4.1.2  Determining Return Need

Manual Transmittal

May 28, 2013


(1) This transmits revised IRM 4.1.2, Planning and Special Programs, Determining Return Need.

Material Changes

(1) This transmittal reissues existing procedures. Minor editorial changes have been made throughout this IRM. Website addresses, legal references, and IRM references were reviewed and updated as necessary. Other significant changes to this IRM include the following:

Reference Change Details
IRM Clarified return needs should be analyzed in conjunction with a return order.
IRM Added Compliance Date Environment (CDE) order information and additional ways to analyze return orders
IRM Updated names and citations. Added clarification to calculations.
IRM Changed order of monitoring reports.

Effect on Other Documents

IRM 4.1.2, dated 10/24/2006 is superseded.


Planning and Special Programs (PSP)

Effective Date


Karen Schiller
Director, Examination Planning and Delivery
Small Business/Self-Employed  (05-28-2013)

  1. This section discusses determining return needs.

  2. The Planning and Special Programs (PSP) Territory Manager (TM) must ensure the correct types of returns are available in the quantity needed to accomplish the examination plan. If workload is unavailable in a needed priority, workload from the next priority that is available will be input to cover needs until the higher priority workload becomes available.

  3. The PSP TM must determine the number and class, of returns needed. To facilitate that effort, a "return needs analysis" and a "return starts analysis" should be completed on a monthly basis.

  4. The PSP TM should analyze priority program direct examination staff year (DESY) application, priority program inventory, projected future inventory and projected year-end accomplishments in relationship to the examination plan in conjunction with a return order.  (05-28-2013)
Return Needs Analysis

  1. The current available inventory and projected return needs should be analyzed on a monthly basis. Return needs for each category, e.g., Individual Master File (IMF) and Business Master File (BMF), should be analyzed separately, by post-of-duty (POD), to determine the number of returns needed. Analyzing by POD will prevent shortages in those PODs with staffing imbalances. IMF return needs for field examination and office examination should be determined separately.

  2. It generally takes 8 to 12 weeks for an original return Martinsburg Computing Center (MCC) Discriminant Function (DIF) order to be delivered for classification; therefore, the PSP must plan well in advance. Compliance Data Environment (CDE) orders for IMF take 1 to 2 weeks to be ready for classification. The "needs analysis" should project future requirements for 4-6 months.

  3. PSP should always be aware of training needs. The PSP Area Coordinator's should stay in close communication with the SB/SE Area Training Coordinator. A separate analysis must be done for training needs early enough to ensure returns are timely classified and delivered.

  4. A proper needs analysis should take the following into consideration:

    1. Current number of examiners in each POD.
      Sources: Area or territory staffing charts, managers.

    2. Centralized Files and Scheduling Unit (CF&S) Status 08 inventory. .
      Sources: Table 1040–1, AO Individual Inventory and Delivery Report and Table 1040–2, AO Individual Inventory and Delivery Analysis.

    3. CDE Status 08 inventory.
      Source: CDE Inventory Report or Statistical Sample Inventory Validation Listing (SSIVL).

    4. Current Status 10 inventory in each POD, by activity code.
      Sources: Audit Information Management System (AIMS) Open Case Database, SSIVL, Examination Returns Control System (ERCS), Table 36, Examination Program Monitoring, etc.

    5. Inventory stored in PSP in Status 06 and Status 08, e.g., compliance initiative project (CIP) cases, return preparer projects (RPP), non-filers, etc.

    6. Inventory in Status 06 at the Campus such as automatics.

    7. Inventory currently being classified in CDE (not already in Status 08)

    8. CDE versus MCC ordering system impact on inventory.

    9. Return orders that have been approved/processed but have not been classified and/or added to either the Centralized Files Database or the Area inventory. These returns should be considered as available inventory, giving adequate consideration to the Area’s select rate.
      Computation: area select rate = returns ordered × delivery percent × select percent).

    10. Related/multi-year pickup rate, if significant. For IMF, remember to consider related pickups as a result of starting partnership and S corporate returns.

    11. Surveyed returns without adequate notification to PSP or managers holding inventory they do not wish to examine. If this is true, then Status 10 inventory should be "discounted" by a comfortable percentage. CF&S inventory should be "discounted" as you approach the time to survey excess returns. Additional analysis will need to be done to determine returns out-of-cycle and needing to be excessed.

    12. Average number of returns needed for each POD, excluding specialty groups, for the 4–6 month period of the analysis.
      Source: Contact managers for their input regarding the number of returns they will need for the next 4–6 months. Also, consider determining the average return starts.
      Computation: average return starts = total number of returns started for each group in a POD for a 12 month period ÷ total number of agents in each POD.
      Computation: average number of returns needed = number of agents × average return starts per agent × 4 (or 6) months.


      Consideration needs to be given to the number of return starts needed in order to meet the plan. If your starts are too low then you need to order additional returns to allow for an increase in new starts.
      Sources: AIMS Open Case Database, SSIVL, ERCS, Table 36, etc.  (05-28-2013)
Return Starts Analysis

  1. After determining the number of returns needed, the PSP Territory Manager should determine the return category, priority, and activity codes needed to deliver a balanced work plan. The number of returns started each month must be monitored to maintain the optimal base inventory level. A method to facilitate this effort is a "return starts analysis."

  2. A "return starts analysis" analyzes the number of returns started during the fiscal year, by return priority and activity code. This projects the number of returns needed to be started for the remainder of the fiscal year.

  3. An effective "return starts analysis" generally includes the following by priority and/or activity code:

    1. Planned returns.
      Source: examination plan.

    2. The average number of returns needed to be input each month.
      Calculation: planned returns ÷ 12.

    3. Calculate the turnover rate for each priority or activity code. The turnover rate is the number of times, in one year, a return will be closed from work in process.
      Calculation: 365 days ÷ number of cycle days for the particular return category.
      Sources: ACIS Closed Case Database, Table 37, Examination Program Monitoring, and Table 36.

    4. Calculate the base inventory required for each activity code. Base inventory is the optimal level of work in process necessary to accomplish the plan.
      Calculation: plan returns ÷ turnover rate.

    5. The base inventory variance. The difference between base inventory returns and current work in process returns.
      Calculation: base inventory - current work in process inventory.
      Sources: Table 37, Table 36, AIMS Open Case Database.

    6. See IRM (4), Return Needs Analysis, for computation of average starts needed.

    7. Starts needed each remaining month to balance the plan.
      Calculation: (planned returns - total return starts) ÷ months remaining in the fiscal year.
      Sources: Examination plan, Table 37 or Table 36.

  4. Now that the number of returns needed each remaining month to balance the examination plan have been determined, by return category and activity code, the PSP Territory Manager must determine if there is sufficient inventory on hand. If sufficient inventory is not on hand for each class/activity code, an order may be necessary.

  5. The "return starts analysis" may indicate on an Area level returns are not needed. However, be sure to review the" return needs analysis" to determine if a particular POD requires inventory.  (05-28-2013)
Deciding to Order

  1. The "return needs analysis" helps to determine if there is a need for additional inventory in the various PODs and the number needed. It also helps to determine the number of returns in each category/activity needed to be started each month to ensure accomplishment of a balanced examination plan. Either one of these analyses, or both, could indicate a need to order returns. However, there are other considerations, with regard to the class or activity of the returns to be ordered:

    1. Productivity. Generally, there is sufficient flexibility built into the monitoring of examination plan accomplishments to allow the PSP Territory Manager to adjust for over/under accomplishments of line items within the individual, corporate, and partnership categories. This flexibility is usually geared toward productivity.

    2. Grade level of the agents in the POD for which returns will be ordered.  (05-28-2013)
Monitoring Unassigned and Unstarted Inventory

  1. The PSP Territory Manager is responsible for monitoring unassigned inventories (Status 08), assigned-no time applied (Status 10), and work-in-process inventories. The monitoring responsibility should be accomplished through the use of the following reports/systems:

    1. Statistical Sampling Inventory Validation Listing (SSIVL)

    2. Table 37 (monthly report MCC generated)

    3. AIMS Database Tables

    4. Inventory and Delivery Reports

    5. Centralized Files and Scheduling Tables

    6. Examination Returns Control System (ERCS)

    7. CDE Inventory Reports

    8. Table 36 (monthly report Campus generated)

  2. Unassigned inventories (Status 08) should be maintained throughout the fiscal year. Generally, inventory levels should not exceed needs for 3–4 months.

  3. Unassigned inventories in Status 10 should be kept to a minimum to allow for a quicker change of direction to meet program needs.

  4. Non-DIF returns may be stored either in centralized files at the campus, or in the area office.

  5. Returns are generally assigned to examination groups in a manner that will facilitate compliance with examination cycle limitations.

  6. Monitoring allows the review of group return orders in PODs and the comparison to Status 10 in other groups in the same POD. If groups are in need of inventory, Status 10 returns could be reassigned to the group with need within the same POD. It also is needed to compare with group surveys to determine poor survey practices.  (05-28-2013)
Inventory Brokering

  1. If a shortage of resources exists in any major category, the affected Area Director and the PSP Territory Manager will take the appropriate actions to redirect inventory and to deliver a balanced examination plan.

  2. Inventory brokering within an Area and between Areas are options.

  3. Inventory brokering requests between Areas are to be coordinated with the Director, Examination Planning and Delivery (EPD) before movement of inventory.

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