4.8.4 Mandatory Review

Manual Transmittal

March 12, 2015


(1) This transmits revised IRM 4.8.4, Technical Services, Mandatory Review.

Material Changes

(1) 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 Description of Changes
IRM (2) Revised paragraph to reflect the field's discretion to request mandatory review categories.
IRM Revised EQMS reference to new title per the SB/SE realignment.
IRM (2) Included specific headquarters office where memo is to be sent when executive or political appointment audits have been completed.
IRM Clarified procedures to be in line with IRM, Processing Returns and Accounts of the President and Vice President, regarding key points to remember during reviews and case routing notifications.

Effect on Other Documents

This material supersedes IRM 4.8.4, dated 05/20/2014.


Small Business/Self-Employed Technical Services employees

Effective Date


Mary L. Coleman
Director, Technical Services SE:S:E:TS
Small Business/Self-Employed


  1. This section provides guidelines for the evaluation of cases that must be reviewed.

Cases Subject to Mandatory Review

  1. Cases subject to mandatory review include:

    1. Joint Committee—IRM 4.36, Joint Committee Procedures

    2. Employee audits—IRM 4.2.6, Examination of Employee Returns

    3. Individual income tax returns for the President and Vice President—IRM, Processing Returns and Accounts of the President and Vice President

    4. Jeopardy and Termination—IRM, Jeopardy and Terminations

  2. Although there are a limited number of identified mandatory review categories, field compliance areas have the discretion to request any type or group of cases as a 100% review category if reviews are considered essential.

  3. National research program (NRP) cases are not mandatory review but may meet other mandatory review criteria. Normal processing procedures should be followed. Reviewers may be requested to conduct in-process reviews.

Case Identification

  1. Examiners identify case files subject to mandatory review on Form 3198, Special Handling Notice for Examination Case Processing. The applicable mandatory review category should be indicated.

Subject to Field Exam NQRS Sampling

  1. Mandatory review cases are subject to Field Exam National Quality Review Staff (NQRS) sampling (previously Examination Quality Measurement Staff (EQMS)). When a SB/SE case subject to mandatory review is selected for Field Exam NQRS sample review, follow the regular procedures outlined in IRM 4.8.3, Technical Services, Examination Quality Measurement Staff (EQMS).

Joint Committee Cases

  1. Overpayment in excess of $2,000,000 must be reported to and approved by the Joint Committee on Taxation as required by IRC 6405, Reports of Refunds and Credits.

  2. Large Business and International (LB&I) field groups should send agreed, no change, and surveyed joint committee cases by means as determined by the group's assigned industry.

  3. Small Business/Self-Employed (SB/SE) field groups should send agreed, no change, and surveyed joint committee cases to the centralized LB&I Joint Committee Review site for case review and preparation of all required reports. Groups should update cases to Status Code 21, using Technical Services Code 901. SB/SE should archive Report Generation Software (RGS) records.

  4. Unagreed joint committee cases are sent to Technical Services and processed in the same manner as non-joint committee cases.

  5. Complete instructions for processing and review of joint committee cases are included in IRM 4.36.

  6. See the Joint Committee home page located at http://lmsb.irs.gov/hq/pqa/4/home.asp.

Employee Audits

  1. All employee return examinations, including returns accepted upon classification or surveyed, are subject to mandatory review. Except as reflected in paragraph 2 below, Service employees, regardless of grade or position, are subject to the same initial screening and classification process. The general rules relating to examinations, proposed changes, appeal rights, etc. will apply to the same extent that they apply to all individual income tax returns. Once the case file is selected for examination, it is identified as an employee audit on Form 5546, Examination Return Charge-Out Sheet.

  2. Survey procedures are applicable only to new employee examinations and regularly classified returns. Treasury mandates (TIGTA referrals) and executive selections cases cannot be surveyed.

  3. Review of employee audits, including surveys, are centralized in the Baltimore Technical Services office. Employee audit cases are closed to their Technical Services office. Technical Services can forward cases to Appeals directly and the remaining cases are sent to the Baltimore Technical Services office via Form 3210, Document Transmittal.

  4. The RGS records on correspondence examination automation support (CEAS) should be updated to the centralized Technical Services RGS group identification number for the territory.

IRM References
  1. Refer to IRM, Employee Audits, for classification, selection, and procedures related to all types of employee return examinations.

  2. IRM 4.2.6, Examination of Employee Returns, provides guidance on the examination of employee returns, audit reconsiderations, closing an employee examination, surveying an employee return, and other related procedures.

  3. IRM, Case Return Criteria, provides guidance on the criteria for limiting the number of cases returned to the group for re-work. The criteria for "substantial error" under IRM, Substantial Error, does not apply to employee audits.

  4. IRM, Exceptions for Program Requirements, states the reviewer must give consideration to the proper completion of procedures and requirements associated with employee audits.

  5. IRM, Policy Statement 4-9, provides standard examination procedures for Service employees.

Audits of New Employees
  1. Refer to IRM, New Employee Examinations. Once the case is closed from Technical Services, Centralized Case Processing (CCP) will forward the required information to the requesting official, such as the Labor/Employee Relations, Treasury Inspector General for Tax Administration (TIGTA), or the National Background Investigations Center. Refer to IRM, Closing an Employee Examination.

  2. For executive or political appointment audits, the reviewer will complete a cover memorandum notifying the Director, Executive Leadership Services Division in the Human Capital Office (HCO) that the examination has been completed, reviewed, and approved. The memorandum is signed by the territory manager and then mailed by the reviewer in Technical Services.

Key Points for Reviews
  1. The reviewer should follow general case review procedures per IRM, General Case Review Procedures, for employee audit case reviews. In addition, consider these key points for review of employee audits:

    1. Confidentiality must be strictly observed.

    2. The quality attributes will provide the basis of the technical review of the examination. See IRM Exhibit 4.8.3–1, Quality Attributes, and Document 12354, Field Compliance Embedded Quality, Field and Office Examination Job Aid.

    3. The review should consider whether or not the employee complied with the Service's ethics program and rules of conduct. See IRM, Violations of the Code of Conduct.

    4. The return of an employee's spouse who has filed separately should be inspected to determine if it should be examined. A copy, RTVUE, or compliance data environment (CDE) print of the spouse's return must be included with the employee's return if it is not examined. See IRM, Examination of Spouse’s Separate Return.

Audit of President and Vice President

  1. The individual tax returns for the President and the Vice President are subject to mandatory review and will be closed directly to the "employee audit reviewer" in Baltimore Technical Services. See IRM (8). The “Other” box in the “Forward to Technical Services” section of Form 3198 must be checked and the examiner should notate “President (or Vice President) Examination; Forward to Baltimore Technical Services.” The examining area will notify the group manager for the Baltimore Technical Services when the return is being shipped. Baltimore Technical Services will provide advance notice to Memphis Centralized Case Processing (CCP), "Miscellaneous Group" , when the return is being closed.

  2. The location of the returns of the President and Vice President will be monitored at all times throughout the examination process.

    1. The returns should be kept in an orange folder at all times.

    2. The returns should not be exposed to viewing by other employees.

    3. The returns should be locked in a secure drawer or cabinet when the examiner is away from the work area.

  3. See IRM and (b) for key points to remember during the review of the returns.