4.24.9 Excise Tax Penalties Guidance

Manual Transmittal

November 21, 2019

Purpose

(1) This transmits a revision to IRM 4.24.9, Excise Tax Penalties Guidance.

Material Changes

(1) The title of this IRM has been modified from Excise Tax Penalties and Excise Return Preparer Penalties Guidance to properly reflect the current information contained within. This IRM has been extensively rearranged and updated. Redundant content was deleted because it is addressed under IRM 20.1 , Penalty Handbook.

(2) The table below identifies the significant changes in content revisions of this IRM.

IRM Section Description of Change
4.24.9.1 Overview of Excise Penalty Provisions Title changed to Program Scope and Objectives. New content added about information involving internal controls to comply with rules and requirements under 1.11.2.1. Prior content moved to 4.24.9.2.
4.24.9.1.1 Common Penalty Features Title changed to Background. New content added about background to comply with rules and requirements under 1.11.2.1.1. Prior content moved to 4.24.9.2.
4.24.9.1.2 Appeals Procedures Applicable Title changed to Authority. New content added about legal authorities to comply with rules and requirements under 1.11.2.1.2. Prior content is redundant and addressed under IRM 20.1.11.
New 4.24.9.1.3 Title added Responsibilities and Roles. New content added about responsibilities to comply with rules and requirements under 1.11.2.1.3.
New 4.24.9.1.4 Title added Program Objectives and Review. Information added from 1.11.2 and IRM 1230, Internal Management Document System Handbook, to comply with rules and requirements under 1.11.2.1.4.
New 4.24.9.1.5 Title added Terms/Definitions/Acronyms. A list of terms, definitions and acronyms frequently used in this IRM, including those related to management and internal controls, added to comply with the rules and requirements under 1.11.2.1.5 and 1.11.2.1.6.
New 4.24.9.1.6 Title added Related Resources. Information added to comply with rules and requirements under 1.11.2.1.7.
4.24.9.2 Overview of Excise Examination Related Penalties Title changed to Common Penalty Features. Content moved from 4.24.9.1.1 and 4.24.9.1.2. Prior content moved to 4.24.9.3.
4.24.9.3 IRC 4103 Willful Failure to Pay Fuel Taxes Penalty Title changed to IRC Section 4103 Case Referrals to Collection Function. Content moved from 4.24.9.3.1. Prior content is redundant and addressed under IRM 20.1.11.10.
4.24.9.3.1 Referring Potential IRC Section 4103 Cases to Collection Function Removed subsection. Content is redundant and addressed under IRM 20.1.11.10.
4.24.9.4 IRC 6651 Failure to File Tax Return or Pay Tax Penalty Title changed to Nontaxable Delinquent Returns. Content moved from 4.24.9.4.1. Prior content is redundant and addressed under IRM 20.1.11.12(2).
4.24.9.4.1 Nontaxable Delinquent Returns Title changed to Penalties Applicable to Delinquent Returns Secured by Excise Employees. Content moved from 4.24.9.4.2. Prior content moved to 4.24.9.5.
4.24.9.4.2 Penalties Applicable to Delinquent Returns Secured by Excise Employee Removed subsection. Content moved to 4.24.9.5.2.
4.24.9.4.3 Penalties Applicable to Substitute for Return Removed subsection. Content moved to 4.24.9.5.3.
4.24.9.4.4 IRC Section 6020(b) Certification Procedures for Non-Filed Excise Returns Removed subsection. Content moved to 4.24.9.5.4.
4.24.9.5 IRC 6672 Trust Fund Recovery Penalty Title changed to Penalties Applicable to Substitutes for Return. Content moved from 4.24.9.4.3. Prior content is redundant and addressed under IRM 20.1.11.4.
4.24.9.6 IRC 6675 Excessive Claims with Respect to Use of Fuels Penalty Title changed to IRC Section 6020(b) Certification Procedures for Non-Filed Excise Tax Returns. Content moved from 4.24.9.4.4. Prior content is redundant and addressed under IRM 20.1.11.5.
4.24.9.7 Introduction to Excise Return Preparer Penalties Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.1 IRC 6694, 6695, and 6713 Return Preparer Penalties Removed subsection. Content is redundant and addressed under IRM 20.1.6.4, IRM 20.1.6.5 and IRM 20.1.6.7, respectively.
4.24.9.7.2 Return Preparer Penalty Disclosure Issues Removed subsection. Content is redundant and addressed under IRM 20.1.6.4.9.
4.24.9.7.3 Return Preparer Coordinator Responsibilities Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.4 When to Propose a Return Preparer Penalty Removed subsection. Content is redundant and addressed under IRM 20.1.6.3.
4.24.9.7.5 Return Preparer Penalty Case Development Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.5.1 Establishing the Need for a Return Preparer Penalty Case Removed subsection. Content is redundant and addressed under IRM 20.1.6.3.
4.24.9.7.5.2 Overview Return Preparer Penalty Case Control Procedures Removed subsection. Content is redundant and addressed under IRM 20.1.6.3.2.
4.24.9.7.5.2.1 Instructions for Completion of Form 5809 Removed subsection. Content is redundant and addressed under IRM 20.1.6.3.2.(2).
4.24.9.7.5.3 Statute of Limitations Periods for Return Preparer Penalty Cases Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.6 Contacting the Return Preparer and Conducting a Comprehensive Interview Removed subsection. Content is redundant and addressed under IRM 20.1.6.8.1.
4.24.9.7.7 Return Preparer Report Writing and Case Processing Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.7.1 No Change Return Preparer Penalty Case Removed subsection. Content is redundant and addressed under IRM 20.1.6.2.2
4.24.9.7.7.2 Form 8872 Instruction Reminders Removed subsection. Content is redundant and addressed under IRM 20.1.11.2.2.
4.24.9.7.7.3 Return Preparer Penalties Proposed Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.7.4 Agreed Return Preparer Penalty Case Processing Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.7.5 Unagreed Return Preparer Penalty Case Processing Procedures Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.7.6 Protest to the Return Preparer Penalty Removed subsection. Content is redundant and addressed under IRM 20.1.6.
4.24.9.7.8 Return Preparer Penalty Appeals Removed subsection. Content is redundant and addressed under IRM 20.1.6.4.16.
4.24.9.7.9 Quick or Prompt Assessment Procedures for Return Preparer Penalty Cases Removed subsection. Content is redundant and addressed under IRM 4.4.25.7.
4.24.9.7.10 Referral to the Office of Professional Responsibility (OPR) Removed subsection. Content is redundant and addressed under IRM 20.1.6.4.14.
4.24.9.7.11 Program Action Case (PAC) Procedures for Excise Tax Removed subsection. Content is redundant and addressed under IRM 20.1.6.6.
4.24.9.8 Overview of Fuel Tax Enforcement Penalties Removed subsection. Content is redundant and addressed under IRM 20.1.11.
4.24.9.8.1 IRC 6715 Misuse of Dyed Fuel Removed subsection. Content is redundant and addressed under IRM 20.1.11.6.2.
4.24.9.8.2 IRC 6717 Penalty for Refusal of Entry Removed subsection. Content is redundant and addressed under IRM 20.1.11.9.2.
4.24.9.8.3 IRC 6718 Penalty for Failure to Display Tax Registration on Vessels Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.4.
4.24.9.8.4 Overview of IRC 6719 Failure to Register or Reregister and IRC 6725 Failure to Report Information Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.5.
4.24.9.8.4.1 IRC 6719 Failure to Register Penalty Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.5.
4.24.9.8.4.2 IRC 6725 Failure to Report Information Penalty Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.7.
4.24.9.9 IRC Section 7272 Penalty for Failure to Register Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.3.
4.24.9.10 IRC Section 7275 Penalty for Offenses Relating to Certain Airline Tickets and Advertising Removed subsection. Content is redundant and addressed under IRM 20.1.11.16.
4.24.9.11 IRC Section 7342 Penalty for Refusal to Permit Entry or Examination Removed subsection. Content is redundant and addressed under IRM 20.1.11.8.1.
Exhibit 4.24.9-1 Instructions for Completion of Form 8278 Computation and Assessment of Miscellaneous Penalties, Non-Return Related Penalties Removed subsection. Content is redundant and addressed under IRM 20.1.6.
Exhibit 4.24.9-2 Instructions for Request for Quick or Prompt Assessment Removed subsection. Content is redundant and addressed under IRM 4.4.25.7.

(3) Editorial changes, such as updates to IRM references, citations and websites have been made.

Effect on Other Documents

This material supersedes IRM 4.24.9 dated August 24, 2016.

Audience

This section is for Small Business/Self Employed (SB/SE) revenue agents (excise examiners), excise tax managers (excise managers) and personnel at Campus Exam/Automated Under Reporter Cincinnati (CEAC) who work with penalties specific to excise tax returns (excise returns), excise tax refunds (excise refunds), excise tax claims (excise claims) and other excise tax compliance (excise compliance) activities.

Effective Date

(11-21-2019)

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

Program Scope and Objectives

  1. General Overview - This IRM provides technical guidance about penalties pertaining to excise returns, excise claims, excise refunds and other excise compliance activities unless otherwise noted in IRM 4.24, Excise Tax.

    Note:

    Criminal penalties are not addressed under this IRM section.

  2. Purpose - This IRM discusses penalties as they pertain to excise returns, excise refunds, excise claims and other excise compliance activities.

  3. Audience - This IRM is for SB/SE excise examiners, excise managers and personnel at Campus Exam/Automated Under Reporter Cincinnati (CEAC) who work with penalties specific to excise returns, excise refunds, excise claims and other excise compliance activities.

  4. Policy Owner - Director, Examination - Speciality Policy is responsible for the administration, procedures and updates related to the technical guidance and information processing steps and methods for penalties specific to excise returns, excise refunds, excise claims and other excise compliance activities.

  5. Program Owner - Director, Examination - Specialty Examination owns Excise Tax Examination operations.

  6. Primary Stakeholders - Appeals, Counsel, Exam Quality and Technical Support (EQTS) and Office of Servicewide Penalties (OSP) are the primary stakeholders for this IRM.

Background

  1. For compliance purposes, it is essential managers, senior management officials, excise examiners and personnel at CEAC understand and correctly follow the technical guidance and information processing steps and methods explained in this IRM section to ensure penalties specific to excise tax are administered fairly and consistently.

Authority

  1. The most significant penalties affecting excise taxes are listed in the table below and are authorized by the applicable Internal Revenue Code (IRC) Sections.

    IRC Section Type of Penalty IRM Reference
    4103 Willful Failure to Pay Fuel Tax/Additional Persons Liable 20.1.11.10
    6651(a)(1) Failure to File 20.1.2.2.7
    6651(a)(2) Failure to Pay 20.1.2.2.8
    6651(f) Fraudulent Failure To File, Civil 20.1.2.2.7.5
    6656 Failure to Deposit 20.1.4
    6662(b)(1) Accuracy Related Penalty-Negligence 20.1.5.7
    6663 Civil Fraud 20.1.5.14.1
    6672 Trust Fund Recovery 20.1.11.4
    6675 Excessive Fuel Claims 20.1.11.5
    6694 Return Preparer Penalty-Understatement 20.1.6.4
    6695 Return Preparer Penalty-Other 20.1.6.5
    6715 Dyed Fuel Sold for Use, or Used in Taxable Use 20.1.11.6
    6715A Tampering With or Failing to Maintain Security Requirements for Mechanical Dye Injection Systems 20.1.11.7
    6717 Refusal of Entry 20.1.11.8.2
    6718 Failure to Display Tax Registration on Vessels 20.1.11.8.4
    6719 Failure to Register or Reregister Under Section 4101 20.1.11.8.5
    6720A Certain Adulterated Fuels 20.1.11.8.6
    6725 Failure to File Information Return Under Section 4101 and any failure to include all of the information required to be shown on such return or the inclusion of incorrect information 20.1.11.8.7
    7270 Failure to Comply with the Requirements of IRC 4374, Liability for Tax 20.1.11.9
    7272 Failure to Register or Reregister under Section 4101 20.1.11.8.3
    7275 Offenses Relating to Certain Airline Tickets and Advertising 20.1.11.16
    7342 Refusal to Permit Entry or Examination 20.1.11.8.1, 20.1.11.9

Roles and Responsibilities

  1. Overall responsibility for penalty programs is assigned to OSP. OSP is charged with coordinating policy and procedures concerning the administration of penalty programs, ensuring consistency with the policy statement, reviewing and analyzing penalty information, researching penalty effectiveness on compliance trends and determining appropriate actions to promote voluntary compliance. Excise Tax Examination is responsible for developing additional guidance or reference materials for its specific functional administrative needs as they apply to penalties specific to excise tax. Such material must remain consistent with OSP policies and general procedural requirements.

  2. Director, Examination - Specialty Policy is responsible for Excise Tax Examination policy and procedures.

  3. Director, Examination - Specialty Examination is responsible for operational examination compliance activities.

  4. Chief, Estate & Gift/Excise Tax Exam is responsible for ensuring the policies and procedures for penalties specific to excise tax are communicated to and carried out by excise examiners.

Program Objectives and Review

  1. Program Goals - The program goals provided in this IRM are designed to increase compliance with excise tax laws by applying the tax laws with integrity and fairness and to provide SB/SE taxpayers top quality post-filing services for excise taxes administered by SB/SE.

  2. Program Reports - Information reporting of program objectives are included on Program Manager Monthly Briefings provided to Director, Examination - Specialty Policy.

  3. Program Effectiveness - Program effectiveness is measured by the Exam Quality Review Staff, located in FSEQ. FSEQ supports the SB/SE Quality Improvement Program utilizing National Quality Review System (NQRS) to conduct independent case reviews from statistically valid samples of examination case work. National, area and territory trend analysis on the quality attributes are used to establish baselines to assess program performance, identify opportunities to improve work processes, analyze causes for failure, assess the feasibility of possible solutions and measure the success of quality improvement efforts.

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

Terms/Definitions/Acronyms

  1. Acronyms and their associated words or phrase used throughout this IRM are listed in the table below.

    Term Definition
    CEAC Campus Exam Automated/Under Reporter Cincinnati
    IRC Internal Revenue Code
    NQRS National Quality Review System
    OSP Office of Servicewide Penalties
    SB/SE Small Business/Self Employed
    TBOR Taxpayer Bill of Rights
    TIN Taxpayer Identification Number

Related Resources

  1. The IRMs listed below are the primary sources of information for excise examiners, excise managers and personnel at CEAC who work with penalties specific to excise returns, refunds, claims and other excise compliance activities. Together this material forms the responsibilities, operating rules and procedures for penalties.

    1. IRM 20.1.1, Introduction and Penalty Relief - This section discusses the background and purpose of penalties, penalty relief guidelines and the general structure of IRM 20.1, Penalty Handbook.

    2. IRM 20.1.2, Failure to File/Failure to Pay Penalties - This section contains policy and instructions with respect to penalties for Failure to File and Failure to Pay under IRC 6651.

    3. IRM 20.1.3, Estimated Tax Penalties - This section provides policy and service-wide guidelines about the administration of penalties for the underpayment of estimated tax under IRC 6654 and IRC 6655.

    4. IRM 20.1.4, Failure to Deposit Penalty - This section provides policy and other important information with respect to the penalty for Failure to Deposit under IRC 6656.

    5. IRM 20.1.5, Return Related Penalties - This section outlines the policy and procedures surrounding return related penalties.

    6. IRM 20.1.6, Preparer, Promoter, Material Advisor Penalties - This section provides the policies for return preparers, promoters and material advisors.

    7. IRM 20.1.7, Information Return Penalties - This section is for compliance functional employees responsible for working information return penalties.

    8. IRM 20.1.9, International Penalties - This section is for compliance functional employees responsible for international penalties.

    9. IRM 20.1.10, Miscellaneous Penalties - This section provides information about miscellaneous penalties.

    10. IRM 20.1.11, Excise Tax and Estate and Gift Tax Penalties - This section provides policies and procedures for the application of excise tax and estate and gift tax penalties.

    11. IRM 4.24.6, Technical Guidance and Information Processing for Excise Tax Examination Issues. - This section provides the procedures for the preparation of excise tax workpapers.

    12. IRM 4.24.10, Appeals Referral Procedures - This section provides information about the referral process for excise cases to Appeals, including whether excise tax penalties are in connection with unagreed tax adjustments or such penalties are the only items at issue.

    13. IRM 4.24.20, Excise Tax Report Writing Guide - This section provides the procedures for the preparation of excise tax reports.

  2. IRS formally adopted a Taxpayer Bill of Rights (TBOR) in June 2014, which provides the nation’s taxpayers with a better understanding of their rights and helps reinforce the fairness of the tax system. In 2015, Congress charged the Commissioner with ensuring IRS employees are familiar with and act in accordance with taxpayer rights afforded by the code. See IRC 7803(a)(3) for a non-exhaustive list of those rights. IRS employees must be informed about taxpayer rights and be conscientious in the performance of their duties to honor, respect and effectively communicate those rights that may aid in reducing taxpayer burdens. IRS employees must administer the law with integrity and fairness and exercise professional judgment, not personal opinions, in conducting enforcement activities. Refer to Pub 1, Your Rights as a Taxpayer, to read TBOR and learn how IRS employees carry out these rights.

Common Penalty Features

  1. In general, each penalty is unique and will stand alone unless otherwise indicated. Exceptions and additional information are noted in the discussions of the specific penalties. However, the general procedures listed below will apply.

  2. Statute of Limitations - In general, the additions to tax, additional amounts, and assessable penalties in IRC 6651 - IRC 6657 and IRC 6671 - IRC 6725 are assessed, collected and paid in the same manner as taxes. To the extent a penalty or addition to tax pertains to a tax return, the assessment is generally subject to the period of limitation in IRC 6501 and shall be assessed within 3 years after the return was filed (whether or not the return was filed on or after the date prescribed).

  3. Reasonable Cause Relief - a determination as to whether or not reasonable cause exists must be based on a careful consideration of the facts and circumstances of each case prior to the assertion of a penalty. Excise employees should consider any reason a taxpayer provides in conjunction with the guidelines, principles and evaluating factors. Refer to IRM 20.1.1.3.2, Introduction and Penalty Relief, Reasonable Cause, as well as the applicable IRC Section and Treasury Regulations relating to the specific penalty. Excise employees may use the reasonable cause relief lead sheet found at the Penalties Knowledge Base Homepage located at http://sbseservicewide.web.irs.gov/penalty/about/default.aspx.

  4. Abatements - For information on penalty abatements refer to IRM 20.1.1.3, Criteria for Relief from Penalties.

  5. Documentation and Managerial Involvement - Excise employees must use Administrative Lead Sheet E500, Penalty Check Sheet, located in the Forms Library of the Notebook, to document the assertion or non-assertion of penalties. Group manager involvement is not required on automatic penalties such as Failure to File and Failure to Pay. Managerial review and written approval is required on assertion of all other penalties and the non-assertion of IRC 6719 and/or IRC 6725 penalties.

IRC Section 4103 Case Referrals to Collection Function

  1. Excise employees will use the procedures described below for referring potential IRC 4103 cases to the Collection function.

  2. The duty to ensure tax is paid and the willful failure to perform such duty on the part of an officer, employee, or agent of the taxpayer, or willfulness and the causation of the taxpayer's failure to pay tax on the part of a person involved will be determined by the excise employee prior to referring the case to the Collection function.

  3. The excise employee will prepare a memorandum to the Advisory Function (Advisory) in Collection. The subject line will state "Referral of Potential IRC 4103 Case."

  4. The memorandum will be forwarded to Advisory through the territory manager and will contain the following information:

    1. Excise employee's name and telephone number.

    2. Taxpayer's name, taxpayer's identification number (TIN) and current address.

    3. Tax period(s), statute date(s), abstract number(s) and deficiencies involved.

    4. Names, titles, TIN's and current addresses of all persons who appear responsible for ensuring payment of the tax.

    5. The excise employee's best estimate of the projected disposition of the case.

    6. An explanation of the proposed adjustments and the facts supporting the excise employee's determination.

  5. When Advisory receives a referral from Excise Tax or any other Compliance examination function, the Collection function will make the final determination in assessing the personal liability for excise tax.

Nontaxable Delinquent Returns

  1. A nontaxable delinquent excise tax return has $0 liability. It is filed administratively by IRS for a specific taxpayer to establish the tax period in order to make an assessment.

  2. Nontaxable delinquent excise tax returns may be filed for which there is additional tax developed as the result of an examination. Since the returns as filed are nontaxable, they are processed without considering the delinquency features or without securing from the taxpayer any statement of reasonable cause for delay in filing.

  3. In such cases the excise employee will, after considering the statement of the taxpayer, recommend assertion or non-assertion of the delinquency penalty in the examination report. Any appropriate comments regarding a penalty recommendation will be incorporated into the report.

  4. For reasonable cause criteria refer to IRM 20.1.1.3.2.

  5. To determine whether reasonable cause relief can be considered for the penalty being considered, excise employees should refer to Exhibit 20.1.1-1 at http://irm.web.irs.gov/Part20/Chapter1/Section1/IRM20.1.1.asp.

Penalties Applicable to Delinquent Returns Secured by Excise Employees

  1. The excise employee's recommendation for assertion or non-assertion of the failure to file or pay penalty will accompany each delinquent return.

    1. For reasonable cause criteria, refer to IRM 20.1.1.3.2.

    2. To determine whether reasonable cause relief can be considered for the penalty being considered, refer to Exhibit 20.1.1-1 at http://irm.web.irs.gov/Part20/Chapter1/Section1/IRM20.1.1.asp.

  2. These requirements preclude affording appeal rights prior to assessment of the penalties. In these cases, the taxpayer should be advised that an appeal may be initiated by filing Form 843, Claim for Refund and Request for Abatement, for the amount of penalties upon payment of the penalties.

  3. An excise employee securing a delinquent return may examine the return to determine whether the tax reported is correct. Such examination should be made as soon as possible after the return is received, and to the extent deemed necessary.

  4. A "No-Change" report will be issued if the excise employee determines that the tax is correctly reported. Refer to IRM 4.4.9.5.14.1, Examining Process, AIMS Procedures and Processing Instructions, Delinquent and Substitute for Return Processing, No Change to Original Return, for more information regarding no-change case processing.

  5. If the excise employee finds that the tax is incorrect, an examination report will be prepared covering proposed changes to the tax reported on the return, and to the delinquency penalty, if applicable.

  6. If the additional tax is unagreed, normal appeal procedures apply.

  7. Refer to IRM 4.4.9 for more information.

  8. For guidance on processing delinquent returns and substitutes for returns (SFRs) refer to Excise Tax Knowledge Base Home page for Closing an Exam located at https://portal.ds.irsnet.gov/sites/vl037/lists/book31/landingview.aspx.

Penalties Applicable to Substitutes For Return

  1. The excise employee will recommend assertion or non-assertion of penalties.

  2. The excise employee will also explain the basis for the recommendation and comment on the taxpayer's statement in the case file.

    1. For reasonable cause criteria refer to IRM 20.1.1.3.2.

    2. To determine whether reasonable cause relief can be considered for the penalty being considered, refer to IRM Exhibit 20.1.1-1 at http://irm.web.irs.gov/Part20/Chapter1/Section1/IRM20.1.1.asp.

  3. The excise employee will compute any penalty recommended on the total tax due for the period involved.

  4. Appeals procedures apply.

IRC Section 6020(b) Certification Procedures for Non-Filed Excise Tax Returns

  1. IRC 6020(b) certification procedures are required to impose the IRC 6651(a)(2), Failure to Pay Tax Penalty, when a taxpayer fails to file an excise tax return.

  2. For information about situations where a taxpayer fails to file an excise tax return and the application of the IRC 6651(a)(2) is warranted, refer to IRM 20.1.2.2.10.2, Failure to File/Failure to Pay, Processing When Deficiency Procedures Do Not Apply.

  3. IRC 6651(g)(2) provides that for purposes of IRC 6651(a)(2) a return prepared by the excise employee under IRC 6020(b) is treated as a return filed by the taxpayer. IRC 6020(b) return requirements are met in a case where the excise employee has processed as a return, documents that:

    • Identify the taxpayer.

    • Provide a basis for the taxpayer's tax computation.

    • Are signed by the excise employee who has been delegated the authority to sign IRC 6020(b) returns.

  4. Instructions for applications of IRC 6020(b) are listed below and found in IRM 20.1.2.2.10.2 (1)(b):

    • Complete and attach Form 13496, IRC Section 6020(b), Certification, to the source document for assessment of tax under IRC 6020(b).

    • Attach the report summarizing excise examination changes or equivalent report of adjustments.

    • Attach Form 886-A, Explanation of Items, appropriate issue lead sheet, or similar form.