4.17.1 Overview of Compliance Initiative Projects188.8.131.52 Overview184.108.40.206 Purpose and Scope220.127.116.11 Activities Not Subject to CIP Procedures18.104.22.168 Definitions Part 4. Examining ProcessChapter 17. Compliance Initiative ProjectsSection 1. Overview of Compliance Initiative Projects 4.17.1 Overview of Compliance Initiative Projects Manual Transmittal April 24, 2017 Purpose (1) This transmits revised IRM 4.17.1, Compliance Initiative Projects, Overview of Compliance Initiative Projects. Material Changes (1) This revision incorporates the following significant changes: IRM 22.214.171.124 – Added TE/GE IRM citations. IRM 126.96.36.199 – Reorganized and updated titles and department names. IRM 188.8.131.52 – Added the following as exempt from CIP procedures: Compliance checks part of an operating units annual work plan; Strategies or work streams specifically identified in a business operation unit's program letter; referrals of specific taxpayers received from other government agencies; TE/GE compliance work. IRM 184.108.40.206 – Updated and consolidated definition of Prohibited Taxpayer Contacts. Added LB&I Project Coordinator. Added Return Inventory Classification System. Effect on Other DocumentsIRM 4.17.1 dated February 25, 2010 is superseded. AudienceCompliance employees within all Operating Divisions. Effective Date(04-24-2017) Deborah NgoActing Director, Exam Case Selection, Small Business/Self-Employed Division 220.127.116.11 (04-24-2017) Overview This chapter contains procedures for the development, approval, and management of Compliance Initiative Projects (CIPs). The Tax Exempt / Government Entities (TE/GE) IRMs contain detailed information in the following sections: IRM 4.75.8, Exempt Organizations Examination (EOE) IRM 4.71.26, Employee Plans (EP) IRM 4.86.2, Indian Tribal Government (ITG) IRM 4.90.5, Federal State Local Government (FSLG) IRM 4.81.2, Tax Exempt Bonds (TEB) 18.104.22.168 (04-24-2017) Purpose and Scope The purpose of this chapter is to ensure all compliance employees follow consistent guidelines and comply with Service policies regarding: Privacy Compliance Security Disclosure Data acquisition and management Measurement of results CIPs are any activities involving contact with specific taxpayers and collection of taxpayer data within a group or segment, using either internal or external data to identify potential areas of non-compliance within the group or segment, for the purpose of correcting the non-compliance. For definitions see IRM 22.214.171.124 (7), External Data and IRM 126.96.36.199 (8), Internal Data. Fundamental principles of CIPs include: Identifying trends of non-compliance and improper treatment of tax issues. Safeguarding taxpayer privacy and protecting taxpayers against unauthorized disclosure of confidential information or unauthorized compliance contacts. Improving voluntary compliance. Using data driven business decisions as the basis for expending resources. Ensuring authorization by all functions whose resources will be significantly impacted. Utilizing resources effectively and efficiently while treating taxpayers consistently and fairly. When gathering taxpayer specific external data CIP procedures will apply regardless of whether taxpayers are contacted. CIP procedures apply to all functions and units within the Internal Revenue Service and are mandatory. No deviation from these procedures is allowed without the written approval of the SB/SE Director, Exam Case Selection (or equivalent); LB&I Director, Compliance Planning and Analytics (CP&A); W&I Director, Refundable Credits Policy & Program Management; or the appropriate TE/GE Functional Director. 188.8.131.52 (04-24-2017) Activities Not Subject to CIP Procedures CIP procedures do not apply to routine business operations. Routine business operations are structured activities commonly conducted in day-to-day operations, in which taxpayers are specifically identified. Examples are: Contacts generated by automated return selection systems such as Discriminant Function(DIF), Discriminant Analysis System (DAS), or automatics (audit codes) identified during return processing. Identification of training returns. Any group of taxpayers that fall within an issue, strategy or work stream specifically identified on a business operating unit's annual work plan for examination or compliance check. Securing information necessary for the collection of delinquent returns and taxes. Submitting, verifying and contacting taxpayers as a result of information reports or referrals, including referrals from other government agencies; federal, state or local, as long as the referrals are not a broad market segment or treated as such. Note: Referrals should be a nominal number of specific individuals or list of individuals or businesses with potential tax implications and are treated individually rather than as a group. Example: Form 3449, Referral Report; Form 3949, Information Report Referral; Form 3949-A, Information Referral; Form 4442, Inquiry Referral; Form 5346, Examination Information Report; Form 5666, TE/GE Referral Information Report; referrals from other IRS functions, or referrals from other government agencies. Extending audits or investigations to related taxpayers. Fraud/BSA compliance examinations or compliance reviews, (Refer to IRM 4.26, Bank Secrecy Act ). Abusive Transactions (AT) Offshore compliance examinations. Lead Development Center (LDC) participant cases (Refer to IRM 184.108.40.206.2, SB/SE Lead Development Center (SB/SE LDC) and Delegation Order 4.60, Functions Related to Potential Promoters/Tax Shelters Cases). Form 3031, Reports of Investigation of Transferee Liability. Approved Research Projects which are not intended to select specific taxpayers for examination. Projects approved through the Government Liaison Business Initiative Proposal or CSO Research Request unless compliance contacts are going to be required. Refer to IRM 11.53.3, CSO Support, Disaster Assistance and Issue Management Resolution System and IRM 11.53.5, Stakeholder Liaison Activities. Approved LB&I campaigns. CIP procedures do not apply to Memorandums of Understanding (MOUs), if all the following applicable conditions are met: They contain a valid business case. They contain clear, specific details regarding taxpayer/return selection criteria and any alternative treatments. They are adopted and approved at Headquarters by individuals (directors or higher) who have authority to commit the resources of the initiating function. They are approved by all significantly impacted functions. The applicable executive authority such as the SB/SE Director, Exam Case Selection or equivalent; LB&I Director, Compliance Planning and Analytics (CP&A); W&I Director, Refundable Credits Policy & Program Management; or the appropriate TE/GE Functional Director are part of the review and approval process. If the above criteria are not met, CIP procedures will apply. 220.127.116.11 (04-24-2017) Definitions Alternative Treatments – Non-audit/collection activities by personnel for the purpose of improving voluntary compliance. Examples include but are not limited to the following: Taxpayer outreach/education Revisions to forms or publications Legislative or regulatory changes Agreements with state or local business licensing authorities for tax compliance requirements Business Case – A collection of facts developed to support a request for implementation of any compliance initiative project. The business case should address all material issues, including why resources should be allocated to the project for which approval is requested rather than other compliance activities. See IRM 18.104.22.168.1, Background and Objectives. CIP Contact – Office/individual responsible for initiating a CIP. CIP Coordinator – CIP coordinators have program responsibility for monitoring CIP projects on a Headquarters, Area, Industry or Functional level. Compliance Data Environment (CDE) – CDE is a workload identification, planning, and delivery system that operates in a web-based environment. It includes Individual, Business, and Trust returns for the current year and 3 prior years. Exam Quality Technical Support (EQTS) – A program designed to increase the level of expertise of employees through specialization and the development of audit techniques specific to particular market segments, with the goal of increasing efficiency, effectiveness, and consistency of audits within market segments. External Data – Taxpayer specific data (see IRM 22.214.171.124 (17), Taxpayer Specific Data) collected from public and private sources outside of IRS. External data does not include non-sensitive data such as electronic asset locator and people locator services, newspaper articles, periodicals, taxpayer websites, etc. Internal Data – Information that is required to be filed with the IRS or is produced within the IRS or is furnished to the IRS and incorporated into its data systems. An example is information received from other government agencies as part of an agreement. Monitoring – Utilize Audit Information Management System (AIMS) data as a tool to track individual CIP results. National CIP Database – The National CIP Database is an Access database which contains information on past and present CIPs. This database contains a brief description of the activities and/or issues that each CIP addresses. The database has historical and current CIP information that is available for research by Service personnel. TE/GE will maintain its own record keeping system of CIPs. Privacy – The right of taxpayers to be free from unauthorized or unnecessary intrusion into their personal affairs. Prohibited New Taxpayer Contacts – For the purpose of IRM 4.17, Compliance Initiative Projects, any contact made with a taxpayer whose case is in a status below 10 at the earlier of the project completion date or the termination date of an authorization. Project Coordinator (LB&I) – LB&I office/individual responsible for initiating a CIP. Return Inventory Classification System (RICS) – RICS is the workload identification and planning system for TE/GE. ROTERS (Record of Tax Enforcement Results) – data, statistics, compilations of information or other numerical or quantitative recordations of the tax enforcement results reached in one or more cases, but not to include the tax enforcement results of individual cases when used to determine whether an employee has exercised appropriate judgment in pursuing enforcement of the tax laws based upon a review of the employee’s work on that individual case. Security – The protection of data from loss or inappropriate use. Taxpayer Specific Data – Any information that contains taxpayer identifiers or can be traced back to a specific taxpayer. Examples are name, address, taxpayer identification number, driver’s license number, telephone number, or coding used in place of another identifier that can ultimately be traced to a specific taxpayer. Taxpayer – Relates to the primary return identified under an approved CIP; does not include related returns or prior or subsequent year returns. TE/GE specific glossaries are located in their respective IRMs. See IRM 126.96.36.199, Overview.