25.25.12 Fraud and Referral Evaluation (FRE) Procedures for Return Integrity Verification Operations (RIVO)

Manual Transmittal

September 25, 2020

Purpose

(1) This transmits revised IRM 25.25.12, Fraud and Referral Evaluation Procedures for Return Integrity Verification Operations.

Material Changes

(1) IRM 25.25.12.3.1(3) Revised bullet list by updating exemptions to dependents per legislative change to suspend exemptions

(2) IRM 25.25.12.3.1(4) Revised to remove Process Status (PS) 55 and add PS 12, IPU 20U0424 issued 03-13-2020

(3) IRM 25.25.12.5 Removed from FRE processing due to work realignment

(4) IRM 25.25.12.9 Revised section to better define and outline treatment on Security Breach Leads

(5) IRM 25.25.12.10(2) Removed by the Department 1 external Leads Team, IPU 20U0424 issued 03-13-2020

(6) IRM 25.25.12.11.1(1) Revised to update Mailbox naming convention and clarify the leads are assigned to RIVO FRE Analyst

(7) IRM 25.25.12.12(3) Removed process status code 0 and 3 per change in Lead Research criteria

(8) IRM 25.25.12.13(2) Revised bullet list to clarify case building on State Leads

(9) IRM 25.25.12.18 Removed STARS as an obsolete process no longer addressed in FRE

(10) IRM 25.25.12.19(1) Revised to clarify use of PS70 for selections and PS28 for FRP cleared returns, IPU 20U0424 issued 03-13-2020

(11) IRM 25.25.12.20 Revised section to remove obsolete queries from bullet list and consolidated remaining process steps

(12) IRM 25.25.12.22 Added section for UNP 126 Process, IPU 20U0424 issued 03-13-2020

(13) IRM 25.25.12.23 Revised to correct the generic inventory control base from 1487322222

(14) IRM 25.25.12.23 Added section for End of Year Process, IPU 20U0424 issued 03-13-2020

(15) Editorial changes to subsection content based upon program realignment and removing or updating obsolete work processes, grammatical updates, and renumbering as needed

Effect on Other Documents

IRM 25.25.12 dated September 23, 2019 (effective October 1, 2019) is superseded. This IRM incorporates IRM procedural update (IPU) 20U0424 issued 03-13-2020.

Audience

Campus employees in Return Integrity Verification Operations

Effective Date

(09-25-2020)

Denise D. Davis
Director, Return Integrity Verification Program Management
Wage and Investment Division

Program Scope and Objectives

  1. Purpose: This IRM section provides guidance for Return Integrity Verification Operations (RIVO) employees who screen individual master file returns in the Electronic Fraud Detection System (EFDS) for possible identity theft and false income and withholding.

  2. Audience: The audience intended in this IRM is RIVO employees.

  3. Policy Owner: The Director of Return Integrity Verification Program Management (RIVPM) is the policy owner of this program.

  4. Program Owner: RIVPM is the program office responsible for oversight over this program.

  5. Primary Stakeholders: The primary stakeholders are Return Integrity Verification Operation (RIVO) and organizations that collaborate with RIVO

  6. Program Goals: Program goals for the program are in the Operations Guidelines as well as IRM 1.4.10 , Return Integrity Verification Operations Managers Guide

Background

  1. Return Integrity Verification Operations (RIVO) strengthens the integrity of the tax system by:

    • Protecting the public interest by improving IRS’s ability to detect and prevent improper refunds

    • Serving the public interest by taking actions fairly and appropriately to identify, evaluate and prevent the issuance of improper refunds

    • Helping taxpayers understand the refundable tax credits for which they are eligible

Authority

  1. Refer to the following:

    • IRM 1.2.1.5.10, Policy Statement 4-21

    • IRC 6402(a), Authority to make credits or refunds

    • IRC 6401, Amounts treated as overpayments

    • IRC 6404, Abatements of tax

    • IRC 6213, Requirements for a statutory notice, including math error authority

Responsibilities

  1. The Director of Return Integrity Verification Operations (RIVO) has responsibility for information in this IRM. Information is published in the IRM on a yearly basis.

  2. The Director of RIVO is responsible for the policy related to this IRM.

  3. The Manager of the Return Integrity Verification Program Management Policy and Analysis Staff (RIVPM PA) is responsible for ensuring this IRM is timely submitted to publishing each year.

Program Management and Review

  1. The program has reports to track the inventory, including receipts and closures.

  2. A quality control program is in place to review all processes to ensure accuracy and effectiveness.

Acronyms

  1. For a list of Acronyms used throughout Return Integrity Verification Operations (RIVO) see IRM 25.25.1.1.5, Acronyms.

Related Resources

  1. The related resources listed below may be utilized for account research and issue resolution. These related resources may be accessed through the IRS Intranet-Servicewide Electronic Research Program (SERP) site.

    • IRM 25.25, Revenue Protection

    • IRM 25.23, Identity Protection and Victim Assistance

    • IRM 21, Customer Account Services

    • IRM 2, Information Technology

    • IRM 3, Submission Processing

    • IRM 4, Examining Process

  2. The following IRMs should be used in conjunction with IRM 25.25.12:

    • IRM 1.1.13, Organization and Staffing, Wage and Investment Division.

    • IRM 25.25.1, Return Integrity Verification Operations Business Master File Procedures

    • IRM 25.25.2, Revenue Protection Screening Procedures for Individual Master File Returns

    • IRM 25.25.3, Revenue Protection Verification Procedures for Individual Master File Returns

    • IRM 25.25.4, Return Integrity Verification Identity Theft Return Procedures

    • IRM 25.25.5, General Correspondence Procedures

    • IRM 25.25.6, Taxpayer Protection Program

    • IRM 25.25.7, Automated Questionable Credit Program

    • IRM 25.25.8, Revenue Protection External Leads Procedures

    • IRM 25.25.9, Revenue Protection Prisoner Lead Procedures

    • IRM 25.25.10, Frivolous Return Program

    • IRM 25.25.11, Wage and Withholding Only (WOW) Procedures

    • IRM 25.25.13, Account Resolution for Integrity and Verification Operation

  3. IDRS restricted access accounts are accounts where a user must request special permissions to access the account through IDRS. Follow IRM 21.2.1.3.2, Authorized IDRS Access.

  4. The IRS formally adopted a Taxpayer Bill of Rights in June 2014. In 2015, Congress codified the Taxpayer Bill of Rights into law and charged the Commissioner with ensuring that IRS employees are familiar with and act in accordance with the taxpayer rights as accorded by the Code. See IRC 7803(a)(3), which refers to taxpayer rights afforded by other provisions of the IRC. Under these Code provisions, in general, taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak with a supervisor whenever quality service is not received. For additional information, refer to IRM 1.2.1.2.36, Policy Statement 1-236, Fairness and Integrity in Enforcement Selection; and the Taxpayer Bill of Rights at irs.gov; and Pub 1, Your Rights as a Taxpayer.

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Fraud and Referral Evaluation Overview

  1. The mission of the Fraud and Referral Evaluation Department (FRE) is to protect revenue by identifying and dispositioning returns which display patterns of fraud (including identity theft).

  2. The Department Manager, Fraud and Referral Evaluation Department (FRE), reports to the Program Manager, Return Integrity Verification Operations (RIVO).

  3. To accomplish the mission, the Fraud and Referral Evaluation Department staff:

    • Identifies and takes action on return inventory that may show patterns of fraud and identity theft as required to protect revenue, taxpayers, and the integrity of the tax system.

    • Receives, researches and processes information leads submitted from a variety of sources (i.e., external leads, industry leads, internal referrals, and prisons).

    • Supports the operation by providing analytical support of inventory processes and reporting.

Fraud and Referral Evaluation Pattern Matching Overview

  1. The Fraud and Referral Evaluation (FRE) Department was established to evaluate returns not selected into the workload for potential fraud and ID theft. Because data mining models and filters learn from past behavior, it is necessary to review non-selected returns so the models do not continue to reinforce themselves. More so, because of the rapid changes made by criminals and those attempting to defraud the government through its tax return system, current models and filters must consistently be updated and improved upon using know patterns. Many of the common fraudulent schemes have been identified and require constant observation and monitoring to prevent refund fraudsters from exploiting those known areas. Concurrently, the FRE Department must scrutinize and look at large sums of data in non-traditional ways (e.g., looking for the "Nulls" , using human behavioral patterns, and observing political events impacting the tax refund system), to identify any new and ingenious patterns that could result in the release of tax refunds to fraudsters.

  2. As these patterns change, FRE must also be able to quickly and robustly adapt/adjust. The FRE Department must operate without preconceptions and fixed notions, and instead think outside the box. FRE Analysts use a variety of techniques and tools, along with critical thinking and data attained from events taking place in the public, to create and update queries identifying any previously undetected fraud. FRE has an impact on reducing the number of external leads by catching them before refunds are released.

Pattern Matching Procedures

  1. Pattern matching is used to analyze returns en masse, not one by one. Utilize Discoverer to run assigned queries and adjust as applicable based on internal and external information.

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  3. Research query results to identify a pattern (this list is not all inclusive).

    Note:

    Utilize pre-refund and post-refund dates to assist in making determination of patterns.

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  4. Once a pattern has been identified:

    • Load/Import all selected returns into CASE. Selected returns must be in PS codes 0, 3, 10, 12, 32, or 47.

    • Push the return to PS 30.

      Reminder:

      When pushing returns to Process Status 30 utilizing Case, do not push returns already assigned an IDT treatment stream (e.g., PS 49/50) as it could possibly change the status of the return.

    • Run the IP PIN Query to ensure the taxpayer did not already use an assigned IP PIN.

    • Input in the EFDS return notes the duplicate buttons that applied to your pattern (e.g., Dup WW, Dup zip code, Dup IP, etc.)

    • Input a secondary EFDS note "RIVO FRE PATTERN" . The note must be on all returns pushed to PS 30.

    • Research may need to performed to verify the return if it indicates "Tribal Income" before selecting the return for inclusion in a pattern. See IRM 25.25.2.6(4) , Unsubstantiated Income and/or Withholding.

  5. Patterns obtained through discoverer queries can be researched on EFDS. Input Julian Date or Stop Refund Date in EFDS to identify pre-refund cases.

    Note:

    Don’t determine pattern of ID Theft from Current Year Return Spreadsheet only; research the Return Detail for a few returns prior to making a determination.

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  6. Research IP addresses based on the Average Refund, smallest to largest:

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  7. Look for additional patterns within original pattern and utilize Discoverer to identify additional returns:

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Process Status 30

  1. Process Status 30, also known as ACE/ADJ in the Electronic Fraud Detection System (EFDS), identifies returns that were manually selected for the Taxpayer Protection Program (TPP) treatment. These returns can be identified from Return Integrity Verification Operations screening inventory, Fraud and Referral Evaluation pattern matching, Criminal Investigation referrals, and other internal or external referrals.

  2. An Access database is used for monitoring process status (PS) 30 inventory. You may query using the following processes:

    • Identifies current PS 30 inventory

    • Identifies all DLNs in PS 49

    • Tracks all DLNs placed into PS 30 at End of Day

    • Identifies TC 971 AC 129 and AC 124 returns for the year

    • Identifies returns without the proper EFDS IDT note

    • Identifies the EFDS note captured for creating the model type

    • Identifies and creates e-mail by manager of incorrect note

    • Tracks all TC 971 AC 123 DLNs

    • Tracks all TC 971 AC 125 DLNs

Process Status 30 Selection Identification Procedures

  1. Identify new inventory in Process Status (PS) 30 using the disposition date:

    • Research for required Electronic Fraud Detection System (EFDS) note (RIVO FRE PATTERN, RIVO RSV IDT, etc.).

    • Determine if the return meets PS 30 criteria (not previously in the Taxpayer Protection Program (TPP), except for accounts containing a TC 971 AC 123 MISC field TPPRP or TPP Recovery).

    • Perform a “B 30” check (accounts that have been placed back into process status 30). The accounts on this spreadsheet must be checked on IDRS for TC 971 AC 124 or AC 129 to see if the return went through the TPP process. If there is no indication of prior TPP, set the return to be sent through the TPP process on the following Thursday. If there is an indication of prior TPP then send the “B 30” listing to management to have accounts removed from PS 30 and placed in the appropriate process status.

    • Provide feedback to managers if criteria are not met.

  2. For returns that meet the PS 30 criteria, determine the refund freeze process and initiate the appropriate freeze actions. Remove from PS 30 those returns not meeting the criteria.

    • Prepare batch freeze template for returns dispositioned to PS 30 after midnight the previous day up to the refund freeze cut off deadline, to generate TC 971 AC 134 and forward to Modernized Development and Delivery (MDD) contact

    • Identify refund returns that were unable to be stopped using the batch freeze template for refund cancellation using CC NOREF, see IRM 25.25.2.4, Stopping the Refund.

  3. Identify the appropriate TPP marker (e.g., TC 971 AC 124 or TC 971 AC 129), prior to the weekly master file cutoff deadline by taking the following actions:

    • EFDS return DLN is not posted - put on the template for the TC 971 AC 124

    • EFDS return DLN is posted

    If And Then
    1
    There is no TC 846 present
    Put on the template for the TC 971 AC 129
    2
    A TC 846 is present on the module
    there is an open RIVO refund cancellation IDRS control Put on the template for the TC 971 AC 129
    3
    A TC 846 is present on the module
    there is No open RIVO refund cancellation IDRS control Push return to PS 65 - input EFDS note "PS 30 REFUND LOST MOVED TO PS 65"

  4. Ensure the master file template is submitted to the server by the deadline and received by MDD.

Monitoring Process Status 30 Procedures

  1. The database is used for monitoring current year process status 30 inventory. Queries can be run on the following processes:

    • Identifies current PS 30 inventory

    • Identifies all PS 49 DLNs(current and historical)

    • Tracks all DLNs placed into PS 30 at End of Day

    • Identifies TC 971 AC 129 and AC 124 returns for the year

    • Identifies 29 cycles aged returns

    • Identifies returns without the proper EFDS IDT note

    • Identifies the EFDS note captured for creating the model type

    • Identifies and creates e-mail by manager of incorrect note

    • Tracks all TC 971 AC 123 DLNs

    • Tracks all TC 971 AC 125 DLNs

  2. Run Discoverer query "PS 30 Daily Inventory.DIS"

    1. Research for missing note

    2. Perform a "B 30" check (accounts that have been placed back into process status 30). The accounts on this spreadsheet must be checked on IDRS for TC 971 AC 124 or AC 129 to see if the return went through the TPP process. If there is no indication of prior TPP, set the return to be sent through the TPP process on the following Thursday. If there is an indication of prior TPP then send the "B 30" listing to management to have accounts removed from PS 30 and placed in the appropriate process status.

Taxpayer Protection Program (TPP) Suspense Expired
  1. Returns still in PS 30 after 29 cycles are reviewed weekly in the Age Out process. If the refund has been released, the return is re-filed. Those with "no response" where the refund is still holding are dispositioned to Scheme Tracking and Referral System (STARS), mirroring the PS 49 process.

Compromised Information Return Processing (IRP) Notes

  1. Run Queries for TPP compromised note process.

    • 1 QRY Prim SSN to Breach

    • 2 QRY SP SSN to Breach List

    • 3Appnd Prim Breach to Master

    • 4Appnd SP Breach to Master

    • 9DLNs Need IRP Note by load Date

    • TPP Comp Note Qry - run daily - add note to IRP “Compromised IRP Data - Do Not Release Based on IRP”

Limited Direct Deposit Refund Procedures

  1. New direct deposit rules began in January 2015 to limit the number of United States Treasury Tax Refunds to be deposited into a single financial account to 3. All subsequent refunds are automatically flipped to a paper check and issued to the address of record. The IRS simultaneously issues CP 53X, A Message About Your Request for an Electronic Deposit Refund, to the address of record, informing the taxpayer of the delay, inability to deposit the refund to the account as requested, and the issuance of the paper check.

  2. Accounts impacted by the new direct deposit rules contain the following:

    • A transaction code (TC) 841 for the original refund amount or split refund amount.

    • A Direct Deposit Reject Reason Code (DDRC) 49.

    • A TC 971 action code (AC) 850 with a DLN of "2827799999999Y" to flip the direct deposit refund to a paper check.

    • A TC 971 AC 804 with a MISC field of "CP 53X" .

    • A second TC 846 for the refund being issued as a paper check.

  3. For accounts where the paper check is returned to the IRS as undeliverable (TC 740) and appears on the Business Objects (BOE) Report, the Return Integrity Verification Operations (RIVO) take the following actions:

    • Update STARS to "DD" (multiple refunds) or "DR" (direct reject) as appropriate.

    • Update the STARS category to "7" .

    • After 60 days, query dispositions "DD" and "DR" in STARS and confirm the returned refund is still held on the account.

    • Confirm identity theft determination and reverse the account data using the Return Integrity Compliance Services (RICS) IDT Tool.

    Note:

    Any return rejected by the RICS IDT Tool is worked manually per IRM 25.25.4, Integrity & Verification Identity Theft Return Procedures.

  4. If CP 53X is returned as undeliverable, it should be destroyed as classified waste, see IRM 21.5.1.4.10, Classified Waste.

S- Freeze Rejects

  1. Monitor S freeze for 60 days. If the refund remains in the account push to scheme.

Security Breach Leads

  1. Security Breach Leads- The IRS receives notification of specific security breach incidents from various sources related to a data breach. This information is received from Electronic Products & Services Support (EPSS), Criminal Investigation and the Intuit software provider. The Fraud Referral and Evaluation (FRE) analysts will provide ongoing analysis of the information received and protect IRS revenue of potential identity theft returns through the referral process.
    Security Breach Lead Analysis:

    • Monitor returns filed for each lead for the current year

    • Monitor prior year client list for potential IDT

    • Monitor all Leads received in the prior year

    .

  2. Run Queries for TPP compromised note process.

    • 1 QRY Prim SSN to Breach

    • 2 QRY SP SSN to Breach List

    • 3Appnd Prim Breach to Master

    • 4Appnd SP Breach to Master

    • 9DLNs Need IRP Note by load Date

    • TPP Comp Note Qry - run daily - add note to IRP "Compromised IRP Data - Do Not Release Based on IRP"

Bank Leads

  1. Leads are external information and communications about questionable tax refunds identified by a variety of stakeholders, including: national banks, state banks, savings and loan associations, mutual savings banks, credit unions, financial institutions, brokerage firms, government and law enforcement agencies, state agencies, tax preparation entities and various other sources. Bank Leads may involve treasury checks, direct deposits/ACH, refund anticipation loans or checks, and pre-paid debit cards.

  2. Leads from financial institutions are voluntarily submitted through the External Lead Mailbox Process. Reference IRM 25.25.8.2 , Processing External Leads, for more information. The bank leads from this mailbox are imported into the "RICS Lead Management System" (LMS). These leads are all post refund returns. The FRE Bank Leads Program utilizes the lead data within the LMS to search for revenue protection and fraud trend identification opportunities.

  3. The FRE Bank Leads Program uses the lead information to identify revenue protection opportunities on additional questionable returns currently in the processing stream. The FRE Bank Leads Program also uses these leads to identify new fraudulent filing patterns and trends. New trends are monitored for additional activity. Any identified returns are assigned to the appropriate processing streams. New filter rule suggestions are periodically forwarded to the appropriate teams in RICS/RIVO for consideration.

  4. Lead Research

    • Review all returns for possible IDT using the bank leads obtained from the saved SSRS Report spreadsheet. Continue reviewing the remaining lead data for fraudulent filing patterns.

    • Review Lead data, including some or all of the following: SSN, Bank Account, IP address, e-mail address, name, and physical address.

    • Research Discoverer, IDRS, EFDS and other systems to conduct lead research and identify fraudulent return patterns.

    • Address Leads differently based on the particular scenario. Refer to the Bank Leads Desk guide for current query processes.

    • Run Discoverer queries daily based on identified lead fraud patterns.

  5. Lead Actions:

    • Disposition all possible ID theft returns to Process Status 30 (ACE/Adjustments) in EFDS. Input the following notes* in EFDS:
      Note 1: "RIVO FRE PATTERN"
      Note 2: Summit (‘extlds Bank Leads-[DISCOVERER QUERY NAME]”)

    • Update database status to "Closed" .

Electronic Return Originator Leads (ERO)

  1. Electronic Filing Identification Numbers (EFINs) and Preparer Tax Identification Numbers (PTINs) are vulnerable to identity theft, breaches, and hijacking. Some cases involve EFINs or PTINs established with identity victims' names and social security numbers (SSNs). Other cases involve EFINs or PTINs originally established by legitimate return preparers or practitioners and then misused by thieves in filing identity theft (IDT) returns. Yet other cases involve a compromised EFIN, under which the IRS receives both a bona fide return from the legitimate owner of the EFIN and an IDT return from a thief. Electronic Product and Services Support (EPSS) and Return Integrity Verification Operation (RIVO) have been working together to identify suspicious EFINs, research them, and inactivate them, when applicable.

  2. Abusive return preparers have been a problem for the IRS and for taxpayers for many years. These preparers prepare returns that contain fraudulent/abusive items (for example, income, withholding, dependents, and refundable credits). Abusive return preparers create a problem for the IRS because these returns cost the government revenue and cost the taxpayers money when they are audited. It is often difficult to discern the abuse, because some taxpayers collude with these preparers while others do not.

Electronic Filing Identification Number (EFIN) and Preparer Tax Identification Number (PTIN) Leads

  1. Suspicious EFIN, PTIN and Preparer information is received in a number of ways from numerous internal and external stakeholders. The most prominent method for receiving suspicious EFIN/PTIN leads is through the RICS/RIVO/FRE Fraud Leads mailbox. Leads are assigned to the RIVO FRE Analyst. The leads come in from EPSS, RAAS, RPO, Analysts, and sometimes from industry. The leads are assigned to an RIVO FRE analyst to research and make a determination on what action needs to be taken. The analyst checks the EFIN application on the Employee User Portal (EUP), the EFIN owners IDRS accounts, EFDS information, addresses, and Accurint for relevant information. Additionally, the analyst pulls the return information from EFDS along with the EFDS statuses and uses all this information to make a determination as to whether the EFIN should be inactivated.

  2. Lead Research

    • Determine if the lead needs to be imported

    • Import the lead to the database

    • Using all available research tools, make a determination on the assigned EFINs/PTINs.

    • Research all EFINs assigned to the participant.

  3. This research must be thorough, because it helps determine if the EFIN is using someone else’s stolen identity; if the good ERO is filing Identity Theft (IDT) returns; or if the EFIN has been compromised.

  4. The five main determinations that the RIVO FRE analyst can make are:

    • "Data Breach" indicates the intentional or unintentional release of confidential information. In ERO cases the released confidential information would be the ERO clients’ Personally Identifiable Information (PII).

    • "Application Misrepresentation" indicates that applications were submitted with the wrong owners/principals listed

    • "Compromised" indicates that an otherwise good ERO’s EFIN has been hijacked; the EFIN is being used by a third party to file returns. In most cases you’ll see good and bad returns coming through the same EFIN.

    • "EFIN filing IDT returns" indicates that a valid EFIN owner is filing IDT returns.

    • "IDT EFIN" indicates that an EFIN was established with a stolen ID and then was used to file IDT returns.

  5. Lead Actions

    • Forward your determination to the primary Management and Program Analyst for review. All documentation to support your determination to EPSS must be included in an Excel spreadsheet.

      Reminder:

      After the review is completed the program manager forwards the recommendation to BPL for review.

    • Update the FRE database with all required fields.

  6. Inventory Tracking

    • All the EFIN referrals from all sources need to be imported into the Leads Management database upon receipt. The inventory from the RAAS EFIN Tool will be included in the ERO Leads inventory and assigned one lead at a time
      Oldest date first
      Case status moved to "In Progress" – lead is being reviewed
      Case updated to "Completed" – lead is closed

      Reminder:

      There should not be more than one case assigned to an analyst at a time. Justification is needed, if multiple cases are open .

  7. Inventory time frames

    • Place the lead status “In Progress” for no longer than 24 hours and completed within 30 days of the received date; this includes all intake sources:
      RAAS
      EPSS/EPPM
      RICS (RIVO/BPL)
      CFAM
      RPO
      ISAC
      Other Ad Hoc Referrals

      Reminder:

      The goal of the program is to inactivate EFINs as soon as possible, protecting the practitioner and revenue. Leads over 30 days are considered aged. Justification is needed for any leads over 30 days and any leads “In Progress” for longer than 72 hours.

Abusive Preparer Program Leads

  1. Return Integrity Verification Operations (RIVO) has implemented a streamlined referral process to direct Abusive Preparer cases to the Lead Development Center (LDC) and to the Return Preparer Coordinators (RPCs) office using specified criteria. This includes Exam functions that focus on the fraudulent items indicated in the referral.

  2. There is a process to refer these abusive preparer cases to LDC and the RPC. After thoroughly researching and developing the referrals, refer only the most egregious preparers. If the criteria is not egregious enough to warrant a referral, forward all leads to the Return Preparer’s Office (RPO) to be filed as a complaint only.

  3. RICS/RIVO/FRE employees are in a unique position to identify these abusive preparers. This identification supports their mission of fraud detection and revenue protection. In addition, they have access to return data that is not generally available elsewhere in the IRS. This frequently results in identifying pockets of questionable returns that are prepared by the same individual and allows for case building on preparer fraud not captured elsewhere.

  4. A FRE Point of Contact (POC) is assigned at each site. A POC review must be completed before any lead can be referred to the Industry Fraud Leads Mailbox. Forward all referrals to the FRE POC’s e-mail address with a CC to their back up.

    Note:

    If the POC disagrees with the research or determines additional case building is required, the template is rejected back to the initiating employee with a description of the reject reason.

    If ... Then ...
    The lead is a potential ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send an e-mail to the FRE mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"
    The lead is a potential ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send an e-mail to the FRE mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"
    The lead is a potential ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send an e-mail to the FRE mailbox ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡"

  5. Program Case Research:

    • Determine if the lead needs to be imported

    • Import the lead into the database

    • Using all available research tools, make a determination if the case is Abusive or Not

    • Verify the CY return totals; > 500 returns for referral to the LDC or < 500 returns referral to the RPC

    • Double check database to make sure the EFIN is still active. (if EFIN is inactive, review the comments to see if a referral is warranted)

    • Consider all EFINs associated with the firm being researched. Make a referral to the LDC/RPC for the firm, not an individual PTIN

    • Capture everything the firm filed, including Paper and ELF

    • Check for open investigations in CI or Civil. Check everything in PS 29 for schemes

    • Pull CY and PY return data using the EIN and/or PTIN and use those DLNs as the condition on the Preparer Query

    • Check for confirmed IDT. If there is any, we would send the case to EPSS for IDT instead of referring it as an abusive preparer

    • Fill out all required fields on the Abusive Preparer Program Template and complete a recommendation spreadsheet (LDC ONLY)

  6. Refer the abusive preparer cases to the LDC (for abusive preparers filling more than 500 returns) and to the RPCs (for abusive preparers filling fewer than 500 returns) and to the RPO, if the referral is not egregious enough and needs to be filed as a complaint only.

  7. Lead Actions:

    • Forward your recommendation to the primary ERO Leads Management and Program Analyst for review. All documentation to support your recommendation to the LDC/RPC/RPO must be included in an Excel spreadsheet or template provided.

    • Forward the complete review to the program manager who will forward the recommendation to the LDC, RPC, or the RPO for resolution.

    • Update the FRE database with all required fields accordingly

Industry Leads

  1. As part of the Security Summit Initiative, lead reports are received from American Coalition of Taxpayer Rights (ACTR) members as well as other participating software partners. The returns referred as part of these lead reports are reviewed and analyzed for possible identify theft characteristics. If a return is thought to be questionable, it is processed accordingly by the IRS to ensure revenue protection. Higher level analysis is then performed to aid in identifying additional returns and any filing patterns or trends that can be used in the future.

  2. Industry Lead files are received on the server through a secure data transfer process. A lead consists of two separate files: 1)a Control file and 2) a Data file.

    • Control File – (txt format) – this file contains company contact information pertaining to the data file.

    • Data File – (xml file format)* – this file contains the actual data records.

  3. Lead Research

    • Import the lead to the database

    • Process the Industry lead file.

    • Review all returns in a workable process status (with stoppable refund stop dates) to identify possible identify theft returns (pattern matching).

    • Disposition all returns identified as possible ID theft returns to Process Status 30 (ACE/Adjustments) through Case in the Electronic Fraud Detection System (EFDS) with the following notes:
      "extlds Industry Leads OL"
      "RIVO FRE PATTERN"

    • Update LM - FRE with all required fields

    • Update the Lead Database Status to "Completed"

    • Move the lead files to the appropriate leads folder.

State Leads

  1. The State Leads Program is a program within RICS that receives referrals from various State taxing agencies relating to fraudulent/IDT returns being filed at the State level. RICS uses these leads to identify questionable returns being filed at the federal level and to identify new fraudulent filing patterns and trends.

  2. Lead Research

    • Review and format the state lead file so that it can be imported into the Lead Management FRE database

    • Import the lead to the database

    • Review all returns that are not in a current ID theft Process Status (with stoppable refund stop dates) to identify possible identify theft returns (pattern matching)

    • Update LM - FRE database with all required fields

    • Disposition all returns identified as possible ID theft returns to Process Status 30 (ACE/Adjustments) through Case in the Electronic Fraud Detection System (EFDS) with the following notes: "extlds State Leads Closed" , "RIVO FRE PATTERN"

    • Update the lead status to "Completed"

    • Move the lead to the appropriate leads folder.

Office of Child Support Enforcement (OCSE)

  1. The Office of Child Support Enforcement (OCSE) assists with the Treasury Offset Program (TOP) Offset Reversal process by supplying a file of social security numbers associated with accounts where TOP offsets were generated from suspect returns (possibly not filed by the true taxpayer). The file OCSE delivers is missing the tax period associated with the TOP offset which the Tax Examiners (TEs) need in order to complete the TOP Offset Reversal Process.

  2. Research is completed with the use of batch tools and databases to find the following information:

    • The tax period associated with the TOP offset

    • The IRS determination:
      Yes: All funds requested back - this is not the true taxpayer
      No: No funds requested back - the offset is valid

  3. Lead Research:

    • Create the query

    • Research the accounts

    • Make the yes/no determination

    • Send the determination back to OCSE

General Agreement on Tariffs and Trade (GATT) Procedures

  1. Identify possible General Agreement on Tariffs and Trade (GATT) returns:

    • Check for prison indicators (If FS 2 - verify both are full-time prisoners)

    • If prisoner indicators are present input TC 971 AC 199 with MISC "GATT EFDS"

    • Input a TC 971 AC 134 daily on all full-year prisoner returns loaded the previous day that claimed a refundable credit

  2. Identify returns meeting GATT criteria:

    • Review re-file queue (PS28) daily for full-year prisoner returns with verified good wages and withholding and a refundable credit

    • Query returns in re-file that have the "GATT EFDS" note

    • Review GII IMFOLT for FS2 to determine if both were full-year prisoners (exclude if one spouse had good income and was not incarcerated for the entire year)

    • Update STARS to CATG "8" Disposition "TT"

Withholding Only Work (WOW) and Automated Questionable Credit (AQC) Procedures

  1. Run CATG 12/15/16/17 DDb reports weekly.

Master File Tax (MFT) 32 Reversal Procedures

  1. The Master File Tax (MFT) 32 Reversal Process monitors accounts to ensure returns moved to MFT 32 (due to possible ID Theft) post back to MFT 30 after authentication of the taxpayer. FRE monitors the accounts after the actions are taken per IRM 25.25.6.7.1, MFT 32 Reversal Procedures and IRM 3.28.4.5.10, Returns on MFT 32. The inventory for this process is received through the Automated Aged Listing (AAL) Spreadsheet (SS) under control 14873 and worked through automation. Inventory that needs to be worked manually is assigned to RIVO Tax Examiners.

  2. FRE process:

    1. Build Combined – Automated Age Listing (AAL) File

    2. Build Combined – Review File and separate into Files below:
      14873 – Review File: inventory to perform automation on before assigning to TEs
      Error Correction (EC) – Review File: corrections needed for control bases

    3. Separate 14873 – Review File into Buckets and work Review Files
      Bucket 1 - Return moved back to MFT 30, refund NOT held or there is a balance due
      Bucket 2 - Return moved back to MFT 30, refund held, income needs verification
      Bucket 3 - Return moved back to MFT 30, refund held, income does NOT need verification
      Bucket 4 - Return NOT moved back to MFT 30, refund held, return needs to be reprocessed
      Bucket 5 – Return moved back to MFT 30, refund held, unpostable needs to be posted in

    4. Update STARS Disposition on returns FRE closed out/released refund

    5. Prepare and submit weekly report

Clean up

  1. Performed annually to ensure all returns are in a process or closed.

Process Status 28

  1. Run Discoverer query weekly

    • Input reversal for TC 971 AC 134, that were not input systemically

    • Input refund release for tool work

    • Send manual work to Team manager weekly

Frivolous Return Program (FRP)

  1. Weekly Reports: Run the Update STARS disposition query:

    Input total PS 77, receipts, closures, IDT and other PS onto report for DM located FRE FRIV Inventory Report Folder

    • Screen through the returns

    • Input into appropriate cases

    • Leave EFDS notes

    • Input TC 810s

    • Screen all incoming PS 77. Move returns that are selected for Frivolous Return Program (FRP) treatment to PS 70 as a FRP select. Non selects are to be refiled as PS28 and FRP cleared .

    • Create CCREQ via EITCRA to open controls to FRP teams on all PS 70 selects

      Note:

      If in another process status, move out and deliver work via electronic listing to the FRP teams once a week.

      • Screen through the returns

      • Input into appropriate cases

      • Leave EFDS notes

      • Input TC 810s

      • Screen all incoming PS 77. Move returns that are selected for FRP treatment to PS 70 as a FRP select. Refile non selects as PS28 and FRP cleared .

      • Create CCREQ via EITCRA to open controls to FRP teams on all PS 70 selects

        Note:

        If in another process status, move out and deliver work via electronic listing to the FRP teams once a week.

  2. Weekly Reports: Run the following FRP Database (SQL) queries:

    • Complete listing from all FRP teams with delete and update queries related to back-end Db change request by teams.

    • Run Unmatched Linking Field Query.

    • Run query "dbo.Over $40K’" query for Erroneous Refunds over $40K. Filter results for refunds over $40K or that add up to 40K for the same taxpayer and e-mail to RIVPM PA, Collection ATAT, FRP Coordinator, and FRP Revenue Agent.

    • Start Manual Assessment or Jeopardy Levy process.

    • Run stored procedure "dbo.usp_FRPATAGLANCE_New" _ , with last Week Ending date.(Saturday). This stored procedure will pull data for completion of both BBTS and FRP at a Glance.

    • Input receipt and closure numbers for each FRP Program Code into BBTS using stored procedure numbers pulled from "dbo.usp_FRPATAGLANCE_New_ ."

    • Run "DS/R5XGB.New TP" query.

    • Run TINS through GII CC INOLES.

    • Compare names entered into the database to ensure integrity of taxpayers being entered are correct and disclosure errors are identified.

    • Send error listing to managers/leads to correct and return back to FRE.

    • Complete "FRP at a Glance" Inventory Report and save to the FRP SharePoint.

    • Run "DS/R5XGB.3175letters" query to identify all new taxpayers added to the Database to issue their one-time warning.

    • Review results for errors. If there are errors, an e-mail is sent to the managers/leads for review.

    • Send letters en masse via CDEX.

    • Import successful letter sent results into FRP database.

    • Run "dbo.usp_qry3175_soft_letter_update" stored procedure and input letter date.

      Note:

      If needed information is missing or incorrect, an error list is sent to the FRP Clerk Team Lead and Manager. The manager/lead is expected to send it back once corrected, so letters can be issued by the analysts.

    • Run "dbo.3176 letter purge 60 days" query to identify all cases in the FRP which have had the pre-notification letter issued to the filer and the 60-day time to comply has expired. Send query results to managers and DM identifying which cases can be moved forward in the pipeline.

    • Run "dbo.IAT3176" query which identifies all pre-notification letters issued the prior week to install L3176 trigger date on the back end (BE). Run "dbo.usp_qryUpdateL3176andfollowUpDate" stored procedure in FRP Master to update the suspense timeframe. Input date.

    • Run "dbo.CI" query to identify cases within FRP inventory that have Criminal Investigation involvement. Send results and input actions requested to be taken by FRP to seek approval from CI to continue or yield to FRP processes. Update database with CI approval or denial to continue with case. Update response date and e-mail technicians with CI’s determination.

    • Run "returns2proc" query to pull cases the FRP sent to processing. Run results through GII to identify posted TC 150 returns. Send results to the Clerk Team Manager/Lead.

    • Run "dbo.TOP 20 oldest cases" query. Export results to Excel, creating a spreadsheet for each Program Code. Perform VLookup from prior week’s results, highlight the cases in yellow that are revolving from the previous report. Sent to all FRP managers and DM.

    • Run "FRP 1099-MISC/F56" query. Search results for all TINs that have been referred from FIRE, Entity, or Funny box. Run TINs through GII on all refundable years to identify if there is an E freeze on the account.

      Note:

      If no E freeze, run GII to install an E freeze to all refundable years. Save TINS and monitor for returns to come in. Once the return is in, screen for frivolous criteria and deliver to the FRP teams.

  3. Monthly Reports

    • Run "Create Purge Issues query" in FRP. Run Pull Purge Listing query in FRP.

    • Run results through GII to identify any cases in a Balance Due, Open AIMS, CI freezes, Purge, or Credit on account over 10K/lead review.

    • Import Balance Due spreadsheet into FRP .

    • Run "Close Comp Run 1st" query (This updates the issues to Balance Due). Run "Close Update Comp" query (This updates the purge date and closes the issue).

    • Import Open AIMS spreadsheet into FRP.

    • Run "Close Comp2 Run 1st" query (This updates the issues to open AIMS). Run "Close Update Comp2" query (This updates the purge date and closes the issue).

    • Import the Z freeze spreadsheet into FRP .

    • Run "Close Comp4 Run 1st" query (This updates the issues to open AIMS). Run "Close Update Comp4" query (This updates the purge date and closes the issue).

    • Import Purge spreadsheet into the FRP database.

    • Run "Purge RUN 1st" query (This updates the issues to purge).

    • Run "Update Purge Execute" query (This updates the purge date and closes the issue).

    • Send for lead review to the Managers in the FRP team. Run "dbo.DeleteRecordsEligiblePurge" query using SSMS. Run "dbo.IDT DB Removal" via SSMS

    • Input Run IDT "DB REMOVAL" in FRP. Import spreadsheet into FRP. Save results into Excel and import to tbl.Match-SSMS

    • Run stored procedure "dbo.usp_IDT_Delete_Query" to remove all confirmed IDT entities and related issues and history from the FRP Master Db.

    • Run "“CI " query in FRP to identity cases we haven’t received a response on in over 30 days. E-mail results to CI coordinator indicating 30 day follow up.

  4. As Needed Reports:

    • Run query in FRP to identify all GECS/ITG cases and e-mail them to teams and DMOS.

    • Automate frivolous Correspondence by running the multiple queries, updates and Stored Procedures on SSMS.

    • Run query on data set contained within automation to identify cases that do not have preventative TC 810s installed on refundable years.

    • Run TINs through GII and install TC 810s en masse on warranted TINS and years.

    • Run "KDICALL" query and perform a GII INOLES run to build listing for the DPC.

    • Input preventative freeze on case spreadsheets received from all campus funny box coordinators.

    • Run "FRIV EFT CHECK FRP" query for the entire month. Send number of checks to Collections ATAT and DMOS.

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Manual Return Treatment (Not in EFDS)

  1. Certain RRP Non-IDT Return Selections are not loaded into EFDS. Since EFDS is the primary platform by which potentially fraudulent returns are screened, an established process identifies this inventory and provides an opportunity for RIVO teams to manually review outside of EFDS and to take necessary action on accounts in furtherance of the revenue protection strategy.

  2. Pull these cases for screening en masse. Cases that do not require manual review will have the screening and refunds released en masse. Any cases that need to be screened manually will have control bases opened and assigned to the TE team for screening.

  3. The tax examiners will release any cases that are verified and close the control bases. All cases that are not verified will be included in the normal manual referral process to AQC, WOW or EXAM.

  4. Tax examiners will send potential ID theft referrals to FRE. Cases will be added to a spreadsheet to be included with the 971/129 Thursday run to add them to the TPP process.

  5. FRE will open a monitoring control base to 1485600001 with the activity MAN2TPP. and monitor the control for 29 cycles for the age out process.

Unpostable (UNP) 126 Process

  1. Run Posting Bypass files through IAT

  2. Close all post file errors

  3. Input totals on Unpostable (UNP) 126 Analysis Spreadsheet

  4. Send spreadsheet to management

End of Year (EOY) Process

  1. End of Year (EOY) is any data unresolved in EFDS or that comes into RIVO during EFDS downtime.

  2. FRE captures the EFDS read only (The One Long Day) snapshots for all movement in EFDS.

  3. At EFDS start up the next year the fraud or ID theft returns will be mass pushed into scheme and into the manual referral process.

  4. For PS 30/49- FRE tracks the TPP with the PS 30/49 databases. FRE mass pushes, performs IRP verifications, inputs manual referrals and releases refunds based on data pulled from the TPP database or PS 30/49 queries.

  5. IDT in PS 30/49 is updated in PS 30/49 DB and mass pushed when EFDS comes up. FRE runs all IDT through the IDT tool on posted tax returns.