3.28.2 Information Referral Process for Form 3949-A

Manual Transmittal

June 21, 2018

Purpose

(1) This transmits new IRM 3.28.2, Special Processing Procedures, Information Referral Screening Process for Form 3949-A, Information Referral.

Material Changes

(1) This Internal Revenue Manual (IRM) will include procedures for special processing instructions to determine if the submission of Form 3949-A, Information Referral, contains a specific and credible tax issue or if it is purely speculative in nature. The procedures will include research to identify the authenticity of the Form 3949-A to determine if further review is required.

Effect on Other Documents

None

Audience

Input Correction Operation personnel, Wage and Investment, Submission Processing Fresno Campus

Effective Date

(06-21-2018)


Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. Purpose:. This Internal Revenue Manual (IRM) section contains instructions for procedures of the technical review process for routing and intake of the Form 3949-A, Information Referral.

    1. Describes the research involved for each pre-determined sort of the Form 3949-A requiring Integrated Data Retrieval System (IDRS) research based on the request of the receiving Business Operating Division (BOD).

    2. Establishes the BOD requirements to allow research and authenticate the credibility of the submission of Form 3949-A.

  2. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing Input Corrections Operations (ICO) Notice Review Tax Examining Technician personnel located in Fresno.

  3. Policy Owner: Director of Submission Processing.

  4. Program Owner: The Post Processing Section of the Specialty Programs Branch in Submission Processing.

  5. Primary Stakeholders: The primary stakeholders are the Tax Examiners (TEs) who rely on the IRM for accurate processing procedures related to the screening process of Form 3949-A. Other areas that may be affected by these procedures include:

    • Large Business and International (LB&I)

    • Return Preparer Office (RPO)

    • Small Business/Self Employed (SBSE) Field Exam

    • Small Business/Self Employed (SBSE) Campus Exam

    • Wage and Investment (W&I) Campus

    • Specialty Tax

    • Tax and Government Entities (TEGE)

    • Image Control Team (ICT)

    • Exempt Organization (EO)

    • Criminal Investigation (CI)

    • Collection Policy

    • Frivolous or Tax Avoidance

  6. Program Goals: To reduce the number of mis-routing or routing out non specific or non credible tax violation allegations that do not warrant the submission meets examination standards of other Business Operating Divisions (BODs).

Background

  1. The production of this IRM is to provide instructions to screen individual and/or business allegations on Form 3949-A for factual potential tax violations. The IDRS research involves tax module analysis to warrant the submission meets examination standards based on criteria submitted from the receiving BODs. This BOD support will reduce the number of unfounded allegations and mis-routes. Input Correction Operation, Notice Review Tax Examiners in the Fresno Submission Campus will conduct the research.

Authority

  1. Title 26 of the United States Code (USC) 7801 and Code section 6103.

Responsibilities

  1. Submission Processing, Specialty Programs Branch, Post Processing Section is responsible for the content in this IRM. The IRM Author will make changes as needed and revise entire content once a year effective August 1st of each calendar year.

  2. The Director of Submission Processing is responsible for policy related to this IRM.

  3. The Post Processing Section manager is responsible for ensuring the IRM is timely submitted to Publishing each year.

Program Management and Review

  1. Managers are responsible for ensuring quality reviews are performed and recorded in the Embedded Quality for Submission Processing (EQSP) System for Information Referrals screened by the tax examiners. See IRM 3.30.30.

  2. Managers will monitor referrals returned to Image Control Team (ICT) and record the date, quantity, area and reason the referral was returned.

  3. Managers must ensure internal control responsibilities are carried out in relation to Separation of Duties. Key duties and responsibilities in authorizing, processing recording, reviewing transactions and handling related assets (e.g., preparing inventory reports), must be separated among individuals to reduce the risk of error or fraud. No one individual should control all key aspects of a transaction or event.

Acronym Definitions

  1. A list of some of acronyms used in this IRM are found below. This list is not all inclusive. For details on other acronyms, please refer to the http://rnet.web.irs.gov/Resources/Acronymdb.asp.

    ACRONYM DEFINITION
    BOD Business Operating Division
    BMF Business Master File
    CC Command Code
    CI Criminal Investigation
    EITC Earned Income Tax Credit
    EO Exempt Organization
    FRP Frivolous Return Program
    FYM Fiscal Year Month
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    ITG Indian Tribal Government
    IVO Integrity and Verification Operation
    LB&I Large Business and International
    MFT Master File Tax Code.
    OFP Organization, Function and Program Code.
    OIC Offer In Compromise
    RICS Return Integrity and Compliance Services
    SBSE Small Business/Self Employed
    TEGE Tax Exempt and Government Entities
    TIGTA Treasury Inspector General for Tax Administration
    TIN Taxpayer Identification Number is a number used to identify an individual or business entity. It can be a:
    • Social Security Number (SSN)

    • IRS Number (IRSN)

    • Individual Taxpayer Identification Number (ITIN)

    • Adoption taxpayer Identification Number (ATIN)

    • Employee Identification Number (EIN)

    W&I Wage and Investment
    SERP Servicewide Electronic Research Program
    SP Submission Processing

Related Resources

  1. The following IRMs and publications are used in conjunction with this IRM section:

    • IRM 1.11.2, Internal Management Document System , Internal Revenue Manual (IRM) Process

    • IRM 2.3, IDRS Terminal Responses

    • IRM 2.4, IDRS Terminal Input

    • IRM 3.10.72, Receiving, Extracting and Sorting

Internal Revenue Manual (IRM) Deviations

  1. Service Center Directors, Headquarters Branch Chiefs, and Headquarter Analysts do not have the authority to approve deviations from IRM procedures. Any request for an exception or deviation to an IRM procedure must be elevated through appropriate channels for executive approval. This will ensure other functional areas are not adversely affected by the change, and it does not result in disparate treatment of taxpayers.

  2. See specific guidelines in IRM 1.11.2, Internal Management Documents System, Internal Revenue Manual (IRM) Process. Request for an IRM deviation must be submitted in writing and signed by the Field Director, following instructions from IRM 1.11.2.2.4.

  3. Any disclosure issues will be coordinated by the Program Owner. No deviations can begin until reviewed by the Program Owner and approved at the Executive Level. All requests must be submitted to the Submission Processing Headquarters IRM Coordinator.

Research

  1. ICT may conduct initial TIN research. Prior to researching the issue validate the authenticity of the TIN. If the TIN is not correct, conduct research to determine the correct TIN. If the TIN can not be determined, return to ICT for retention. Ensure the criteria is function appropriate prior to routing. Compare data on IDRS against Form 3949-A, Information Referral.

  2. Use http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for assistance (e.g., command codes INOLE, RTVUE, BMFOL, IRPTR, ENMOD), which is available on Servicewide Electronic Research Program (SERP).

  3. Submission Processing (SP) officials and managers must communicate security standards to their employees and establish methods for enforcement. Refer to IRM 1.4.6, Managers Security Handbook, for more information.

  4. Employees are responsible for taking the required precautions to provide security for documents, information and property handled while performing official duties.

Authorized Integrated Data Retrieval System (IDRS) Access

  1. The modules accessed on IDRS is only permitted to accomplish the official duties of the examiner.

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What is Form 3949-A?

  1. The Form 3949-A is a tax related public use form submitted voluntarily by customers to report alleged violations of tax law by individuals and businesses to the IRS and remain confidential.

  2. Specific information provided may be helpful in an investigation and may include who is being reported, the type of activity being reported and how it became known, when the alleged violation (s) took place, the amount of money involved.

  3. The tax violations may involve:

    • False Exemption

    • False Deductions

    • Multiple Filings

    • Organized Crime

    • Unsubstantiated Income

    • Earned Income Credit

    • Public/Political Corruption

    • False/Altered Documents

    • Unreported Income

    • Narcotics Income

    • Kickback

    • Wagering/Gambling

    • Failure to Withhold Tax

    • Failure to Pay Tax

    • Failure to File Return

    • Other

Issue Identification

  1. The submissions will be pre-sorted by the ICT using Section B 3 “Alleged Violation” and/or keywords/key phrases in Section B 5 on Form 3949-A. Refer to IRM 3.10.72.19.2, Information Referral Routing Guide for more information.

    Note:

    Not all Information Referrals will be referred for additional screening by the ICT team. If the alleged violation is not addressed in this IRM but it is identified in IRM 3.10.72.19.2.

  2. Consider each form on it’s own merit when multiple Forms 3949-A are attached.

  3. Review the submission against IDRS to determine whether the submission contains specific and credible data for a potential federal tax issue.

  4. If analysis disproves the allegation as factual, return to ICT for retention procedures.

Multiple Issue Identifications

  1. Identify multiple issues and determine if it involves multiple BODs.

  2. If the issues identified concern multiple BODs, identify all BODs

    1. If analysis disproves the authenticity on one sort, continue with analysis to authenticate all issues .

  3. If multiple issues are involved and criteria is authenticated as Criminal Investigation (CI), send to CI.

  4. If multiple issues involve both Small Business/Self Employed (SBSE) campus and SBSE field, send to SBSE field.

  5. Multiple issues involving more than one BOD:

    • If BODs are LM and SB,, send to LB&I.

    • If BODs are TE and SB, send to SBSE Field.

    • If unable to determine, refer to the lead.

Initial Research

  1. Use the initial research steps on all issues

  2. Using IDRS, validate the taxpayer or business matches the Form 3949-A. If additional TIN research is needed, perform the additional research to identify and validate the taxpayer, spouse or business before conducting any additional research. If TIN identification can not be made, return to ICT for retention.

  3. Some categories require validation of the appropriate responsibility for the account by reviewing the BOD. The following describes the BOD code and defines the organization.

    • LM - LB&I Large Business and International

    • WI - Wage and Investment

    • SB - Small Business/Self Employed

    • TE - Tax Exempt/Government Entity

  4. Validate the tax year, if specified on Form 3949-A, using IDRS. If not specified, follow specific year requirements based on the BOD/sort.

  5. If the allegation is not addressed in this IRM, review IRM 3.10.72.19.2. Return incorrect sorts to the ICT team to route appropriately. For example, if the sort submission contains a request for a reward or Form 211, Application for Award For Original Information, is attached the submission should have been routed directly to Whistleblower Office from ICT, return to ICT informing the team of the correct sort.

  6. If verification of the taxpayer, business or allegation cannot be made, no other issues exist, and/or the criteria is not met, return the case to the ICT team for retention.

Issue Identified W&I Campus Exam

  1. W&I Campus Examination Operations supports administration of tax law by selecting returns to audit. The primary objective is to promote the highest degree of voluntary compliance on the part of the taxpayers.

Dependents and EITC Criteria

  1. Conduct Initial Research.

  2. Research IDRS using command code (CC) IMFOL with definer “T” to verify the specific alleged tax year contains a posted TC 764 and/or TC 768. If the allegation does not contain a specific tax year, use the current processing year.

  3. Research IDRS using CC DDBKD for any duplicate dependents listed. If there is a posted TC 764 and/or TC 768 and no duplicate dependents are met, continue processing as W&I Campus Exam criteria.

    Note:

    W&I only accepts EITC with unreversed transaction codes 764 and/or 768 indicated on Master File.

  4. When IDRS research does not reflect TC 764 and/or TC 768 and DDBKD contains at least one duplicate dependent listed:

    1. Review to determine if the allegation meets SBSE Campus Exam criteria.

    2. If criteria is met, remove case from the sort and ensure case is routed to SBSE Campus Exam. See IRM 3.28.2.12, Special Processing Procedures, Information Referral Screening Process for Form 3949-A , Information Referral for more information.

Issue Identification Return Preparer Misconduct Form 14157, Return Preparer Complaint

  1. The Return Preparer Office was created in 2010 to oversee registration and suitability of federal tax return preparers. The mission is to improve taxpayer compliance by providing comprehensive oversight and support of tax professionals.

  2. Form 14157, Return Preparer Complaint, Tax Return Preparer should be submitted. If Form 3949-A contains allegations about a return preparer, the behavior must be related to return preparation or the preparer’s tax return business.

  3. Form 14157- A, Tax Return Preparer Fraud or Misconduct Affidavit, are allegations against the preparer but are also requesting victim assistance to change their tax data. Form 14157-A, submissions need to go to AM. If this form is attached with any other forms, remove from sort and ensure case is routed appropriately to ICT. DO not send submissions to RPO when Form 14157 - A is attached.

  4. The allegation must be about the preparer’s business. The following are examples accepted by RPO:

    • Allegations against tax preparer altering tax return data

    • Allegations of incorrect or egregious return preparation

    • Allegations the preparer was not authorized to file tax return (s)

    • Allegations the preparer misdirected all or a portion of the refund due

  5. RPO does not address the following examples of matter including but not limited to:

    • Unprofessional language, professionalism, or refusing to prepare or file a tax return

    • Disagreement over fees charged or believe fees were too high

    • Preparer receiving payments in cash

    • Preparer’s lifestyle is extreme, beyond his ability, or appears not to be reporting all income

  6. Conduct IDRS research to obtain the EIN/TIN and notate on Form 3949-A.

Frivolous or Tax Avoidance

  1. A Frivolous position is one that attempts to illegally avoid/reduce tax liabilities or to increase refunds by fraudulent or frivolous means.

  2. Frivolous position categories may include:

    • Frivolous income

    • Frivolous deductions

    • Frivolous credits

    • Altered/Invalid documents e.g., Form 56, Notice Concerning Fiduciary Relationship, Form 1099 series, including Form 1099-A, Acquisition or Abandonment of Secured Property, Form 1099-C, Cancellation of Debt, Form 1099-MISC, Miscellaneous Income, Form 1099-OID, Original Issue Discount

    • Other positions

      Note:

      Data of documents posted to IRPTR may still be false or frivolous

    Frivolous Arguments can be made by Individuals and businesses who oppose compliance with Federal Tax laws. Frivolous Arguments are described in Notice 2010-33 and are available at https://www.irs.gov/irb/2010-17_IRB#NOT-2010-33.

  3. Tax avoidance is the arrangement of one’s financial affairs to minimize tax liability

Issue Identification Frivolous or Tax avoidance

  1. If the allegation on Form 3949-A contains any mention to opposition of compliance with Federal Tax laws or indicates Tax Avoidance language, review IDRS to confirm the allegation.

  2. If allegations contain taxpayer address with Puerto Rico, remove from sort and ensure case is routed to SBSE Field. See IRM 3.28.2.13 for more information.

  3. The allegation may include:

    • The alleged is lying or cheating on their Federal tax obligation

    • The alleged is not a United States citizen, receives income or benefits from sources within the United States and does not pay their taxes

    • The alleged is not filing their Federal taxes

  4. Compare bank account information to prior year data.

  5. Review the alleged account for posted returns on IDRS CC IMFOL with definer “T”. If return posted, review return data on TRDBV for income and withholding amounts. Compare against reported income on IDRS CC IRPTR with definer “O” paying close attention to Form W-2, Wage and Tax Statement, and Form 1099-OID ,Form 1099-MISC, etc; which can be frivolous or fraudulent.

  6. If the allegation is substantiated by the research and the False/Altered Documents is by one taxpayer, send to:


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Issue Identification Collection Policy

  1. Collection Policy provides guidance on collection processes that are common to large groups of taxpayers with similar characteristics and develop, design and deliver Collection program policies, strategies and objectives.

  2. Allegations containing issues of non-filing, owing, lien, levy and/or unreported income should be reviewed for collection activity.

  3. Collection activities would be filing liens or issuing levies.

  4. Use the following IDRS CC to determine collection activity or identify a Notice of Federal Tax Lien (NFTL).

    1. CC SUMRY - Will have the word “lien” if a lien has been filed on a module.

    2. CC TXMOD “A” or CC IMFOL “T” or CC BMFOL “T” - Will reflect a posted TC 582 to indicate a NFTL has been filed.

    3. CC TXMOD “A” or CC IMFOL “T” or CC BMFOL “T” - Will also reflect a TC 971 AC 069 to indicate a final notice has been issued and Collection is planning to issue levies to aid in reducing the tax liability.

  5. Below is an IF and Then chart detailing the routing process for different status codes.

    If ... And ... Then Send to...
    A. Master File Status is 72 The case is related to Bankruptcy if the transaction code 520 with closing codes 60 - 67, 83 ,85 - 89 is present the case is Bankruptcy related ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    B. Master File Status is 72 Transaction code 520 with closing code 70 - 82, 84 is present. The case is related to Appeals ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    C .Master File Status is 71 or has an unreversed Transaction code 480 (OIC has been received). A -Y Freeze is set ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    D. Master File Status is 24 or 26 Referral alleges the taxpayer has assets available and the taxpayer’s account must show an outstanding liability ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    E. Master File Status is 22 Referral alleges the taxpayer has assets available and the taxpayer’s account must show an outstanding liability ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    Note:

    If the allegation issue is regarding outstanding liabilities, non-filer, or unreported income, etc. and collection activity is not indicated during IDRS research, remove from sort and ensure case is routed to SBSE Field Exam. See IRM 3.28.2.13 for more information.

Large Business and International (LB&I)

  1. Large Business and International (LB&I) serves corporations, sub-chapter S corporations, and partnerships with ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Also, serves U.S. citizens and residents with offshore activities and non-residents with U.S. activities.

Issue Identification LB&I

  1. Referrals mentioning Offshore, overseas or a foreign country or a U.S. Citizen living abroad are considered International Individual Compliance (IIC) issues. Remove from the sort and ensure case is routed to ICT for proper routing per IRM 3.10.72.19.2, Form 3949-A Information Referral Routing Guide.

  2. LB&I works corporate and partnership return issues that pertain to LM BOD code.

  3. Access IDRS CC ENMOD or CC INOLE with definer “S”. If parent EIN is present, access parent EIN using CC INOLES.

  4. If CC INOLE shows only filing requirements for Form 940 and Form 941, research further for business EIN or to determine the business is a Schedule C business. Cross-references can be found using CC BMFOLE. If research indicates the issue is not pertaining to LM BOD code with corporate and partnership returns, route to SBSE Field Exam. See IRM 3.28.2.13 for more information.

  5. BOD code LM with issue relating to corporate or partnership return issues. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. If unable to send referral electronically, mail to:
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Issue Identification Specialty Tax Examination

  1. Specialty Examination includes Bank Secrecy Act, excise, employment, estate and gift taxes.

  2. The submissions may contain the following description or issue related to speciality tax

    1. Employment Tax Form 1099

    2. Estate Form 706, U.S. Estate Tax Return and Gift Tax Form 709, United States Gift Tax Return

    3. Estate Tax Form 720, Quarterly Federal Excise Tax Return

Issue Identification Employment Tax

  1. When the referral addresses Employment Tax, Form W-2 or Form 1099:

    1. Research to determine if business returns appear to be unreported or under reported wages or income.

    2. Send the issue to Employment Tax Specialty Employment Tax Workload Selection and Delivery (ET-WSD), if the allegation concerns employee earnings on Form W-2, worker classification issues reported on Form 1099 or if MFT 01 and the BOD code is not LM.

  2. If Form 3949-A relates to issues with business filing incorrect Form W-2 or Form 1099 series, remove from sort and ensure case is routed to Employment Tax.

  3. If the return appears to be under-reported or unreported income, but does not concern accuracy of employee earnings versus Form W-2 worker classification issues reported on Form 1099 series, remove from sort and ensure case is routed to SBSE Field. See IRM 3.28.2.13 for more information.

  4. If the employment tax issue is related for a City, County, State or Federal government or employee, remove from sort and ensure case is routed to Federal, State and Local Government (FSLG). See IRM 3.28.2.10.4 for more information.

Issue Identification Estate Tax Form 706 and Gift Tax Form 709

  1. Estate Tax referrals will be accepted ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Gift tax referrals require mention of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Referrals stating a return has not been filed for a decedent taxpayer and Form 1040, U.S. Individual Income Tax Return, or Form 1041, U.S. Income Tax Return for Estates and Trusts, should be completed remove from sort and ensure case is routed to SBSE Field. See IRM 3.28.2.13 for more information.

  4. Referrals containing refund disputes on a decedent’s final return need to be return to ICT for retention. This is not a tax issue.

Issue Identification Excise Tax

  1. Excise taxes are taxes paid on the manufacture, sale or use of particular supplies or services. Excise taxes include but are not limited to:

    • Fuel taxes

    • Environmental Taxes (Ozone Depleting Chemicals, Coal)

    • Communications and Air Transportation

    • Manufacturers Taxes (Bows & Arrows; Coal, Tires, Gas Guzzlers and Vaccines)

    • Retail Tax on Heavy Trucks, Trailers and Tractors

    • Heavy Vehicle Use Taxes

    • Ship Passenger Tax

    • Foreign Insurance Taxes

    • Obligations Not in Registered form

    • Indoor Tanning Services

    • Wagering

  2. Examples of referrals would include mention to any of the above or Form 720

Tax Exempt & Government Entities (TEGE)

  1. TEGE helps taxpayers understand and comply with applicable tax laws and to protect the public interest by applying the tax law with integrity and fairness to all.

  2. TEGE customers include small local community organizations, municipalities, major universities, large and small retirement plans, local and state governments, participants in complex tax-exempt bond transactions, and Indian tribal governments and tribal associations.

  3. TEGE customers are divided into three segments:
    Employee Plans

    • Retirement Plans, Individual Retirement Accounts (IRAs), and related trusts

    • Plan participants and beneficiaries

    • Employer sponsors of retirement plans

    Exempt Organizations

    • Organizations exempt from income tax under Internal Revenue Code Section (IRC) 501 (including charities, private foundations and other types of exempt organizations, such as business leagues, labor unions and veteran's organizations)

    Government Entities

    • Indian tribal governments

    • Tax-exempt bonds

Issue Identification Exempt Organization (EO)

  1. Certain non-profit organizations or trusts that meet specific standards under IRC 501 are not required to pay federal income tax and may be exempt from other types of tax as well. These organizations are classified and referred to as Exempt Organizations.

  2. The range of exempt organizations is extensive and includes charitable, religious, scientific and educational groups.

  3. Research the web to ensure the status of the organization is Exempt Organization (EO). Examples of EO include:

    • Affordable Care Act (ACA) related to Non-Profit Hospitals

    • Hospitals

    • Charity

    • Church

    • Code 501 Organization

    • Non-Profit

    • Political Action

    • Committee (PAC)

    • Section 527

  4. Note:

    EO criteria must contain allegations specifically directed to the Exempt Organization. If the allegation is an employee of the EO, send to SBSE Field. See IRM 3.28.2.13 for more information.

Issue Identification Employee Plans (EP)
  1. The Employee Plans Office is part of the TEGE Division of the IRS. The Office is responsible for ensuring that plan sponsors, individuals and benefits practitioners understand and comply with the tax law governing retirement plans and IRAs.

  2. There are different types of employee plans. For example, Form 5500, Annual Return/Report of Employee Benefit Plan, 401 (k) and 403 (b) are valid Employee Plans (EP). A list of retirement plan types is available at https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans.

  3. Discern personal audit issues from an employee plan issue in the allegation.

Issue Identification Tax Exempt Bonds - (TEB)

  1. These issues are only about Tax Exempt Bonds.

  2. Verify the BOD, then check the filing requirements and confirm that one of the Form 8038 series returns is referenced on INOLE. If not, remove from sort and return to ICT for retention.

  3. Examples of true bond issues are:

    • Bond is not legal under state law

    • Bribes related to bonds

    • Bonds that are not in compliance

    • Not using the funds for the intended purpose

    • Sold property and did not pay the bonds

  4. Tax treatment of tax-exempt interest does not go to TEGE. Remove from sort to be routed to SBSE Field. See IRM 3.28.2.13 or LB&I See IRM 3.28.2.8 based on the BOD code, for more information.

TEGE Indian Tribal Government (ITG)

  1. Make sure the referral is regarding a Federally Recognized Indian Tribe. Contact Indian Tribal Government (ITG) if unsure.

  2. Do not include issues regarding the Indian Employment Credit Form 8845, Indian Employment Credit. The Indian Employment Credit is an income tax issue and should be worked by the respective group. Identify and refer to the appropriate group based on BOD code, SBSE Field See IRM 3.28.2.13 or LB&I. See IRM 3.28.2.8 for more information.

  3. If there are multiple issues related to Exempt Organizations (EO) and ITG, EO takes priority.

Federal, State and Local Government (FSLG)

  1. This sort is for Federal Employment Issues Only.

  2. Kickbacks or bribes are routed to SBSE Field. See IRM 3.28.2.13 for more information.

  3. Low Income Housing Credit (LIHC) referrals identify a state or local government - those must be forwarded to LIHC.

  4. If the issue is regarding a state or local income tax issue, do not refer to FSLG. Send to ICT for retention.

  5. All other referrals identifying FSLG issues must be forwarded to FSLG.

Referrals to CI

  1. IRS Criminal Investigation (CI) detects and investigates tax fraud and other financial fraud, including fraud related to identity theft. Additional areas involving identity theft include employment tax cases, abusive return preparer schemes, and narcotics and money laundering investigations. CI Refund Crimes focus on identifying schemes for the purpose of referring and supporting high impact criminal tax and related financial investigations.

  2. CI Refund Crimes accepts allegations of unreported income, domestic and international due to intentional unlawful actions impacting a considerable number of taxpayers, embezzlement or foreign tax, etc.

  3. All (-Z) Freeze accounts are referred to CI.

Issue Identification IRS CI Refund Crimes

  1. Research IDRS CC INOLE with definer “S” to verify the taxpayer.

  2. Research IDRS CC INOLE with definer “S” to see the BOD Code of the alleged taxpayer or business.

  3. Research IDRS CC IRPTR. Unreported income not resulting from Form W-2 wages and understatement of income is in ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , send to CI.

  4. If income is reported ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , remove referral and send to SBSE Field. See IRM 3.28.2.13 or LB&I based on BOD code of taxpayer, for more information.

Unreported Income criteria

  1. If the allegation of unreported income on Form 3949-A is verified through IDRS for the following conditions below, accept the sort as CI Refund Crimes.

    • Fraud Ring

    • Organized Crime

    • Refund Schemes involving multiple taxpayers (may include false/altered documents such as Form W-2 or Form 1099 series)

    • Abusive transactions or alleged to be assisting US persons hide assets overseas, or US persons alleged to be involved in criminal activity overseas irrespective of dollar amounts or years involved

    • Indication of contact with CI but (-Z) freeze is not on Master file account

  2. Use the following If And Then table to determine the correct sort

    If ... And ... Then ...
    1. Allegation includes cash sales on realtor commissions ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The criteria is met continue with routing to CI Refund crimes.
    2. Allegation includes case sales on realtor commissions ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Review and sort based on BOD code.
    Under-reported income SBSE Field Exam (SB)
    Corporate or Partnership LB&I (LM)
    3. Allegation includes embezzlement Referral contains no mention of prosecution The criteria is met continue with routing to CI Refund crimes.
    4. Allegation includes embezzlement Referral contains mention of prosecution Sort as SBSE Field Exam
    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Income is not due to a wage income (Form W-2) The criteria is met continue with routing to CI Refund crimes.
    6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Income is due to a wage income (Form W-2) Sort as SBSE Field Exam regardless of BOD Code.
    7. Domestic and/or International allegations ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The criteria is met continue with routing to CI Refund crimes.
    8. Foreign Tax Allegation to be promoting offshore
    • Foreign banks

    • Financial advisors

    • Attorneys

    • Accountants/bankers

    Accept as CI Refund Crimes sort
    9. ID Theft listings
    • List of victims

    • List of TINS

    • Multi-years on and has direct tax implications

    • Includes a Jurat on the signature line for supporting that purpose and fact

    The criteria is met continue with routing to CI Refund crimes.
    10. Referrals requiring coordination
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Badges of fraud

    • Current/Former employee

    • Attorney/Client Privilege

    • Identity Theft or Refund Schemes related to a substantial number of taxpayers

    The criteria is met continue with routing to CI Refund crimes.

Issue Identification Small Business/Self Employed (SBSE) Campus Exam

  1. SBSE Campus Examination Operations support administration of tax law by selecting returns to audit. The primary objective is to promote the highest degree of voluntary compliance on the part of the taxpayers.

  2. The National Office Tax Compliance Officer (TCO) and Revenue Agent (RA) Classification Guidelines can be found at:http://mysbse.web.irs.gov/examination/tip/classification/default.aspx.

  3. Research IDRS CC IMFOL to verify filing.

  4. Research IRPTR with definers “J” to find the approximate balance due.

Dependent without Earned Income Tax Credit (EITC)

  1. SBSE Campus routing requires at least one duplicate dependent without existing EITC claims.

  2. Ensure EITC is not present on the specific year of allegation or current year if a year is not specified. If EITC is present, See IRM 3.28.2.4.1. for more information.

  3. Check for duplicate dependent TIN’s by using CC DDBKD. If a duplication of one dependent TIN is identified, no further research is required continue with routing to SBSE.

Non-Filer Criteria

  1. Do not refer reports of Non-Filers with Substitute for Return (SFR) Balance due of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Remove from sort and ensure case is routed to ICT for retention.

  2. Do not refer deceased taxpayers. They do not qualify as a Non-Filer issue. Remove from sort and ensure case is routed to ICT for retention.

  3. Referral research may include spouse information.

    • Obtain spouse TIN information.

    • Review the filing status codes to determine if filing was completed as possible secondary/spouse filing.

    • Research IDRS CC IMFOL to review the past five years posted (years 2013 to 2016).

    • Only research the Identified spouse TIN for filing of the past five years posted, if the filing includes the alleged taxpayer.

    • Check IMFOL with definer “T” on alleged taxpayer to validate the TIN cross reference.

  4. Use CC IRPTR with definer “J” for calculations of SFR balance due on the first non-filed year.

  5. Once a single year exceeds ≡ ≡ ≡ additional research of any years is not required. Continue routing to SBSE.

Issue Identification Small Business/Self Employed (SBSE) Field Exam

  1. Conduct IDRS research to verify the criteria is for SBSE Field Exam matches the pre-determined sort for the Form 3949-A.

    1. Research IMFOL or BMFOL to verify filing and determine the fiscal year month of the taxpayer.

    2. If a filed return is on the module, research RTVUE, BRTVU, TRDBV or Modernized e-File (MeF) to review the return for overall omission of the allegations stated on Form 3949-A

    3. Research Referrals with (-L) Freeze on the module. Use IDRS CC AMDIS with definer A to look at the status codes. Print AMDISA and attach to the front of the referral.

    4. If the status code is 10 through 44, notate on the print Employee Group Code (EGC) audit. Route the AMDISA print and the referral to the appropriate EGC. Refer to http://mysbse.web.irs.gov/examination/mis/contacts/default.aspx for the Employee Group Code (EGC) Listing Contacts

    5. If status is 80 through 82, notate “Appeals audit control” on CC AMDIS print.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Refer to RA or TCO classification if cannot make the determination. http://mysbse.web.irs.gov/examination/examorg/hq/ecs/fieldexamretsel/29623.aspx

  4. Use the “IF and Then” chart below when specific criteria is in the referral:

    If ... Then ...
    A. Allegation contains Self-Employed or Independent Contractor (sale of goods or services, selling or working out of home) Research for business filing. Determine if return appears to be under-reported.
    B. Allegation contains Tip Income Unreported Look for Form W-2 data containing Allocated tips on IRPTR ”I” Field 11 or box 8 on the Form W-2, if attached. If tips data is blank, it could be an Indication of possible unreported tips on any business that would normally have tips for employees i.e., restaurants, delivery services, drivers, hair stylists.
    C. Trust or Trustee Issues Research for Form 1041 filing requirements on Trusts. For trustee income look at IRPTR.
    D. Capital Gain (insider trading) Research IRP for trade documents if the capital gain is related to stock investment. If other types of capital gains or is related to business capital being sold; Forward to RA Classification.
    E. Corporation Issues Forward to RA Classification.
    F. Employment Tax (Form 1099 ) Unreported Income Research for filing of a business and determine if return appears to be under-reported. If Form W-2 versus Form 1099 issue. Send to Employment Tax Specialty.
    G. Farm issues Research for Schedule F. Forward to RA classification.
    H. Investments of any kind, other than stock trades (see Capital Gain) Forward to RA classification.
    I. Kickbacks to an individual or business Forward to RA classification.
    J. Lease/Rental Property or Landlord issues Research for a Schedule E. If rental property is a house with high rents or more than one house, an apartment building or numerous properties and not filing a Schedule E.
    K. Cash Payments (off the books, under the table, bartering, etc.) Research for unreported income; Follow dollar criteria above.
    L. Sale of Property (except in Foreign Country) Research for unreported sale. Follow dollar criteria above.
    M. Offshore or Foreign income issues and income are located in the United States Research for unreported income. Follow dollar criteria above.
  5. If the criteria above is not met or it is below the threshold and no other issues are involved, remove from sort and route back to ICT for retention.