- 4.3.1 Overview
- 126.96.36.199 Overview
- 188.8.131.52 Uses and Applications
- 184.108.40.206.1 Profiling
- 220.127.116.11.2 Classification
- 18.104.22.168.3 Issue Identification
- 22.214.171.124.4 Case Building
- 126.96.36.199.5 Alternative DIF Delivery and Processing Tool (ADDAPT)
- 188.8.131.52.6 Subsets and Extracts
- 184.108.40.206.7 Matcher Program
- 220.127.116.11 Requesting MACS Research
- 18.104.22.168.1 Compliance/Compliance Services Requests
- 22.214.171.124.2 Requests From Outside Compliance/Compliance Services
- 126.96.36.199.3 Requests for Subsets and Extracts
- 188.8.131.52.4 Requests for MACS Data Outside the Local Area
- 184.108.40.206.5 Requests from Federal State Agencies
- 220.127.116.11 Aids
- Exhibit 4.3.1-1 Glossary of Terms
- Exhibit 4.3.1-2 Acronyms
This section is an overview of the new Multi-functional handbook entitled "Midwest Automated Compliance System (MACS)." It is a consolidation of existing information and procedures as well as new material not previously published to be used by Compliance and Field Compliance Services.
MACS is a menu-driven, automated database and data retrieval system that is housed and operated on a microcomputer. It is located in the Planning and Special Program (PSP)/Compliance area or in an Information Services (IS) computer room in areas and compliance services. It contains a unique compression program that allows immediate access to and easy manipulation of tax return data for an area's/compliance services entire tax filing population. Data is available for three or more years from the following forms:
"Tax return data" refers to those lines that are transcribed at the service center during processing (located on the Returns Transaction File or RTF), as well as certain information from the Masterfile such as Post of Duty (POD), date of birth, audit history, DIF score, etc. Data retrieval is quick, typically requiring only a few seconds to view a taxpayer’s return.
MACS is extremely sensitive due to the large amount of taxpayer information and the easy-to-use query programs. The security features installed on MACS are meant to protect the user and the taxpayer information which the system stores and processes. Unauthorized access to taxpayer information on MAC can result in criminal prosecution. Users of MACS shall thoroughly familiarize themselves with the security and other functions of the system and report any suspected security breach to a manager. IRM 25.10, Information Systems Security Handbook, should be used as a reference for additional information not contained in this handbook.
The MACS database contains information from the return posted to Masterfile using Transaction Code (TC) 150. Subsequent amendments, duplicates, claims, etc., are not included in the database.
MACS is not a return selection or classification system. Although it is broad based because it includes all filed returns, it does not contain the criteria for selection. It is a tool to provide information quickly and easily for data driven decisions as part of the return selection and classification processes. In addition, MACS can:
Profile an area's population by market segment (a market segment being any group of taxpayers with one or more common characteristics)
Be matched against other internal and external databases by Taxpayer Identification Number (TIN) to identify nonfilers
Provide research on specific taxpayers, even if only a partial name or address is known
A number of capabilities make MACS a particularly useful tool to identify potential noncompliance. For example it can:
Use complex calculations such as percentages in filters
Produce three-year comparisons of tax returns
Locate taxpayers by TIN, name or address
A filter is a request to the system to identify all returns with a specified characteristic or group of characteristics. If a filter is used to identify a particular population of taxpayers, MACS can statistically stratify that population as well as generate a random sample of returns for testing.
MACS produces return facsimiles which can be displayed in either a one-year or a three-year comparative format. They may be viewed on screen, printed individually or batch printed. On-screen viewing in the three-year format is valuable for return classification. The three-year facsimile print is useful for case building. The return facsimile includes Masterfile data discussed in (1) above, as well as a Cash T computed from the transcribed items on the tax return (IMF only). The Cash T is used primarily to identify returns with potential unreported income.
MACS hardware and software are evolving as technology improves. MACS Development Center (MDC) maintains a list of required and recommended hardware and software. Through its newsletter, MDC informs system administrators and MACS users of changes in recommended system configuration. MDC also publishes system configuration information in the MACS library on the IS Support Networked Bulletin Board System.
One of the most significant features of MACS is its security certification and accreditation. Certification and accreditation documents are maintained at MDC. C2 security is a government wide requirement for all computer systems containing sensitive information. All information processed by IRS is considered sensitive, whether or not it contains taxpayer identifying information such as names or TIN’s. The security features on MACS include (but are not limited to):
Be physically located in a controlled area and be in a lockable container or in an IS computer room
Have controlled access
Contain an audit trail to record selected user activities
Have no electronic access (e.g. LAN or dial-up modem)
Meet all other security requirements in IRM 25.10, Information Systems Security Handbook
For security, disclosure and privacy purposes, there is an absolute prohibition against the electronic downloading of MACS data. Data from the system can be provided in hard copy only.
Access is generally limited to a few individuals under the control of the PSPArea Support Manager/Compliance Center Exam Operation. Other functions may receive MACS data by submitting an approved research request to PSP Area Support/Field Compliance Services Exam Operation.
The MACS User Guide is a desk reference for all MACS users covering the following:
Understanding security requirements
Accessing returns by TIN, name or address
Researching by market segment
Using complex filters
Navigating MACS program menus
The User Guide is produced and periodically updated by MDC.
The MACS System Guide is an Official Use Only document for the system administrator and the security officer. The System Guide provides information about:
Installation of MACS hardware and software
How to install and delete users from the system
How to generate and review MACS audit trails
How to back-up and store MACS data
How to run the Matcher program
MACS extracts and subsets
MACS error messages
Other items of special interest to the system administrator and security officer
The System Guide is produced and periodically updated by MDC.
This section explains the different uses and applications of MACS and how to request MACS research.
A profile is a summary of one or more significant filing characteristics of a population of returns. It is limited to the information contained in the MACS database.
MACS can profile actual return filings of areas and compliance services to analyze the makeup of their populations. Understanding the characteristics of a filing population can improve the processes of allocating resources, developing outreach activities and identifying filing trends.
The National MACS Database, located at MDC, can profile on a multi-area or national level.
Some examples of profiling are:
Types of returns by POD. This profile can identify the number of 1040, 1120, 1065, 1120S and 1041 returns filed by post of duty and activity code. A profile of all returns with activity code 219 and above may show an increase in taxpayers meeting large case criteria, indicating a need for an increase in large case examiners. A large increase in the number of 1120S filings could indicate a trend from 1120 to 1120S returns and a need to reallocate resources to 1120S audits.
Number of returns by market segment. Knowing how many taxpayers fall within a particular market segment is useful in developing educational efforts structured toward that market segment.
Number of returns with Schedule A’s, Earned Income Credit, Foreign Earned Income, businesses with losses, etc. Trends can be identified through this type of population analysis.
MACS is used to assist in the classification of returns. Since it typically contains three years of filings, it is possible to view a three-year comparison of the taxpayer. The multi-year comparison gives the classifier a better financial overview of the taxpayer, improving the selection process.
When classifying original business returns, MACS can be used to view the shareholders’ or partners’ returns at the same time.
MACS has the ability to identify returns containing specific issues. The MACS system allows for up to 100 filter lines and 10 computed fields. See IRM Section 18.104.22.168.4, Filter Comparisons Available for more information. Some examples of issue identification using MACS filters are as follows:
All returns in a specific market segment with a net profit percentage of less than 5%
Taxpayers who appear to have failed to pay Alternative Minimum Tax when required
Taxpayers who may be required to use an accrual method of accounting but do not
A Compliance Initiative Project (CIP) is required for all MACS identified projects. The exception is for returns identified only by the same elements as a DIF order (activity code, POD and PIA code) and which are above the locally defined DIF cutoff score. See IRM procedures for Compliance Initiative Projects for more information.
The MACS system provides a facsimile print of a taxpayer’s return in a one- or three-year format. The information on the MACS return contains the original information transcribed when the return was filed. It also includes additional information such as a Cash T, date of birth for the primary taxpayer, DIF score, market segment, prior audit indicators and other information from the Masterfile.
The above information is useful in pre-audit analysis, when requesting a subsequent or related return, or to verify whipsaw issues, etc.
ADDAPT is a MACS inventory and delivery program that groups business returns by market segment and DIF score order. Returns must be viewed and classified in descending DIF score order. See IRM Section 22.214.171.124.4, Alternative DIF Delivery and Processing Tool.
Subsets and extracts are smaller segments of MACS, available only from the National MACS Database at MDC. They may be requested in either hard copy or electronic format. Electronic subsets and extracts are uncompressed and can be manipulated using commercial software.
A subset is MACS data meeting all of the following criteria:
It is derived from the requesting area's or Compliance Services own MACS database
It is requested by the Compliance/Compliance Services Compliance function
It will reside on a MACS machine
An extract is MACS data meeting any of the following criteria:
It is requested by a function other than Compliance/Compliance Services
It includes tax return data outside the requester's area (or Compliance Services area).
It will not reside on a MACS machine
Electronic extracts must reside on a computer system that has C2 security.
For purposes of this Handbook, research is defined as any user activity on the MACS system.
Research requests are an integral component of the MACS input and audit trail processes. Research, except for the demo database, may be initiated on MACS only with a written research request. Request forms may vary locally but must at least contain the following information so that reviewers of the audit trail can verify the legitimacy of the system use:
Name of requester
Date of request
Manager’s signature and date
PSP Area Support/Compliance Services signature and date
Type of research requested
Type of return
Explanation of data requested
TIN, if appropriate
Exhibit 4.3.4–1 contains an example of a MACS Research Request form.
Procedures for requesting and authorizing MACS research will vary depending on the type of research requested and whether the request is from within or outside Compliance/Compliance Services.
A MACS Research Request form must be completed by the requester, authorized by the requester’s manager and forwarded to the PSPArea Support/Compliance Services Exam Operation.
A MACS Research Request form must be completed by the requester, authorized by the requestor's manager and forwarded through appropriate channels to the PSP Territory Manager-East/West/Compliance Services Exam Operations. Approval may be locally delegated to the PSPArea Support Manager/Compliance Services Exam Operation Program Manager.
A MACS subset must be requested by the, PSP Area Support Manager/Compliance Center Exam Operation, by completing the MACS Subset Request form (Exhibit 4.3.6–1, MACS Subset Request). For complete procedures, see IRM Section 126.96.36.199, Subsets and Extracts.
MACS extract requests originating in Compliance/Compliance Services will be routed through the territory manager to the area director for preliminary approval, then forwarded to Small Business/Self Employed, Compliance Policy, Attn: Centralized Workload Selection and Delivery for final approval. SEE IRM 188.8.131.52
MACS extract requests originating in Headquarters or functions other Compliance/Compliance Services will be routed through their chief, territory manager, etc., to the director, deputy commissioner, etc., for preliminary approval, then forwarded to Small Business/Self Employed, Compliance Policy, Attn: Centralized Workload Selection and Delivery for final approval. SEE IRM 184.108.40.206.
Each MACS site houses only return information for the local area or compliance services area. If there is a need for information from another area, a request may be made to that MACS site. Before making an outside request, ensure that there are no reasonable means for securing the information locally. To make a request for MACS data outside the local area, the requester must submit a research request form to the local PSP/Compliance Services Exam Operation following the procedures in IRM Section 220.127.116.11, Research Request Procedures of this handbook. The local MACS coordinator will then forward the request to the outside area/compliance services where it will be processed and returned to the local PSP/Compliance Services Exam Operation for distribution to the requester. All data will be provided in hard copy only.
Requests from federal/state agencies, whether for electronic or hard copy data, will be treated as extract requests from the Office of Government Liaison and Disclosure. Extract procedures in Section 18.104.22.168, Requests from Headquarters and Functions other than Compliance/Compliance Services in this handbook, will be followed. For electronic data, the requesting agency must provide a written statement that the system to be used to house the data meets C2 security requirements.
When a request is submitted from a federal/state agency, the receiver of the request (generally the FedState Coordinator or the Disclosure Officer) will forward it to the Liaison Disclosure Officer to ensure that "need and use" requirements have been met by the state tax agency. The Disclosure Officer will then submit an extract request according to the procedures contained in IRM Section 22.214.171.124.3.2.
After the request is filled by MDC, the data will be sent through the appropriate System Control Point (SCP) to the Disclosure Officer for review and distribution to the federal/state agency.
See Exhibits 4.3.1–1 for "Glossary of Terms" and 4.3.1–2 "Acronyms" related MACS.
|C2 Security||A governmentwide requirement for controlled access protection for security systems containing sensitive data.|
|Cash T||A list of sources and applications of funds compiled from transcribed tax return information for IMF returns.|
|Facsimile Print||Tax return information from the MACS database in a one- or three-year format.|
|Filter||A series of one or more Boolean statements used to identify returns with a specified characteristic or group of characteristics.|
|MACS Research||Any user activity on the MACS system.|
|Market Segment||A group of returns with similar filing characteristics.|
|National MACS Database||A computer system which contains three or more years of MACS data for the entire country.|
|Profile||A summary of one or more significant filing characteristics of a population.|
|Sample Seed||A number representing the starting point in the random number sequence for the statistical sampling process.|
|Sensitive Data||All tax return information, whether or not specific identifiers, such as name or TIN, are present.|
|Transcribed Data||Information transcribed from the return into a database during tax return processing at the submission processing campus.|
|ADDAPT||Alternative DIF Delivery and Processing Tool|
|AGI||Adjusted Gross Income|
|AIMS||Audit Information Management System|
|AIS||Automated Information System|
|BMF||Business Master File|
|BRTVU||Business Return View|
|CD ROM||Compact Disc Read Only Memory|
|CDN||Consolidated Data Network|
|CIP||Compliance Initiative Project|
|ERCS||Examination Returns Control System|
|FOIA||Freedom of Information Act|
|IDRS||Integrated Data Retrieval System|
|IMF||Individual Master File|
|LAN||Local Area Network|
|MACS||Midwest Automated Compliance System|
|MDC||MACS Development Center|
|PBA||Principal Business Activity|
|PIA||Principal Industry Activity|
|POD||Post of Duty|
|PSP||Planning and Special Programs|
|RPP||Return Preparer Program|
|RTF||Return Transaction File|
|RTFTP||Return for Taxpayer|
|RTVUE||Return View (IMF only)|
|SCP||System Control Point/Configuration Management|
|SSN||Social Security Number|
|TCS||Treasury Communication System (replaced CDN)|
|TIN||Taxpayer Identification Number|