Part 4. Examining Process
Chapter 22. National Research Program (NRP)
Section 9. International Form 1040 NRP Study
November 18, 2011
(1) This transmits revised IRM 4.22.9 - International Form 1040 NRP Study.
(1) This IRM was updated with the following offices name change:
Large and Mid-Size Business (LMSB) changed to Large Business and International (LB&I)
International Compliance Strategy and Policy, and Foreign Resident Compliance combined and is now International Individual Compliance (IIC)
William W. Hannon
Director, National Research Program
International Individual Compliance (IIC) examiners will refer to IRM 4.22.1 - NRP Overview dated 04-24-2008, which provides an overview of the need for current compliance measures and the National Research Program's approach to measuring and reporting compliance.
IIC examiners will refer to IRM 4.22.6 - Area Office - Examination of Individual Returns, which provides information that is used during the classification and examination of tax returns in NRP, describes the research that will be included in NRP case files, and explains how it should be utilized. The NRP approach maximizes use of data available to the IRS and, to the extent possible, minimizes intrusiveness and taxpayer burden.
Generally, IIC examiners will follow IRM 4.22.3 - Classification of NRP Returns. However, return classification assignment may vary in LB&I International due to resources. The following statements refer to the classification of International Form 1040 NRP returns.
Reference IRM 184.108.40.206.2.1 – Earned Income Credit (EIC) and Related Issues
Returns claiming EIC will be examined by a IIC examiner by correspondence or face-to-face.
Reference IRM 220.127.116.11.2.6 – Foreign Tax Credit
International classifiers will select all Forms 1116 filed.
International classifiers will select Form 2555 based on tolerances found in IRM 18.104.22.168 under Tolerances and any IRP discrepancy or processing error.
Reference IRM 22.214.171.124.2.7 – Schedule A – Itemized Deductions
In general, International classifiers will consider Schedule A variations as they relate to International taxpayers.
Reference IRM 126.96.36.199.3 – Classification Results
The NRP tax return will be completely classified prior to the determination of the classification results. The classifier will select the appropriate issues on the classification checksheet, review those issues against the following criteria for determining the overall result, and will lastly check the "Classification Results" box(es) on the classification checksheet.
All returns designated as "Accepted as Filed" , "Accepted with Adjustments" or Selected will be reviewed and concurred by a NRP Coordinator or classification reviewer.
Reference IRM 188.8.131.52.4 - Area Examination
International classifiers will identify a return as "Selected for Examination" .
International classifiers will not designate the type of contact for examination. Management will make this determination.
Generally, IIC examiners will follow IRM 4.22.4 - Area Office - Examination of NRP Cases, which provides guidance for conducting NRP examinations in Area Offices. The emphasis is on quality examinations within the guidelines that will produce reliable research information to be used in future workload selection. Consideration will be given to minimize taxpayer burden and to maximize IRS resources through maximum use of in-house data to limit the scope, where appropriate, in NRP examinations. The following statements refer to the examination of NRP Form 1040 returns in LB&I International.
Reference IRM 184.108.40.206- Examination of Returns
For IIC examiners: in addition to the information provided in IRM section 220.127.116.11, the following also applies:
(13) International cases may require special procedures
Reference IRM 18.104.22.168.1 – Scope and Depth of Examination
For IIC examiners: in addition to the information provided in IRM section 22.214.171.124.1 the following also applies:
(a) IIC examiners will request and inspect copies of all tax returns filed in the host country.
(b) IIC examiners will request Foreign Information Return Payment documents (similar to Form 1099), if available.
Reference IRM 126.96.36.199.5 – Transfers
For IIC examiners:
Generally, LB&I International will follow the procedures in IRM 188.8.131.52.5 dealing with return transfers. However, the International NRP Coordinator will determine whether case transfers will be made within International or to a SBSE domestic group.
Generally, IIC examiners will follow IRM 4.22.6 - Area Office - Examination of Individual Returns, which provides guidance for conducting NRP examinations in Area Offices. The following statements refer to the examination of NRP Form 1040 returns in LB&I.
Reference IRM 184.108.40.206 - Initiating Examinations
For IIC examiners: in addition to the information provided in IRM 220.127.116.11 the following also applies:
Correspondence procedures may vary for International examinations.
MAP procedures may be required for International examinations. See IRM 4.60.2 - Mutual Agreement Procedures and Report Guidelines and 4.60.3 - Tax Treaty Related Matters.
Reference IRM 18.104.22.168 - Individual Examination Guidelines
Generally, IIC examiners will follow the procedures in IRM 22.214.171.124 LB&I will provide training separate from the NRP training modules, as needed, for:
foreign income exclusion and,
foreign tax credit.
Reference IRM 126.96.36.199.2 - NRP Program Office and Operating Divisions Program Monitoring
For IIC examiners in addition to the information provided in IRM 188.8.131.52.2 the following also applies:
(2) Due to overseas travel requirements, IIC group managers should complete a minimum of one evaluative in-process review per examiner within 120 days of the date of the examiner's first interview.
Reference IRM 184.108.40.206.3 - Area NRP Program Monitoring
For IIC examiners the following will apply: The International NRP Quality Review Team Lead will identify the make-up of the review team.