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4.13.5  Exam SFR Reconsiderations

Manual Transmittal

December 16, 2015

Purpose

(1) This transmits revised IRM 4.13.5 Audit Reconsideration, Exam SFR Reconsiderations

Material Changes

(1) IRM 4.13.5 - Replaces IRM 4.13.5, Automated Substitute for Return (ASFR) , with content from IRM 4.13.8, Exam SFR Reconsiderations, which was duplicated content. ASFR reconsiderations are contained in IRM 5.18.1. This IRM has been combined and restructured to enhance clarity for Exam SFR. All IPU’s from IRM 4.13.8 are incorporated and listed below in (7) - (20).

(2) 4.13.5.2 (5) replaced Letter 143C with Form 3531 and Letter 2416C.

(3) 4.13.5.3.1 (a) Added instruction for campus address and fax number.

(4) 4.13.5.4 (3) Eliminated TC 470 closing code.

(5) 4.13.5.4.1 (2) Eliminated RGS mailbox address for Field and changed to campus access to CEAS Field.

(6) 4.13.5.4.4 (5) Added IRM reference.

(7) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.3 - Clarified definition of SFR reconsideration. Added content on identification and initial screening.

(8) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4 - Changed content with deletions of obsolete content and added content on return verification.

(9) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.1 - Clarified and added new content.

(10) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.2 - Added content on Form 3870.

(11) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.3 - Renumbered and retitled from 4.13.8.5. Deleted obsolete content and added guidance on litigation contacts.

(12) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.4 - Renumbered and retitled from 4.13.8.5. Deleted obsolete content and added guidance on joint filer back-out procedures.

(13) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.5 - Renumbered from 4.13.8.6. Removed references to IRM 5.18. Added content specific to priority codes used with Exam TC 300 SFR assessments. Added content on previously abated penalties.

(14) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.6 - Renumbered and retitled from 4.13.8.7. Added new content on ASED & RSED.

(15) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.7 - Added new section on correspondence to the taxpayer.

(16) IPU 14U0509 issued 03-20-2014 IRM 4.13.8.4.8 - Added new section on referrals to examination including fraud.

(17) IPU 14U0509 issued 03-20-2014 Exhibit 4.13.8–1 - New exhibit on common freeze codes.

(18) IPU 13U1401 issued 08-28-2013 IRM 4.13.8.2 - Delete Fresno address and insert receiving campus

(19) IPU 13U1804 issued 12-23-2013 Revalidating changes issued with IPU 12U1702 for IRM 4.13.8.3 - Change in Operation and routing address for Exam SFR Reconsiderations.

(20) IPU 13U1791 issued 12-23-2013 Revalidating changes issued with IPU 11U1886 for IRM 4.13.8.5(6)(a) updated to correct address M/S and zip code.

Effect on Other Documents

This section contains procedures for processing Substitute for Return (SFR) reconsiderations in SBSE and W & I Campus Exam.

Audience

Small Business/Self Employed and Wage and Investment Campus Compliance, Customer Account Services Employees, Appeals, TAS

Effective Date

(12-16-2015)


Scott E Irick
Director,
Examination/AUR Policy
Small Business/Self-Employed

4.13.5.1  (09-27-2011)
Overview

  1. A reconsideration occurs when the Service processes a Substitute for Return (SFR) and the taxpayer subsequently files an original return.

  2. These procedures will ensure :

    1. The amount of tax assessed is correct.

    2. Cases are handled in a consistent manner.

  3. The audience for this IRM Section includes:

    1. SB/SE Exam Reconsideration examiners.

    2. W & I Exam Reconsideration examiners.

4.13.5.2  (12-16-2015)
Reconsiderations of Delinquent Returns Worked in a W & I Campus

  1. All W & I Exam SFR Reconsideration cases will be worked in the receiving campus.

  2. Refer complex issues to Classification. Review IRM 4.19.11.1.3 , Procedures for Screening Individual Returns, to identify issues that are not conducive to a correspondence audit. Follow the "Accepted" instructions below for all other cases.

  3. If Classification determines that the case should be:

    IF and THEN
    Accepted,   Assign to Centralized Reconsideration Unit (CRU). Do not establish on AIMS. Make the appropriate changes to the account per the return filed.
    Selected for Campus, the only issue is income, Do not establish on AIMS. Work the case following audit recon procedures.
    Selected for Campus or Area Office, the issues are additional income and expenses, and the expenses are being questioned, If expenses are disallowed, establish case on AIMS. Follow Statutory Notice procedures to assess the IRM income and disallow the expenses.
    Selected for Campus or Area Office, issues are selected other than income, Establish case on AIMS. If the issues can be worked by the Campus, assign the case to Correspondence Examination. If the case contains complex issues that need to be worked in SBSE, assign the case to the appropriate Area Office or SBSE Campus.

    Note:

    When transferring a case to the AO, refer to IRM 4.13.3.5 procedures.

  4. The CEAS Audit Recon record will be updated accordingly.

    1. If the case is "Accepted" by Classification, the CEAS record should be updated with Status 7600 - Full Allowance. Also update the abatement field in the CEAS record. It is not necessary to send a revised report or acknowledgment letter on SFR returns that are accepted in full. The taxpayer will receive a computer generated notice notifying them of the tax adjustment based on the acceptance of their delinquent filed return.

    2. If the case is "Selected" by Classification and the only issue, income, is allowed after Audit Reconsideration, update the CEAS record with Status 7600 – Full Allowance. Also update the Abatement field in the CEAS record.

    3. If the case is "Selected" by Classification and the only issue, income, is disallowed after Audit Reconsideration, update the CEAS record with Status 7400 – Full Disallowance.

  5. If an unsigned return is submitted in response to an SFR notice, whether it is a claim for a refund or reports additional tax due, do not accept or process. The return is invalid. Reject to the taxpayer with Form 3531. Review the return for other missing items and request all missing required information. Form 3531 will include instructions to the taxpayer that they may fax the return or mail back to the reconsideration unit. Insure the correct fax number and address with Stop numbered is included.

    Exception: Do not mail back numbered returns or returns with date stamps. Correspond with the taxpayer for signature with jurat statement using Letter 2416C.


    Suspend the case for 45 days with Status Code 7700. If the taxpayer does not respond to Letter 2416C, treat the case as a full disallowance. For closing actions, see IRM 4.13.3.8.3, Closing Procedures-Full Allowance. Document the workpapers with your decision.

    Note:

    After 45 days in status 7700, case will close through "Autoclose" feature. See IRM 4.13.3.8, Closing Procedures.

4.13.5.3  (12-16-2015)
Reconsiderations of Delinquent Returns worked in an SBSE Campus

  1. An SFR reconsideration is the initial original delinquent return submitted by the taxpayer to contest a SFR assessment made by SB/SE Examination.

  2. All IMF SBSE Examination SFR and FRP SFR Reconsiderations are worked in the Examination Operation at the Brookhaven Campus.
    Route all cases to:
    Internal Revenue Service
    Examination Operation Stop 614
    1040 Waverly Ave
    Holtsville, NY 11742

  3. SBSE SFR reconsiderations are identified by the following IDRS transaction codes:

    1. A TC 150 followed by "0.00" and the literal "SFR" to the right of the TC 150 assessment Document Locator Number (DLN),

    2. Tax class 2 with Document Code 10 and Julian date of 888 in the DLN,

    3. Blocking Series 000-299,

    4. The tax amount assessed will appear as a TC 300 (Examination SFR Assessment) with blocking series 540-549 or 640-649,

    • TC 300 with File Location Codes 17, 19, 28, 29, and 49

    • TC 420/421

    • Primary Business Codes (PBC) 295 through 299 for SBSE campus and PBC 201 through 207 for Area Office assessments. The PBC is located to the right of TC 420.

  4. SBSE FRP SFR Reconsiderations are identified by the following IDRS transaction codes:

    • TC 150 .00 (DUMMY SFR Return)

    • TC 300 with File Location Codes 29

    • TC 421

    • Primary Business Codes (PBC) 298

    • Project Codes 0311, 0312, and 0313. The Project Code can be found directly above or to the right of TC 420

  5. If the module contains multiple TC 300s and no Appeals code or a TC 971 AC-282 the taxpayer original return was received during the Non-filer examination and is not a SFR reconsideration. Refer to IRM 4.13.2.2 (3), Function Responsible & Routing Guidance, for routing guidance.

  6. If the module contains a TC 300 SFR assessment and subsequently has a TC 599 CC 89 followed by a TC 29X adjustment, the taxpayer original delinquent return (SFR reconsideration) has already been processed. Returns should be forwarded to Accounts Management. If return figures match TC 29X adjustments, it is a duplicate and should be sent to Files for association.

  7. If the module contains a TC 290 SFR assessment refer to IRM 4.13.2.2, Function Responsible & Routing Guidance, for routing guidance.

  8. If TC 300 follows a TC 29X adjustment route to Exam Reconsideration Centralized Reconsideration Unit (CRU) per TC 420.

4.13.5.3.1  (12-16-2015)
First Read Screening

  1. Reconsideration requests must be screened within 5 workdays of receipt to ensure they should be accepted and worked in centralized SBSE SFR Reconsideration units prior to controlling on IDRS within 14 days of receipt. Reconsiderations are not controlled on CEAS.

  2. Initial Screening criteria includes attributes listed in IRM 4.13.5.3, Reconsideration of Delinquent Returns worked in an SBSE Campus. Verification includes analyzing return, IDRS and CEAS RGS file for:

    1. Signature on return. If the taxpayer submits an unsigned return in response to an SFR assessment, do not accept or process the return. The return is invalid and unprocessable by the Service. Reject to the taxpayer with Form 3531. Review the return for other missing items and request all missing required information. Form 3531 will include instructions to the taxpayer that they may fax the return or mail back to the reconsideration unit. Insure the correct fax number and address with Stop numbered is included.
      Exception: Do not mail back numbered returns or returns with date stamps. Correspond with the taxpayer for signature with jurat statement using Letter 2416C.

    2. Verify BOD is SBSE with PBC and TC 420 DLN
      — If BOD is W&I, check CC SUMRY for open controls on other SFR years. If multiple SFR reconsiderations are present and one or more is SBSE, the W&I SFR reconsideration will be worked in conjunction with SBSE reconsideration
      — If W&I assessed the SFR but the reconsideration contains Schedule(s) C, E, F, or Form 2106 it will be worked by SBSE. Verify BOD is SBSE.

    3. Freeze codes IRM 4.13.5-1, Common Freeze Codes

    4. Valid ASED

    5. Verify first original return on CEAS RGS for agreed Exam disposal codes. If taxpayer signed Form 4549 and did not submit return during nonfiler examination, the return is an SFR reconsideration

    6. Research spouse on Married Filing Joint Filing Status returns

4.13.5.4  (12-16-2015)
Processing Procedures for SBSE Exam SFR Reconsiderations

  1. Cases will be worked in IRS receive date order with the following priority exceptions:

    • Tax increases

    • TAS cases

    • Form 3870 referrals from Revenue Officers

    • Expedites from Appeals, Bankruptcy, Offer in Compromise, Revenue Officers, etc

  2. When there are other open SFR tax modules on IDRS CC SUMRY, the returns must be worked together to provide better customer service

  3. Collection hold will be input to accounts using TC 470. Use REQ77 to input. No collection hold can be place on module when in Status 12, 26, 60, 71 and 72. No collection hold will be placed on Form 3870 referrals from Revenue Officers unless specifically directed by them in writing.

    Exception: If the case will be worked and closed within one day, there is no requirement to input TC 470/ TC 472.

  4. The IAT xclaim tool will be used to process the return

  5. Exam SFR examiners are required to leave an AMS history

  6. If there are no prior adjustments besides the original SFR assessment, blocking series 00 should be used unless stated otherwise. Blocking Series 05 should be used on joint filer backout

  7. Prior to adjusting account tax examiner will verify initial first read screen and review account and return for :

    • Income

    • SSN's

    • Address

    • X-ref Spouse

    • Forms and/or Schedules

    • Signature(s)

  8. Current entity information will be verified on IDRS.

  9. Any dependents claimed will have name control matched to TIN and age will be verified if claiming any credits.

  10. The entire return will be math verified.

  11. All necessary supporting schedules and forms must be present prior to processing. Follow guidance in IRM 5.18.1.10.2.3.19, Math Errors.

  12. Income will be verified for complete reporting on IDRS and also Form 4549 on CEAS. Follow guidance in IRM 5.18.1.10.2.3.20, Under/unreported Income.

4.13.5.4.1  (12-16-2015)
Area Office SFR Reconsiderations

  1. Identified by PBC 201 through 207 with EGC 1XXX or 2XXX. The administrative file will be requested on cases meeting Exam referral criteria. local .

  2. ESTAB to secure administrative file. Make two attempts, three weeks apart (the second request should be a special search). If the administrative file is not received from Files three weeks after the second request, obtain the RGS administrative file through CEAS-VIEW CASE READ-ONLY FIELD.

  3. After the administrative file and/or RGS detail is secured, review the administrative file or RGS records to determine if the taxpayer submitted a return during the examination.

  4. If determined return is reconsideration, process and route to Exam Classification for selection and transfer to Area Office.

    Note:

    If the AO worked multiple year packages, upon closing CCP enters a TC 971 AC 057 with a year. The year designates the closing document that contains the administrative workpapers for all years. If only one year is being opened for reconsideration, you must request the year with the workpapers attached as well. When the administrative file is received, detach the workpapers and attach to the reconsideration case file. Input TC 971 AC 057 on the year(s) not being reconsidered to indicate what year the workpapers are now associated with.

4.13.5.4.2  (12-16-2015)
Form 3870 from Revenue Officers

  1. Received from CFf Mailbox

    The unit CFf coordinator screens all mailbox receipts. When a Revenue Officer (RO) secures a delinquent return, they will prepare Form 3870 and forward the return to the appropriate campus. The RO is responsible for making sure the return is signed correctly, all income is reported and contains correct SSN’s. Examiners must math verify all income, SSNs and appropriate schedules attached. If the return is incomplete, contact the RO and have the missing information faxed. If this can’t be done, reject the form back to the RO.

  2. Paper Form 3870:

    Tax examiners will contact RO if return is incomplete

4.13.5.4.3  (12-16-2015)
Processing Procedures for Litigation -W and -V Freezes

  1. If the taxpayer is in litigation in the tax court or bankruptcy court, examiners must receive approval prior to processing the return.

  2. If -W freeze, send E-mail to *AP Account Resolution for approval to process. Request Appeals closing code and how case closed. Refer IRM 4.13.7-13, Audit Reconsideration of Assessments Made by Appeals Processing Unit.

  3. If -V freeze, call Centralized Insolvency Operation (CIO) for approval to process at phone number provided listed in the Insolvency (Bankruptcy) National Field/Centralized Site Directory

4.13.5.4.4  (12-16-2015)
Processing Procedures for Special Conditions

  1. Joint Filer Backout when both taxpayers have SFR assessment

    • Make a copy of the first and second page of the Form 1040

    • Address all payments on the secondary account

    • Process case through xClaim and input TC 594/84 on the X-ref spouse

    • Send a Correspondex letter to the secondary TP

    • Continue processing the primary taxpayer’s return

  2. Joint Filer Backout when only the Secondary taxpayer is SFR assessment:

    • Make a copy of the first and second page of the Form 1040

    • Address all payments on the secondary account

    • Process case through xClaim and input TC594/84 on the X-ref spouse

    • Send a Correspondex letter to secondary TP informing them that the account has been resolved and forwarded to FSC for processing, to reflect their joint filing status. Include, if needed, the phone number the TP can contact for a lien fee removal (1-800-913-6050). IRM 5.18.1.10.2.3.48.10, Lien Fee

    • Remove all SFR editing and write on top of the return “PROCESS AS ORIGINAL” in red

    • Circle the tax year and underline the Name Control in red

    • If any unreported income place red "D" on bottom of page 1 of return

    • Forward the original case to FSC for processing. Prepare a Form 3210 for Statutes (only on Statute years) to review and an additional Form 3210 to FSC so Statutes can forward the case

    • Send an 86C letter to the primary TP informing them that the case has been forwarded to FSC for processing, to reflect their joint filing status

  3. International Returns (including Form 1040NR and returns with foreign addresses)

    • Send all returns with Form 2555 or 2555EZ to Brookhaven for processing. Once the account has been adjusted per the taxpayer’s return, the return and Form 2555 or 2555EZ will be forwarded to the Philadelphia Campus. If there is unreported income on the return, make a notation on the Form 3210 next to the SSN. Mail the Form 3210 to the following address:
      Internal Revenue Service
      2970 Market Street
      M/S 4-F23.142
      Philadelphia, PA 19104

    • Generally international taxpayers are not required to report or pay taxes on investment income. If the taxpayer responds stating they are not liable due to this criteria, refer case to the Philadelphia Campus.

  4. Frivolous Return Reconsiderations

    • If Project code is 311-313 on TXMOD Make a copy of the return. Input a TC290 .00 using xClaim. Forward the original on a Form 3210 to the Frivolous Filer Coordinator at Stop 613.

  5. Abusive Tax Avoidance Transactions (ATAT)

    • An Abusive Tax Avoidance Transaction (ATAT) is any plan, or transaction designed, sold, or promoted by an individual, promoter, or return preparer for the purpose of circumventing tax laws or evading tax obligations, and offered to a person or entity with U. S. tax obligations to obtain tax benefits not allowed by law.

    • Per IRM 5.20.11.3, Substitute for Return Reconsiderations, SFR assessments with an Exam ATAT project code will have identifier "OPEN ATAT" on TXMOD History.

    • Per IRM 5.20.11.3(6), Substitute for Return Reconsiderations, when a delinquent return with a History Item "OPENATAT" is received, the examiner will contact the ATAT Coordinator where the taxpayer is located to verify that the "OPENATAT" identifier is correct. A listing of ATAT coordinators is located at the Abusive Transactions website at: Abusive Tax Avoidance Transaction – Collection Coordinator Area Contacts

    • Process returns as follows:

      IF AND THEN
      The ATAT identifier is not correct, A revenue officer or ATAT Coordinator informs the examiner that the "OPENATAT"control is incorrect, Process the delinquent return using existing procedures.
      The ATAT identifier is correct,  
      1. 1. Contact the ATAT Coordinator to obtain the name, phone number, and fax number of the revenue officer assigned to the account.

      2. Provide a copy of the return to the revenue officer by facsimile.

      3. Suspend the case for 15 days until pertinent information is received from the revenue officer.

      4. If pertinent information is not received within 15 business days, forward the return to Ogden:
        Internal Revenue Service
        Classification Team 101
        Mailstop 4705
        1973 N Rulon White Blvd
        Ogden, UT 84404

      5. Prepare Special Handling Alert sheet and attach to the front of the case. Include a notation at the bottom of the ATAT Special Handling Alert "Pertinent information available but not received." The name and telephone number for the assigned revenue officer will be included.

      Note:

      All "OPENATAT" cases will be classified in Ogden.

    • Any ATAT SFR returns accepted by Ogden Classification will be processed expeditiously.

4.13.5.4.5  (12-16-2015)
Recalculating SFR Penalties

  1. Computing the Failure to File Penalty (FTF)

    1. The FTF penalty is assessed on balance due returns filed after the due date or the extended due date. See IRM 20.1.2, Failure To File/Failure To Pay, for complete information.

    2. Exam SFR assessments usually post the FTF penalty manually with a TC 160.

    3. If the TC 300 has Priority code 9 or 3, input TC 162 .00 for correct calcualtion

    4. If the TC 300 does not have Priority code 9 or 3, manually compute the FTF penalty

  2. Computing the Failure to Pay Penalty

    1. The FTP penalty is assessed on tax not paid by the due date of the return, without regards to any extension to file. See IRM 20.1.2, Failure To File/Failure To Pay, for complete information on calculating the FTP penalty.

    2. If the TC 300 has Priority code 9 or 3, the FTP will systemically calculate on tax decreases. If tax is being increased, the FTP must be manually computed.

    3. If the TC 300 has no Priority code 9 or 3, manually compute the FTP. TC 272 should not be used if the Exam SFR assessment did not contain priority code 3 or 9. Instead, the penalty has to be manually computed and adjusted.

  3. Computing the Estimated Tax (ES) Penalty

    1. Taxpayers are required to have tax withheld as income is received or make estimated tax payments during the year. When a taxpayer fails to take one of these actions, he/she may be subject to the ES penalty. See IRM 20.1.3, Estimated Tax Penalties, for complete information on computing the ES penalty.

    2. The ES penalty will always be manually computed.

    3. Priority code 8 needs to be input when adjusting all withholding tax with a TC 806/807.

  4. Previously Abated Penalties

    1. Cases that have penalty reversals that include A TC 290.00 with RC 065 and PRC 043 or 044 should not have the ES, FTF, or FTP penalties assessed on any balance due.

4.13.5.4.6  (12-16-2015)
Statute of Limitation

  1. All returns must be reviewed to ensure protection of all statutes of limitation. See IRM 25.6, Statute of Limitations, for specific instructions on statute protection. See IRM 25.6.1.6.15 , When a Document Is Treated As Filed Under the IRC, to determine the return received date, and to determine the date the return is considered filed under the IRC.

    Note:

    Per IRM 3.11.154.3.6, Statute Returns,- No review for statute clearance is necessary for original returns secured by Compliance employees. Do not route to the Statute Control Unit any original return secured or any returns prepared under the authority of IRC 6020(b). Forward returns to files after input of adjustment.

  2. Refund Statute Expiration Date (RSED)

    1. The RSED is generally three years from the Return Due Date (RDD) for payments and prepaid credits if a return was filed, or two years from the payment date for other payments whichever is later. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for further explanations.

    2. SFR Reconsiderations are original returns. Generally, prepaid credits must be claimed within 3 years of the due date of the return with regard to extension. Therefore, if a SFR Reconsideration is received more than three years from the due date with regard to extensions, a refund of prepaid credits should not be made. There are conditions that extend the RSED, see IRM 25.6.1, Statute of Limitations Processes and Procedures.

    3. Generally, the amount to be credited or refunded is limited to the tax paid during the three years immediately preceding the filing of a claim, plus the period of any extension of time to file. Therefore, even if prepaid credits are barred, available credits paid within three years of the received date of the SFR Reconsiderations are not barred.

    4. Do not allow any overpayment of prepaid credits or subsequent payments to refund or offset if the RSED has expired.

      Note:

      Do not solely rely on the RSED posted to TXMODA to determine if credits should be offset or refunded. Follow disallowance procedures in IRM 25.6.1, Statute of Limitations Processes and Procedures.

    5. When barring a refund, take the following actions:

    • Use Hold Code 4 on the ADJ 54 on IDRS- Hold Code 4 will hold the credit on the module and suppress the Notice of Adjustment.

    • Send 105C letter with Appeal Rights- The 105C explains that the refund cannot be released.

    • Prepare Form 8758, Excess Collection File Addition with as much information as possible at the time the adjustment is input. Form 8758 is used to transfer the barred credit from the module to the Excess Collection File (XSF).

    • A copy of the prepared Form 8758 must be included in the closed case released for PAS review.

    • The form 8758 must be submitted for processing within five (5) business days of the adjustment posting.

    Note:

    In the instance of a balance due return, where subsequent payments are barred, it will not be possible to complete box #7 until the adjustment has posted.

    • See IRM 25.6.1.7.3.1, Transferring Credit to XSF, for additional instructions on transferring credits to XSF.

  3. Assessment Statute Expiration Date (ASED)

    1. The general rule is that an assessment of tax must be made within three years from the date a return is filed or the due date of the return whichever is later. Generally, this means that tax must be posted or journalized to Master File within 3 years from the received date of the return. Additionally, the Service has three years to assess additional tax due. See IRM 25.6.1 for exceptions to assessing additional tax within three years from the received date or due date of a return whichever is later. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for a more thorough explanation of the ASED, and the conditions that extend the ASED.

    2. SFR default assessments and the SFR dummy TC 150 do not start the running of the ASED. Therefore, the ASED must be set when processing SFR Reconsiderations.

    3. SFR Reconsiderations that are tax increases must be posted to Master File within three years of the received date.

    4. If a return is received with an imminent ASED, see IRM 25.6.1.9.9..2, After Hours and Imminent Assessments. Imminent ASEDs are when the ASED is within 90 calendar days.

    5. When processing SFR reconsiderations, determine the ASED. If the ASED is not posted on IDRS or the ASED is not correct on IDRS, input the ASED on IDRS. Generally, the ASED is set three years from the received date of the return. See IRM 25.6.1, Statute of Limitations Processes and Procedures, to determine the date the return is considered filed under IRC when the return received is not valid.

      Note:

      Per IRM 3.11.154.3.6, Statute Returns - No review for statute clearance is necessary for original returns secured by Compliance employees. Do not route to the Statute Control Unit any original return secured or any returns prepared under the authority of IRC 6020(b). Forward returns to files after input of adjustment.

    6. To set the ASED input a TC 599 CC 89 using CC FRM49 with the received date of the return when processing.

    7. To correct an ASED posted to IDRS, input a TC 560 using CC REQ77. The required fields for input are:

    • TC 560

    • The ASED (the correct received date plus 3 years)

      Note:

      When TC 976 is posted, the ASED is systemically set on IDRS. It is not necessary to input TC 560 in these cases unless the generated ASED is incorrect on IDRS.

4.13.5.4.7  (12-16-2015)
Corresponding to the Taxpayer

  1. Correspondence may be issued to the taxpayer to:

    • Request missing information

    • Inform them that the return was processed but subject to changes due to math error

    • Inform them that the return cannot be processed as submitted or refunds not issued due to statute time frames such as filing status changes separate to joint, credits or refunds barred.

  2. Letters sent to request information for return processing completion must always include the employee name and phone number.

  3. Disallowance letters based on statute time frames will contain the toll free number. The taxpayer does not need to contact a specific employee to answer appropriately.

  4. If the return processed contains both math error and statute barred credits/refund, a 474C will be issued for the math error and the 105C will be issued for the barred credits/refund.

  5. If the taxpayer replies to a 105C or 106C letter requesting an Appeal, an administrative file must be created and routed to Appeals. For administrative file case building guidelines see IRM 5.18.1.10.2.1.4.1, Appeals Case Building.

    Common Letters

    IF Send letter
    Disallowance of separate to joint returns 916C to non-filer
    105C to taxpayer who filed
    Information is requested (missing Schedules, Forms, unreported income, etc.) 2416C
    Math error due to no reply from taxpayer for information requested 0474C
    Appeals & Tax Court cases 916C
    Refer to IRM 4.13-7-13 for open paragraph
    Disallowance of TETR credit 105C
    Refund barred 105C
    Joint filer back out 2358C

4.13.5.4.8  (12-16-2015)
Referrals to Examination

  1. All SFR Reconsiderations meeting local SFR Screening Matrix Criteria must be referred to Classification after the return has been processed and the adjustment posted to IDRS.

  2. When Examination Classification referral is needed:

    1. Input assessment.

    2. Retain source document (Taxpayer's Return).

    3. Use IDRS CC ESTAB (T) to recharge to Exam.

    4. Use Form 5101 or locally approved referral form to route cases to Exam.

    5. Close any open SFR Reconsideration unit control base on IDRS.

    6. Attach IRPTR or SUPOL print for both primary and secondary taxpayers when under and unreported income is an issue.

  3. Forward the closed case file to Exam Classification by use of Form 3210, document Transmittal. Copy of Form 3210 must be retained for one year.

  4. International returns F1040 and F1040NR with F2555 or F2555EZ attached should be sent to Philadelphia Service Center based upon the "Processed International Return Procedures identified below.

    Processed International Return procedures:

    • Forward on F3210 the processed delinquent International Returns that contain a F2555 or F2555EZ to Philadelphia Service Center.

    • Use a separate F3210 for each of the three programs: ASFR, ASFR Reconsiderations, and Non-Filer (HINF).

    • Send return to:

      Internal Revenue Service
      4–E08.141
      Examination Classification
      2970 Market St.
      Philadelphia, PA 19104

  5. Fraud Referrals

    • Returns secured in reply to the SFR Program may appear to have suspicious or questionable expenses/credits/deductions claimed. Refer to IRM 25.1.2.3 , Indicators of Fraud, for examples of Fraud indicators and on how to refer to the Campus/Exam Fraud Coordinator.

    • In general, returns should be processed prior to referral.

Exhibit 4.13.5-1 
Common Freeze Codes

See Document 6209 Section 8A and IRM 21.5.6.4, Freeze Code Procedures, for complete information.

IF THEN
-W Send email to *AP Account Resolution for approval to process
-V Call Centralized Insolvency Operation (CIO) for approval to process.
-C Combat Zone Balance Due: Give to lead to process Refund Due: Process following normal procedures Refer to IRM 5.19.10.6, Combat Zone Accounts
-L Make AMDISA prints and attach to the case. Forward to EGC/PBC located on SERP, Who/Where tab. Close control, leave history on IDRS & AMS. EXCEPTION: If there is a pending TC 300 it will be worked in SFR Reconsideration Unit.
-A If the default assessment matches the return, input a TC 290 0.00 with hold code 4, and a TC 599 cc 89 . If return does not match verify if this is reconsideration return. Check CIS for all TC 976/977 postings
-Y This master file freeze code identifies an account in offer status. The TC 480 identifies a pending offer. If the freeze is set due to TC 480, the return can continue being processed. If the freeze is set due to a TC 780 or TC 788, do not make any abatements or increases, these are barred with the offer acceptance. Input a TC 599 cc89 to establish ASED. Input TC 290 0.00 with blocking series 80. Issue 916C to taxpayer using language in the IRM 21.5.4.4.50, -Y Freeze, “Because your account reflects an accepted Offer in Compromise, no further adjustments are permitted.” Complete AMS history and send the return to Files.
-I Restricted interest. Interest on adjustments input must be manually computed.
-E If Project code is 311-313 on TXMOD Make a copy of the return. Input a TC 290 0.00 using xClaim. Forward the original on a Form 3210 to the Frivolous Filer Coordinator at Stop 613
F- Make a copy of the return. Input a TC 290 0.00 using xClaim. Forward the original on a Form 3210 to the Frivolous Filer Coordinator at Stop 613
-Z Return can be processed. The adjustment will unpost and be routed to CI. CI will then receive receive direction from Special Agent.

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