code Count Report provides a count of all cases in an AAC by employee and activity code. This report also counts cases in status 10 and 12.  (05-19-2010)
Reports to be Worked by the Group

  1. Inventory Validation Listing (IVL) — Annually, each group performs a complete inventory validation retrieved from the statistical sample inventory validation system (SSIVL). The validation involves verifying the physical presence of returns and all AIMS data on all returns shown on the Inventory Validation Listing. IRM 4.4.16, Inventory Control, provides time frames and instructions for performing this validation.

  2. AIMS Weekly Update Report — This report will be generated only when a change occurs at Master File that affects a case in a group. The report informs a group of a change which has occurred on the taxpayer’s account or other information which a group needs to know. The report will reflect changes such as the filing of an amended return or a change in the taxpayer’s address. A description of this report, with instructions, appears at IRM, AIMS Weekly Update Reports.

  3. 424 Reject Register — This report is distributed weekly to all examination groups which are affected. The report informs a group manager that a request to establish a database and/or secure a return Transaction Code (TC) 424 has not been accepted at master file. It provides a code which explains why the account rejected. A taxpayer’s account appearing on the register will require follow-up, correction, monitoring, and/or re-input of the requisition.

  4. Statute Date Override Report — Lists returns when statute dates on ERCS and AIMS are different and ERCS has been changed to reflect the statute date on AIMS. For example, when the return was requested through ERCS, the normal statute date was generated. When the requisition became fully established on AIMS, the statute date reflected a late-filed return. ERCS is corrected to reflect the AIMS statute date.

  5. Unexplained Update Report — During the weekly comparison, the AIMS values for project codes, source codes, status codes, activity codes, aging reasons, claim amounts, and POD codes are compared to the ERCS values. If ERCS is updated from the information on AIMS, this report is generated. Special attention should be given to status code changes.

  6. Dropped AIMS Record Report — Lists records open on ERCS but reflecting no data on AIMS. The report is distributed to the group and must be worked. The report should be compared with AIMS and action taken to resolve the discrepancy.

  7. AAC Difference Report — The AAC Difference Report (ADIF) lists returns for which the AIMS and ERCS AAC’s differ and there are no pending updates or flags in the ERCS database to explain the difference. This report should be printed and worked weekly after the AM7109 file has been processed.  (05-19-2010)
Group Manager Expectations

  1. A group manager plays a vital role in accomplishing the mission of the Service. It is essential that all levels of management identify and prioritize expectations.

  2. A group manager develops the expectations for the group in conjunction with the territory manager. The territory manager will share the Area business plan, emphasizing the relationship of the Area business plan to the Balanced Measurement System and individual commitments. A group manager and territory manager will jointly identify opportunities, agree on goals, develop plans and jointly reach commitments on those plans. These expectations should include the performance management objectives in a group manager's Managerial Performance Plan. These expectations must come within the provisions of section 1204 of the Restructuring and Reform Act of 1998 (RRA 98).  (05-19-2010)
Performance Management System (PMS)

  1. PMS is the appraisal system used to evaluate Service non-bargaining unit employees. It consists of an ongoing process of setting expectations, monitoring, evaluating and recognizing performance. The Service's performance management system is designed to strengthen the linkages between performance management and the Service's mission, strategic business goals, business plans and the Balanced Measurement System.

  2. The performance agreement for a group manager consists of:

    • Responsibilities – representing the core values of the Service, what is important to us as an organization and common to all executives, managers and management officials

    • Commitments – distinct actions/desired results to be achieved during the performance period

    • Summary Evaluation – balances the Retention Standard, Responsibilities and Commitments to determine the final rating

  3. Objectives establish specific expectations for each group manager. They provide the basis for monitoring work, providing feedback on progress and recognizing accomplishments. A group manager's success in executing programs and implementing Service policies is reflected in their achievement of PMS objectives.

  4. Feedback on the progress toward these goals based on a group manager's actions and activities during the year will be obtained through the following:

    • Operational reviews

    • Periodic briefings

    • Mid-year assessments

    • Year-end PMS appraisal

  5. Refer to the Human Capital Office IRS Leadership Competencies website located at for a listing of core responsibilities and leadership competencies for group managers.

  6. A group manager is expected to prepare a self-assessment. For guidance visit the Human Capital Office, Performance Management website  (05-19-2010)
Federal Managers’ Financial Integrity Act of 1982 (FMFIA)

  1. FMFIA was implemented by the Office of Management and Budget (OMB) Circular A–123, Management Accountability and Control. Its purpose is to safeguard assets and to provide for compliance with the law. Refer to Resource Guide for Managers, IRM 1.4.2, Monitoring and Improving Internal Control, for a detailed explanation.  (05-19-2010)
Developing Group/Team Expectations

  1. A group manager's relationship with the territory manager is very important. The first step in establishing this relationship is to understand the territory manager’s expectations. A discussion with the territory manager regarding Operating Division, Area, and territory goals and the assessment of the current condition of the group is the best starting point.

  2. Open lines of communication are very important. A group manager should keep both the territory manager and the group informed of significant matters. Priorities during the year will change and the territory manager expects a group manager to be flexible. At the same time, a group manager should let the territory manager know the impact of shifting priorities on resources and programs. A group manager is expected to be a team player. This may result in sacrificing group goals to meet broader organization goals.

  3. After a group manager prepares expectations, ensure each is understood and strive to accomplish the expectations. Ensure that the provisions of IRM 1.5, Managing Statistics in a Balanced Measurement System, and section 1204 of the Restructuring and Reform Act of 1998 are met when setting expectations for the group or agreeing to those set at a higher level.


    IRM 1.5 provides guidance in using enforcement statistics. A group manager's expectations and evaluation of an examiner's performance must not be based on enforcement statistics. For example, a group manager should be concerned about the group’s no change rate. However, a group manager cannot establish a numeric goal/percentage for the no-change rate for examiners. Each examiner’s work and inventory needs to be assessed on its own merits.  (05-19-2010)
Communicating Expectations to Employees

  1. Communicating a group manager's expectations and procedures to employees is very important. The high-level definitions of the critical job elements are the same across all IRS occupations. The elements are:

    1. Employee Satisfaction–Employee Contribution

    2. Customer Satisfaction–Knowledge

    3. Customer Satisfaction–Application

    4. Business Results-Quality

    5. Business Results-Efficiency

  2. All of a group manager's employees have predetermined critical job elements and expectations are linked to these elements. For example:

    1. Element — Employee Satisfaction–Employee Contribution: an employee willingly helps other employees in the group to resolve a problem and shares knowledge with the group.

    2. Element — Customer Satisfaction–Knowledge: an employee identified a potential hardship on a refund hold and made a decision that the issue did not meet hardship criteria; an employee demonstrated knowledge to deal with the unanticipated situation and applied knowledge of IRS procedures and research materials to make the correct decision.

  3. A group manager should establish his/herself as the leader, but at the same time maintain an atmosphere of flexibility. Encourage employee engagement and discuss their ideas in an open forum. Once a decision is made, solicit mutual agreement and ensure understanding on the direction to be taken.

  4. New procedures and programs will require implementation. As the team leader, it is a group manager's responsibility to communicate any new practices to employees in a positive manner, using a partnership approach. The success of new procedures and programs rests on a group manager's ability to share and implement them in a positive manner. Remember, it is a group manager's responsibility to keep the morale of the group high by taking positive actions toward group activities and operations.

  5. Through open communication, a group manager has the best chance of gaining the group’s commitment to the organization’s goals and expectations. As a group manager prepares to set and communicate the expectations for the group, they should remember the style and methods of communication used by former supervisors. A group manager should use the effective communication methods used by others as a model. To be successful a group manager should be prepared to do the following:

    1. Share the area/territory goals;

    2. Share group expectations;

    3. Ensure employee understanding;

    4. Encourage employee input; and

    5. Solicit employee support.

  6. Remember, realistic, challenging goals should motivate and encourage a high level of performance by group employees. A group manager sets the tone for the group.  (05-19-2010)
Monitoring and Follow-up Procedures

  1. Once a group manager has established and communicated expectations to employees, monitoring systems should be established to assess progress. Achievements and accomplishments require planning, execution, and monitoring. Depending on what area a group manager is monitoring, feedback may be specific, written, or informal. Some key areas a group manager will monitor are: direct exam time, overage inventory, quality, and statutes. Occasionally, review the monitoring system to determine if it requires revision based on changing priorities and needs.

  2. After expectations have been established, shared, and a monitoring system is in place, establish follow-up procedures. The formality and structure of follow-up procedures will depend on the area involved.


    Abusive trust arrangement cases being monitored by Project Code 0233 may no longer be a priority area. Thus, discontinue running Project Code Report on ERCS. Share changes in priorities with examiners.  (05-19-2010)
Guiding and Evaluating Employees

  1. A group manager is responsible for guiding the activities of the group and evaluating employees. There are a number of management tools available. They include but are not limited to the following:

    • Group manager concurrence meeting (Field Exam only)

    • In-process case reviews

    • Workload reviews

    • On-the-job visits

    • Completed case reviews

    • Technical time report reviews

    • Ongoing observation

  2. Information obtained through the above reviews and visits must conform to the requirements of Document 11678, 2016 National Agreement - Internal Revenue Service (IRS) and National Treasury Employees Union (NTEU).  (05-19-2010)
Performance Appraisal

  1. The formal mechanism for providing written feedback about an employee’s accomplishments is Form 6850-BU, Bargaining Unit Performance Appraisal and Recognition Request, or Form 6850 NBU, Non-Bargaining Unit Performance Appraisal. The performance appraisal serves as a:

    • Record of performance;

    • Basis to provide further training;

    • Tool to improve performance;

    • Document for personnel actions; and

    • Rating of Record.

  2. Under the performance evaluation system, the first year of employment serves as a probationary period. During this time, each employee must demonstrate fully successful performance. This requires a group manager to closely monitor and review a probationary employee’s work.  (05-19-2010)
Service Policies, Procedures and Guidelines

  1. A group manager's evaluation of employee performance must conform to procedures detailed in the IRM and Document 11678, 2016 National Agreement - Internal Revenue Service (IRS) and National Treasury Employees Union (NTEU).

  2. Policies of the Service must be adhered to when evaluating performance. These policies prohibit the use of predetermined quantitative standards, enforcement results, or quotas to influence the evaluation of an examiner’s performance. See IRM 1.5, Managing Statistics in a Balanced Measurement System and section 1204 of RRA 1998. A group manager may look to the territory manager, Labor Relations, and Human Resources for additional direction and guidance.  (05-19-2010)
Appraisals and Documentation

  1. An efficient and effective employee appraisal depends on a group manager's active involvement and timely direction. Fair and balanced feedback is essential to maintain and improve skills.

  2. Keep an employee’s overall performance in mind when a group manager discusses work and related activities. Timely inform an employee when some aspect of performance may negatively influence the next performance rating. Verbal notification must be followed by written documentation. A recordation is defined as a group manager’s written record evaluating an employee in a positive or negative manner. Recordation must be shared with bargaining unit employees within 15 work days of the time the group manager becomes aware, or should have been aware, of the event which it addresses. Document 11678, 2016 National Agreement - Internal Revenue Service (IRS) and National Treasury Employees Union (NTEU), Article 12, Section 9.

  3. A group manager's role as an instructor and evaluator is to assess the quality of the employee’s work and provide timely feedback and guidance. By maintaining documentation throughout the rating period, sufficient information will be available to prepare the annual appraisal. Remember that performance appraisals are used to give employees official feedback and need to be clearly and timely communicated. Refer to IRM 6.430.2, Performance Management Program for Evaluating Bargaining Unit and Non-Bargaining Unit Employees Assigned to Critical Job Elements (CJEs), for additional information  (05-19-2010)

  1. Employee recognition is designed to reward and recognize employees, either individually or as a member of a team or group, for their performance, adopted suggestion ideas, or other exemplary contributions to the Service's mission. Employee recognition may include monetary awards, time-off awards, honorary recognition (e.g., plaques, certificates, etc.), informal recognition items, or a combination. Listed below are some forms of recognition:

    • Performance Awards–See IRM 6.451, Employee Performance and Utilization

    • Quality Step Increase–See IRM 6.451.1.21

    • Special Act or Service Awards–See IRM 6.451.1.10

    • Manager's Awards–See IRM 6.451.1.11

    • Time-Off Awards–See IRM 6.451.1.14

    • Bilingual Awards–See IRM 6.451.1.12

    • Suggestion Awards–See IRM 6.451.1.13

    • Secretary of the Treasury Honor Awards Program–See IRM 6.451.1.17, e.g., Commissioner's Award, IRS Career Service Recognition Program, and Certificates of Recognition

    • Albert Gallatin Award–See IRM 6.451.1.18.

  2. For additional information on awards visit the Human Capital Office website located at  (05-19-2010)
Processing Awards

  1. Form 6850-BU, Form 6850-NBU, and Form 9127, Recommendation for Recognition, are used to process awards. See the Human Capital Office website located at for additional information.  (05-19-2010)
Employee Performance Files (EPFs)

  1. An EPF is a record of performance-related data maintained on an employee. EPFs must be established and maintained for all full-time, part-time, seasonal, intermittent, term and temporary employees expected to be employed at least 120 days in a calendar year.

  2. An EPF is a required file for each employee. A group manager is responsible for maintaining and assuring effective use of the EPF system by:

    • Establishing EPFs

    • Updating EPFs

    • Securing performance records/documents

    • Forwarding EPFs to the new group manager upon transfer or reassignment

  3. Each EPF must be clearly labeled as "Employee Performance File" , along with the employee's name and last four digits of their social security number, or, as an alternative, their SEID. Access to an EPF is limited to the employee, management officials with a need to know, and any representative designated by the employee, such as NTEU. EPFs should be kept in a locked cabinet, room, or other secured area.

  4. Information to be retained in the EPF includes:

    • Performance plan (critical elements and standards);

    • Form 6774, Receipt of Critical Job Elements and Retention Standard;

    • Annual appraisals, departure appraisals and ratings;

    • Any records of performance documentation such as workload reviews, case file reviews, job visitations, progress reviews, mid-year assessments and all appraisal forms, such as Form 6850, needed to justify a personnel action (e.g., promotion, award, furlough, or removal);

    • Records of performance counseling;

    • Rebuttal statements submitted by the employee;

    • Career Learning Plan;

    • Student employment work agreement;

    • Employee self-assessments.

  5. No documentation related to disciplinary or adverse action will be placed in an EPF unless such action was based on performance.

  6. All EPFs should be purged annually to remove documentation over four years old.

  7. If an employee leaves the Service, the EPF is sent to the servicing Transactional Processing Center (TPC). Contact the Area Labor Relations Office to identify the specific items that should not be sent to the TPC. Additional information can be accessed at

  8. Documents related to an employee's conduct, such as failure to file taxes, tardiness, or leave abuse, may be filed in a "drop" file which will be kept separate from the EPF. Documents should be sanitized for any items the maintenance of which is not consistent with the underlying purpose of keeping the record or in violation of federal law or regulations (e.g., date of birth).

  9. Additional information on EPFs can be found in:

    1. Document 11678, 2016 National Agreement - Internal Revenue Service (IRS) and National Treasury Employees Union (NTEU), Article 7; and

    2. 5 CFR 293, Subpart D;

    3. IRM 6.430.2, Performance Management Program for Evaluating Bargaining Unit and Non-Bargaining Unit Employees Assigned to Critical Job Elements (CJEs).  (02-03-2015)
Group Manager Concurrence Meeting (GMCM) for Revenue Agents

  1. The GMCM is an opportunity for the group manager and RA to discuss the scope and depth of the examination, as well as the mutual commitment date (MCD). Group manager involvement in the early stages of an examination results in fewer delays, increased efficiency and higher quality cases.

  2. The GMCM should occur within 30 business days following the completion of the initial appointment. The GMCM may also be conducted prior to the initial appointment, for example, when the taxpayer or representative is procrastinating and has rescheduled the initial appointment multiple times.

  3. The RA should schedule the GMCM meeting as soon as the date of the initial appointment is scheduled.

  4. GS-12 revenue agents and below are required to use the GMCM.

  5. GS-13 revenue agents are encouraged to utilize a GMCM in order to provide updates on cases and obtain guidance from managers.

  6. At a minimum, the RA should be prepared to discuss:

    • The initial appointment meeting and MCD;

    • Accomplishments and planned actions for completing the case;

    • Issues currently identified;

    • Required filing checks;

    • Location of the audit work; and

    • Concerns or barriers to closing the case.

  7. The GMCM should be documented on the GMCM lead sheet (#115).

  8. The GMCM can be evaluative or non-evaluative. If the GMCM is evaluative, the manager should consider rating the following EQRS quality attributes:

    1. Attribute 100, Protection of Statute of Limitations

    2. Attribute 101, Pre-Plan Activity

    3. Attribute 111 - LUQ After Pre-Plan (Other than Income)

    4. Attribute 112, Required Filing Checks

    5. Attribute 114, IDR (Information Document Request)

    6. Attribute 300, Exam Income Determination

    7. Attribute 405, Interpreted/Applied Tax Law Correctly

    8. Attribute 440, Audit/Compliance Interview

    9. Attribute 502, Workload Management

    10. Attribute 509, Time Charged

    11. Attribute 510, Time Span

    12. Attribute 707, Workpapers Support Conclusions

    This list is not meant to be all-inclusive, but rather to provide a starting point for a GMCM evaluative review. The group manager should use their judgment to determine which quality attributes are most applicable. Refer to Document 12354, Field Compliance Embedded Quality, Field and Office Examination Job Aid, for points to consider.  (05-19-2010)
In-Process Case Reviews

  1. An in-process case review is an opportunity for a group manager to be involved in an examination while the case is ongoing. The involvement may be extensive or may be limited to a very specific part of the examination. Some areas a group manager may wish to consider are:

    1. Determining overall examination abilities;

    2. Training in a new or unique issue;

    3. Developing accounting and/or auditing skills;

    4. Observing communication skills;

    5. Assisting in the proper development of technical issues;

    6. Determining and/or improving proper time utilization;

    7. Reviewing and/or improving workpaper documentation;

    8. Determining scope and depth of examinations;

    9. Improving your knowledge of certain industries and/or issues;

    10. Observing interview techniques and offering constructive feedback; and

    11. Providing assistance with overage cases

  2. Completion of in-process reviews should be annotated in the case file on Form 9984, Examining Officer’s Activity Record.

  3. Listed below are a few of the EQRS quality attributes that lend themselves to being rated in an in-process case review. This list is not meant to be all-inclusive, but rather to assist a group manager in this particular type of case review. A group manager should use their own judgment to determine which quality attributes are most applicable for a specific review.

    1. Attribute 101, Pre-Plan Activity - Were the pre-plan activities appropriate for the case?

    2. Attribute 300, Exam Income Determination- Were the minimum tests performed?

    3. Attribute 440, Audit/Compliance Interview - Were interviews effective and information obtained to understand the taxpayer/business operations?

    4. Attribute 405, Interpreted/Applied Tax Law Correctly - Were the proper techniques used, issues properly developed and tax law applied correctly?

    5. Attribute 408, Civil Penalty Determination - Was the assertion or non-assertion of penalties correctly considered, computed and documented?  (05-19-2010)
Workload Reviews

  1. Workload reviews will give a group manager the best overall picture of each examiner’s work and activities. A good understanding of the employee's work is necessary for evaluating performance, providing direction, and deciding when a group manager should become more involved in specific examinations.

  2. Workload reviews should foster open and honest interaction between a group manager and employees; therefore, it is essential that a group manager discuss areas where there is above-average performance as well as areas that require improvement. Agreed actions and directions provided during the review should be noted in the workload review documentation and a comment placed on Form 9984, Examining Officer’s Activity Record, that the case was reviewed as part of a workload review.

  3. Workload reviews should be timely summarized in writing, addressing the quality attributes and as many of the job elements as practical. The workload review feedback should be timely discussed with the employee in person. The meeting to discuss the workload review should occur within the first few days after the review is completed to achieve the most value.

  4. Workload reviews are valuable management tools; therefore, timely follow-up to determine if the agreed-upon actions have been completed is very important.

  5. Listed below are a few of the EQRS quality attributes that lend themselves to being rated in a workload review. This list is not meant to be all-inclusive, but rather to assist a group manager in this particular type of case review. A group manager should use their own judgment to determine which quality attributes are most applicable for a specific review.

    1. Attribute 408, Civil Penalty Determination - Was the assertion or non-assertion of penalties correctly considered, computed and documented in the workpapers?

    2. Attribute 510, Time Span - Were timely actions taken?

    3. Attribute 502, Workload Management - Was work appropriately and logically planned through the use of a planning calendar? Were appointments and follow-up work appropriately scheduled? Was work appropriately prioritized?

    4. Attribute 707, Workpapers Support Conclusions - Was there a clear audit trail? Were techniques and conclusions documented in the workpapers? Were relevant workpapers included in the file?  (05-19-2010)
Compare Group Controls with Examiner's Inventory

  1. Begin the workload review by securing a list of all returns assigned to the examiner. With ERCS, the inventory list can be sorted by several different categories, including but not limited to priorities, status codes, days in process, and activity codes. The review can be limited to priority work and overage cases, or a complete review of the examiner's inventory including status 10 work. See also IRM, ERCS Reports, of this chapter for a list of reports that may be useful when conducting workload reviews.

  2. All cases assigned to the examiner should be available and matched against the 100% IVL listing during the workload review. Inspecting all cases available will identify "copies of returns" and years which are being worked but are not controlled on ERCS/AIMS. It will also identify potential "missing" or reassigned returns where the ERCS controls were never properly reassigned or closed.  (05-19-2010)
Items to Address During the Workload Review

  1. Items to address during a workload include but are not limited to the following:

    • Adequacy of inventory;

    • Priority work;

    • Cases in process for extended periods of time;

    • Status 10 inventory;

    • Workload problems and delays;

    • Compatibility of work with employee's grade;

    • Specialist referrals;

    • Use of time; and

    • AIMS/ERCS controls  (05-19-2010)
Adequacy of Inventory

  1. The employee’s total inventory should be reviewed to determine if the employee has a good balance of work in process.

  2. A determination should be made as to whether inventory is balanced among cases in opening, active, and closing stages of the examination.

  3. The complexity of the cases in process should be considered.

  4. The total amount of priority work assigned to the employee and the time required for timely completion should be considered.  (05-19-2010)
Priority Work

  1. The group manager should review priority work areas including but not limited to: short statute cases, audit reconsiderations, reviewer's reports, request for information, collateral investigations, claims, informant claims for rewards, inadequate records, refund hold, and overage cases.


    The listing above may change depending on strategic program initiatives.

  2. A group manager should:

    1. Determine if priority work has been identified and scheduled.

    2. Determine if the highest priority work has been scheduled first.

    3. Determine when priority status 10 work can be started or if it should be reassigned or closed by survey.

    4. Determine if any barriers to closing exist for started inventory.  (05-19-2010)
Cases in Process for Extended Periods of Time

  1. A group manager should review cases in process for extended periods of time to:

    1. Determine if delays result from taxpayer relations, follow-up procedures, examination planning, or examination techniques.

    2. Determine if the employee has a pattern of keeping cases in process for excessive periods of time.

    3. Determine if the employee is experiencing difficulty recognizing and developing issues.  (05-19-2010)
Status 10 Inventory

  1. The cases that are not in process should be reviewed to:

    1. Determine if returns with the most potential are worked first.

    2. Determine if the employee initiates examinations or appropriately surveys returns.

    3. Determine if managerial approval should be required prior to the employee starting new cases.

    4. Determine if any case should be reassigned.  (05-19-2010)
In Process Inventory

  1. The cases that are in process should be reviewed to:

    1. Determine the progress of each case.

    2. Determine if the pre-examination plan is effective.

    3. Determine if risk analysis was conducted by the employee during the planning process (Field Examination only).

    4. Determine if mutual commitment dates are secured on cases in process with the taxpayer or representative (Field Examination only).

    5. Determine if the examiner's time charges exceed guidelines (preplan, interview, or closing activities) without managerial approval (Office Examination only.)

    6. Determine if the examination was conducted in a logical manner and appropriate examination techniques were used.

    7. Determine if fraud indicators were recognized and properly considered.  (05-19-2010)
Workload Problems and Delays

  1. Pinpoint specific actions which should be taken to improve the status of the examination and/or an employee’s work performance. These actions include:

    1. Prevent frequent cancellation of appointments by taxpayer or representative and suggest new approaches for scheduling appointments

    2. Correct deficiencies in pre-audit examination plans to eliminate substantial deviation

    3. Address any delays in securing records
      Curtail repeated contacts for piecemeal information;
      Address any taxpayer complaints regarding requests for information;
      Point out valid objections by the taxpayer which the employee has failed to consider;

    4. Address any problems and delays in the development of facts:
      Diversionary tactics by taxpayers and representatives to impede case development;
      Excessive time spent to develop facts, and research issues; and
      Complaints by the examiner concerning unreasonable taxpayers or representatives;

    5. Address any problems and delays in the development of issues:
      Lack of ability to recognize issues;
      Lack of ability to develop issues; and
      Lack of ability to use indirect methods or other examination techniques;

    6. Set target dates for completion of specific actions;

    7. Resolve unwarranted case closing delays;

    8. Require follow-up on unanswered requests for information;

    9. Follow-up on progress in fraud cases;

    10. Evaluate the tax potential of cases and determine if any compliance problems exist;

    11. Research specific technical issues;

    12. Review appropriate examination techniques; and

    13. Urge employees to reach decisions when there is enough information to do so.

  2. Review repeat cases from the last workload review to determine if the employee has followed the directions provided or previously agreed upon.

  3. Review cases inactive for a specified period of time.

    1. Identify the specific reason for no action or follow up by the employee.

    2. Identify and evaluate delays caused by the taxpayer or practitioner

    3. Determine if the employee consistently has inactive cases and why.

  4. Identify cases that require mutual agreement on additional work required and set target dates for completion.

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