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4.8.6  Criminal Restitution and Restitution-Based Assessments

Manual Transmittal

August 05, 2015

Purpose

(1) This transmits new IRM 4.8.6, Technical Services, Criminal Restitution and Restitution-Based Assessments.

Material Changes

(1) This is a new IRM that provides the procedures for Technical Services when processing cases where criminal restitution has been ordered by the court after August 16, 2010. This section incorporates Interim Guidance SBSE 04-0214-0013, Interim Guidance on Criminal Restitution Procedures, dated February 5, 2014, , Interim Guidance SBSE-04-0215-0019, Re-Issued Interim Guidance on Criminal Restitution Procedures, dated February 5, 2015 and Interim Guidance SBSE-04-1014-0056, Interim Guidance for Restitution-Based Assessment, dated October 7, 2014.

Effect on Other Documents

This IRM incorporates Interim Guidance SBSE 04-0214-0013, Interim Guidance on Criminal Restitution Procedures, dated February 5, 2014, , Interim Guidance SBSE-04-0215-0019, Re-Issued Interim Guidance on Criminal Restitution Procedures, dated February 5, 2015 and Interim Guidance SBSE-04-1014-0056, Interim Guidance for Restitution-Based Assessment, dated October 7, 2014.

Audience

SB/SE Technical Services employees

Effective Date

(08-05-2015)

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

4.8.6.1  (08-05-2015)
Overview

  1. Technical Services (TS) has exclusive responsibility for completing assessments on criminal restitution (CR) cases where IRC 6201(a)(4), Assessment Authority, is applicable. A CR assessment is also referred to as a restitution-based assessment (RBA).

  2. IRC 6201(a)(4) requires criminal restitution ordered after August 16, 2010, to be assessed as if it were a civil tax. Whether criminal restitution can be assessed as a tax under IRC 6201(a)(4) depends on whether the restitution ordered is traceable to a tax imposed by Title 26. Restitution ordered for a criminal violation of IRC 7201, Attempt to Evade or Defeat Tax, IRC 7202, Willful Failure to Collect or Pay Over Tax, IRC 7203, Willful Failure to File Return, IRC 7206(1), Fraud and False Statements, as well as several other criminal tax violations under the Internal Revenue Code and Title 18 may meet the requirements necessary to be assessed as a tax. The applicability of IRC 6201(a)(4) will be determined by criminal investigation (CI) with input from Criminal Tax Counsel and will be reflected on Form 14104, Notification of Court Ordered Criminal Restitution Payable to IRS.

  3. As described later, a closing package with assessable restitution payable to the IRS will be sent to two locations as follows:

    1. The centralized TS restitution assessment group and

    2. The local TS territory manager (TM) or designee.

  4. The manager of the centralized restitution site will monitor the group's inventory to ensure all procedures are followed and will monitor Examination Returns Control System (ERCS) to ensure accurate records are created and maintained and that timely actions are taken.

  5. The local TS group manager will ensure that the correct ERCS coding, based upon the disposition of the civil examination, is entered onto the ERCS restitution collateral record prior to closing the collateral record to Status Code 90 as set forth in the procedures to follow.

  6. Each TS territory manager and local TS group manager has responsibility to ensure proper adherence to criminal restitution procedures.

4.8.6.2  (08-05-2015)
Roles and Responsibilities of the TS Centralized Restitution Assessment Group

  1. A TS group has been designated to make all of the CR assessments. This group will receive all CI closing packages that contain court ordered restitution payable to the IRS that are assessable per IRC 6201(a)(4), Assessment Authority. These tasks to follow will be accomplished by tax examiners (TE) and centralized restitution coordinators (CRC) in this TS group.

4.8.6.2.1  (08-05-2015)
Roles and Responsibilities of Centralized Group Tax Examiners

  1. To track and monitor CR inventory, TS will establish ERCS collateral records for all taxpayers against whom assessable restitution payable to the IRS has been ordered by the court. ERCS collateral records will not be established if there is no restitution to assess, there is no restitution payable to the IRS or there is insufficient information for TS to rely on to make an accurate assessment. For all assessable restitution cases, an ERCS collateral record will be established upon receipt of the properly completed Form 14104 package into the TS centralized CR mailbox;*SBSE TECH Svs Criminal Restitution . The restitution collateral record should be set up within three business days after the receipt of the properly completed Form 14104 package.

    Note:

    All packages that are not complete and accurate when received will be returned to the appropriate local CI conditions of probation (COP) coordinator within 30 calendar days of receipt in the TS CR mailbox. TS will take no further actions until a complete and accurate Form 14104 closing package is received back into the TS CR mailbox. Subsequently, upon receipt of a complete and accurateForm 14104 closing package, TS will resume processing the RBA.

4.8.6.2.1.1  (08-05-2015)
Establishing Collateral Records

  1. The TS TE with responsibility for working the CR mailbox will create a collateral record within three business days of receiving a properly completed Form 14104 closing package with assessable restitution. The ERCS "date in review" will be the date a Form 14104 package is received in the CR mailbox. A collateral record will not be built if there is no restitution to assess or no restitution payable to the IRS.

    Note:

    If a collateral record is built and it is later determined that there is no restitution to assess or that restitution was not payable to the IRS, the collateral record can be closed. The collateral record will be updated to Review Type 94 or Review Type 97, Suspense Type 000 and Status Code 90. See Exhibit 4.8.6-1 for review type definitions.

  2. The TE will pull command code (CC) INOLES to verify / confirm the accuracy of the name and taxpayer identification number (TIN) per Form 14104.

    1. There may be instances where the defendant does not have a TIN / EIN. For example, the defendant may be a foreign individual without a SSN or ITIN. In these instances, the collateral record will be created with a "dummy" SSN or EIN until a TIN can be created for the defendant. The CRC group will use a "dummy" SSN or EIN in the following format; 000-00-0XXX. The TIN for the ERCS collateral record will be updated when a TIN / EIN is created for the defendant.

  3. Collateral records are for TS inventory purposes only. These records do not get established on Audit Information Management System (AIMS) and should never be updated to a field, Planning and Special Programs (PSP), Campus or Appeals status.

  4. The TE will complete the following actions for each Form 14104 package in creating the collateral record on ERCS.

    1. Log into ERCS; User Group: Review User; Examination Main Menu.

    2. Select #1 Request Tax Return and then select #4 Control Collateral Examination.

    3. Input 20X 88700 XXXX based upon the designated centralized reviewer group and the designated TS employee ERCS identification number (ID) of the reviewer.

      Reminder:

      For collateral records the primary business code (PBC), secondary business (SBC) and employee group code (EGC) must correspond to the assigned reviewer's group number.

    4. Follow the prompts to input the social security number (SSN) / employer identification number (EIN) of the defendant reflected on the Form 14104, as applicable.

    5. Input the taxpayer name. The name should always be preceded by the letters "REST" and a hyphen "-" . This will aid in identifying the collateral as a CR record. The format will be "REST-last name, first name" or "REST-name of corporation."

    6. Input MFT "30" if the defendant is an individual or MFT "02" if the defendant is a non-individual (e.g., corporation).

    7. Input Tax Period "198811."

    8. Input Activity Code. Input either "272" if the defendant is an individual or "203" if the defendant is a non-individual.

    9. Input Source Code "70."

    10. Input Status Code "20."

    11. Input Statute "04/OO/1992."

    12. Input Tracking Code "6568."

    13. Input Project Code "1168."

    14. Input Review Type "91" if the restitution is based on the defendant's Form 1040, U.S. Individual Income Tax Return; Review Type "95" if the restitution is based on a corporate liability in full or part; or Review Type "96" if the restitution is based on returns prepared by a return preparer in full or part. If unsure, use Review Type "91" .

    15. Input Technical Services Code (TSC). Enter the applicable TSC of the TS group.

    16. Select "N" for Joint Committee.

    17. Select "N" for Foreign Controlled Corporation.

    18. Select "Y" if all of the information input is correct.

    19. Enter "N" for no more to input since there is only one year.

    20. Select "N" for related.

    21. Select "N" for CIC.

    22. Select "none" for the Aging Reason Code.

    23. Enter Control primary business code (PBC) "217."

    24. Enter into ERCS Examination Main Menu.

    25. Select #2, Correct and Display Record.

    26. Select #2, Correct Multiple Examinations.

    27. Update the Suspense Type (#17) to "551."

    28. Update "Date in Review" to the date the Form 14104 package was received in the mailbox.

  5. The collateral record will be updated to the next appropriate status code, review type, and suspense type as reflected in Exhibit 4.8.6-1.

4.8.6.2.1.2  (08-05-2015)
Initial Review of the Form 14104 Package

  1. The Form 14104 package will be reviewed for completeness. A complete package contains the following items at a minimum.

    1. The most current version of Form 14104;

    2. The correct name and SSN / EIN based on the Integrated Data Retrieval System (IDRS) research performed;

    3. A check mark in the Final Adjudication box in the Approval section of Form 14104;

    4. The most current version of the Form 13308, Criminal Investigation Closing Report; and

    5. A Judgment and Commitment Order (J&C).

  2. If the Form 14104 package is complete, the TE will complete the following actions:

    1. Determine if the same information was simultaneously sent to the local TS office. If this information was not sent to the local TS office, then the TE is to forward the information to the local TS office.

    2. Establish the ERCS collateral record with the CRC reviewer's ERCS ID# and the TSC.

    3. Forward the Form 14104 package to the CRC.

    4. Move the incoming e-mail with the attachments into a designated folder for reference at a later date.

  3. If the Form 14104 package is NOT complete, the TE will forward an e-mail to the CI office’s COP coordinator and to the local TS office. In the body of the e-mail the TE should state the following information.

    1. "The Form 14104 package is not complete" ;

    2. What caused the package to be incomplete; and

    3. To re-submit a completed Form 14104 package to the TS centralized mailbox, the local TS office and all other required parties.

    Note:

    TS will take no further actions until a complete Form 14104 package is received back into the CR mailbox. When a complete Form 14104 package is received back into the CR mailbox, the TE will follow steps 2a, 2b, 2c, and 2d above.

  4. The TE in the CRC group will print the Form 14104 package, create a case file, attach a Form 9984, Examining Officer's Activity Record, and pull the appropriate IDRS information.

  5. The collateral record will be assigned on ERCS to the CRC.

  6. The collateral record will be updated, as appropriate, to reflect all steps taken in the CR assessment process. See Exhibit 4.8.6-1 for current review types, suspense types, etc. to be used for CR cases.

4.8.6.2.2  (08-05-2015)
Roles and Responsibilities of Centralized Restitution Coordinators (CRC)

  1. The CRC will review the Form 14104 package to ensure accuracy of the closing package. This review is called "Perfecting a CI - CR Package." The CRC will review the closing documents within 10 business days of receipt as described below to "perfect" the CI - CR package.

  2. Time spent by the CRC will be charged to Activity Code 587-091 on the agent's input document.

4.8.6.2.2.1  (08-05-2015)
Perfecting the CI - CR Package (Reviewing the Form 14104 Package by the CRC)

  1. The current revision of Form 14104 must be used.

  2. IDRS research of CC INOLE should confirm the Form 14104 name in Section 1 and TIN in Section 2 are for the subject identified.

  3. IDRS research of CC SUMRY should verify the CI "Z" freezes have been released.

    Note:

    The CI "Z" freeze will not prevent the case from being "perfected" but will prevent the creation of a MFT 31 RBA assessment module. The input by CI of the TC 912 should be addressed with CI immediately. ERCS should be updated to Status Code 30 until the "Z" freeze is removed.

  4. The Approval section at the top of Form 14104 should have the box checked for final adjudication to indicate all appeal deadlines have expired and no appeals are outstanding. Restitution cannot be assessed if the subject has submitted an appeal which is pending.

  5. The date in Section 5 should correspond to the J&C date and MUST be after August 16, 2010 to make the RBA.

  6. The amount in Section 6, Restitution Payable to the IRS, MUST tie to the grand total amount in Section 14 AND to the amount payable to the IRS per the J&C.

    Note:

    The J&C must state that restitution is payable to the IRS and list a dollar amount of the restitution ordered. If the J&C does not list the IRS as a victim, possibly because the victims list is sealed, follow up with the CI COP coordinator for confirmation that the IRS is a victim and for what amount. In these situations, a written confirmation that the IRS is a victim should be secured by CI, ideally from the Assistant United States Attorney (AUSA). If that is not possible, a written confirmation from CI will suffice.

    1. A signature is not required on the J&C as long as the docket number is indicated.

    2. The main document in a CI closing package is the J&C NOT the Form 14104.

    3. In some instances, the J&C only states "The defendant is to pay the IRS $XXX within XXX years as a special condition of supervised release." This is a term of probation and is not an order of restitution. In this instance, confirm with Counsel that there was no restitution ordered.

  7. For cases where the J&C and / or Form 14104 indicate that the restitution ordered is joint and several (J&S) with other co-defendant(s), the following actions should be taken:

    1. Verify that the joint and severally liable names per Form 14104 reconcile with the J&C and supporting documents (e.g., plea agreement, special agent report (SAR), spreadsheets, etc.).

    2. Research ERCS to identify the other J&S defendants. If any of the other J&S defendants are in the assessment process, coordination is needed to ensure the assessment paperwork is processed at the same time.

    3. In return preparer program (RPP) J&S cases, ensure the client lists are provided that specify what each defendant owes and what clients were the basis for the restitution ordered. Sometimes it may be the same client list for all of the defendants. When the restitution amounts are different for some of the J&S defendants, this indicates that different clients made up the restitution calculation. Separate client lists are therefore needed for each defendant.

  8. A checkbox should be selected in Section 8.

    1. If checkbox "b" is selected in Section 8, the amounts attributable to the defendant and/ or other co-conspirators must be accurate and separately identified.

      Note:

      Restitution for fictitious returns that are not those of the defendant or co-conspirators, are not assessable restitution but the total should appear in Section 14d.

    2. If checkbox c is selected in Section 8, the amounts shown on the attached listing must be accurate and include all applicable identifying information (i.e.., EIN, year / tax period, and amount of restitution per year / period).

  9. If a checkbox is selected in Section 10 indicating that the restitution is J&S, the information on all J&S defendants MUST be provided by CI.

  10. If the restitution is based on a corporate liability or any other return that is not the SSN of the defendant, Section 14a, Column 1 should contain the related EIN(s) for the corporate, employment tax or other module. All applicable periods and restitution amounts MUST be reflected.

  11. If some of the restitution is based on a penalty, the nature or code section of the penalty should be verified. Restitution assessed as a penalty is assessed using the same transaction code or reference number as the civil penalty.

  12. The total amounts in Section 14 shown by CI for restitution as tax, interest and penalty should total the restitution ordered. In many instances, other documents provided by CI (i.e., information / indictment, plea agreement, government sentencing document, court document, court transcript, etc.) will support the figures reflected by CI in this section.

    Note:

    There should not be any negative amounts in Section 14. CI should reasonably allocate any negative amounts to other years or periods.

    Note:

    If supporting details are not provided, accept the amounts reflected in Section 14.

  13. If any of the information reflected above is missing, not complete or raises questions about making the RBA, the package is not accurate. See IRM 4.8.6.2.2.1.2 below.

4.8.6.2.2.1.1  (08-05-2015)
Form 14104 Accepted as Prepared by CI

  1. If upon review of Form 14104, J&C, and Form 13308, it is determined that the Form 14104 package is correct as stated, document such in the activity record and proceed to IRM 4.8.6.2.2.3 directions in this document.

4.8.6.2.2.1.2  (08-05-2015)
Form 14104 That Needs Additional Information

  1. If upon review of Form 14104, J&C, and Form 13308, it is determined that the Form 14104 package is NOT accurate, the CRC will document it in the activity record and forward an e-mail to the CI office, COP coordinator, and to the local TS office. In the body of the e-mail the CRC should state the following:

    1. The Form 14104 package is not accurate;

    2. What needs to be done to make the package accurate; and that

    3. Accurate Form 14104 package shall be submitted to the TS centralized mailbox, the local TS office, and all other required parties.

      Note:

      TS will take no further actions until a complete Form 14104 package is received into the CR mailbox. The collateral will be updated to Status Code 30, Suspense Type 552. When a Form 14104 package is received back and the CRC determines the CI documents are accurate and complete, the TE will update the collateral record from Status Code 30, Suspense Type 552 to Status Code 20, Suspense Type 551 and the "date in review" to the date the perfected Form 14104 was received in the mailbox.

4.8.6.2.2.2  (08-05-2015)
Assessing Restitution

  1. Restitution is assessed under the defendant's SSN if the defendant is an individual or EIN of the business entity, such as a corporation.

  2. MFT 31 will be used to assess all restitution when the defendant is an individual.

  3. The applicable corporate or BMF MFT will be used to assess the restitution when the defendant is NOT an individual (e.g., corporation, etc.). The RBA can be made on a defendant's BMF MFT 02, 01, or 06, etc. module.

  4. When a criminal restitution case involves a foreign taxpayer or foreign owned corporation that does not have a TIN, a request must be made to have a TIN assigned to the entity so that a RBA may be made under a TIN of the defendant.

    1. Form 9956, Request for Temporary IRSN, should be completed and faxed to Ogden Submission Processing, Entity Team 34301 at fax number 801-620-6698. The form will create the needed TIN / EIN to make the RBA.

    2. Once the Form 9956 request is processed, Ogden Submission Processing will return the completed form with the assigned TIN / EIN. The assigned TIN / EIN will immediately show up under IDRS command code ENMOD.

    3. Once the assigned TIN / EIN posts to master file ( e.g., no longer EP or PN), the assigned TIN / EIN will show up under IDRS command codes INOLE, IMFOL, and BMFOL.

4.8.6.2.2.2.1  (08-05-2015)
Creating MFT 31 Tax Modules and Recording TC 971 Action Code 102

  1. MFT 31 modules are needed for all defendants that are individuals, NOT corporations. There are two ways that a MFT 31 module can be created; via Form 3177, Notice of Action for Entry on Master File, entering a TC 971 Action Code (AC) 102 on a MFT 30 module OR via IDRS command code MFREQ. The procedures to follow will address both situations and when they are used.

    Note:

    There are two sample Form 3177s as exhibits. Although the instructions and exhibits in this IRM generally will address all restitution situations, the format and data that are shown on the exhibits are specific to a common restitution scenario.

    1. When the restitution to be accessed is IMF based (i.e., based on the defendant's own Form 1040), the MFT 31 account will be established through the defendant's MFT 30 account. If a joint return was filed, use the primary spouse's SSN. See procedures in IRM 4.8.6.2.2.2.1(2).
      If the MFT 30 module is on retention, use IDRS CC IMFOLB to recall the module from retention.
      If there is no MFT module present, use IDRS CC MFREQ to create a MFT 30 module.
      If there is no filing requirement, use IDRS CC MFREQ to create a MFT 31 module.

    2. When the restitution to be assessed is BMF based (i.e., based on a business entity related to the defendant), use IDRS CC MFREQ to create the needed MFT 31 accounts.

      Example:

      Use MFREQ to create MFT 31 accounts for a BMF based assessment for a Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, for tax period 200712. See IRM 4.8.6.2.2.2.1(3).


      If the BMF module is on retention, use IDRS CC BMFOLB to recall the module from retention.
      If there is no MFT module present, use IDRS CC MFREQ to create the needed module.

    3. If restitution is based on BOTH an IMF liability and a BMF liability for the same period (e.g., tax year 200712 for the defendant's Form 1040 and for a related calendar year Form 1120, U.S. Corporation Income Tax Return), the MFT 31 account will be created through the defendant's MFT 30 module, NOT MFREQ. See IRM 4.8.6.2.2.2.1(2).

    4. If restitution is based on BOTH an IMF liability and a BMF liability for different periods, (e.g., 200712 for the defendant's Form 1040 and for a related fiscal year Form 1120 for 200710) the MFT 31 accounts will be created through the defendant's MFT 30 module to create the 200712 module and using MFREQ for the 200710 module. See IRM 4.8.6.2.2.2.1(2) and IRM 4.8.6.2.2.2.1(3).

    5. When the restitution to be assessed is RPP based (tax returns prepared by the defendant), use IDRS CC MFREQ to create MFT 31 accounts.

      Example:

      Use MFREQ to create MFT 31 accounts for a RPP based assessment for client returns for Form 1040, Form 1120, etc. If the client returns are not on a calendar year, the applicable MFT 31 period will be created based on the fiscal year of the entity (i.e., 200710). See IRM 4.8.6.2.2.2.1.

  2. When the creation of the MFT 31 account is accomplished through the defendant's MFT 30 module, the following information will be entered on the Form 3177. Use Exhibit 4.8.6-2 as a guide to prepare the Form 3177.

    1. Initiator information - Enter your name, phone number and employee number.

    2. Date - Enter the date the form is created.

    3. Taxpayer Name - Enter the name found on the MFT 30 module.

      Note:

      The defendant’s SSN may not be the primary SSN on the MFT 30 module to establish the correct name to enter.

    4. EIN or SSN - Enter the social security number found on the MFT 30 module where the defendant filed the tax return.

      Note:

      The defendant’s SSN may not be the primary SSN on the MFT 30 module.

    5. TC 971 - Enter the following instructions next to "Other (specify)" - Establish MFT 31 with TC 971 AC 102 for (SSN of a defendant liable to pay restitution).

    6. Enter MFT Code 30 and tax period(s) in the appropriate columns.

  3. When using IDRS CC MFREQ to create a MFT 31 account for the periods needed, a dummy MFT 31 module will be created but it will drop off IDRS in six cycles if no other transactions are posted on the module. As soon as the MFT 31 module is created, prepare Form 3177 using Exhibit 4.8.6-3 as a guide to record a TC 971 AC 102 onto the MFT 31 module:

    1. Initiator information - Enter your name, phone number, and employee number.

    2. Date - Enter the date the form is completed.

    3. Taxpayer Name - Enter the name of the defendant liable for criminal restitution. This will be the same name found on the MFT 31 module.

    4. EIN or SSN - Enter the social security number of the defendant liable for criminal restitution. This will be the same SSN found on the MFT 31 module.

    5. TC 971 - Enter the following instructions next to "Other (specify)" - To record TC 971 AC 102 [EIN / SSN of related entity, MFT 02, 01, 30, et. and the MFT 02, 01, 30, etc. tax year period] (e.g., 12-345678 // 02 // 200309).

      Note:

      To record TC 971 AC 102 in RPP cases - [SSN of the defendant, MFT 31, and the MFT 31 tax year period] (e.g., 123-45-6789 // 31 // 200712).

    6. Enter the MFT Code 31 and MFT 31 taxable period in the appropriate column.

    7. Use Exhibit 4.8.6-3 as a guide to record TC 971 AC 102 and send to CCP.

    Note:

    IDRS CC MFREQ has several uses. For restitution assessment purposes, MFREQ should be used to create a module as outlined in the table below. A MFREQ dummy module will drop off after six cycles if no history is recorded. The needed forms should be submitted as soon as possible after the dummy module is created to prevent it from dropping off master file.

    Situations using MFREQ on CR Cases Explanation for MFREQ Usage
    If the restitution is an IMF based or BMF based module and a tax period is not on master file (e.g., no MFT 30 200912 tax period or the related MFT 02 200912 tax period). Then use MFREQ for the missing tax period to create a dummy IMF / BMF module (i.e., the missing 200912 MFT 30 module).
    If the restitution is BMF based only - restitution is based on a related BMF entity of the defendant (e.g., restitution-based on a related payroll entity / Form 941 for 200903, 200906, 200909 and 200912 tax periods). Then use MFREQ to create a dummy MFT 31 module for tax periods 200903, 200906, 200909 and 200912.
    If the restitution is IMF and BMF based - restitution is based on both an IMF module of the defendant and a related BMF entity of the defendant (e.g., restitution-based on the defendant's Form 1040 for 200912 and related payroll entities / Form 941 for 200903, 200906, 200909 and 200912 tax periods). Then use MFREQ to create a dummy MFT 31 module for tax periods 200903, 200906 and 200909 ONLY. The MFT 31 module for 200912 is created through the defendant's MFT 30 module.
    If the restitution is RPP based only - restitution is based on client returns prepared by the defendant (e.g., restitution-based on client returns (Form 1040 returns for 200712 and 200812 tax years). Then use MFREQ to create a dummy MFT 31 module for periods 200712 and 200812.
  4. If it is discovered that an MFT 31 account was previously created for the taxpayer for another purpose, additional research is needed. The MFT 31 should be evaluated to determine why the MFT 31 account was created and the nature of what was assessed in the MFT 31 module. The assessment statute expiration date (ASED) should also be evaluated to ensure sufficient time remains on the ASED to post an assessment.
    If the ASED reflected on the MFT 31 module has expired or will expire within nine months, a new ASED date needs to be input (via a TC 560). The new ASED date should be a date one year from the current month ending date (e.g., 3/31/2015, if the update is done in March of 2014).
    A Form 3177 should be prepared to "record" a TC 971 AC 102 on the MFT 31 account and update the ASED if needed. See IRM 4.8.6.2.2.2.1(3).

    Note:

    An ASED is only needed on the module to make the RBA. An assessment cannot post if there is an expired ASED. If an ASED has been updated on an existing MFT 31 module that contained a civil assessment in order to process the RBA, the ASED will need to be restored to the original ASED once the RBA posts. This will prevent any potential for a civil audit during the one year period extended for CR purposes.

  5. In the rare instances where the defendant is a non-individual (i.e., a corporation), the RBA will be made on the applicable MFT of the non-individual (i.e., MFT 02). To identify this module as a restitution assessment module, a TC 971 AC 102 will be input onto the MFT module of the non-individual defendant. Use Exhibit 4.8.6-3 as a guide to prepare Form 3177 to record the TC 971 AC 102. The MFT of the entity should be evaluated to determine if the ASED should also be updated to post an assessment. If an ASED has been updated on a corporation in order to process the RBA, the ASED will need to be restored to the original ASED once the RBA posts. This will prevent any potential for a civil audit during the one year period extended for CR purposes.

  6. All completed Form 3177s should be e-faxed to Memphis CCP. Their e-fax number(s) can be found at http://mysbse.web.irs.gov/AboutSBSE/aboutccs/ccsprog/casepro/cp/cont/28100.aspx.
    The ERCS collateral record suspense type will be updated to 553 when all Form 3177s have been submitted to CCP for processing.

4.8.6.2.2.2.2  (08-05-2015)
Notification of the Kansas City Restitution Unit

  1. On a weekly basis, the centralized restitution reviewer or tax examiner will provide a list to the Kansas City (KC) Restitution Unit via their e-mail address (*W&I Criminal Restitution) that identifies the MFT 31 accounts that were initiated for the RBA (i.e., Form 3177 was submitted to create the MFT 31 account or MFREQ was used to create the dummy MFT 31 module) since the last weekly notification.

  2. Upon receipt of the listing, KC will research their files for any payments received for the defendants reflected. For those defendants that have made a payment, KC will begin to prepare the necessary paperwork to move the payment (s) into the MFT 31 account. When the MFT 31 account has been fully created, KC will submit the needed forms to move the payments to the MFT 31 account.

  3. When the defendant is a non-individual (i.e., a corporation), the centralized restitution reviewer or tax examiner will provide notification to the KC Restitution Unit via their e-mail address when the assessment paperwork has been submitted to CCP that a RBA will be made on a non-individual.

    1. The notification will reflect:
      The EIN of the defendant where the restitution assessment will be made;
      The MFT of the assessment module;
      The applicable periods for the restitution assessment; and
      The amount of restitution that will be assessed per period.

    2. Upon notification, KC will begin preparing the needed paperwork to move the payments into the applicable modules.

    3. TS will monitor the assessment modules and will notify KC when the assessment(s) have posted.

    4. Upon the 2nd notification, KC will process the paperwork to move the payments into the applicable RBA modules.

    5. KC will monitor the accounts to ensure all payments have been correctly moved.

4.8.6.2.2.2.3  (08-05-2015)
Monitor IDRS

  1. After waiting 30 calendar days, the CRC or TE will monitor IDRS for the creation of the MFT 31 account or the posting of the TC 971 AC 102 onto the MFT 31 module. The ERCS collateral record suspense type will be updated to 554 when all MFT 31 accounts have been created and reflect the TC 971 AC 102.

  2. After 30 days, if IDRS does not reflect the creation of the MFT 31 account or the posting of the TC 971 AC 102 onto the MFT 31 account, follow up actions are required with CCP. The ERCS collateral record will be updated to Status Code 25.

  3. After all MFT 31 accounts have been created, the ERCS collateral record suspense type will be updated to 554 and the CRC will continue with the restitution process by preparing and submitting the Form 3870, Request for Adjustment, and Form 3177.

4.8.6.2.2.3  (08-05-2015)
Assessing Restitution and Related Issues

  1. When the determination is made by CI that a restitution assessment is warranted under IRC 6201(a)(4), an RBA will be made under the SSN or EIN of the defendant. The tax returns that were the basis for the restitution order will not reflect the RBA. For example, an individual defendant is ordered to pay restitution to the IRS based on a tax loss and may or may not reflect the civil tax liability actually owed. All of the restitution ordered will be assessed on MFT 31 accounts created under the defendant’s SSN not on MFT 30 or MFT 02.

  2. Prior to preparing / submitting the restitution assessment forms, the applicable assessment modules should be reviewed to determine if an assessment statute expiration date (ASED) is reflected. Generally, a recently created MFT 31 module will not reflect an ASED. However, when the MFT 31 account was previously used for another reason, there may be an ASED present. Prior to submitting the restitution assessment paperwork, all MFT 31 modules that will be used for the restitution-based assessment should be reviewed.

    Note:

    There is an ASED issue when multiple Form 3870s need to be submitted for one tax period. When an assessment posts to the restitution MFT 31 account, the system creates an ASED based upon the normal due date of the year / period of the module. While working cases when multiple assessments are needed on the same module (usually only when working BMF-based restitution cases) where multiple BMF entities were the basis of the restitution ordered, the ASED needs to be updated or input in advance of the assessments posting. If the ASED is not updated in advance, the second and subsequent assessments will not post since there will be an expired ASED (because of the first assessment). When updating an ASED, a new ASED date needs to be input (via a TC 560 on Form 3177). The new ASED date should be a date one year from the current month ending date (e.g., 3/31/2015, if the update is done in March of 2014).

    1. If there is no ASED on the module and only one restitution assessment is needed on the module, no further steps are required.

    2. If there is an ASED on the module that is expired or will expire within 9 months or if multiple assessments (usually BMF based restitution assessment cases) will be made on the module, the ASED needs to be updated or created on the MFT 31 module. Submit the Form 3177 to CCP to input a TC 560 to reflect an ASED (1 year from the current date). The Form 3177 should be submitted prior to submitting the Form 3870. For most BMF cases, this can be accomplished on the same Form 3177 that will be processed to input the TC 971 AC 102 onto the MFT 31 module. See http://mysbse.web.irs.gov/AboutSBSE/aboutccs/ccsprog/casepro/cp/cont/28100.aspx for a listing of the e-fax numbers.

  3. All RBA documents will be processed by CCP Memphis. Completed Form 3870s should be e-faxed to Memphis. See http://mysbse.web.irs.gov/AboutSBSE/aboutccs/ccsprog/casepro/cp/cont/28100.aspx for a listing of the e-fax numbers.

    Note:

    It will take approximately 35 calendar days for the assessment to be reflected on IDRS. Multiple assessments needed in the same module or period will take longer.

  4. After 35 days, if no assessments are pending or if the receipt of the Form 3870 is not recorded in the history section of a TXMOD, follow up actions are required with CCP.

  5. In addition to sending the Form 3870 to CCP, Form 3177s for command code RAPID will also be sent to CCP with the Form 3870. See IRM 4.8.6.2.2.5.

  6. The ERCS collateral record suspense type will be updated to 555 when all Form 3870s are submitted to CCP.

  7. After all RBAs have correctly posted, the ERCS collateral record suspense type will be updated to 556.

4.8.6.2.2.3.1  (08-05-2015)
No Civil Assessment Exists on MFT 31

  1. If no civil assessment exists on MFT 31, the restitution will be assessed via Form 3870. A separate Form 3870 is required for each period and for each assessment. Line by line instructions for the Form 3870 are as follows:

    1. Line 1 - Enter the SSN of the defendant liable for criminal restitution (the SSN of the MFT 31 account).

    2. Line 1 - (cross reference TIN) - IF APPLICABLE: Enter the EIN of the BMF entity that was the basis for the restitution being assessed.

    3. Line 2 - Enter the name and address of the defendant liable for the restitution.

    4. Line 4 - Enter 31.

    5. Line 5 - Enter applicable tax period.

    6. Line 11 - Enter "Assess criminal restitution per instructions below" and any other needed processing instructions. If the restitution was BMF based, include the interest start date of MM/DD/YYYY (usually due date of BMF return).

    7. Line 13 - Enter your signature as the preparer of the form along with your telephone number and the date.

    8. Line 14 - Your manager should sign as the approving official and enter the appropriate title and the date.

    9. Line 16 Block Series - Enter "00" if no TC 150 appears on the MFT 31 module or enter "05" if TC 150 is present on the MFT 31 module (this may occur if the account was previously created for another purpose such as innocent spouse.)

    10. Line 18 Source Code - Enter "02" if assessment is based on IMF / RPP liability or leave blank if the liability is based on a BMF liability.

    11. Line 19 Reason Code - Enter the appropriate 14X code(s) based on the facts of the case. See Exhibit 4.8.6-4 for a listing of reason codes. Up to three reason codes can be used.

    12. Line 21 Hold Code - Enter "0" if only one assessment is to be made in a single tax period / module or leave blank if multiple assessments will be made in a single tax period / module.

      Note:

      When correcting modules, use Hold Code "4" to prevent a Notice and Demand (CP 94) from being issued. The final Form 3870 will contain Hold Code "0" and will allow the systemic Notice and Demand to be issued.

    13. Line 23 Priority Code (use only one code) - Enter "8" if this assessment amount is within $10 of a prior assessment on the MFT 31 module; or enter "1" if there is a TC 420 on the MFT 31 module; or enter "5" if a priority code 8 or 1 is NOT needed.

    14. Line 25 Source Doc - Always enter "Yes" .

    15. Line 29 Adjustments - Enter the appropriate TC in the first column (TC 290 for IMF and RPP (IMF clients) based restitution assessments and TC 298 for BMF and RPP (BMF clients) based assessments) with the related restitution as tax assessment amount in the second column. If applicable, enter the penalty transaction code (e.g., TC 320 for the fraud penalty) in the first column and the related restitution as penalty amount in the second column. Miscellaneous penalties are entered using the applicable reference number of the penalty in the "Ref. No." column and the related restitution as penalty amount in the fourth column, "Item Adjustment" .  Do NOT put TC 240 in the first column of the form. For example, fraudulent failure to file is Penalty Reference Number 686. Enter 686 in the "Ref. No." column and the Fraudulent Failure to File Penalty amount in the "Item Adjustment" column. This will post as TC 240 showing PRN 686.

      Note:

      All penalty transaction codes should be separately reflected and should be the same as the civil penalty transaction code. For example, if part of the restitution ordered was based on a delinquency penalty (TC 160) reflected on the defendant's MFT 30 module, the restitution being assessed on MFT 31 as a penalty will be assessed via TC 160. Examples of other penalties that could be assessed as restitution are the Estimated Tax Penalty (TC 170), Failure to Pay Tax Penalty (TC 270), Fraud Penalty (TC 320), and Miscellaneous Civil Penalties (TC 240 with the applicable reference number).

    16. Line 30 Remarks - Enter "Per Criminal Case #" (case number from J&C).

    17. See Exhibit 4.8.6-4 and Exhibit 4.8.6-5 as a guide to complete the Form 3870.

4.8.6.2.2.3.2  (08-05-2015)
Civil Assessment Already Exists on MFT 31

  1. If a civil assessment already exists on the MFT 31, a Form 3870 should be prepared as reflected below to take into account the previous civil assessment. The MFT 31 module should never contain a duplicate assessment. The Form 3870 should be prepared as discussed in IRM 4.8.6.2.2.3.1 with the following exceptions:

    1. If the civil assessment in the MFT 31 account is for the same amount and based on the restitution ordered for the year, use Form 3870 to input TC 290 for $0 (with the applicable reason code which is usually 143) with an explanation in the remarks section that explains that restitution was assessed as part of the civil assessment that posted on the module.

      Example:

      Assuming the assessment already on the MFT 31 account is the same as would be assessed as restitution, the TC 290 should be for $0. On Form 3870, in Section 11, explain as follows: "The TC 300 assessment made on xx/xx/xx represented the restitution ordered by the court. No restitution needs to be assessed."

    2. If the civil assessment in the MFT 31 account is for more than and based on the restitution ordered for the year, use Form 3870 to input TC 290 for $0 (with the applicable reason code which is usually 143) with an explanation in the remarks section that explains that restitution was assessed as part of the civil assessment that posted on the module.

    3. If the civil assessment in the MFT 31 account is for less than and based on the restitution ordered for the year, use Form 3870 to input TC 290 for an amount so the total civil assessment plus the TC 290 equals the restitution ordered (with the applicable reason code which is usually 143). There would be an explanation in the remarks section that explains that restitution was assessed as part of the civil assessment that posted on the module and this TC 290 assessment.

4.8.6.2.2.3.3  (08-05-2015)
Fixing Restitution-Based Assessment Module

  1. When a RBA module needs to be corrected because the assessment is not correct, the CRC group, upon notification of the error, has exclusive responsibility for correcting the account.

    1. The CRC will secure all relevant information (e.g., J&C, Form 14104, etc.) to establish the correct amount of restitution to be assessed.

    2. The total RBA, excluding interest, should never be more than the restitution ordered by the court.

    3. To avoid corrections that are de minimus errors, see Delegation Order SB/SE 4.41, Error Tolerance Levels.

  2. When corrections are warranted, the incorrect RBA will be reversed / abated in FULL and the correct RBA will be made. The Form 3870 should reflect both the reversal / abatement (i.e., TC 291 for the abatement and TC 290 for the assessment). If two ore more Form 3870s are needed to correct a module, all Form 3870s except the LAST Form 3870 should reflect a Hold Code 4. All Form 3870s should clearly state the reason for the abatement and reassessment.

    Note:

    In very rare instances based on the specific facts of the case, the original assessment may not be reversed. The second assessment / abatement will be used to correct the modules RBA. The Form 3870 should clearly state the reason for the correction.

4.8.6.2.2.4  (08-05-2015)
Cross Referencing Accounts

  1. TC 971 AC 18X action codes are used to define and link RBA and associated fraud penalties to duplicate and non-duplicate RBA, civil and fraud penalty assessments and / or to underlying tax liabilities for a specific TIN, MFT, and tax period.

  2. The linkages are applied to the accounts in pairs in most instances (i.e., TC 971 "points" to a TIN / MFT / tax period and the corresponding TIN / MFT / tax period "points" back.)

  3. The Memo Money Amount (MMA) field of the TC 971 AC 18X is used to identify the amount of the RBA and / or Fraud Penalty that is a duplicate. The dollar amount of the MMA is displayed on CC TXMOD only when an amount greater than $.00 has been entered.

  4. The transactions for the RBA, MMA amount, and associated TC 971 AC 18Xs are initiated by TS and input by Campus Compliance Services (CCS) located in the Ogden Campus. All completed Form 3177s are sent to CCS e-mail box at *SBSE Ogden RBA.

4.8.6.2.2.4.1  (08-05-2015)
Preparation of Form 3177

  1. Once all Form 3870s have been prepared and sent to CCP, the CRC will prepare Form 3177s to cross reference the MFT 31 account to the related MFT account (e.g., MFT 30, 02, 01, 10) AND to cross reference the related MFT account (e.g., MFT 30, 02, 01, 10) to the MFT 31 account. A separate Form 3177 must be prepared for each MFT and for each tax period. This will direct any IDRS account viewer to the applicable restitution account and other related accounts.

  2. The following are the line by line instructions for preparing the Form 3177 to cross reference the MFT 31 module to the related MFT.

    1. Initiator information - Enter your name, phone number, and employee number.

    2. Date - enter the date the form is completed.

    3. Taxpayer Name - Enter the name of the defendant liable for criminal restitution as it appears in the MFT 31 module.

    4. EIN or SSN - Enter the social security number of the defendant liable for criminal restitution as it appears in the MFT 31 module.

    5. TC 971 - Enter the following instructions next to "Other (specify)" - AC 18X; XRef SSN or EIN of related entity / MFT 30, 02, 01, 10, etc. / Year / amount of duplicate assessment, if any. See Exhibit 4.8.6-6 for TC 971 AC 18X definitions and IMF examples or Exhibit 4.8.6-7 for TC 971 AC 18X definitions and BMF and RPP examples.

    6. Enter MFT Code 31 and tax period in the appropriate columns.

    7. Use Exhibit 4.8.6-8 as a guide to complete the Form 3177.

  3. The following are the line by line instructions for preparing the Form 3177 to cross reference MFT 30, 02, 01, 10 to MFT 31.

    1. Initiator information - Enter your name, phone number, and employee number.

    2. Date - enter the date the form is completed.

    3. Taxpayer Name - Enter the name of the defendant liable for criminal restitution as it appears in the MFT 30, 01, 02, and 10 modules. On a married filing joint return in which the defendant was not the primary taxpayer, include both the primary and defendant names.

    4. EIN or SSN - Enter the social security number or tax identification number of the related module / entity.

    5. TC 971 - Enter the following instructions next to "Other (specify)" - AC 18X; XRef SSN of restitution liable defendant / MFT 31 / Year / amount of duplicate assessment, if applicable. See Exhibit 4.8.6-6 for TC 971 AC 18X definitions and IMF examples or Exhibit 4.8.6-7 for TC 971 AC 18X definitions and BMF and RPP examples.

    6. Enter MFT Code 30, 02, 01, 10 and tax period in the appropriate columns.

    7. Use Exhibit 4.8.6-9 as a guide.

    Note:

    Prior to submitting any cross referencing Form 3177, IDRS should be reviewed to ensure the account for the cross reference entity is present. If the related entity does not exist and can't be created via MFREQ, a TC 971 AC 187 should be entered on MFT 31.

4.8.6.2.2.4.2  (08-05-2015)
Cross Referencing for RPP Cases

  1. In RPP cases, actual client returns or some kind of extrapolation based on client returns is the basis for the restitution ordered. However, in most instances, the restitution ordered is substantially less than the actual tax loss sustained by the government. This is because CI's investigation only captures enough clients and client returns needed to support the charges against the defendant. CI does not include every return prepared by the defendant in their investigation. Therefore, there are generally many other client returns that were prepared incorrectly that were never considered when restitution was determined.

    1. In cases where it is clear that the restitution ordered included all false returns prepared by the defendant, there will be a possibility of duplicate assessments; the restitution assessment based on the loss from the client return and the subsequent examination or amended return to correct the false return. In these situations, IDRS will be reviewed on every client return year to determine if there has been an adjustment made to correct the false return. If a duplicate assessment situation exists, the defendant's MFT 31 module and the adjusted return of the client will be flagged as duplicate assessment accounts using TC 971 AC 184 and AC 185. AC 185 will generally be on the MFT 31 account of the preparer / defendant and the AC 184 will generally be on the client return. The MMA amount will be the amount of the duplicate assessment found on the client return module. The amount of the duplicate assessment (MMA) will never be more than the tax loss provided by CI for the specific client.

      Example:

      A defendant was ordered to pay $15,000 of restitution for 2007 based on the following: client #1 loss of $7,000, client #2 loss of $2,000, client #3 loss of $1,000, and client #4 loss of $5,000. If only client #3 and client #4 are audited / adjusted reflecting an increase in tax for client #3 of $1,000 and an increase in tax for client #4 of $2,000, the following 18X transactions would be reflected:
      Client #1 - No TC 971 AC 18X is required.
      Client #2 - No TC 971 AC 18X is required.
      Client #3 - The MFT 30 account of the client would reflect a TC 971 AC 184 to cross reference to SSN of the defendant, MFT 31, tax year 200712, MMA = $1,000. The defendant's MFT 31 account would reflect a TC 971 AC 185 to cross reference to the SSN of the client's MFT 30, tax year 200712, MMA = $1,000.
      Client #4 - The MFT 30 account of the client would reflect a TC 971 AC 184 to cross reference to the SSN of the defendant, MFT 31, tax year 200712, MMA = $2,000. (Even though $5,000 of the restitution was based on client #4's return, his account was adjusted only for $2,000; therefore, the MMA would be $2,000.) The defendant's MFT 31 account would reflect a TC 971 AC 185 to cross reference to the SSN of client #4, MFT 30, tax year 2007, MMA = $2,000.
      The MFT 31 module of the defendant / preparer will reflect a TC 290 to assess the restitution of $15,000 for tax year 200712. See Exhibit 4.8.6-8, Example 17.

    2. In cases where the actual client returns of the defendant / preparer are unknown (e.g., when CI extrapolates the tax loss based on a few client returns) or when an estimate is used to determine the tax loss, no cross referencing to client returns is required.

4.8.6.2.2.4.3  (08-05-2015)
Severally Liable on RPP Cases

  1. In many RPP cases, the restitution ordered is joint and several with other co-defendants. In these instances, it is imperative to secure a listing of client returns that were the basis for the restitution ordered for each defendant. The following example illustrates how the Form 3177 would be prepared to reflect a duplicate assessment due to the assessment on each of the defendant’s accounts.

    Example:

    Three defendants are ordered to pay restitution jointly and severally with each other. The restitution amount is based on multiple client returns for 2003 only.
    Defendant 1 (Lead): TC 971 AC 189 for 200312 XREF Defendant 2; MMA = The total CR amount for all of the same client returns for the 200312 tax period; and TC 971 AC 189 for 200312 XREF Defendant 3 - MMA = The total CR amount for all of the same client returns for the 200312 tax period.
    Defendant 2 (Co-defendant): AC 188 for 200312 XREF Defendant 1; MMA = The total CR amount for all of the same client returns for the 200312 tax period.
    Defendant 3 (Co-defendant): AC 188 for 200312 XREF Defendant 1; MMA - The total CR amount for all of the same client returns for the 200312 tax period.
    If the client returns were audited or adjusted, AC 18X would also point to each of the client returns with their respective MMAs (the tax loss for the respective client).
    Also see Exhibit 4.8.6-8, Example 17.

4.8.6.2.2.4.4  (08-05-2015)
IDRS CC Rapid Input

  1. Command code RAPID was created (effective January 2014) for CCS to assist with monitoring of duplicate assessment accounts. Whenever there are duplicate assessments, TS will prepare Form 3177s to cross reference the duplicate assessment modules as described in IRM 4.8.6.2.2.4. One of the Form 3177s is entered by CCS onto the MFT 31 module and will contain a TC 971 AC 184 / AC 185 or TC 971 AC 188 / 189 with an MMA for the amount of the duplicate assessment. The second Form 3177 is entered by CCS onto the MFT 30, 02, 01, etc. module and will contain a TC 971 AC 184 / AC 185 and / or TC 971 AC 188 / 189 with an MMA for the amount of the duplicate assessment. The data needed for the input into RAPID will be obtained from the Form 3177 for the MFT 30, 02, 01, etc. module. Therefore, two copies of the Form 3177 for the MFT 30, 02, 01 should be printed. One of the copies will be sent to CCP with the Form 3870.

    Note:

    All completed Form 3870s and Form 3177s for the MFT 30, 02, 01, etc. module for CC RAPID input should be e-faxed to Memphis CCP. This department will be processing both the input into CC RAPID and also the input of all Form 3870s. See http://mysbse.web.irs.gov/AboutSBSE/aboutccs/ccsprog/casepro/cp/cont/28100.aspx for a listing of e-fax numbers.

    Note:

    RAPID is only to identify duplicate assessment modules. Only Form 3177s for the input of a TC 971 AC 184 / 185 or AC 188 / 189 should be sent to CCP. Form 3177s for the input of a TC 971 AC 180 / 181 and AC 182 / 183 should not be sent to CCP.

    Note:

    This is in addition to sending the Form 3177s to Ogden CCS as described in IRM 4.8.6.2.2.4.

  2. When duplicate assessment linkages (TC 971 AC 184 / 185 or AC 188 / 189) are corrected, the corrected Form 3177s should also be sent to CCP for CC RAPID input.

    Example:

    A TC 971 AC 185 with a MMA $100 was entered on the MFT 31 module and a TC 971 AC 184 with a MMA $100 was entered on the MFT 30 module. The TC 971 AC 184 with a MMA $100 was also sent to CCP to be used for the CC RAPID input. The MMA amount should have been $1,000. Form 3177s would be submitted to CCS to enter a TC 972 AC 185 MMA of $100 and a TC 972 AC 184 MMA $100 to reverse the TC 971s. The correct Form 3177s would be submitted to CCS to enter a TC 971 AC 185 MMA of $1,000 on MFT 31 and TC 971 AC 184 MMA $1,000 on MFT 30. The Form 3177 for the TC 971 AC 184 MMA of $1,000 on MFT 30 would also be sent to CCP for CC RAPID input.

4.8.6.2.2.5  (08-05-2015)
Notification of Collection Advisory

  1. Upon confirmation that the restitution assessment correctly posted and the TC 971 AC 18X linkages are correctly posted, the CRC will notify Collection Advisory at their dedicated COP / Restitution e-mail address: *SBSE EEF Dallas Restitution. The following will be included in the e-mail:

    1. Taxpayer's Name

    2. EIN / SSN

    3. Years of restitution assessments

4.8.6.2.2.6  (08-05-2015)
Entering Restitution Assessment Information Into ERCS

  1. To capture what was reflected on the Form 14104 and what was assessed as restitution, the restitution collateral record will be updated to reflect the restitution assessment. The following should be updated on the restitution collateral record:

    1. Update to Disposal Code 12.

    2. Use the Form 14104 Item 14 "Totals" to enter the restitution as tax, penalties and interest.
      Using the Form 14104, enter the total amount for this taxpayer (cumulative total of all years) "Amount of Restitution to be Assessed as Tax" in Item 34 as "deficiency" .
      Using the Form 14104 enter the total amount for this taxpayer (cumulative total of all years) "Amount of Restitution Attributable to Interest" on Tax in Item 34 as "interest" .
      Using the Form 14104 enter the total amount for this taxpayer (cumulative total of all years) "Amount of Restitution Attributable to Penalties" in Item 36 as "penalties" . The penalty code section will also have to be input.

4.8.6.2.2.7  (08-05-2015)
Forwarding ERCS Record to Local Technical Services Fraud Coordinator

  1. The ERCS collateral record should be updated to the appropriate local Technical Services fraud coordinator (LTSFC) as described in IRM 4.8.6.3 for civil disposition. The LTSFC and group manager will be contacted via e-mail that the restitution collateral record has been transferred to the group. There should be no need to transmit any documents to the LTSFC since they should have already received the same information that the CRC received from CI. This will serve as the notification for the LTSFC to proceed with appropriate civil actions.

    1. Update the collateral record to Suspense Type 557 (14 calendar days).

    2. Update the Technical Services code (TSC) of the LTSFC who will commence appropriate civil actions.

    3. Update the primary business code (PBC), employee group code (EGC), and the reviewer ERCS ID number to the applicable LTSFC.

4.8.6.2.2.8  (08-05-2015)
Referral of Taxpayer Inquiries to Campus Compliance Services (CCS)

  1. Once a notice and demand is issued after the restitution assessment, the IRS may receive an inquiry from the taxpayer recipient.

  2. TS will address taxpayer inquiries if the problem is related to the following:

    1. Taxpayer questions or disputes the assessment or the assessment amount;

    2. Requests for information on penalty and / or interest computations; or,

    3. All other technical questions or issues that are not specifically addressed in IRM 4.8.6.2.2.8 below.

  3. CCS will address taxpayer inquiries that relate to the following:

    1. Questions regarding restitution payments made and received by the IRS and / or credited to their restitution assessment or another assessment.

    2. Requests for the balance remaining on the restitution module(s).

    3. Requests for an installment agreement.

    4. Taxpayer claims an inability to pay, is incarcerated or is deceased.

  4. If TS needs to refer a question to CCS, Form 4442, Inquiry Referral, will be used to send the referral. Phone and e-mail inquiries received by TS can be documented using Form 4442 and sent to CCS by secure e-mail to: *SBSE Ogden RBA. Written inquiry correspondences will be forwarded to CCS along with Form 4442 to the following address: Internal Revenue Service, 1973 N. Rulon White Blvd., Ogden, UT 84404, ATTN: CSCO RBA / MS 5300.

    Note:

    Referrals sent to CCS that are not under their purview will be returned to TS. CCS will determine if collection related referrals received from TS should be further referred to Collection Advisory or Field Collection.

4.8.6.2.2.9  (08-05-2015)
Inquiries from Powers of Attorney

  1. In some instances, the assessment of restitution will generate an inquiry from a power of attorney (POA). To discuss the case with the POA, a Form 2848 should be secured. Section 3 of the Form 2848 should reflect in the Description of Matter section either: restitution assessment or RBA. All RBA years / periods should also be reflected in Section 3 as well. No entry is required in the Tax Form Number section.

4.8.6.2.2.10  (08-05-2015)
Resolution of a COP / Restitution Case by Appeals

  1. Appeals, upon resolution of the COP / Restitution case, will notify a designated CI and Collection employee. They will also notify the TS CR mail box (*SBSE TECH Svs Criminal Restitution) that the case has been resolved. Upon notification in the TS CR mailbox, the centralized tax examiner will forward the information to the LTSFC. The LTSFC will research IDRS for all applicable and related modules (MFT 31, 30, 02, 10, 01, etc.) to determine if there are duplicate assessments on Master File.

4.8.6.3  (08-05-2015)
Role and Responsibilities of the Local Technical Services Fraud Coordinator

  1. Upon receipt of closing documents that include the Form 14104with assessable restitution, the LTSFC will ascertain whether the information was also sent to the CR mailbox. If the information was not sent to the CR mailbox, the LTSFC will forward the information to the CR mailbox at *SBSE TECH Svs Criminal Restitution.

  2. The responsibility for reviewing the Form 14104 and related closing information for determining the accuracy of the Form 14104 will rest with the CRC. If the CRC determines that the Form 14104 package is not accurate, the package will be returned to CI to correct the package with a courtesy copy sent to the LTSFC.

  3. The LTSFC will take no actions, except as reflected below, on the closing package until notified by the CRC that the required restitution process has been completed.

    1. The LTSFC may contact CI to obtain relevant documents to assist in making a determination if an examination is warranted.

    2. All cases in Fraud and Grand Jury suspense will be immediately returned to the field upon receipt of the Form 13308 / Form 14104 closing package from CI. See IRM 4.8.6.3.2.1.

    3. Cases with less than one year on civil statutes (either the 3 year or the 6 year statute), will be immediately forwarded to Planning and Special Programs (PSP) for civil actions as warranted. See IRM 4.8.6.3.2.2

    4. Cases with a condition of probation (COP) period expiring in 18 months or less will be immediately forwarded to PSP for civil actions as warranted. See IRM 4.8.6.3.2.2

  4. At any point during the restitution assessment process, the LTSFC should forward additional pertinent restitution assessment information that they have in their possession to the CRC via the CR mailbox.

  5. Since restitution cases may also be COP cases, if applicable, the LTSFC will create a COP collateral record within 10 calendar days of receipt of the closing package per the 12/4/10 memorandum from the TS Area Director regarding ERCS collateral records for cases with COP and IRM 4.8.2.10.3.7.9, "Responsibilities of Technical Services (Examination) to Monitor Conditions of Probation" .

    Note:

    There may be two collateral records open for this taxpayer for this time period; one may be for COP and one for the restitution. The restitution collateral record will be closed upon the initiation of appropriate civil actions. See IRM 4.8.6.3.2 and IRM 4.8.6.3.2.5.

4.8.6.3.1  (08-05-2015)
Notification of Completed Restitution Case from CRC

  1. Upon confirmation by the CRC that all required restitution actions have been completed, a centralized restitution TE will update the ERCS restitution collateral record to Suspense Type 557 and to the TSC, PBC, EGC and ERCS ID of the LTSFC. The restitution collateral record will remain in Status Code 35.

  2. The LTSFC and group manager will be contacted via e-mail that the restitution collateral record has been transferred to the group. There should be no need to transmit any documents to the LTSFC since they should have already received the same information that the CRC received from CI. This will serve as the notification for the LTSFC to proceed with appropriate civil actions.

4.8.6.3.2  (08-05-2015)
Civil Actions on Cases with a Restitution-Based Assessment

  1. Upon notification from the CRC that the restitution assessment process has been completed, the LTSFC must take appropriate civil actions within 14 calendar days.

  2. The LTSFC will review the CI closing package to determine if a civil examination is warranted based on the facts of the case. If necessary, the LTSFC will contact CI to obtain relevant documents to make this examination determination.

    1. If it has been determined based upon the review of the closing documents and the facts of the case that civil examination actions are warranted, the LTSFC will prepare a memorandum to the appropriate examination group and / or, if applicable, PSP containing specific instructions for civil disposition of the case.

      Note:

      All cases already open on AIMS need appropriate civil actions to conclude the civil examination.

      Note:

      As described in IRM 4.8.6.3(3), some cases may have already been sent to the field for civil disposition.

    2. If it has been determined based upon the review of the closing documents and the facts of the case that no civil examination actions are warranted and all required procedures as per IRM 4.8.2.10.3.6.3, Civil Settlement, IRM 4.8.2.10.3.6.3.5, May the Fraud Penalty Be Removed?, and IRM 25.1.6.2, Procedures, have been addressed, the LTSFC will prepare appropriate documentation to support this decision. The case file can then be filed with the group's COP files, if this is a COP case or closed under normal procedures for cases with no civil actions warranted.

  3. Since restitution cases may also be COP cases, the procedures already outlined in other TS IRM sections (e.g., IRM 4.8.2.10.3.6.3, IRM 4.8.2.10.3.7.9, IRM 4.8.2.10.3.7.10, Technical Services Closing Actions) should be addressed in connection with the procedures outlined in this section.

  4. The LTSFC will follow up with CI if the TC 914 has not been reversed.

  5. For additional information, refer to the TS Fraud SharePoint home page at https://organization.ds.irsnet.gov/sites/SBSEfeTS/SME/Fraud/SitePages/Home.aspx.

4.8.6.3.2.1  (08-05-2015)
Cases in Fraud or Grand Jury Suspense

  1. The LTSFC will follow the procedures outlined in IRM 4.8.2.10.3.6.3.1, Case File Maintained in Suspense. The LTSFC will also determine whether or not the case should be returned to the originating group manager. If the case cannot be returned to that group for civil disposition, the fraud coordinator will consult with PSP to determine which group is to receive the case file. Refer to IRM 4.8.2.10.3.7.5, Routing of Case From Technical Services.

  2. Prior to forwarding a case for civil disposition, the LTSFC will ensure the following actions are taken (assistance from PSP may be needed):

    1. Update / input the appropriate aging reason codes (i.e., 16, 17 or 18);

    2. Input Project Code 1168 and /or Tracking Code 6568;

      Caution:

      If there is already a national project code on the module, do not update the project code to 1169. Only Tracking Code 6568 will be input / updated. If there is also already a national tracking code on the module, Tracking Code 6568 will supersede / replace that existing tracking code.

      Note:

      The input AIMS Freeze Code "P" is not required. IDRS will systemically generate a Criminal Restitution Code of "1" . This will prevent the case from closing and ensure it is returned to the LTSFC. Criminal Restitution Code 1 is generated when the tax year contains both a TC 971 AC 102 and TC 420 (AIMS indicator).

  3. The LTSFC will prepare a memorandum as described in IRM 4.8.6.3.2.4 and IRM 4.8.2.10.3.7.4, Technical Services Memorandum Regarding Civil Action.

4.8.6.3.2.2  (08-05-2015)
Cases NOT in Fraud or Grand Jury Suspense (Not Established on AIMS)

  1. LTSFC will follow the procedures in IRM 4.8.2.10.3.6.3.2, Case File Not Maintained in Suspense. The LTSFC will prepare two memorandums. The first memorandum is to transmit the CI closing package to PSP for appropriate civil disposition.

  2. The LTSFC will prepare a second memorandum as described in IRM 4.8.6.3.2.4.

4.8.6.3.2.3  (08-05-2015)
RPP Cases

  1. In some instances, the basis for the restitution ordered is preparation of false returns by the defendant. When considering the appropriate civil actions on the client returns of a RPP defendant, the statute of limitations of the client return should be considered.

  2. Client returns with more than 18 months remaining on the clients’ statute of limitations may be sent to PSP / the return preparer coordinator for civil actions if the evidence available supports an examination.

  3. PSP should be advised that restitution was assessed against the return preparer and all returns that are selected for examination should contain an AIMS Freeze Code "P" to ensure the client returns audited are returned to the LTSFC.

  4. At the conclusion of the audit of the client returns, the LTSFC will be responsible for the input of the TC 971 AC 18X to identify the client return modules and the preparer's MFT 31 restitution assessment modules as duplicate assessment modules. See IRM 4.8.6.3.3.3 (4) for instructions on the completion of Form 3177.

  5. If at the conclusion of the audit of a client return, the client is going to Appeals, the LTSFC will be responsible for the input of the TC 971 AC 180 on the preparer’s MFT 31 module and a TC 971 AC 181 on the client’s MFT 30 module to "link" the two modules together. When the case is resolved in Appeals and an assessment posts to the client’s MFT 30 module, CCS will notify the CRC that the assessment posted. The CRC will review the module to ensure the correct TC 971 AC 18X codes are on the modules of the return preparer and client.

4.8.6.3.2.4  (08-05-2015)
All Case Files / Packages Forwarded for Civil Disposition

  1. The LTSFC will prepare a memorandum to transmit the case for civil disposition. The memo should be tailored based on the specifics of the case. See IRM 4.8.2.10.3.7.4, Technical Services Memorandum Regarding Civil Action.

  2. When a case is forwarded for civil disposition, the LTSFC should forward the following documents as applicable:

    1. Form 13308, Criminal Investigation Closing Report

    2. Judgment and Commitment Order

    3. Form 14104

    4. Indictment, complaint and /or other court documents

    5. Special agent's report (SAR) (Administrative cases only)

    6. Plea agreement, Proffer, Statement of facts, Factual basis, etc., if applicable

    7. Court documents related to the prosecution of the case (pre-sentence report, sentencing memorandum)

    8. Applicable witness files to support the penalty and adjustments other than any Rule 6(e) information from grand jury proceedings

    9. Other applicable non Rule 6(e) grand jury supporting documents to support the penalty and adjustments

    10. Tax returns (originals and / or copies, as available)

    Reminder:

    If the above documents are needed and not available, the LTSFC should determine if any of the documents are available through PACER. If not available through PACER, the special agent may be contacted to help locate the documents. See IRM 4.8.2.10.3.6.3.3, Documentation Needed to Develop the Fraud Penalty.

  3. A copy of the civil disposition memo(s) and CI closing package will be maintained by the fraud coordinator in a dummy file until the civil examination has concluded. When the field completes the civil examination , the case will be closed by TS. The dummy file maintained will be included with the civil case file upon final closure by TS unless that file is needed for the dummy COP file. See IRM 4.8.2.10.3.7.9, Responsibilities of Technical Services (Examination) to Monitor Conditions of Probation.

4.8.6.3.2.5  (08-05-2015)
Monitoring and Collateral Record Updates

  1. The LTSFC is responsible for case monitoring and the ERCS actions as described below. Prior to closing any restitution collateral record, the LTSFC will confirm that the restitution was assessed and the required TC 971 AC 18X are present. The collateral record updates reflected below are only applicable to the restitution collateral record not to the COP collateral record if one is established. Review Types 91 through 97, as described in Exhibit 4.8.6-1 are only to be used on the restitution collateral record.

  2. If cases are open on AIMS or a civil examination is warranted:

    1. If an AIMS record is already established (and possibly a COP collateral record built) for the taxpayer, the LTSFC will update the restitution collateral record to Review Type 92 and close (Status Code 90) the restitution collateral record. Review Type 92 will indicate that the restitution assessment process was completed for this taxpayer and civil actions have been initiated. At this point for COP cases, monitoring of civil actions is provided for in IRM 4.8.2.10.3.7.9, Responsibilities of Technical Services (Examination) to Monitor Conditions of Probation.

      Note:

      At this point ONLY the restitution collateral record is updated.

      Note:

      In some instances the civil case may already have been examined and therefore does not require civil actions. In these instances, the restitution collateral record can be updated to Review Type 92 and closed (Status Code 90).

    2. If there is not an AIMS record established for the taxpayer, the restitution collateral record will remain in Status Code 35 and monitored until the civil examination case is established on AIMS. When forwarding the memorandum to PSP, the restitution collateral record suspense type should be updated to 558 (60 calendar days). The LTSFC will monitor AIMS until the establishment of the civil case on AIMS (Status Code 08). If the closing information was forwarded more than 60 calendar days prior, follow up actions are required with PSP. Upon creation of the AIMS record by PSP, the LTSFC will confirm that a COP collateral record had been created, if applicable, and the restitution collateral record will be updated to Review Type 92 and closed (Status Code 90). Review Type 92 will indicate that the restitution assessment process was completed for this taxpayer and civil actions have been initiated. At this point for COP cases, monitoring of civil actions is provided for in IRM 4.8.2.10.3.7.9.

  3. If a civil examination is NOT warranted:

    1. The LTSFC is responsible for the following ERCS actions when it has been determined that no civil actions are warranted. The review type for the restitution collateral record will be updated to 93 and closed (Status Code 90). Review Type 93 will indicate that the restitution assessment process has been completed and no civil action is warranted.

  4. RPP Cases:

    1. If the LTSFC determines that an examination of some or all of the client returns is warranted, the restitution collateral record will be updated to Review Type 92 and closed to Status Code 90 when the client returns are sent to PSP.

    2. If the LTSFC determines that NO examination of the client returns is warranted, the restitution collateral record will be updated to Review Type 93 and closed to Status Code 90.

    3. See IRM 4.8.6.3.2.3.

4.8.6.3.3  (08-05-2015)
Conclusion of Civil Actions / Examination

  1. At the conclusion of the civil examination process for a case involving assessable criminal restitution, the case will be returned to TS for review. Since all restitution civil settlement cases have a Criminal Restitution Code "1" when they are forwarded to the field for civil settlement, all cases will be required to be returned to TS.

    Note:

    Unless specifically stated, the instructions to follow do not supersede instructions in other TS IRMs or instructions posted to the TS Fraud SharePoint home page.

4.8.6.3.3.1  (08-05-2015)
Review of Civil Cases with Assessable Restitution

  1. The Form 14104 should be reviewed to ensure the appropriate amount of restitution was assessed on MFT 31 for ALL cases where restitution was assessable per Section 8 of Form 14104. If the assessment is believed to be incorrect or if there are questions on the payments, the centralized restitution group should be contacted. The MFT 31 restitution assessment should never be corrected by anyone other than the CRC.

  2. The revenue agent report (RAR) should be reviewed to ensure the report is correctly prepared reflecting all civil adjustments. The RAR should be prepared following the current report preparation procedures and should have no reference to restitution on the report or attachments. See IRM 4.10.8, Report Writing, and other relevant sections.

    Caution:

    The field has been advised that they should not issue an examination report to the taxpayer if the total restitution-based assessment is greater than the total proposed civil assessments for the same years reflected on the examination report (tax plus penalties). If a case comes to TS and a report was issued to the taxpayer, local Area Counsel should be contacted for guidance on how to proceed.

  3. All other required review actions should be performed as appropriate for the case being reviewed as follows:

    1. Statutory Notice of Deficiency (SNOD) - see IRM 4.8.9, Statutory Notices of Deficiency

    2. General case review procedures - see IRM 4.8.2.7, General Case Review Procedures

    3. Unagreed Appeals case review - see IRM 4.8.2.8.2.1, Unagreed Appeals Cases

    4. Burden of Proof - see IRM 4.8.2.10.3.8.1(3), Burden of Proof

  4. The RAR should be reviewed to ensure the IRC 6663, Fraud Penalty, or the IRC 6651(f)Fraudulent Failure to File Penalty, was asserted. If not asserted, the case file should fully document the reason for not asserting the penalty and if needed, Counsel's concurrence should be included in the case file. See IRM 25.1.6.2. Procedures. Any other applicable IRM sections should be addressed as well.

  5. Form 5344 should be reviewed to ensure the proper information was entered in Item 38. See IRM 25.1.6.5(1), Case Closing.

  6. Prior to closing the case to CCP or Appeals, the Criminal Restitution Code of "1" should be updated to "2" and if needed, AIMS freeze code "P" should be removed.

  7. For all COP cases, copy the RAR and SNOD, if applicable, and place the copy in the "dummy" COP file. Follow all other required monitoring responsibilities discussed in IRM 4.8.2.10.3.7.9, Responsibilities of Technical Services (Examination) to Monitor Conditions of Probation. Also, refer to the Instructions for Collateral Records document on the TS Fraud SharePoint home page at https://organization.ds.irsnet.gov/sites/SBSEfeTS/SME/Fraud/SitePages/Home.aspx.

4.8.6.3.3.2  (08-05-2015)
Restitution-Based Assessment on MFT 31 Module and Civil Assessment Needed on MFT 31

  1. Since the MFT 31 module should NEVER contain a duplicate assessment, processing of civil assessments on a MFT 31 module with a restitution assessment should be made with caution. When a restitution assessment is already on a MFT 31 module and a civil assessment is needed on the same MFT 31 module which would in effect duplicate the restitution assessment the actions outlined in the following paragraphs should be taken.

    1. The MFT 30 module should be closed the way it would normally be closed. For example, in an innocent spouse case, the Form 5344 for the MFT 30 module would reflect a TC 300 for $0 with a Disposal Code 12 and $1 in Item 35. As applicable, Adjusted Gross Income (AGI), Taxable Income (TI), and any other non-tax adjustments will be input on Line 15 of Form 5344.

    2. The MFT 31 module would reflect the proper assessments so the account is correctly stated. The Form 5344 would reflect the proper TC 300 depending on the facts of the case. There are 3 possible ways to prepare the Form 5344:

    If the MFT 31 restitution assessment is ... Then ...
    The same as the tax due on the civil report, Prepare Form 5344 with TC 300 $0; applicable TC of the penalties to be assessed and / or penalty reference number (PRN); Disposal Code 12; $1 in Item 35; and Reason Code 143 in Item 51.
    Greater than the tax due on the civil report, Prepare Form 5344 with TC 300 $0; applicable TC of the penalties to be assessed and / or penalty reference number (PRN); Disposal Code 12; $1 in Item 35; and Reason Code 143 in Item 51.
    Less than the tax due on the civil report, Prepare Form 5344 with TC 300 for the difference of the restitution already assessed on MFT 31 and the tax due per the report; applicable TC of the penalties to be assessed and / or penalty reference number (PRN); Disposal Code 03, 04, 09, 10 as applicable; and Reason Code 143 in Item 51.

    Caution:

    The field has been advised that they should not issue an examination report to the taxpayer if the total restitution-based assessment is greater than the total proposed civil assessments for the same years reflected on the examination report (tax plus penalties). If a case comes to TS and a report was issued to the taxpayer, local Area Counsel should be contacted for guidance on how to proceed.

4.8.6.3.3.3  (08-05-2015)
Agreed (to Include Survey and No Change Cases) and Defaulted SNOD Cases With Assessable Criminal Restitution

  1. The case should be closed to CCP following current procedures.

  2. The account should be monitored until the civil assessment(s) has posted, if applicable. If there will be a duplicate assessment after the assessments post, the LTSFC can prepare and submit Form 3177s as described in IRM 4.8.6.3.3.3(4) below while waiting for the assessment to post.

  3. After the civil assessment posts for COP cases, the fraud coordinator will notify the CI liaison and Collection Advisory that the assessment(s) has posted via their dedicated COP / Restitution e-mail address: *SBSE EEF Dallas Restitution.

  4. After the assessment(s) posts, there will now be duplicate assessments: an assessment of the restitution on MFT 31 and civil tax on MFT 30 (or 01, 02, 10, etc.). Transaction codes are required to identify the two accounts as duplicate assessment accounts. Form 3177s should be prepared "in pairs" to cross reference the MFT 31 account(s) to the related MFT account(s) (i.e., MFT 30, 02, 01, 10). A separate Form 3177 must be prepared for each MFT and for each year. This will direct any IDRS account viewer to the applicable restitution account and other related accounts.

    1. Prepare a Form 3177 to input a TC 972 with the same action code as was previously input on MFT 31 module (e.g., AC 180). See Exhibit 4.8.6-10 for a sample Form 3177.

    2. Prepare a Form 3177 to input a TC 972 with the same action code as was previously input on the MFT 30, 02, 01, 10, etc. module (e.g., AC 181). See Exhibit 4.8.6-11 for a sample Form 3177.

    3. Prepare a Form 3177 to input a TC 971 with AC 18X to indicate there is now a duplicate assessment and the amount of the duplication. The line by line instructions for the cross referencing are as follows. See Exhibit 4.8.6-6 and Exhibit 4.8.6-7 for current XRef and MMA definitions and instructions. See Exhibit 4.8.6-8 for a sample Form 3177.

      Line Item: Instruction:
      Initiator information Enter your name, phone number, and employee number.
      Date Enter the date the form is completed.
      Taxpayer Name Enter the name of the defendant liable for criminal restitution as it appears in the MFT 31 module.
      EIN or SSN Enter the social security number of the defendant liable for criminal restitution as it appears in the MFT 31 module.
      TC 971 Enter the following instructions next to "Other (specify)" - AC 18X; XRef EIN / SSN of related entity; MFT 30, 02,01,10, etc.; Year; amount of duplicate assessment. See Exhibit 4.8.6-6 or Exhibit 4.8.6-8 for current XRef and MMA definitions and instructions.
      Tax Period Enter the appropriate tax period
      MFT Enter MFT 31
    4. Prepare a Form 3177 to input a TC 971 with AC 18X to indicate there is now a duplicate assessment and the amount of the duplication. The line by line instructions for cross referencing are outlined in the table below. See Exhibit 4.8.6-6 and Exhibit 4.8.6-7 for current XRef and MMA definitions and instructions. See Exhibit 4.8.6-9 for a sample Form 3177.

      Line Item: Instruction:
      Initiator information Enter your name, phone number, and employee number.
      Date Enter the date the form is completed.
      Taxpayer Name Enter the name of the defendant liable for criminal restitution as it appears in the MFT 30, 02, 01, or 10 module.
      EIN or SSN Enter the social security number or tax identification number on the related module / entity.
      TC 971 Enter the following instructions next to "Other (specify)" - AC 18X; XRef SSN of restitution liable defendant; MFT 31; Year; amount of duplicate assessment. See Exhibit 4.8.6-8 or Exhibit 4.8.6-7 for current definitions and instructions.
      Tax Period Enter the appropriate tax period.
      MFT Enter MFT 30, 02, 01, 10 as appropriate.
  5. All completed cross referencing Form 3177s (both for the TC 972 and TC 971) should be e-mailed to Ogden CCS (at *SBSE Ogden RBA). The e-mail will be sent with the following in the subject line: EXPEDITE** Form 3177 to change AC 180 / AC 181. This will reverse the TC 971 AC 180 / 181 that is no longer correct and input the correct TC 971 AC 184 / 185 with a MMA for the amount of the duplicate assessment. In addition to sending all of the completed Form 3177s to CCS, the Form 3177s that were prepared to be entered onto the MFT 30, 02, 10, etc. module that reflects the TC 971 AC 184 / 185 will be sent to Memphis CCP at the e-fax number that processes Form 3870s. See http://mysbse.web.irs.gov/AboutSBSE/aboutccs/ccsprog/casepro/cp/cont/28100.aspx for a listing of e-fax numbers. The subject line will reflect: Form 3177s for CC RAPID input. For example, the 200812 civil assessment has caused a duplicate assessment on MFT 30 and on the MFT 31 restitution modules. The following Form 3177s need to be prepared and submitted to CCS and CCP.

    Description Send to CCS? Send to CCP? (For CC RAPID input)
    Form 3177 to enter TC 972 AC 180 on MFT 31 Yes No
    Form 3177 to enter TC 972 AC 181 on MFT 30 Yes No
    Form 3177 to enter TC 971 AC 184 OR 185 on MFT 31 Yes No
    Form 3177 to enter TC 971 AC 184 OR 185 on MFT 30 Yes Yes

    Note:

    The Form 3177s for the input of the TC 972 and the TC 971 entries on MFT 31 do not require CC RAPID input and should not be sent to CCP.

  6. The LTSFC will monitor all affected modules for the posting of the corrected TC 971 / 972 AC 18X cross referencing. When the civil assessment and TC 971s correctly post, the LTSFC responsibilities for criminal restitution monitoring and if applicable, COP monitoring are finished. If the cross referencing Form 3177s do not appear on the module within three weeks (as shown on TXMODA), the reviewer should follow up with CCS.

  7. If duplicate assessment linkages (TC 971 AC 184 / 185 or AC 188 / 189) are not reflected on IDRS correctly, Form 3177s should be prepared as described in IRM 4.8.6.3.3.3(4)(a) and (b) to enter a TC 972 AC 18X to reverse the incorrect codes. Form 3177s should be prepared as described in IRM 4.8.6.3.3.3(4)(c) and (d) to enter the correct TC 971 AC 18X. The corrected Form 3177s for the MFT 30, 02, 10, etc. module that reflects the TC 971 AC 184 / 185 or AC 188 / 189 will also be sent to Memphis CCP CC RAPID input. See IRM 4.8.6.3.3.3(5).

    Example:

    A TC 971 AC 185 with a MMA $100 was entered on the MFT 31 module and a TC 971 AC 184 with a MMA $100 was entered on the MFT 30 module. The TC 971 AC 184 with a MMA $100 was also sent to CCP to be used for the CC RAPID input. The MMA amount should have been $1,000. Form 3177s would be submitted to CCS to enter a TC 972 AC 185 MMA of $100 and TC 972 AC 184 MMA $100 to reverse the TC 971s. The correct Form 3177s would be submitted to CCS to enter a TC 971 AC 185 MMA of $1,000 on MFT 31 and TC 971 AC 184 MMA $1,000 on MFT 30. The Form 3177 for the TC 971 AC 184 MMA of $1,000 on MFT 30 would also be sent to CCP for CC RAPID input.

    Note:

    CC RAPID is only used to identify duplicate assessment modules. Therefore, only Form 3177s for the input of a TC 971 AC 184 / 185 or AC 188 / 189 should be sent to CCP. Form 3177s for the input of a TC 971 AC 180 / 181 and AC 182 / 183 should not be sent to CCP.

4.8.6.3.3.4  (08-05-2015)
Closed Case Inquiries and Linkage Corrections

  1. There will be instances when something happens to the MFT 31 module or to the related civil module after restitution is assessed. An amended return may be filed or the civil module may post assessments without the cases going through TS. When this happens, CCS will notify the CRC group of changes made to the RBA or related modules for possible TC 971 AC 18X corrections. When the restitution collateral record is open in the hands of the LTSFC or was closed by the LTSFC, the CCS inquiry will be forwarded to the LTSFC to address possible linkage issues.

  2. The LTSFC will review IDRS to determine if linkage corrections are warranted. If linkage corrections are needed based on the IDRS research, the LTSFC will ensure needed corrections are made to all impacted modules.

4.8.6.3.3.5  (08-05-2015)
Appealed and Petitioned SNOD Cases with Assessable Criminal Restitution

  1. Close the case with Appeals following all existing Appeals / Tax Court procedures. If applicable, the LTSFC will follow current COP procedures and notify Appeals, CI and Collection Advisory via e-mail that the COP / Restitution case has been forwarded to Appeals.

  2. The LTSFC criminal restitution and COP responsibilities for the case are suspended until the case has been resolved by Appeals or Tax Court.

4.8.6.3.3.6  (08-05-2015)
Resolution of the COP / Restitution Case by Appeals

  1. When the COP / Restitution case has been resolved, Appeals will notify a designated CI and Collection employee. They will also notify the TS criminal restitution mail box (*SBSE TECH Svs Criminal Restitution) that the case has been resolved.

  2. When the notification is received in the TS criminal restitution mailbox, the centralized tax examiner will forward the information to the LTSFC. The LTSFC will do the following:

    1. Review IDRS for all applicable and related modules (MFT 31, 30, 02, 10, 01, etc.) to determine if there are duplicate assessments on MF.

    2. If there are duplicate assessments (restitution on MFT 31 and civil tax on MFT 30, 02, 01, 10, etc.), transaction codes are required to identify the two accounts as duplicate assessment accounts. See IRM 4.8.6.3.3.3.

Exhibit 4.8.6-1 
Restitution Codes

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Exhibit 4.8.6-2 
Sample Form 3177 - Creation of MFT 31 Account Through MFT 30

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Exhibit 4.8.6-3 
Sample Form 3177 - Record TC 971 AC 102 on MFT 31 Module

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Exhibit 4.8.6-4 
RBA Reason Codes

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Exhibit 4.8.6-5 
Sample Form 3870 - IMF Based CR Assessment

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Exhibit 4.8.6-6 
Sample Form 3870 - BMF Based CR Assessment

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Exhibit 4.8.6-7 
IMF TC 971 Definitions and Examples

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Exhibit 4.8.6-8 
BMF / RPP TC 971 Definitions and Examples

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Exhibit 4.8.6-9 
Sample Form 3177 - TC 971 AC 18X on MFT 31

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Exhibit 4.8.6-10 
Sample Form 3177 - TC 971 AC 18X on IMF - BMF MFT

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Exhibit 4.8.6-11 
Sample Form 3177 - TC 972 AC 18X on MFT 31

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Exhibit 4.8.6-12 
Sample Form 3177 - TC 972 AC 18X on IMF - BMF MFT

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