4.23.19 Employment Tax Case Assignment and Grading Criteria

Manual Transmittal

January 12, 2018

Purpose

(1) This transmits revised IRM 4.23.19, Employment Tax, Employment Tax Case Assignment and Grading Criteria.

Material Changes

(1) Editorial and technical changes have been made throughout this section.

(2) IRM 4.23.19.1. New subsection, Program Scope and Objectives. Rearranged existing IRM content to place information involving internal controls for a program IRM under this subsection to conform to the new rules to ensure that the program’s internal controls are adequately expressed in the IRM.

(3) IRM 4.23.19.1.1. New subsection, Background. Formerly IRM 4.23.19.1, Assignment of Employment Tax Examinations - General.

(4) IRM 4.23.19.1.2. New subsection, Authority.

(5) IRM 4.23.19.1.3. New subsection, Responsibilities.

(6) IRM 4.23.19.1.4. New subsection, Program Objectives and Review.

(7) IRM 4.23.19.1.4.1. New subsection, Program Reports.

(8) IRM 4.23.19.1.5. New subsection, Acronyms. A list of frequently used abbreviations and their definitions.

(9) IRM 4.23.19.1.6. New subsection, Related Resources. A list of related resources.

(10) IRM 4.23.19.2. Deleted areas referring to ET-WSD instructions.

(11) IRM 4.23.19.3. Deleted areas referring to ET-WSD instructions. Added Note for IRM reference on transferring of returns.

(12) IRM 4.23.19.3.1. Deleted areas referring to ET-WSD instructions. Added Note for IRM reference on transferring of returns.

(13) IRM 4.23.19.3.2. Section title changed to General Assignment Criteria for Tax Compliance Officer (TCO) Assignments. Deleted reference to "selection" and replaced with "assignment" to clarify that this is for managers.

(14) IRM 4.23.19.5(2). Note added to clarify that the second digit of the grade of case can not exceed a "2" for ROE cases.

(15) IRM 4.23.19.6. Clarified the criteria used is for the Management Information System.

Effect on Other Documents

This material supersedes IRM 4.23.19, dated March 25, 2014.

Audience

This section contains instructions and guidelines for SB/SE employees when identifying, selecting, and assigning employment tax cases.

Effective Date

(01-12-2018)

Daniel R. Lauer
Acting Director, Examination - Specialty Policy
Small Business/Self-Employed Division

Program Scope

  1. Purpose: This IRM provides guidance regarding case assignment by the group manager when assigning cases to an examiner. The section also provides factors managers should consider when making a final determination as to the grade of case for all employment tax examinations.

  2. Audience: This section contains instructions and guidelines for Small Business/Self-Employed (SB/SE) managers.

  3. Policy Owner: Director, Examination - Specialty Policy of the Small Business/ Self-Employed Division.

  4. Program Owner: Program Manager - Employment Tax Policy. The mission of the Employment Tax Policy is to establish effective policies and procedures, to support compliance with employment tax laws.

  5. Primary Stakeholders:

    • Employment Tax – Workload Selection and Delivery (SE:S:E:HQ:ECS:S:ETEGCS:EWSD)

    • Specialty Examination - Employment Tax (SE:S:E:SE:ET)

    • Examination - Specialty Policy, Employment Tax Policy (SE:S:E:HQ SP:ET)

  6. Program Scope: The mission of the Employment Tax Policy is to establish effective policies and procedures, and to support compliance with employment tax laws.

Background

  1. Significant revenue to the government is reported on the various employment tax returns and compliance with employment tax law is critical to the funding of the government, including the social security trust fund.

  2. The identification, selection, and assignment of employment tax returns involves an approach that considers a variety of factors and analysis that identifies returns most worthy of examination. Many factors influence whether a case will be selected and subsequently assigned for examination. Principal among these factors is the appearance of non-compliance with employment tax filing and/or reporting. In addition:

    • Program priorities as stated in the annual Employment Tax Program Letter and Workplan,

    • Status of un-started and in-process work at the group level,

    • Complexity and industry (specialization) involved,

    • Experience and training level of examiners that may be assigned the case, and

    • Geographic location of examiners.

    Note:

    When compliance impact warrants, cases not meeting the above factors may still be selected and assigned.

Authority

  1. Employment tax provisions are found at Internal Revenue Code Subtitle C:

    • Chapter 21, Federal Insurance Contributions Act (FICA),

    • Chapter 22, Railroad Retirement Tax Act (RRTA),

    • Chapter 23, Federal Unemployment Tax Act (FUTA),

    • Chapter 24, Federal Income Tax Withholding (FITW), and

    • Chapter 25, General Provisions relating to employment taxes and collection of income taxes at source.

  2. The Employment Tax Program is governed by Policy Statements and other internal guidance that apply to all Service personnel regardless of operating division. The Policy Statements found in IRM 1.2, Servicewide Policies and Authorities, Policies of the Internal Revenue Service apply to all employment tax issues and examinations. Examiners should review these Policy Statements to properly perform their examination duties.

  3. A website, Delegation Orders by Process, located at https://www.irs.gov/uac/delegation-orders-by-process1 summarizes data contained in the applicable IRM sections under IRM 1.2, relating to Delegation Orders, in a single, electronic source.

  4. IRM 4.23 provides Servicewide instructions for all operating divisions with employees involved with the correct filing, reporting, and payment of employment taxes. IRM 4.23 serves as the foundation for consistent administration of employment taxes by various IRS operating divisions. By providing one source of authority for all operating divisions, the Service greatly reduces philosophical and procedural inconsistencies.

Responsibilities

  1. Director, Examination - Specialty Policy is responsible for the procedures and updates addressed in this IRM.

  2. Director, Specialty Examination is the executive responsible for Specialty examination operational compliance.

Program Objectives and Review

  1. Program Goals: The processes and procedures provided in this IRM are consistent with the objectives or goals for Employment Tax - Examination that are addressed in IRM 1.1.16.3.3.3, Employment Tax Examination and for Employment Tax Policy, found in IRM 1.1.16.3.5.2.2, Employment Tax Policy.

  2. Program Effectiveness: Program goals are measured with Employment Tax Embedded Quality Performance Reports that monitor whether quality attributes are applied uniformly and consistently.

  3. Annual Review: Employment Tax Policy - Program Manager, is responsible for reviewing the information in this IRM annually to ensure accuracy and promote consistent tax administration.

Program Reports
  1. Program Reports: Information regarding the reporting of program objectives are included on, but not limited to, the following reports submitted to the Director, Examination - Specialty:

    • Headquarters Examination Monthly Briefing,

    • Program Manager Monthly Briefing,

    • Examination Operational Review, and

    • Business Performance Reviews.

Acronyms

  1. The following table lists commonly used acronyms and their definitions:

    Acronym Definition
    CAWR Combined Annual Wage Reporting
    CI Criminal Investigation
    ET-WSD Employment Tax - Workload Selection and Delivery Unit
    FUTA Federal Unemployment Tax Act
    LB&I Large Business & International
    RA Revenue Agent
    ROE Revenue Officer Examiner
    RRTA Railroad Retirement Tax Act
    SB/SE Small Business/Self-Employed
    TAS Taxpayer Advocate Service
    TBOR Taxpayer Bill of Rights
    TCO Tax Compliance Officers
    TE Tax Examiner
    TE/GE Tax Exempt/Government Entities
    WSD Workload Selection and Delivery Unit

Related Resources

  1. The following table lists the primary sources of guidance:

    Source Title Description of Guidance
    IRM 4.23 Employment Tax IRM Twenty IRM sections owned by SB/SE Examination - Specialty Policy. Provides Servicewide instructions for employees of all operating divisions involved with the correct filing, reporting, and payment of employment taxes. IRM 4.23 serves as the foundation for consistent administration of employment taxes by various IRS operating divisions.
  2. Other helpful information sources include:

    • The SB/SE Knowledge Management home page for Employment Taxes https://portal.ds.irsnet.gov/sites/vl014/pages/default.aspx.

    • The Specialist Referral System home page: https://srs.web.irs.gov/.

    • A list of SB/SE Employment Tax Policy Analysts, their contact information and program assignments, are found at: Policy Analyst Listing.

    • The web site "Examining an Employment Tax Case" at: http://mysbse.web.irs.gov/ExamKM/et/examreturns/default.aspx.

  3. The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC 7803(a)(3). For additional information about the TBOR, see http://irweb.irs.gov/AboutIRS/tbor/default.aspx.

Assignment of Employment Tax Cases - Overview

  1. The SB/SE Employment Tax field organization consists of employment tax specialists:

    • Revenue Agents (RA),

    • Revenue Officer Examiners (ROE),

    • Tax Compliance Officers (TCO), and

    • Tax Examiners (TE).

    These employees report to a Group Manager, who in turn, reports to a Territory or Program Manager who reports to the Chief, Employment Tax.

  2. This section provides criteria to be used by a manager when assigning cases to an examiner. The section also provides factors managers should consider when making a final determination as to the grade of case for all employment tax examinations.

  3. This guide establishes a uniform system to:

    • Identify the correct initial case assignment,

    • Identify the correct initial grade of case,

    • Identify the correct final grade of case,

    • Provide information that should be considered in making position classification determinations, and

    • Improve the utilization of an employment tax specialist’s time and talents.

  4. This guide will also aid in reviewing employment tax specialist positions for grade structure purposes. It is not intended to, nor does it evaluate, a specialist’s performance and cannot be considered the sole predictor of the appropriate overall grade level for individual positions. Variables such as the extent of supervision or the impact of other duties are not given consideration in this guide.

  5. It is emphasized that this is primarily a guide and is not intended as a substitute for the exercise of supervisory judgment.

Procedures for Initial Case Assignment

  1. Employment Tax - Workload Selection and Delivery Unit (ET-WSD) staff is responsible for the initial case assignment for most employment tax cases. Managers who receive referrals through the Specialist Referral System (SRS) should use the criteria found in the following table when determining initial case assignments. A referral may be transferred to another group if assignment to a certain type examiner is warranted (e.g., a referral is assigned to a field group but the issue is more conducive for a TCO).

    Note:

    See IRM 4.11.29, Transfer of Returns Open for Examination, for additional guidance.

  2. The following table provides a basis for the proper case assignment by managers. This criteria will be used to ensure inventory received from ET-WSD or the SRS is appropriate for an examiner:

    Correspondence (TE) Remote (TCO) Field (RA/ROE/Tax Specialists)
    Initial interviews will be limited but not be required, although verbal contact may be necessary to follow up on requests for information Initial Interviews will be required with additional verbal contact necessary to follow up on requests for information Initial interviews will be required with extensive verbal contact anticipated to follow up on additional requests for information
    Records can be verified to source documents that can be easily submitted via mail/correspondence Analysis of original source documents may require follow-up to verify their appropriateness and tax law interpretation required Tour of business is required to establish the initial scope of examination
    Limited review of journals, ledgers, or other books and records will be necessary to arrive at the correct determination Multiple non-filed returns may be involved generally involving only one entity Analysis of complex areas of tax law interpretation may be required
    Limited analysis of information/data required Limited 3rd Party Contacts may be required to corroborate testimony Multiple related entity transactions may be identified and developed
    Verification-type issues only conducive to substantiation Simple to complex issues may be involved requiring verification and/or development that can be submitted by mail for review Expanded 3rd Party Contacts may be required
    Badges of fraud are not apparent Fraud may be identified and developed or referred to the field, if appropriate Fraud may be identified based on FinCEN Query System, referrals, and other external sources
    Limited scope examinations will require the use of re-engineering workpaper Lead Sheet #130 Review of financial records may be required to develop issues Complex and multiple issues requiring verification and/or development are identified
    Referrals to other examiners required if scope and depth change during case development Audits are conducive to remote audit procedures due to the frequency of contact and amount of information anticipated Complex books and records are likely
        Issues may require on-site inspection of books and records and the business as a whole
        Financial records available as a source of information

Additional Criteria for Tax Examiner (TE) Assignments

  1. The following provides additional criteria when determining if a case is appropriate for assignment to a Tax Examiner (TE). Cases not meeting the criteria will be deemed appropriate for TCOs or field examiners (RAs, ROEs, or Tax Specialists).

  2. General Assignment Criteria for TE Assignments:

    • Involves non-filed tax periods

    • May involve a full year Combined Annual Wage Reporting (CAWR) assessment if there are no other issues identified during classification

    • Requires only administrative processing to resolve the taxpayer’s module (e.g., unposted employment tax returns due to filing requirement issues)

    • Examination can be conducted via correspondence and requires limited review of books and records and taxpayer contact

    • Fraud is not identified or developed

  3. Work sources and issues that can meet the criteria for TE assignment:

    1. Credit Balance cases,

    2. Small CAWR cases,

    3. Form 944 filing requirement cases where the quarters of the unposted Form 941 match the wages reported for the year, and

    4. TC976 freeze cases where the return causing the TC976 is available and there are no other issues.

    Note:

    If issues outside the scope for TEs are found during development, the case should be transferred to the appropriate examiner (TCO or Field Examiner) to complete the examination. See IRM 4.11.29, Transfer of Returns Open for Examination, for additional guidance.

General Assignment Criteria for Tax Compliance Officer (TCO) Assignments

  1. The following provides additional criteria to use when determining if the case is appropriate for assignment to a Tax Compliance Officer (TCO). Cases not meeting the criteria will be deemed appropriate for field examiners (RAs, ROEs, or Tax Specialists).

  2. General Assignment Criteria for TCO Assignments:

    • Involves limited issues, such as CAWR and/or Form 1120-S officer compensation cases identified during classification

    • No related entities are identified during classification

    • Examination can be conducted using remote audit procedures

    • Adjustments are generally limited to pre-classified issues

    • Worker classification and potential section 530 issues are not identified during initial classification

    • Issues are well-established, such as Form 1120-S officer compensation cases

  3. Work sources and issues that can meet the criteria for TCO assignment:

    1. Form 1120-S officer compensation and related fringe benefits where distributions are evident on the face of the return,

    2. Claims meeting other selection criteria for TCOs,

    3. CAWR,

    4. Backup Withholding not involving a worker classification determination,

    5. Fringe Benefit issues such as Bonus Payments not properly treated, and

    6. Referrals where issues identified otherwise meet TCO assignment criteria.

      Note:

      If issues outside the scope for TCOs are found during development, the case should be transferred to the appropriate field examiner to complete the examination. See IRM 4.11.29, Transfer of Returns Open for Examination, for additional guidance.

Training Returns

  1. The criteria in IRM 4.23.19.3.1 and IRM 4.23.19.3.2 are also used when identifying training returns for new employment tax examiners. Generally, new hires will be assigned cases originally identified for TCOs; however, the cases will be worked based on the position of the trainee, not the classification of the case. Managers must work with the new hire and the on-the-job-instructor to determine when or whether to assign work having more complex issues.

Manager Responsibilities for Initial and Final Case-Grading and Assignment

  1. Every employee should perform work consistent with the needs of the organization, the grade level of the case, and the examiner’s grade.

  2. IRM 4.23.19.6, Characteristics of ALL Employment Tax Examination Cases, provides guidelines for the grading of all employment tax returns.

  3. When assigning cases, the group manager will review the case and, based on the grading criteria, determine the appropriate initial grade level for assignment. A final grade level is determined at case closing and entered on the Form 5344, Examination Closing Record, based on the issues developed in the case. Note that the final grade of case may be different from the initial grade based on the issues identified and subsequently developed by the examiner. See IRM 4.23.19.5 below for specific instructions on determining the Form 5344 entry.

  4. In addition to determining the grade level of the case, the manager will review the criteria in IRM 4.23.19.3, Procedures for Initial Case Assignment, to determine if the case is properly assigned.

    For example, when managers receive a case for assignment to a TCO or RA trainee, they will review the factors below in Exhibit 4.23.19-1 , Employment Tax Case-Grading Factors, to ensure the case does not qualify for a Grade 12 or 13. If it does not, they will use the criteria in IRM 4.23.19.3 to ensure the issues are appropriate for a TCO/RA trainee. If the case is determined to be inappropriate for a TCO or RA trainee, the case will be reassigned to an examiner with the appropriate grade within the group for examination (or transferred to another group if necessary).

  5. A group manager may provide an employee with the opportunity to perform a limited quantity of higher graded work to enhance their career development subject to the National Treasury Employees Union (NTEU) contract.

    Caution: A group manager must ensure, prior to the assignment of higher-graded work, that such work will not require more than 25 percent of the examiner’s direct examination time (DET). Review Document 11678, National Agreement - Internal Revenue Service (IRS) and National Treasury Employees Union (NTEU), Article 16, "Details and Non-Competitive Temporary Promotions," for details. Retroactive pay is required when it is determined that the time spent on higher-graded work exceeds 25 percent in any four-month period. A group manager should either assign the work at the appropriate grade level or secure advance permission for a temporary promotion. Managerial involvement is critical to ensure the examiner does not work more than 25 percent on higher graded cases.

Recording Grade of Case on Form 5344, Examination Closing Record, for Field Examination Cases

  1. A group manager determines the grade of case for all field examination employment tax cases and enters a three digit number in item 32 of Form 5344.

  2. The first digit will represent the class number for the industry, occupation, or type of case that most closely resembles the activity on the examined return.

    • "1" : Class 1 – Manufacturing, Construction, Mining

    • "2" : Class 2 – Retail, Wholesale, Transportation

    • "3" : Class 3 – Services, Farming

    • "4" : Class 4 – Financial and Utilities

    • "5" : Class 5 – Non-Business Individual, Fiduciary

  3. The second digit is the second digit of the closing examiner's grade:

    • "1" : GS-11 and below

    • "2" : GS-12

    • "3" : GS-13

    Note:

    For cases closed by ROEs, the second digit can never be greater than a "2" .

  4. The third digit is a "1" for all cases.

  5. When related returns are being closed by the same examiner who worked the primary return, enter the same three digit code as for the primary return, followed by an "R" (for related). If related returns are examined by a different examiner, each will be graded as a separate case and the "R" will not be recorded.

    Example:
    A manager has determined that an employment tax examination involving a manufacturing company has been graded as a GS-12 examination. The final case grade in Item 32 on Form 5344 would be "121" :

    • 1st digit = "1" for Class 1 (Manufacturing, Construction, Mining)

    • 2nd digit = "2" for a GS-12 grade

    • 3rd digit = "1"


    Related returns examined by the same revenue agent who examined the primary return would be coded "121R" . Related returns examined by other revenue agents would be coded without the "R" and graded as a separate case.

Characteristics of ALL Employment Tax Examination Cases

  1. A case is defined as the primary return for one period plus other related returns. The primary return is the return that has been classified for examination. Related returns include returns filed subsequent and/or prior to the primary return of the taxpayer as well as returns for related taxpayers. For Management Information System purposes, when the primary return and related returns are examined by the same examiner, the related returns will carry the same grade as the primary return. If related entities are examined by other agents, entities examined by a separate agent will be graded as a separate case.

    Example:
    The 2016/12 Form 941 for ABC Company is assigned to an examiner. After pre-analysis, the examiner determines an examination is warranted and expands the audit to include the 2016/03, 2016/06, and 2016/09 quarters. After the initial interview, the examiner expands the audit to include all four quarters of 2015 of both ABC Company and a related entity, XYZ Company. The 2016/12 Form 941 would be the primary (key) case and all other returns opened as a result of the examination would be related. Since the same examiner is working the entire case, the grade of case will be the same for all returns involved.

  2. The case-grading guidelines discussed in this IRM are not intended to cover all possible factors that may influence a final case grade. New projects, new programs, or other unusual situations may require a group manager to use their judgment in grading a case. Reliance must be placed on the case-grading factors for these situations.

Employment Tax Case-Grading Factors

  1. The case-grading factors listed in Exhibit 4.23.19-1, Employment Tax Case-Grading Factors, should be used for the initial and final grading of cases. In arriving at a grade, all factors do not have to be met; however, normally more than one of the most important factors is necessary. The factors involve:

    • Accounting Systems / Methods,

    • Issues / Knowledge,

    • Guidance / Tax Laws,

    • Scope and Effect,

    • Contacts, and

    • Other Characteristics.

Employment Tax Case-Grading Factors

The following provides managers with issues and/or characteristics that MAY result in an upgrade:

I. ACCOUNTING SYSTEMS / METHODS
GS-12 GS-13
GS-12 Case Characteristics:

- Business organization may be sizeable, with several subdivisions involving varied systems of accounting present
- Data may be derived from multiple systems and maintained in different internal accounting organizations
- Extensive system of computer records may be present which may require sampling to project the degree of compliance and scope of examination
- Cases involving businesses where direct verification may not be practical, such as situations in which books and records are incomplete, inadequate, or require interpretation of vague and unclear/conflicting documents
- Adaptation of standard investigative methods in the development of information
- Use of third party data and contacts to trace and/or reconstruct books and records
- Involves detailed and extensive analysis of books and records and the analysis of contractual agreements
- May involve related examinations of other taxpayers, although limited in scope
In addition to GS-12 characteristics, the case should have the following traits:

- Records may reflect reorganization, merger, and similar transactions of large corporations that have significant employment tax implications
- Cases in which organizations generate large amounts of data so that consolidation and reconciliation of data from numerous entities, divisions, related companies or profit centers is required
- Extensive system of computer records exist that may require sampling and adjustment in the initial scope of examination
- Review of SEC and other compliance and regulatory filings may be required
- Involves large complex firms normally with national and/or international operations that may require the assistance of a Computer Audit Specialist
- May require development of new and innovative examination approaches
- Information derived from a wide range of third parties may be required
- Significant International transactions may be apparent
- Taxpayers may file consolidated employment tax returns
II. ISSUES / KNOWLEDGE
GS-12 GS-13
GS-12 Case Characteristics:

- Issues encompassing medium to large business operations, related affiliates, liquidations, mitigation of statute of limitations, transferee problems, negotiations, businesses with several subdivisions or with employment taxes from many sources
- Issues may have regional, national, or industry wide impact
- Issues are not always restricted to the taxpayer entity
- Knowledge of business conditions and trade practices are usually necessary to develop issues for which research is required, but precedent has been established by case law, rulings, or prior examination
- Tip examinations involving multiple establishments in which extensive analysis and sampling techniques are required
- Complex cases involving section 530 – industry practice involving extensive analysis or documentation, law and regulations to establish proper classification of a worker
- May involve unusual determination of type of services in order to establish proper classification of a worker
- Requires development of fringe benefit issues, e.g., Accountable/Non-Accountable Plans, Relocation pay, etc.
- Compensation may take the form of wages not reported on Form W-2
- Review and consideration of FinCEN Query System derived transactions may be required
- Complex officer compensation cases
- Cases involving abusive tax avoidance schemes, including offshore leasing, pyramiding schemes, and trusts
In addition to GS-12 characteristics, the case should have the following traits:

- Specialized knowledge of major industries may be required so that expert judgments can be applied to business transactions
- Specialized knowledge of international employment tax issues including application of tax treaties
- Business transactions may include reorganization, consolidation, intercompany transfers on a national or international level in which there are complex employment tax implications
- Issues developed could affect legislation or precedent
- Knowledge must be such that decisions are made based on lack of precedents, law, or non-definitive authority, i.e. new law or change in law
- Tip examinations involving a multitude of establishments with nationwide impact in which extensive analysis and sampling techniques are required
- Complex cases involving section 530 with regional or national industry practice
- Requires development of fringe benefit issues involving larger taxpayers and more complex issues, such as stock options, that may have regional or national implications
- Complex situations involving interpretation/use of non-Title 26 Federal Statutes, e.g., FinCEN Query System
- International features regarding employees out of the country and employees working in the US
- Executive compensation issues involving stock and other forms of compensation which may be deferred
- Significant withholding issues may be present
- Coordination with other areas of IRS may be required (LB&I, TE/GE).
III. GUIDANCE / TAX LAWS
GS-12 GS-13
GS-12 Case Characteristics:
- Cases require research and analysis to establish proper interpretation of tax laws which are similar to, but may not be identical to precedent cases
- Cases may require interpretation and application of tax law where there may be limited guidelines although some precedents may exist
- May require research of committee reports to determine the intent of Congress, particularly where the law and/or regulations are vague or non-existent
- May involve a request for technical advice
- May involve interpretation and/or application of tax treaties
- A limited number of foreign corporations, subsidiaries, or partnerships situations may exist
In addition to GS-12 characteristics, the case should have the following traits:
- Cases have tax/legal issues involving nonexistent or conflicting precedent(s)
- Cases have unusual, complex issues which are considered to be in what is considered gray areas of the law, and there is very little precedent to make a determination. Any determination of the issues may set a precedent and have regional, national, or industry-wide impact
- Extensive research is necessary to locate similar cases or evaluate the impact of the case
- Comprehensive analysis is required to ensure proper evaluation of all points involved in application of law
- Significant potential tax change may be involved with unclear provisions of law. Issues may set precedent
- Involves complex separation of foreign and domestic operations to determine any employer/employee relationships and intercompany charges and/or payments relating to compensation
- Involves the development of alternative resolution solutions to the issues raised in examination
- Cases requiring complex interpretation and application of IRS employment tax laws, such as classification of employees, section 530, and executive compensation
IV. SCOPE AND EFFECT
GS-12 GS-13
GS-12 Case Characteristics:
- Examination potential is beyond immediate taxpayer and may extend throughout the particular industry or significant section of the nation
- Consequences may be extensive due to recurring effects in prior and subsequent years
- Consequences may also have deterrent effects on other taxpayers in the community
- May involve development of evidence to support fraud
In addition to GS-12 characteristics, the case should have the following traits:
- Tax results are of major significance even for “no change” cases because the tax liability is large, or cumulative amounts over the years are large
- Cases have indirect regional or nationwide deterrent effects. Important principles are developed resulting in new precedents
- Cases involve information gathering projects which are large in scope and cover a large volume of taxpayers
- Highly complex cases that may involve development of evidence to support fraud
V. CONTACTS
GS-12 GS-13
GS-12 Case Characteristics:
- May require contact with employees and representatives of medium to large size corporations
- May involve related or third parties placed under examination due to the audit of the primary taxpayer
- Case may require interaction and involvement with members of Headquarters and/or National Office staff
- Case may require interaction and involvement with Counsel to ensure consistency of treatment of a given issue
In addition to GS-12 characteristics, the case should have the following traits:
- Cases involve contacts with persons who are prominent because of their reputations in their fields, especially the accounting and employment tax fields, or officials of large businesses with national reputations
- Requires interaction and involvement with National Office and/or Counsel to ensure consistency of treatment of a given issue that involves more complex issues
- Cases may require advanced negotiation and communication skills due to political sensitivity issues and concerns.
VI. OTHER CHARACTERISTICS
GS-12 GS-13
GS-12 Case Characteristics:
- Information may be derived from a concluded Grand Jury investigation
- The interpretation of contracts may be necessary to support the legal position, such as who is an employee versus independent contractor
- Closing agreements (including voluntary closing agreements) requiring coordination with both local counsel and national office counsel, as necessary
- Analysis of substance versus form, such as employee leasing, per diem payments, etc.
- Local or regional issues advanced by promoters, such as tool rental cases
- Involves extensive information gathering or enforcement coordination:
a. Criminal Investigation/Grand Jury involvement
b. Third party witnesses who may be reluctant to produce records
c. Extensive summons enforcement procedures
d. Jeopardy/terminations
In addition to GS-12 characteristics, the case may have the following traits:
- Requires interpretation of Contracts with national implications
- Involves complex issues with closing agreements requiring coordination with local and headquarters counsel
- Cases involving promotions with nationwide ramifications, e.g., Promoters of Tool Rental schemes or use of unique, unusual, and/or precedent-setting schemes

- Referrals from LB&I,
- Cases with media involvement