4.24.18 Excise Case Selection

Manual Transmittal

April 27, 2018


(1) This transmits revised IRM 4.24.18, Excise Case Selection.

Material Changes

(1) This IRM has been updated to include required information about the program’s system of internal controls.

(2) Editorial changes have been made throughout this IRM such as updating electronic hyperlinks and IRM references.

(3) The table below identifies significant changes in content.

IRM Subsection Number Nature of Change
4.24.18 Excise Case Selection Title is revised to reflect the name change from "Excise Operations Support."
4.24.18 Excise Case Selection Entire content updated to reflect organizational title changes, update cites and update links. Text is revised and reformatted to reflect updated procedures. Style and punctuation was updated to conform to the IRM Style Guide and the Plain Writing Act of 2010., Program Scope and Objectives New section "Program Scope and Objectives" . Content added about internal controls to comply with rules and requirements under, Background Added information about excise taxes., Authority New subsection "Authority" and added legal authorities about excise taxes., Responsibilities Added information about responsible positions for Excise Case Selection., Program Management and Review - Added information about program management and review., Program Management and Review New subsection "Program Management and Review", Program Controls Added information about program controls., Terms, Definitions and Acronyms Added a list of terms, definitions and acronyms used in the Excise Case Selection program., Fairness in Case Selection New section "Fairness in Case Selection", Taxpayer Rights New subsection "Taxpayer Rights", Confidentiality of Taxpayer Information - Taxpayer Privacy New subsection "Confidentiality of Taxpayer Information - Taxpayer Privacy", Excise Tax Returns and Claims Forms New section "Excise Tax Returns and Claims Forms", Workplan Development New section "Workplan Developmen" t describes processes for developing and monitoring Excise Tax Exam., Operational Assessment of Excise Tax Abstracts and Activity Code Coverage New section "Operational Assessment of Excise Tax Abstracts and Activity Code Coverage", Workplan Monitoring New section "Workplan Monitoring", Prioritizing Workload Initiatives New Section "Prioritizing Workload Initiatives", JOC Network Updated JOC Network information to reflect transition to IRS IT database, JOC Data Catalog Added information on post JOC data catalog to SharePoint, JOC Data Refresh Added information on data refreshes, Data Acquisition Added information on process to acquire data, Data Transfers Added information on process to transfer data, ExSTARS Administrative Support New section on ExSTARS processing in the JOC, Leads without Taxpayer Identification Numbers Added process to identifying TINs on leads, FIDGAP New section "FIDGAP", ECS Inventory System Added information on ECS inventory system processes, Inventory Reports Identified inventory reports available, Monitoring ECS Inventory Added information on monitoring inventory, Scheduling Initiative Runs Added information on the process to refer leads for classification, Identifying Leads for Classification Added information on how to identify leads for classification, Determining Case Compliance Approach Provides guidance on determining case compliance approach, Processing ECS Inventory Guidance on maintaining inventory fields and tables, Surveys New information on case survey approval and documentation, Whistleblower Leads New information on processing whistleblower leads, Sample Reviews Adds guidance on identifying and selecting 637 Registration Sample reviews, Work Order Request Tracking System New documentation of the WORTS process, Inventory Assignment of Leads for Classification New guidance on assigning leads for classification, Classification New guidance on forwarding classification decisions to WSD manager, manager review and inventory updating., Case Selection Factors New guidance on case selections factors, Classification Documentation Revises process for documenting classification decisions, FinCEN New guidance on FinCEN data, Processing Leads Selected for Compliance Action New section title and instructions, Requests to CSTO for ERCS and IMS Creation New guidance on requests to CSTO, Related IRMs New guidance on related IRMs, Creating Case Files New guidance on creating case files, Case Coordination New guidance on case coordination, Return Preparer Coordinator New guidance on return preparer coordinator duties, Indian Tribal Governments Guidance on Indian Tribal Governments, Inadequate Records Notice Guidance on Inadequate Records Notices, Doubt As To Liability Guidance on Doubt as to Liability cases, Erroneous Refunds Guidance on erroneous refund cases, Technical Guidance Guidance on technical guidance, Coordination with Centralized Specialty Tax Operations New information on coordination with Centralized Specialty Tax Operations, JOC State Partner Processes Section revised to reflect new partner processes, Quality Review New information on conducting quality review
4.24.18-1, Terms/Definitions and Acronyms New exhibit on terms/definitions and acronyms

Effect on Other Documents

This material supersedes IRM 4.24.18 dated April 9, 2014.


This section is for SB/SE Exam Case Selection - Specialty Excise Case Selection employees.

Effective Date


Maha Williams
Acting Director, Exam Case Selection
Small Business/Self Employed

Program Scope and Objectives

  1. General Overview - This IRM provides guidance for the Excise Case Selection function in identifying, classifying and delivering inventory for compliance action. Excise Case Selection includes the operations of the Joint Operations Center and Workload Selection and Delivery.

  2. Purpose - This IRM provides guidance for the Excise Case Selection (ECS) function in identifying, classifying and delivering inventory for compliance action. It:

    1. Describes the steps in developing and monitoring workplan assumptions that balance workload among priority programs, mandatory workload, and other sources of work.

    2. Establishes the standards and procedures to identify examination cases.

    3. Provides detail on coordination with excise tax policy staffs to evaluate excise tax policy effectiveness.

  3. Audience - These procedures apply to IRS employees responsible for identifying, classifying and processing excise tax compliance leads and cases.

  4. Program Owner - The Director, Exam Case Selection - Specialty, is the program owner and responsible for Excise Case Selection policies and procedures.

  5. Primary Stakeholders - Employees in ECS, Excise Tax Exam, Specialty Policy, and Centralized Specialty Tax Operations.

  6. Program Goals - The program goals are consistent with the objectives or goals addressed in IRM, Organization and Staffing, Small Business and Self/Employed (SB/SE), Excise Tax Examination.

  7. An additional program goal is to ensure excise tax examinations are initiated based on indicators of non-compliance or other criteria (such as selection for the National Research Program), identified in the IRM. See IRM, Select Dispositions, for additional information on selection factors. Ensure reviews of the decisions to survey cases, i.e., not initiate an examination, are based upon factors outlined in the IRM and approved by an appropriate level of management. See IRM, Surveys, for additional information on surveys.

  8. Contact Information - To recommend changes or make other suggestions related to this IRM section, see IRM, Providing Feedback About an IRM Section - Outside of Clearance.


  1. Excise taxes are imposed on the sale or use of various items (IRC sections 4041 through IRC 5881). Excise taxes administered by the IRS include fuel taxes, environmental taxes, communication taxes, air transportation taxes, manufacturer taxes, retail sales taxes, ship passenger taxes, foreign insurance taxes, and taxes on obligations not in registered form. Excise taxes imposed on alcohol, tobacco, and firearms are not administered by the IRS. Some of these taxes are dedicated to trust funds that pay for related capital improvements such as highways and airports. Excise taxes are independent of income taxes except for certain income tax credits.

  2. It is important to consider the applicable excise tax requirements for different market segments. Pub 510, Excise Taxes, provides useful information on excise taxes.

  3. Certain excise tax activities are required to be registered with the IRS. Information on registration may be found in IRM 4.24.2, Form 637 Excise Tax Registrations.


  1. Policy Statement 4-21, Selection of returns for examination, states the primary objective in selecting returns for examination is to promote the highest degree of voluntary compliance on the part of taxpayers. This requires the exercise of professional judgment in selecting sufficient returns of all classes of returns, in utilizing available experience and statistics indicating the probability of substantial error, and in making the most efficient use of examination staffing and other resources.

  2. IRM, Supplemental Sources of Guidance, provides that organizations may issue supplemental guidance and local procedures to employees when the primary guidance is in the IRM. Supplemental guidance contains information that details how to perform or review a task. Supplemental sources must comply with published guidance and not supersede the IRM.

  3. Consider these factors when determining whether to incorporate information into the IRM or publish it in another source:

    • If a category of employees (even if just one) are required to perform certain actions, the information belongs in the IRM.

    • If employees are evaluated on how they follow the instructions, the information belongs in the IRM.

    • If the information itself is retained for future use (workpapers, worksheets) and is part of a case file, then the worksheets can either be published, appended to the IRM (job aid) or be accessed via an online tool. However, the rules for preparing the worksheets belong in the IRM.

    • If specific instructions are provided on how to complete a form, they may be associated with the official form or placed in the IRM.


  1. The Director, Exam Case Selection - Specialty, is responsible for oversight of Excise Case Selection.

  2. The Program Manager, Excise Case Selection, is responsible for oversight of the Joint Operations Center (JOC) and Workload Selection and Delivery (WSD) operations.

  3. The JOC and WSD group managers, respectively, are responsible for oversight of the JOC and WSD.

  4. The mission of the JOC is to provide a technical foundation for a common data repository that supports the innovative use of technology to collect, analyze, and share information to provide qualified tax compliance leads. To accomplish its mission, the JOC:

    • Collaborates with subject matter experts to develop and maintain workload initiatives which attempt to identify areas of noncompliance and to provide the best possible work for further classification and enforcement efforts.

    • Identifies questionable activities and tax evasion schemes using data-mining technologies, predictive analytics technology, link-analysis tools, and other forensic-type tools and techniques.

    • Fosters state, federal and multi-national cooperation in the strategic analyses of tax compliance trends and patterns.

    • Identifies, acquires, and integrates federal, state, and other third-party data supporting tax compliance analysis.

    • Develops baselines for measuring improvement in tax compliance activities.

    • Collects, analyzes, and shares information to facilitate tax compliance activities

  5. The mission of WSD is to manage the classification and delivery of excise tax-related inventory. To accomplish its mission, WSD:

    • Coordinates creation of the ETE annual workplan assumptions.

    • Monitors progress in delivering inventory for the workplan.

    • Implements policy for ordering, classifying, and delivering workload to support plan goals.

    • Collaborates with subject matter experts to develop and maintain workload initiatives that address excise tax compliance to provide the best possible work for enforcement efforts.

Program Management and Review

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

    • Headquarters Examination Monthly Briefing

    • Program Manager Monthly Briefing

    • Examination Operational Review

    • Business Performance Review

  2. Program Effectiveness: Program goals are measured by analysis of excise tax compliance to:

    • Establish baselines to assess program performance

    • Identify opportunities to improve work processes

    • Analyze causes for failure

    • Assess the feasibility of possible solutions

    • Measure the success of quality improvement efforts

  3. Data sources used to identify compliance leads include excise tax return filings and third-party data primarily from other federal agencies used to corroborate taxable events. See IRM, JOC Network, for additional information.

  4. Quality review is conducted on program processes to ensure requirements are met for fairness in case selection. See IRM, Quality Review, for additional information.

Program Controls

  1. All information management systems have safeguard measures in place that address key components of Information Technology (IT) security requirements to restrict access to sensitive data.

Terms/Definitions and Acronyms

  1. See Exhibit 4.24.18-1, Terms/Definitions, and Acronyms, for a list of acronyms and definitions used in this IRM.

Fairness in Case Selection

  1. Policy Statement P-1-236, "Fairness and Integrity in Enforcement Selection," emphasizes the IRS mission statement that includes enforcing the tax law with integrity and fairness to all. The Taxpayer Bill of Rights (TBOR) includes taxpayers' right to a fair and just tax system. As IRS employees, we are expected to carry out our duties with integrity and fairness. Fairness and integrity therefore apply to how IRS administers tax laws to all taxpayers as well as how IRS employees interact with each taxpayer and each tax professional.

  2. SB/SE supports administration of tax laws by selecting returns to audit. The primary objective in selecting returns for examination is to promote the highest degree of voluntary compliance on the part of taxpayers while making selection decisions. Employees must exercise their professional judgment, not personal opinions, in conducting their enforcement responsibilities. There are three parts to enforcing the tax law with integrity and fairness:

    1. To ensure fairness to the taxpaying public, employees must take into account the responsibilities and obligations that all taxpayers share and pursue those individuals and businesses who don’t comply with their tax obligations. In this way, employees are being fair to those who are compliant and that, in turn, helps promote public confidence in our tax system for all taxpayers.

    2. To ensure an equitable process for all taxpayers, fairness and integrity are built into the foundation of our enforcement selection processes. These processes operate under a comprehensive set of checks and balances and safeguards to identify the highest potential noncompliance using scoring mechanisms, data driven algorithms, third-party information, whistleblower and information provided by the taxpayer. No one individual can control the enforcement selection decision-making processes, and we limit involvement to only those employees whose duties require involvement. This produces processes that are impartial and applied consistently to each taxpayer return.

    3. To ensure fairness to each taxpayer, whose return is selected, individual return selection decisions are based on the information contained on the taxpayer’s return and/or the underlying relevant tax law. Managerial as well as quality reviews of selection decisions occur during each phase of the selection and assignment process.

  3. Selecting returns for audit also involves making the most efficient use of finite examination staffing. As GAO has recommended, SB/SE Examination is adding an additional program-level objective which addresses fairness in returns selection. The new objective is as follows:

    • Ensure examinations are initiated based on indicators of non-compliance or on other criteria (such as selection for the National Research Program) identified in the IRM. In addition, a review of the decisions to survey a return, i.e., not initiate an examination, are based upon factors outlined in the IRM and efficient use of examination resources. The decision is reviewed and approved by management.

Taxpayer Rights

  1. Excise Case Selection employees have the ongoing responsibility to ensure that all taxpayer rights are protected and observed, whether these rights are mandated by statute or provided as a matter of policy. For more information, refer to IRM, Taxpayer Rights.

  2. Employees should review the Taxpayer Bill of Rights found at https://www.irs.gov/taxpayer-bill-of-rights.

Confidentiality of Taxpayer Information - Taxpayer Privacy
  1. The obligation to protect taxpayer privacy and to safeguard the information taxpayers entrust to us is a fundamental part of mission of the IRS mission which requires we apply the tax law with integrity and fairness to all. Taxpayers have the right to expect that the information they provide will be safeguarded and used only in accordance with the law.

  2. For guidance concerning IRS privacy policy on the protection of tax information that includes PII, SBU data and tax information, refer to IRM 10.5.1, Privacy Policy.

  3. For unauthorized access requirements, refer to IRM 10.5.5, IRS Unauthorized Access or Inspection of Taxpayer Records (UNAX) Program Policy, Guidance and Requirements, and IRM, Unauthorized Access (UNAX).

Excise Tax Returns and Claims Forms

  1. IRM 4.24 provides servicewide instructions for all operating divisions with employees involved with the correct filing, reporting and payment of excise taxes. IRM 4.24 serves as the foundation for consistent administration of excise taxes by various IRS operating divisions. By providing one source of authority for all operating divisions, the Service greatly reduces procedural inconsistencies. IRM 4.24 provides guidance and procedures for excise tax issues and is the primary source of authority for the administration of excise tax examinations by the IRS and is used in coordination with other examination IRMs.

  2. Excise taxes and claims are reported on the forms listed below:

    • Form 11C, Occupational Tax and Registration Return for Wagering

    • Form 720, Quarterly Federal Excise Tax Return

    • Form 720X, Amended Quarterly Federal Excise Tax Return

    • Form 720CS, Carrier Summary Report

    • Form 720TO, Terminal Operator Report

    • Form 730, Monthly Tax Return for Wagers

    • Form 2290, Heavy Highway Vehicle Use Tax Return

    • Form 6197, Gas Guzzler Tax

    • Form 6627, Environmental Taxes

    • Form 8876, Excise Tax on Structured Settlement Factoring Transactions

    • Form 8849, Claim for Refund of Excise Taxes

    • Form 843, Claim for Refund and Request for Abatement, for dyed diesel fuel penalty claims.

  3. An overview of excise taxes reported on Form 2290, Form 11-C, and Form 730, may be found in IRM, Overview of Excise Taxes Reported on forms 2290, 11-C, and 730.

  4. For detailed information on Form 720, see IRM, Overview of Excise Taxes Reported on Form 720.

  5. Certain excise tax-related credits may be filed on income tax returns with the following attachments to the returns:

    • Form 4136, Credit for Federal Tax Paid on Fuels

    • Form 6478, Biofuel Producer Credit

    • Form 8864, Biodiesel and Renewable Diesel Fuels Credit

  6. For additional information on excise taxes, see IRM 4.24.1, Excise Tax, Introduction to Excise Taxes.

Workplan Development

  1. An annual ETE workplan is developed by Field Exam Specialty BSA Workload Planning and Analysis (FSB WPA) in accordance with guidelines found in IRM 1.5, Managing Statistics in a Balanced Measurement System, and in Policy Statement P-1-236, Fairness and Integrity in Enforcement Selection. See also IRM, Fairness in Case Selection. Plan information is used to determine program priorities with the allocation of resources, workload selection, and assessment of program effectiveness.

  2. The WSD group manager is responsible for coordination from within ECS on workload assumptions provided to FSB WPA that are then used in development of the final workplan. The WSD group manager shall collaborate with ETE, Excise Tax Policy and Fuel Tax Policy as to the plan numbers with FSB WPA preparing the final plan based on those discussions. Generally, the final plan is communicated on or before the beginning of the fiscal year but may be adjusted as changes in circumstances and law (IRS goals, funding, tax law, etc.) occur.

  3. Topics for coordination to be defined and quantified include:

    • Workstreams to be monitored

    • Historic pickup ratios

    • Employee resources

    • Training needs

    • Tax law changes and/or current issues affecting excise taxes

Operational Assessment of Excise Tax Abstracts and Activity Code Coverage

  1. Abstracts and activity codes may be covered by more than one chartered initiative; however, multiple charters may not ensure complete coverage of all aspects of these items. Review should include whether additional activities are necessary to complete coverage.

  2. On an annual basis, an operational assessment should be documented by a cross-functional team of JOC, WSD, ETE Excise Tax Policy and Fuel Tax Policy to assess excise tax abstract and activity coverage. The assessment should review:

    • Excise abstract coverage by taxation point, i.e., where products/commodities become taxable such as upon import or manufacture, go over the rack, etc.

    • Planning for future compliance activities

    • Data sources available to address compliance initiatives

  3. Document each abstract taxation point to ensure that related issues are being addressed. For example, Abstract 033, Retail Truck Tax, includes a taxation point for imported vehicles as well as a taxation point for domestic manufacturer of vehicles. Review whether these are all the points under which taxation occurs and whether a means of identifying non-compliance with those points exists. Are systems in place to for reporting compliance? Does the Service address compliance with the taxation point outside of SB/SE such as TEGE returns?

  4. Brainstorm acquisition of new data sources that may result in identifying non-filers and under-reporters of related excise taxes.

  5. Create a prioritized list of activities to pursue for the coming fiscal year for each abstract and/or activity.

  6. Post documentation by abstract and activity code to the ECS SharePoint Charters library Master List of Initiatives for:

    • Points of taxation, e.g., domestic and imported products, waterborne lightering, pipeline, state reports, etc.

    • Charter crosswalk to point of taxation

    • Comment whether all aspects of the abstract are addressed by charters

    • Comment on aspects not addressed and the reason why

  7. The ECS, ETE, Excise Tax Policy and Fuel Policy program managers should jointly approve documentation confirming agreement for abstract and activity code coverage.

Workplan Monitoring

  1. Workplan monitoring includes reviewing the number of returns and taxpayers started each month, the number of returns and taxpayers closed each month and the number of returns and taxpayers in process to maintain optimal base inventory levels. The WSD group manager is responsible for coordinating with the JOC group manager to ensure delivery of sufficient and appropriate lead inventory and reviewing the inventory current month and year-to-date lead identification, lead referrals for classification, and classification dispositions with reasons for leads not selected.

  2. Review may result in changes to initiative runs, when leads should be referred for classification and compliance approach for specific lead types. Changes should be posted to the Master List of Initiatives spreadsheet on the ECS SharePoint Charters library.

  3. Monitor workplan goals by reviewing:

    1. Cases delivered - leads selected as cases for all destinations including CSTO and ETE

    2. Examination Return Control System (ERCS) case controls and Issue Management System (IMS) uploads to reconcile completion of new requests

    3. Examination results

    4. Returns and taxpayers planned, opened and closed

    5. Pick-up ratios

    6. Correspondence work for contingencies such as travel restrictions and disasters

    7. Large case referrals

    8. 637 reviews

    9. ExSTARS reviews

    10. Fuel Compliance Program inspections

    11. Penalty cases

  4. Ensure workplan delivery by conducting, at a minimum, bi-weekly inventory monitoring of:

    • ERCS status 08

    • ERCS status 10

    • Leads available for classification

    • Leads assigned for classification

Prioritizing Workload Initiatives
  1. Prioritize workload initiatives for classification in accordance with:

    • Accomplishment of workplan goals

    • Next best case concept - inventory selected represents the next best case available

    • Training needs

    • Work Order Request Tracking System (WORTS) - volume and completion of orders

    • CSTO needs

    • Specific abstracts and activities based on management priorities

Excise Tax Exam Inventory Monitoring

  1. The WSD group manager is responsible for monitoring ETE inventory to determine progress in meeting the workplan. The following monthly reports assist with monitoring and are provided by FSB WPA:

    • Base Inventory Work in Progress (WIP) - work in progress for ERCS status 10 and 12, it assists with identifying whether enough work is in process for pro rata closures. The US Base worksheet provides workstreams by return and taxpayer, time on closures, year-to-date closures and the number pro rata needed for the following months. The Taxpayer Base data reflects current pickup rates to project total closures.

    • New Starts - workstream planned and actual new starts by each month of the fiscal year.

    • Monitoring/Specialty Program Excise US Summary - return closures, non-examined closures, inventory status, cycle time, etc.

    • Monitoring/Pivot Tables - base data by numerous categories with underlying case data available. This worksheet allows a detailed understanding by many AIMS data categories by territory and group.

  2. Monitor new starts as to number and type at the group level to assist with determining when to order cases.

  3. Compare base inventory levels to work-in-progress. Use variances between WIP and base inventory levels in correlation with closures to determine starts needed. Data needed to compute the base inventory are cycle time and the examination plan returns. Cycle time can be obtained using A-CIS closed case database.

  4. Maintain unassigned inventory in ERCS status 08 at minimum levels to allow change of direction to meet program needs. As a general rule, the inventory should not exceed two to three months of new starts.

  5. On a quarterly basis, analyze priority program inventory, projected future inventory, and workplan delivery. If a significant variance is determined in any specific priority program, coordinate with Excise Tax Policy, Fuel Tax Policy and ETE to discuss modifications to workload delivery.

JOC Network

  1. The JOC Network (Network) supports compliance examinations by using a variety of data and advanced analytical tools. Network data tables are hosted within the IRS Compliance Data Warehouse (CDW).

  2. Network data contains original source data, processed data such as data that has been cleansed and joined with duplicates eliminated, and reference data such as product and country codes.

  3. The Network has individual folders for employees and contractors with full security clearances that are mapped to network drives.

  4. There is a network drive shared folder with read/write permissions for IRS employees only that consists of three primary sub-folders:

    • Individual - Used to store and share documents and files. Folders are named after individual users.

    • Projects - Initiative folders with Read/Write permissions, it contains the formal outputs, documentation and code for each compliance initiative. The root folders are created by system administrators upon request. By default, three sub-folders are created: Outputs, Code, and Documentation. Analysts can upload final analytical outputs, documentation, and code into these folders. Analysts may create additional sub-folders to satisfy personal requirements.

    • SharedFiles - Used to store information shared by all analysts

  5. There is a network drive with read/write permissions for member state employees only. It consists of two primary sub-folders:

    • Individual - Used to store and share documents and files. Folders are named after individual state users.

    • StatesDataUploads - Used by state members to place updated data that is ready to be uploaded to the database

  6. There is a network drive used by DBAs and assigned to JOC personnel as a placeholder to review and prepare data for upload to the database.

JOC Data Catalog

  1. The JOC data catalog is an information repository which provides information supporting JOC data operations and data management. Users can readily access this information to identify the database tables and corresponding columns for the data being sought. A copy of the data catalog can be accessed on the ECS SharePoint.

  2. The JOC acquires data to assist with developing a comprehensive understanding of excise tax issues. This information is fundamental to obtaining a complete understanding and systematic approach to tracking and trending excise lead data for detecting non-compliance. Data from internal, external, commercial and other government agencies must then be processed and integrated. Raw data requires comprehensive understanding, analysis, and manipulation to make it useful. It is inherently complex and requires considerable effort to massage it into suitable formats. Acquisition of some data requires MOUs and/or commercial subscriptions.

  3. The JOC must:

    • Ensure continuing data feeds for up-to-date transactional records.

    • Obtain a comprehensive field-level understanding of data received.

    • Identify challenges with data quality and develop processes to perform meaningful analysis.

    • Identify discrepancies or conflicts between data sets and develop suitable mediation strategies.

    • Cleanse data and develop reference tables where appropriate.

    • Develop targeted database schemas to facilitate analysis and advanced reporting.

    • Optimize database performances using a variety of administrative activities such as fine-tuning data search scripts and developing indexes to enhance computer run time.

  4. Network data includes, but is not limited to, the following sources:

    • ExFIRS - includes Form 720, ExSTARS and Customs and Border Protection (CBP) filings

    • AIMS

    • ERCS

    • State uploads

    • Reference tables integrating numerous diverse data sets

    • Standardized product codes for data that originates at different points

    • Product code crosswalks that allow fusion of various data sets such as CBP, ExSTARS, U.S. Army Corps of Engineers (USACE), etc.

  5. As new data sources are acquired, the JOC data coordinator will document:

    • Name

    • Description of data

    • Data dictionary including a description of each field in the tables

    • What rows represent

    • Internal/external support of data

    • How each data table was created and what its source is

    • How data can be used

    • Anticipated updates

JOC Data Refresh

  1. Core data is refreshed on a monthly basis. This ensures lead generation and case selection efforts are made using the most recent data available. Excise data along with other data, such as CBP filings and ExSTARS information, are combined to form Excise File Information Return System (ExFIRS) extracts. These files are then used to update the corresponding data on the JOC database.

  2. ExFIRS automatically generates Oracle export files of its Data Warehouse (DW) and Operational Database (ODB) data stores for the monthly refresh. IRS IT then prepares the files for the specific load process.

  3. ExFIRS data includes the following files:

    • General excise tax data (forms 720, 8849, 11-C, 637, 2290, etc.)

    • Customs Form 7501

    • ExSTARS

    • AIMS

    • Other common reference data such as 637 registrations

Data Acquisition

  1. Employees are encouraged to suggest new data sources and/or data applications that may assist with identifying excise tax compliance leads.

  2. Requests to acquire new data (including expanding currently-received data) require completion of Part A of the data acquisition template found on the ECS SharePoint JOC Data Catalogue library to provide minimum information to secure management approval to begin the formal process for procuring data.

  3. Email completed requests to the JOC group mailbox at: mailto:sbse.excise.joc@irs.gov.

  4. Requests will be reviewed by the JOC group manager and, if approved, assigned through the JOC Task Tracker for completion, vetting with data analysts and completion of Part B of the data acquisition form.

  5. Vet the proposed acquisition with initiative teams that process issues related to its use. This will identify whether the data may be used for other efforts and/or whether similar data has already been obtained.

  6. Data purchases over $3,000, require use of the Integrated Procurement System (IPS) – see the IPS website at http://awss.web.irs.gov/Procurement/ips.shtml. Contact the Strategy & Finance, Shared Finance Program Support, SFP Support Team 1 for assistance. If the purchase is for a contract to be renewed, an IPS requisition must be completed and lead time provided to Procurement to establish a new contract. The previous year requisition may be copied from IPS with the new requisition using the “OPROC” Action Type.

  7. Data purchases less than $3,000 may be completed through the local purchase process.

  8. Federal, state and local agency data requests and most requests for external data require coordination with the HQ Governmental Liaison for completion of the GLIDe template. See IRM, GL Initiative Development Guide, for information on this process. The GLIDe is used to establish a business case for proposed joint initiatives with federal, state and local agencies to ensure joint initiatives support IRS business objectives and/or key stakeholder objectives and that key issues are considered in developing proposed initiatives. In partnership with the business units, GL staff will use the GLIDe to facilitate the development of initiatives with external agencies. The GLIDe will document the type of agreement, MOU, written request, ad hoc referral, etc., will be used to initiate and continue the exchange or activity.

  9. Changes to the database including new data loads require approval and documentation through the JOC data coordinator and JOC group manager. Requestors should complete a Change Request form "JOC NDC CR DR Form " available on the ECS SharePoint ECS Forms library and forward it to the JOC data coordinator as a part of obtaining the necessary approvals.

  10. Approved GLIDes and change requests should be posted to the ECS SharePoint JOC Data Catalogue and JOC Change Management libraries respectively.

Data Transfers

  1. Data transfers refer to the process of moving data from a local computer or removable media to the JOC network drives or from the JOC network drives to a local computer or removable media. All data movements to and from the JOC network are considered data transfers. Examples of data transfers include fulfilling a request for information (RFI) for an internal customer that would require the data to be transferred out of the JOC network to be delivered to the requestor and transferring third-party data to the JOC network for use in data analysis to generate compliance leads.

  2. Transfers of data to and from the network database outside of ExFIRS must:

    • First be approved by the JOC group manager via email request. The request must include the data source(s), the need for the data, how it is to be used, and by whom.

    • Not violate license or usage agreements.

    • Be labeled with the nature of the data and clearly marked SBU.

    • Be encrypted using the Symantec Endpoint Encryption (SEE) application if extracted to a CD, DVD, USB flash, or external disk drive.

    • Be delivered, when applicable, by an IRS-authorized carrier with delivery only to the authorized recipient as identified in the approved removal email.

  3. When selecting a method by which to transfer data, it is important to select one that ensures compliance with the sender’s data policies and procedures as well as IRS data policies and procedures. Business needs, technical abilities and limitations, and timeliness are important considerations when selecting a method to transfer data. The JOC prioritizes the methods as follows from the perspective of easiest to more difficult. Utilize discretion and choose a method commensurate with the business needs and data to be transferred.

  4. Data containing sensitive or protected information necessitates secure handling while in transit. The approved methods for transferring data from an external source to the JOC are:

    • Office Communicator System

    • IRS Email

    • Hand-carried Media

    • Secure File Transfer Utility

    • Postal Mail

  5. Request data transfers as follows:

    1. Email request for approval from the JOC group manager including the location where the files will be accessed or stored.


      Files larger than15 MB, may require Office Communication Server (OCS) as the method of transfer.

    2. Post files to specified location.

    3. If the data is to be loaded to the database, coordinate with the JOC data coordinator who will inspect the data files, work with IT on the upload and coordinate any issues.

Data Uploads to the Network
  1. Data uploads refer to moving data from an IRS computer to a JOC Network system.


    PII, SBU data and tax information must not be sent to a non-IRS mobile computing devices (such as a notebook/laptop, tablet, smartphone, Blackberry, etc.).

Data Downloads from the Network
  1. Data downloads refer to moving data from the JOC Network system to an IRS computer.


    PII, SBU data and tax information must not be sent to a non-IRS mobile computing devices (such as a notebook/laptop, tablet, smartphone, Blackberry, etc.).

JOC Data Coordinator

  1. The JOC Data Coordinator acts as the primary point of contact for all matters related to JOC data including performing targeted data testing following data refreshes and coordinating with IT and JOC data analysts on data-related issues to help drive issues to resolution.

  2. The data coordinator can be identified by accessing a list within "AAA Master List of Initiatives" spreadsheet that is maintained in the ECS SharePoint.

  3. JOC Data Coordinator is responsible for:

    • Working with the JOC group manager and state representatives to arrange data transfers.

    • Collaborating with state representatives to send the data to the JOC data transfer primary and backup point of contact.

    • Ensuring that state data is available in the proper location and ready for upload

    • Submitting IT help tickets and assigning them to the appropriate groups within IT to initiate the state data refresh

    • Coordinating with IT and state representatives on issues or questions that may arise during the refresh

    • Coordinating with state representatives to test data pursuant to loads.

    • Working with IT and state representatives to resolve data refresh issues.

    • Maintaining the JOC data catalog as changes occur.

JOC Data Quality Review

  1. Data quality is an important factor that directly relates to lead output. Validating data assures that it is consistently verifiable and reliable. Data obtained from internal, external, commercial and other government agencies sources should be reviewed for quality issues.

  2. The JOC group manager is ultimately responsible for the overall data quality. The JOC group manager reviews reported issues and works with the data coordinator to assess business risks and the potential for timely resolutions and takes actions as necessary.

  3. As data quality issues are identified, employees should forward the following information to the JOC data coordinator:

    • Problems with the data

    • Possible causes of the problem

    • Recommended steps to correct the problem

    • Risks to initiative analyses due to the problem

  4. Provide a monthly summary report of the accumulated data quality issues with the following information:

    • Errors in the data sources and whether they can be resolved.

    • Barriers to completing initiative objectives.

    • Status of each issue and suggestions for how they should be resolved.

ExSTARS Administrative Support

  1. ExSTARS is an electronic data interchange system developed by federal, state, and industry stakeholders to facilitate the electronic filing requirement of IRC4101(d). The IRS uses the information gathered through ExSTARS to monitor fuel tax compliance.

  2. The IRS requires approved fuel terminal operators to file Form 720-TO to report the receipt and disbursement of all liquid products. The IRS also requires bulk carriers file Form 720-CS. Vessel operators report all liquid product receipts and disbursements to and from approved terminals and refineries designated with a Terminal Control Number (TCN) and Refinery Control Number (RCN), respectively. A pipeline operator only reports receipts and disbursements to and from an approved terminal designated with a TCN.

  3. The JOC staff member assigned administrative responsibilities can be identified by accessing a list within the "AAA Master List of Initiatives" spreadsheet found on the ECS SharePoint Charters library.

  4. ExSTARS related administrative processes are:

    • Letters of Application (LOA) for the Motor Fuel Excise Tax Electronic Data Interchange

    • Validating vessel operator numbers (VON)

    • Validating ExSTARS EINs

    • ExSTARS application table updates

    • MOU with states for ExSTARS use

    • ExSTARS Help Desk

    • EDI Help Desk

    • Assistance requests

  5. Letters of application should be updated every three years to use the Motor Fuel Excise Tax Electronic Data Interchange (EDI) Requests include how files will be transmitted. The EDI Help Desk allows access upon a request from the JOC.

  6. Memorandum of Understanding agreements with individual states allow access to ExSTARS data filed with the IRS.

  7. The ExSTARS Help Desk is a contact point where inquiries can be recorded; however, there is no live contact available. Check the line periodically and return contacts or forward them to the appropriate area for response.

  8. Assistance requests may be received from taxpayers, contractors or employees via email or telephone and should be processed as follows:

    • Unlock accounts for individuals as appropriate.

    • Reset passwords and contact the individual to make sure that they can log in.

    • Delete accounts that have been inactive for 180 or more days.

    • Assist the EDI Help Desk and/or the data contractor as needed including submitting monthly ticket for updates and software testing.

    • Advise employees that requests for data or assistance require use of the RFI process.

    • Respond within ten business days or as soon as possible.

  9. See IRM 4.24.17, Excise Summary Terminal Activity Reporting System (ExSTARS) Compliance Examination Procedures, for comprehensive information on the ExSTARS system.

  10. See Pub 3536, Motor Fuel Excise Tax EDI Guide, for information on requirements, specifications, and procedures for the electronic filing of forms 720-TO, Terminal Operator Report, and 720-CS, Carrier Summary Report in the ExSTARS system.


  1. Charters are business documents that formally authorize the undertaking of an initiative. Charters include the basis and framework for initiating and conducting full-scale data analyses to generate case leads or generate information related to identifying leads. They also include specific, non-routine steps for classifying leads and, in some cases, specific actions for consideration by employees examining lead-related cases.

  2. Charter documentation provides a basis for future continuance or obsolescence for unsuccessful activity. Charters ensure:

    • Collaboration of appropriate business units for technical expertise and understanding of compliance issues involved.

    • Employees performing the work are included in planning the work.

    • Deliverables and planned completion dates are identified.

    • Objectives support the workplan.

  3. Approved charters are posted to the ECS SharePoint Charters library. In addition, the "Master List of Charters" in the Charters library should be updated to reflect new initiatives and charter revision dates.

Charter Development and Approval

  1. New charter development should address whether:

    • There are similar objectives with other prototypes already under development.

    • Required data are available or may be acquired.

    • The JOC has or can develop capabilities or tools required to execute its data analysis strategy.

    • Resources are available to support the effort, e.g., skill set, knowledge base, analytical capability, etc.

  2. Charter development requires:

    • Collaboration of appropriate business units for technical expertise and understanding of compliance issues involved.

    • Assignment of teams comprised of JOC data analysts, WSD classifiers and Policy analysts who will develop the compliance approach, perform the analysis and classify the leads.

    • Identification of deliverables and schedule of completion dates.

    • Completion of the charter template.

    • Management approval.

  3. Charter approval requires agreement on the charter language by the team indicated by their signatures on the charter. Each charter is then submitted for signature approval through ECS to the Director, Exam Case Selection - Specialty.

  4. The ECS charter coordinator will post approved charters to the ECS SharePoint Charters library and update the “Master List of Charters” spreadsheet to reflect new or revised charters (including archived charters and their effective dates.

Case Assignment Sheets

  1. With charter approval, all initiatives that develop leads for examination require a manager-approved corresponding Case Assignment Sheet (CAS) for inclusion in examiner case files. The CAS provides initiative-specific information for use in examination activities.

  2. A CAS should be included in all case files sent for compliance action where lead-producing charters exist. It provides information on:

    • How and why the case was selected

    • Suggested activities to be performed with the data provided

    • Direction that the examiner should consider all potential issues that may or may not be contained in the case file

    • Any instructions to complete and return specific feedback to assist with refining future data analysis

    • Contact information for questions about how or why the case was selected as part of the initiative

  3. The CAS template with instructions for completion and all approved CAS documents may be found in the ECS SharePoint Case Assignment Sheet library.

Operational Assessment of Charters

  1. As tax laws change, new data and data analysis tools are acquired, business results are analyzed and ideas are brainstormed, there is potential for identifying new or revised hypotheses for suspected excise tax non-compliance. The JOC and WSD group managers are responsible for conducting and documenting the reviews of all charters and the related initiatives.


    Charter revisions include obsolescence.

  2. Whenever material change in tax law or facts and circumstances surrounding any excise abstract are identified, charter must be reviewed by assigned teams for needed changes.

  3. JOC and WSD group managers are responsible for updating the names of analysts and classifiers assigned to initiative teams from their respective groups. The managers also coordinate with excise tax policy managers to update the list of policy analysts assigned to the initiative teams.

  4. Charter status will be documented on the ECS SharePoint Charters library Master List of Initiatives as:

    • Active - planned for execution in the next 12 months

    • Inactive - not planned for execution for up to the next 36 months

    • Archive - not planned for execution

  5. The JOC and WSD group managers shall collaborate with stakeholders to identify performance metrics and ensure cases selected for compliance actions support the workplan and overall goals of the organization. The operational assessment of each charter should employ a comprehensive review of methods and techniques for measuring overall effectiveness of the charter to promote increased efficiencies in the prioritization of tax compliance efforts. At a minimum, on an annual basis, an operational assessment and planning meeting with the cross-functional team (JOC, WSD, Excise Tax and Fuel Tax Policy) should be conducted. The assessment should review:

    • Whether efforts overlap

    • Whether charters should continue

    • Compliance activity

    • Case feedback

    • Tax law changes

    • State partner joint initiative efforts

  6. Review should address standard questions including:

    • Are fairness in case selection standards documented?

    • Are all excise tax compliance responsibilities receiving sufficient coverage including tax examinations and claims, fuel inspections, 637 registration reviews and fuel information reporting reviews?


      Although more than one initiative may address a single abstract, that does not ensure that all aspects of the abstract are covered.

    • Are initiative leads identifying abstract issues required to meet the current workplan?

    • Are metrics for success identified for each initiative to ensure results are being reviewed adequately?

    • Should an alternative compliance approach be taken to the traditional field audit/investigation?

    • Is additional training needed to understand the compliance issue identified or to understand case file contents and how they can be used to assist with achieving compliance?

    • Are charters and case assignment sheets accurately documented?

    • Do related case files include appropriate documentation for examiners to understand data included and why case was created?

  7. Standard data should be made available to assess results including:

    • Workplan and available resources to conduct the initiative compliance activity

    • Trust Fund Revenues - an understanding of the overall trust fund revenues from voluntary compliance vs enforced compliance, knowledge of collected examination dollars, population breakdowns, industry awareness, etc. Is the tax issue understood by industry? Is outreach needed to achieve voluntary compliance? Are there areas where fraud is present? The link TreasuryDirect.gov provides a "Summary of Specific Account" policies to better understand initiative effects on trust funds.

    • IRS examination and collection results including filing population by filer/non-filer, tax liability, and claims

    • AIMS Results – examination assessment dollars, claims disallowed, penalties assessed, no change rates, surveys, not liable to file, etc.

    • Leads identified by abstract and initiative number

    • Historic classification results including non-selects and the reasons for not selecting, selects not sent out, selects sent to the campus or field, etc.

    • Taxpayer Education Outreach Efforts – industry meetings/conferences, Tax Notes, revenue rulings, legislation, counsel opinions, irs.gov information, media events, soft notices, etc.

    • Compliance Action Taken – soft notices issued, correspondence audits, investigations, terminal reviews, field audits, etc.

    • Stakeholder Feedback – IMS and group mailbox feedback to determine examiner satisfaction with the quality of data provided. Is data provided adequately described, available in a format that is easy to use and understand and received in a timely manner?

  8. As a result of the review, the JOC and WSD group managers shall:

    • Update the master list of initiatives on the ECS SharePoint with prioritized initiatives reflecting initiative status and excise-related compliance activity coverage.

    • Ensure initiative charters are updated to include action items from the review. Charters should reflect the rationale for discontinuing to ensure future efforts benefit from past actions.

    • Direct employees to report monthly on the status of their action items.

    • Elevate an action plan to the ECS Program Manager for approval to ensure approved team review recommendations are addressed timely and by appropriate employees.

    • Post review results and action plan to the ECS SharePoint.

    • Monitor action plan for completion.

  9. Prioritize initiatives based on the results review and the following data:

    • Workplan needs

    • Business results including lead identification results, classification dispositions, IMS feedback, compliance activity results such as how and where leads selected as cases were processed and their related results, etc.

    • Excise-related compliance activity coverage - Abstract (the IRS number on excise tax return forms that identifies the type of excise tax) require that all of their different aspects are addressed where data and resources are available.

  10. Provide a summary document annually to the ECS Program Manager with all actions taken pursuant to the action plan.

Initiative Data Analysis and Lead Output

  1. Data analyses from chartered initiatives commonly result in anomaly identification. JOC data analysts plan, develop, and perform data analyses to output anomalies. Anomalies are then summarized as leads by taxpayer identification number and tax period and entered to inventory using the current approved template. A separate spreadsheet should be used for each initiative and saved with naming convention "Initiative #_Anomalies_Tax Period - e.g., initiative 123 Anomalies 201003."

  2. For each lead identified, detail data by transaction record for the various data sources used should be made available for inclusion in case files. These records allow classifiers and examiners an understanding of how the compliance case was identified. Analysts should submit a separate detailed spreadsheet from each data source used in their analysis saved.

  3. Detail data files should be saved with naming convention "Initiative#_Detail_Data_201603" e.g., Initiative_123_Detail_Data_201603.

Leads without Taxpayer Identification Numbers

  1. Leads may be found that do not contain a taxpayer identification number (TIN). Identifying TINs for data analysis is assisted with the Integrated Automation Technologies (IAT) tool EITCRA/BuildCommandCode. This utility allows input of mass requests for many IDRS command codes. JOC analysts and WSD classifiers can use the IAT tool to research command code NAMEE to identify missing TINs based on name and address.


  1. The Fuel Inspection Data Gathering Project (FIDGAP) is an ECS chartered initiative developed to assist ETE in developing optimal fuel inspection sites for workload planning. Geographic location data is extracted from a variety of data sources and then merged and geocoded as potential fuel inspection sites. Estate & Gift/Excise Tax Exam management provides employee locations so that inspection site data can be made available as a tool to balance operational parameters as part of workload planning and to provide examiners with detailed data on sites for inspections.

  2. JOC data analysts work directly with ETE management to coordinate FIDGAP data runs to provide inspection planning recommendations posted to the Fuel Compliance Program SharePoint site. The JOC group manager coordinates with Excise Fuel Policy and ETE to determine the annual workplan for fuel inspections for use with FIDGAP and is responsible for monitoring the quality of the inspection recommendations. Inspection cases are not classified or selected by ECS as the ETE program determines the sites selected from FIDGAP.

  3. The FIDGAP system divides the workplan into quarters and adjusts output from quarter to quarter depending on inspection results captured from IMS. It can be adjusted to meet workplan goals such as when over-achieving retailer inspections or under-achieving end users inspections. Site data is made available for examiners based on the workplan.

  4. The FIDGAP process combines data including fuel terminals, gas stations, retail stations and end users along with historic inspection results to assist with ensuring sites are inspected. It considers such parameters as the availability of examiners, driving distance to sites, and weather to maximize time utilization. The system uses the Issue Based Management Information System (IBMIS) and the Examination Return Controls System (ERCS) reports to monitor inspections along with the Dyed Diesel Inspection Scheduler (DYEDIS) program to assist with monitoring locations that may need inspections.

  5. Sites may be prioritized based on any combination of filtered data such as product sold or entity type such as end user, producer, retailer, etc. Entities are prioritized for a specific period (usually quarter), but ETE management may assign them differently whereupon FIDGAP data will be updated.

  6. The FIDGAP program supports:

    • Activity 515, Diesel Terminal Inspection

    • Activity 516, Diesel Fleets & Truck Stop Inspection

    • Activity 518, Diesel all Other Dyed Fuel Inspections

  7. The FIDGAP program does not support Activity Code 517, Diesel On-road Inspections as these inspections are for vehicles at mobile sites that are temporary and scheduled by non-IRS personnel.

  8. Estate & Gift/Excise Tax Exam and ECS collaborate to determine how often the lists of inspection sites are compiled and distributed. See IRM 4.24.13, Overview of Excise Fuel Compliance Program, additional information.

ECS Inventory System

  1. The ECS inventory system includes monitoring the two distinct processes of JOC lead identification and WSD lead classification. The inventory system provides data and reports on all leads with potential for tax compliance issues received from both internal and external sources from whatever source derived.

  2. The ECS inventory system provides a mechanism to:

    • Monitor leads from initiative data analysis and external referrals

    • Prioritize and schedule initiative runs

    • Manage which leads are referred for classification by various fields such as filer/non-filer, abstract, grade, MFT, tax period, etc.

    • Analyze characteristics to determine the compliance approach

    • Record classification dispositions

    • Match ECS compliance activities to closed case results

Inventory Reports

  1. The ECS inventory system includes standard reports to assist with monitoring inventory. Leads may be matched to a variety of data sources such as ERCS and AIMS to identify related results and assist with determining referrals for classification as well as selection of cases.

  2. Standard inventory reports include:

    • Estate & Gift/Excise Tax Exam Status - monthly program status reflecting examination results to monitor workplan goals. The report is provided to the ECS Program Manager for review and dissemination.

    • Lead Activity - current information on leads including those not yet referred for classification, those referred for classification, and those where classification has been completed

    • Wall Inventory - leads selected as cases for compliance action kept in virtual inventory awaiting referral for action. Cases are maintained in ERCS status 08. There are two distinct reports - one by state and one by employee group code (EGC). Each of the reports is created by a query to inventory thereby creating two separate worksheets in a workbook.

    • WORTS Daily Status - status of outstanding inventory requisitions orders to prioritize specific leads to complete an order. The automated generation of the report may be requested daily or as needed and when an order is filled.

    • CSTO ERCS/IMS - Inventory extract requesting ERCS controls and IMS case file creation and uploads for CSTO. Information should be provided in a format that allows efficient input of information to ERCS and IMS. Reports should be output as directed by the WSD group manager.

    • AIMS Results - A match of ECS inventory of selected leads matched to AIMS by TIN. It provides information on historic examination activity and should be used to assist with identifying the benefits of initiative data analysis and classification.

    • ERCS Weekly Inventory - used to reconcile and monitor ETE case status and activity. Extracted by ERCS PBC 214 status 08-90 weekly. The data is compiled into separate reports posted to the ECS shared server by territory, group manager by territory, project and tracking code errors, new starts, MFT B6 by territory and ERCS status 10-51 by EGC.

Monitoring ECS Inventory

  1. To ensure workplan goals are met, the JOC and WSD group managers are responsible for monitoring lead activity by the following data:

    • Leads identified by initiative, abstract, and grade and other pertinent data fields.

    • Classification dispositions including non-selected leads and the reasons for non-selection.

    • Compliance activity on leads selected as cases including wall inventory, campus soft notice and correspondence audit results and field examination results.

  2. Review inventory of available leads (those not referred for classification) and wall cases to determine:

    • Initiatives to be run - to ensure that appropriate initiatives are being run to meet the workplan

    • Referral for classification - to ensure available leads are timely referred for classification

    • Criteria for leads to be selected for casework - to ensure that guidance is provided to select certain leads to meet the workplan including those assigned to wall inventory

    • Wall cases that need to be referred for compliance action or removed from inventory due to age of case or other issues deeming them no longer needed

    • Compliance approach - to provide guidance on lead types that should be considered for soft notice or correspondence audit in lieu of field audit

    • Potential for joint compliance action with states

  3. Review the Lead Activity report to approve lead filtering to meet the workplan. This may include creating lead lists by any of the following fields:

    • Initiative

    • Potential tax

    • Grade of case

    • Wall inventory

    • WORTS

Scheduling Initiative Runs

  1. Initiative runs to identify leads must be planned to ensure timely and sufficient leads are identified to meet workplan goals. Analysis of inventory will assist with determining new initiative run goals. The JOC and WSD group managers are responsible for cooperatively meeting at least monthly to determine initiative run schedule based on:

    • Availability of new data

    • Workplan goals

    • Resources available to conduct data analysis and classification

  2. The proposed schedule of initiative runs will be posted to the ECS SharePoint Charter library on the Master List of Initiatives with the actual run dates posted at least monthly.

  3. Changes to the proposed initiative run schedule will be approved by the JOC and WSD group managers and posted to the SharePoint Master List of Initiatives.

Identifying Leads for Classification

  1. Selecting entities for compliance action involves making the most efficient use of staffing. The JOC and WSD group managers will review lead inventory to identify leads to be referred for classification. The JOC group manager, with the concurrence of the WSD group manager, will email the inventory gatekeeper regarding the parameters for creating a new lead list for classification which may include but not be limited to:

    • Abstract

    • Initiative

    • Tax Period

    • Grade of Case

  2. Review unclassified leads by:

    • Workstream category

    • Abstract

    • Initiative

    • Assessment statute

    • Grade of case - are examiners available?

    • Historic classification dispositions - are select rates efficient?

    • Prior audit history - include a review of No Change and Survey results

  3. For leads meeting classification criterion, provide guidance to classifiers on potential compliance action for leads selected as cases that will contribute to workstreams needed where resources are available to process the work. Consider the following:

    • Cases for Wall inventory not currently needed for compliance action

    • Cases to be processed by CSTO

    • Cases to be processed in field

    • Potential for joint compliance action with states

    • Appropriate MFT (03, B0, B1, B5, P9, etc.)

    • Outstanding WORTS order

    • Classifier availability

  4. Review should also consider substantial non-compliance factors (SNiF) criteria found in IRM,Special Enforcement Program (SEP) Leads.

  5. Monitor progress of leads from classification to completion including case building and posting case files for uploads.

Determining Case Compliance Approach

  1. Cases selected for compliance action require a determination on their compliance approach. See also IRM, Inventory Assignment of Leads for Classification. There are several potential approaches including:

    • Soft notice for information only - intended as taxpayer education, these do not request a response from the recipient

    • Soft notice requesting a response - responses require classification to identify next action

    • Correspondence exam by campus

    • Correspondence exam by field

    • Field examination - this includes audits, reviews and investigations

    • Joint audit with JOC states

  2. The WSD group manager is responsible for determining case compliance approach. Compliance approach documentation should be posted to the Master List of Initiatives on the ECS SharePoint Charter library and involves documenting:

    • Filters to create lead lists for classification, e.g., abstract, initiative, non-filers, grade of case, etc.

    • Compliance approach by initiative or other filter type.

Processing ECS Inventory

  1. All leads processed in ECS must be entered to ECS inventory.

  2. Enter internal referral leads identified through data analysis and all other means by assigned initiative numbers using the Lead Entry template posted to the ECS SharePoint Inventory Reports library. The template requires minimum data of taxpayer identification number, abstract, and tax period so that results may be monitored. Adding new leads to inventory requires the following minimum data:

    • Initiative Number

    • TIN or Entity Name

    • Tax Period

    • JOC Filing Status Code

    • Run Date

    • Analyst Name

    • Anomaly Detail Data

  3. Enter external referral leads with a minimum of initiative number, TIN, entity name and tax period but may include additional data as shown in the current template. Note: Use the miscellaneous initiative number if leads are not likely to be numerous or repeated.

  4. Process all leads in inventory as follows:

    1. Validate lead data prior to entering to inventory for consistent formatting and required fields. Inspect information provided in the lead entry and initiative run spreadsheet for the required fields, values, and format within the fields.

    2. Process leads requiring restricted access using a non-PII tracking mechanism or with permissions to access approved by management.

    3. Provide lead lists for classification as directed by management using the approved lead list template. See IRM, Identifying Leads for Classification, for data fields used. Update the status and date fields when referring leads for classification.

    4. Upon receipt of classified leads, update inventory with dispositions indicating whether or not they were selected for potential compliance action and, if not, the reason for non selection to assist with future lead identification efforts and to meet fairness in case selection standards.

    5. Update all disposition fields for leads with classification completed.

    6. Update inventory database supporting tables as needed.

    7. Use queries and scripts to capture and match data from various tables such as disaster zip codes and ERCS as required. Maintain tables from the drop-down boxes of the classification checksheet and ensure up-to-date versions are posted to the ECS SharePoint

    8. Provide daily inventory backup file for use in preparing reports

    9. Ensure the inventory system is backed up.

  1. Ensure a review of the decision to survey a case, i.e., not initiate an examination, is based upon factors outlined in the IRM and approved by an appropriate level of management. See IRM, Fairness in Case Selection, for additional information.

  2. To document surveys, extract and complete the Lead List classification spreadsheet with the following fields for the specific TINs being surveyed:

    • Disposition - Survey

    • Other or Survey Reason - Specific reason written in for the survey

    • Manager Review - Approved

    • Date

    • Comments - If needed

  3. Ensure inventory is updated by forwarding the approved spreadsheet to the gatekeeper.

  4. Form 5351, Examination Non-examined Closings, must also be completed for TIN, tax period, entity name, abstract and reason for survey and submitted to the WSD group manager for approval to survey a case.

  5. The approved Form 5351 should be provided to the inventory gatekeeper to update the inventory field "Classification Disposition" to "Survey" and the field "Non-select Reason" for the reason for the survey for each case and subsequent posting to the ECS SharePoint in the Survey Approvals library. Forms should be retained for three complete calendar years.

Excise Tax Leads

  1. Excise taxes are levied on a wide variety of goods, services and activities. They may be imposed at the time of sale by the manufacturer, sale by the retailer, or use (by the consumer). Many excise tax trust funds are earmarked for related capital projects, such as highway and airport improvements. Excise taxes are independent of income taxes.

  2. Employees should stay abreast of new developments, rulings, and decisions affecting industries related to excise taxes. Employees are responsible for forwarding suggestions for new compliance initiatives, preparer projects, Compliance Initiative Projects (CIPs) and partnering opportunities through the chain of command.

Sources of Leads

  1. All leads must be entered to inventory from whatever source derived to ensure appropriate monitoring. Leads are categorized as follows:

    • CIP

    • Priority

    • Charter

    • Claims

    • 637 Registration

    • Fed/State Agreement and State Revenue Agent Report (RAR)

    • Specialist Referral System (SRS)

    • Information Report

    • Whistleblower Claims

    • Joint Audit

Compliance Initiative Project

  1. Certain initiatives require an approved Compliance Initiative Project (CIP) when they involve groups of taxpayers that have unique excise tax compliance issues. CIP procedures are not required in the case of “routine business operations” as defined in IRM, Activities Not Subject to CIP Procedures. The criteria in IRM, Compliance Initiative Projects (CIP), must be used to determine when CIP procedures apply for excise tax projects.

  2. Refer to WSD for assistance with determining the need for a CIP. Upon receipt of Form 13502, Compliance Initiative Project Authorization -Part One,Form 13498, Compliance Initiative Project Authorization - Part Two, extensions or Form 13497, Compliance Initiative Project Authorization - Termination,

  3. WSD will coordinate the implementation and approval of any new CIPs with the National CIP coordinator.

  4. Leads from approved CIPs follow routine classification procedures.

Priority Leads

  1. Priority leads require routine classification processing including entry to inventory and documentation of selects and non-selects Priority leads include:

    1. HQ Requests - received through chain of command, these are commonly external referrals such as Congressional requests. See also IRM, Processing Requests for Disclosure, for additional information.

    2. Prompt Determinations See IRM, Procedures on Prompt Determinations, and Revenue Procedure 2010-27 for process guidance.

    3. Taxpayer Advocate Service Referrals - see IRM, Taxpayer Advocate Service (TAS) Cases. for process guidance.

Charter Leads

  1. Charter leads are identified from approved charter data analysis.

Fed/State Program and State Audit Report Program Leads

  1. The IRS Fed/State Program partners with state government agencies to enhance voluntary compliance with tax laws. This includes facilitating the exchange of taxpayer data, leveraging resources, and providing assistance to taxpayers to improve compliance and communications. Consideration should be given at least annually to state government audit results as a source of leads for all relevant excise tax abstracts.

  2. The Privacy, Governmental Liaison and Disclosure Program (PGLD) is responsible for the coordination of activities between the IRS and state and local governments as well as other federal agencies.

  3. State audit reports are received through a PGLD shared site and should be classified including considering for joint audit processing. The State Audit Report Program (SARP) provides specific return type information requested from states. The OL5081 application is used to request access to the shared folder. Refer to IRM 11.3.32, Disclosure to States for Tax Administration Purposes, for additional information.

Specialist Referral System Leads

  1. The Specialist Referral System (SRS) is an online automated system that allows for submission and approval for specialist assistance. SRS is used to provide mandatory excise lead referrals on Coordinated Industry Cases (CIC) from LB&I as well as Industry Cases (IC) from LB&I, SBSE and TEGE. See IRM, Specialist Referral System (SRS) On-Line Referrals and IRM, Specialist Referral System (SRS) - Overview, for additional information.

  2. SRS excise referrals are centralized in WSD.

  3. The SRS system is programmed to route referrals directly to the designated WSD classifier. Referrals are received via email from SRS@IRS.gov and should be acted upon within 15 days by either transfer to an ETE group manager or rejection of the referral. Management may extend the deadline to take action on specific referrals, at their discretion, but should notify the SRS Administrator of this decision.

Information Report Leads

  1. Information report leads may be received on Form 3449, Referral Report, or Form 5346, Examination Information Report. The reports provide information of sufficient compliance value to warrant enforcement follow-up. Excise field examiners submit information report leads electronically through their group manager to the ECS group mailbox.

  2. Requests are added to inventory, routinely matched to other inventory data and provided for classification on the current lead list template.

  3. Process requests within ten business days when possible.

  4. Forms clearly marked as "Time-Sensitive" such as jeopardy assessments or wagering cases involving coordination with law enforcement agencies should be processed within two business days when possible with the receiving field group establishing ERCS controls.

  5. Monitor completion to ensure timely actions and document delays.

  6. Process receipts as follows:

    1. Review the information report to ensure it contains sufficient information to process including that the "Other Information" section clearly indicates the reason for the referral and the form is approved by the manager. If sufficient information to process the form is not provided, email the originating group manager with the reason for the rejection.

    2. Enter to inventory under the proper initiative number.

    3. Provide lead list for classification including routine ancillary data on related initiatives, ERCS, etc.

    4. Classify via routine lead list classification steps that require reporting disposition results for inventory tracking.

Whistleblower Leads

  1. Whistleblower claim leads are received from the IRS Whistleblower Office when Form 211, Application for Award for Original Information, is received and deemed related to excise tax.

  2. Claims should be classified and documented per IRM 25.2.1, General Operating Division Guidance for Working Whistleblower Claims,

  3. All leads should be entered to ECS inventory under Initiative 998, Form 211, with data access restricted to employees assigned to process whistleblower claims only.

  4. Whistleblower cases should be controlled with ERCS tracking code 7882 for IRC section 7623(a) claims and 7894 for section 7623(b) claims.

Other Duties
  1. The WO will provide a monthly e-Trak report to the WC identifying all cases in all statuses including the number of days in status. The WC will monitor claims through the weekly ERCS reports as they move through examination.

  2. The WC will provide status updates to management and to the WO or ETE when requested. Field examiners should refer to the following IRM sections for guidance on how to work and close Form 211 cases:

    • IRM, Examining a Whistleblower Claim

    • IRM, Form 11369

    • IRM, Form 11369 Package Examined Claims

    • IRM, Form 11369 for Surveyed Claims

    • IRM, Form 11369 for Transferred Claims

Joint Audits with Partner States Leads

  1. All leads should be reviewed for potential as joint audits with JOC partner states to ensure appropriate coordination is conducted between the IRS and state partners. Leads identified as conducive to joint audit processing should be processed as follows:

    1. Enter joint audit indicator to inventory for tracking.

    2. Include joint audit case process and guidance on disclosures of federal tax information from JOC activities to non-participating and participating state partners as the first workbook in the electronic case file for leads selected as cases.

    3. Provide state manager contact information in the case file, and include a statement that the case is recommended for joint audit processing. If the case is currently open, recommend joint audit processing as appropriate for the status of the case.

637 Registration Leads

  1. WSD is responsible for monitoring the annual ETE workplan including the 637 Registration Program accomplishments.

  2. WSD is responsible for identifying and selecting all sample review cases and shall coordinate with the ETE program manager to ensure that sufficient cases are identified to meet workplan goals.

  3. IRM 4.24.2, Form 637 Excise Tax Registrations, provides additional information on the 637 Registration Program including three types of 637 reviews as follows:

    • Initial Application - applications received by CSTO are scanned into IMS and referred for further processing by the 637 Registration Program. Applications are also received by revenue agents in the E&G/ET field and are forwarded to 637 Registration group lead technicians to be loaded into IMS.

    • Sample - follow-up compliance reviews identified by WSD for registrants with approved applications.

    • Discretionary - follow-up compliance reviews identified by field examiners for registrants with approved applications related to current audits.

  4. WSD shall monitor workplan goals by:

    1. Reviewing historical 637 registration data including the number of units processed.

    2. Identifying a list of activity letters identified as high, medium and low risk for review.

    3. Analyzing FTEs in each territory, unassigned inventory, and historical data for initial, sample, and discretionary reviews to allocate units needed for each territory.

    4. Analyzing registrant data including filtering by status and last review date where data is available.

    5. Considering appropriate grades of cases and resources are considered when identifying work.

    6. Providing new entities to the 637 Registration Program group manager for case assignments.

  5. Provide a monthly report of current month and fiscal year-to-date inventory to the WSD group manager, ETE program manager and 637 Registration group manager. Review the monthly report to:

    • Reconcile new starts to ensure that selections are processed appropriately. For any not started, coordinate to ensure action is appropriate and update the master list accordingly.

    • Provide the final list of registrants selected by type and tracking code for inclusion in ECS inventory reporting.

Sample Reviews
  1. WSD is responsible for identifying and selecting Sample review cases. The process for identifying cases is documented in its related charter.

Work Order Request Tracking System

  1. When inventory is needed in the field, ETE territory managers forward Work Order Request Tracking System (WORTS) requests to WSD indicating the location where work is needed and the number of cases desired.

  2. The WSD group manager reviews all requests and coordinates any not approved with the requestor. Approved requests are processed as follows:

    1. Assign a WORTS order number

    2. Review wall inventory for cases meeting order criteria for update to ERCS status 10.

    3. Monitor order to completion including coordination of additional sources of work as needed

    4. Email a complete listing of TINs selected for completed orders to the requesting group manager

ECS Data Assistance Requests

  1. The ECS group mailbox addressed at: *sbse.excise.joc@irs.gov provides an avenue for employees to submit requests for data, information reports and data assistance.

  2. Requests for data and case-related data analysis assistance should be received on the current Request for Information (RFI) form found on the SBSE. The RFI ensures requests are clearly communicated as to what data is requested and also provides response accountability.

  3. The JOC Task Tracker spreadsheet posted to the ECS SharePoint JOC Task Tracker library is used to document all receipts from the group mailbox and to assign request numbers that are provided back to requestors to ensure timely responses. The Task Tracker allows a standard method for requesting, tracking and receiving information from the JOC.

  4. Requests should be tracked weekly until completed with any delays communicated timely to the requestor.

Case-Related Data Assistance

  1. Requests for case-related data assistance require current ERCS controls for the same tax period. Process requests as follows:

    • Review form to ensure it contains sufficient information to process.

    • Return requests with insufficient information to the originating manager with the reason for rejection.

    • Enter approved requests to the Task Tracker database to assign a request ID.

    • Route requests containing sufficient information to process to the appropriate JOC employee for completion.

    • Complete requests within ten business days or provide feedback to the requestor on delays or the need for additional information to complete the request.

    • Update the task tracker database as status changes.

Inventory Assignment of Leads for Classification

  1. The WSD group manager is responsible for directing the assignment of leads for classification and shall review lead inventory to assign data filters and classifier assignments including the following categories:

    • Forwards - leads that match to an open Estate & Gift/Excise Tax Exam ERCS control

    • WORTS - leads that meet current WORTS orders

    • Referrals - includes whistleblower, large case, information report, etc.

    • AIMS - leads that match AIMS abstract/activity to initiative abstract/activity for a prior period determined by management

    • Suspense - any leads previously suspended for which the expiration date has occurred

    • JOC State Partner locations

  2. The inventory gatekeeper will process lead list classification assignments pursuant to management direction by matching leads to internal data for lead list inclusion. Internal data is subject to availability and includes:

    • Related Initiatives

    • ERCS - current case controls for the same TIN. The match may be only for Primary Business Code (PBC) 214. These should be processed as “Forward” dispositions.

    • Suspense Dispositions

    • Historic Classification Dispositions

    • Related entities such as Form 720 filer tax contact for multiple terminal/facilities, each with its own TIN, indicating a relationship among the entities. Related entities may also show where there are multiple EIN’s that are related such as parent-subsidiary relationships. This will provide information on leads that require case control coordination on multiple employee assignments.

    • 637 Registration

    • Large Case Indicator - located on the IBMIS listing of open cycle cases for current fiscal year

    • WORTS orders

    • AIM & WRS data

    • JOC Partner States

  3. Save lists by the filtering mechanism used such as “ERCS Match” that provide leads that match open ERCS or "Suspense Expired" that have current expiration dates. Suspense leads shall have the reason for suspense noted in the lead list.


  1. Classification is the process of determining whether a lead should be selected for examination. Generally, leads to be classified have been identified as part of an approved chartered initiative or from an external referral. All leads to be classified should have an assigned initiative number that allows monitoring classification results.

  2. Classification should be conducted by examiners possessing experience commensurate with the type of return and activity being classified. Classifiers are responsible for informing the WSD group manager of leads where the type, industry or issue is unfamiliar to them.

  3. Classifiers should:

    1. Be alert to fraudulent refund schemes and potential preparer project returns.

    2. Understand initiatives being classified by reviewing the related charters and case assignment sheets.

    3. Be familiar with a case file example to ensure files include appropriate formatting, case-related data, and information to understand included data.

  4. Leads prioritized by management will be assigned for classification via the current Lead List template found on the ECS SharePoint Inventory Report library to track results.

  5. Classifiers will:

    • Complete lead lists for all leads classified with classification dispositions including the reason for any non-selects and expiration dates for any suspense dispositions.


      The lead list includes standard fields to assist classifiers with case knowledge, fields for classification dispositions and fields to document reasons for not selecting leads such as surveys due to statutes, non-selection due to prior audit history, etc.

    • Complete the classification checksheet template found on the ECS SharePoint ECS Forms library for all leads selected for potential compliance action.

    • Save checksheets with naming convention: TIN/Name Control/Tax Period/Date.


      Checksheet data is used to update inventory with classification dispositions and information for reports to CSTO to establish case controls and case file uploads.

    • Email completed lead lists and related checksheets as directed by the WSD group manager.

  6. The WSD group manager is responsible for reviewing at least 10% of lead classification decisions including select/non-select dispositions and their related compliance approaches to ensure adherence to fairness in case selection requirements prior to updating inventory and before referral as cases.

  7. The WSD group manager will update the lead list with approval/non-approval of lead classification dispositions (case selections or non-selections) along with the date of review to the ECS inventory gatekeeper and coordinate with classifiers on any dispositions not approved.

  8. The inventory gatekeeper will make available inventory report information on case selection review data as follows:

    • Period of data extract

    • Date and status of reviews

    • Classification dispositions including reasons for non-selects

    • Select disposition data for initiative number and title, MFT, and tax period

Case Selection Factors

  1. Case selection responsibilities include identifying entities for classification using a risk-based approach to identify the next base case. Consideration shall be given to:

    • Excise abstract coverage

    • Annual workplan priorities

    • Available resources to limit initiative lead output using specific tolerances or criteria to filter leads.

    • Balanced coverage

    • Anticipated field inventory needs

    • WORTS requests

    • Highest potential non-compliance

    • Case grading guidelines

    • Referrals on potentially non-compliant entities from IRS employees and external sources including other agencies

    • Data matching reveals information on a tax return that does not match tax reported to IRS by states, employers, or other third parties

    • Data analysis to identify areas of non-compliance. These characteristics generally involve a specific tax issue known or suspected to have high non-compliance in a particular industry or population.

    • Specific identification projects on tax compliance through audits of randomly-identified samples of tax returns.

  2. In addition to routine classification criteria, cases selected for examination should be based on the following selection factors:

    • History of non-compliance

    • Leads from approved initiatives identifying under-reported tax, non-filing required tax returns, or failing to provide required information

    • History of late or stop filings

    • Identified through internal referrals from Collections, CI or other office examinations

    • Identified through external referrals from federal, state or local law enforcement agencies

    • IDRS freeze codes prohibiting selection

    • Collectibility

    • Statutes

Classification Documentation

  1. All classification decisions/dispositions (selected or not selected) must be documented in inventory from the classification lead list. Leads selected for compliance action must have a classification checksheet documenting the reason for selection. Leads not selected, including any suspended, purged or surveyed, must also be documented.

  2. Classifiers should update the lead list for classified leads in the following fields:

    • Classification Disposition

    • Disposition Reason - reason for leads not selected. Reasons appear in the Lead List drop-down menu related to the specific non-select disposition.

    • Other or Survey - when the "Other " disposition reason is selected from the Lead List drop-down menu, this field must be completed with text explaining the reason.

    • Suspense Expiration - expiration date for suspense period. If the expiration date cannot be identified, input a date six months forward

  3. Leads selected for compliance action require one of three distinct dispositions for selected leads and three distinct dispositions for non-selected leads. :

    • New - no open status 08 - 18 excise tax-related ERCS control. This disposition requires completion of the classification checksheet for case controls and other case-related information.


      Leads previously disposed of as "New" may subsequently be disposed of as survey. The survey disposition should overlay the new disposition in the Lead List spreadsheet and include in the "Other or Survey" field the reason for the survey. See IRM, Surveys, for information on processing surveys.

    • Forward - open status 08 - 18 excise tax-related ERCS control for the same TIN. Forwards require sending case file documentation to the group where controls exist. Additional ERCS controls and IMS case creation are at the discretion of the group.

    • Expedite - there may or may not be open status 08 - 18 excise tax-related ERCS control; however, the new case is to be sent to a specific group where ERCS control and IMS creation will be created by the group if applicable. These include Form 5346 information report cases requested for return to a specific group and cases that require further field group review to determine whether they should be opened for examination.

  4. Leads not selected for compliance action require one of the following dispositions:

    • Reject - lead does not have potential for compliance action.

    • Suspense- lead has potential for compliance action but not selected temporarily due to various reasons. The reason for suspending and its related expiration date must be documented on the lead list so the lead will be available in inventory for classification when the suspense period expires. If the expiration date cannot be identified, input a date six months forward.

    • Purge - lead should be removed from inventory. Purged leads must have the reason for purging documented in inventory.

  5. Reject disposition reasons include:

    • Analysis - data analysis issues

    • OOB - out of business

    • De Minimus - minimal tax potential

    • Prior Exam - prior exam should be for the same tax issue for a period determined by management

    • Management - determination not to work specific abstracts/initiatives/issues, etc. - may be based on legislative mandates, court decisions, lack of resources, etc.

    • Other - requires text for the specific reason entered to the Lead List "Other or Survey" field.

  6. Purged disposition reasons include:

    • Aged Inventory

    • ASED Imminent

    • Other - requires text for the specific reason entered to inventory "Other or Survey" field.

  7. Suspense disposition reasons include:

    • Appeals

    • Bankruptcy/Litigation - V freeze

    • CIC Off-cycle (Large Case - form Coordinated Industry Case)

    • Collectibility - T freeze

    • Criminal Investigation - Z freeze

    • Other - requires text for the specific reason entered to the Lead List "Other or Survey" field. Other reasons include certain IDRS freeze conditions some of which may be found in IRM, Account Resolution, Freeze Codes. Certain freeze codes require coordination before selecting leads and some require suspending leads until an expiration date is met.

  8. Classifiers should forward lead lists with dispositions and reasons for non-selects to the WSD group manager for review in a timeframe directed by management before compliance action may be taken on any selected as cases.

  9. Lead classification dispositions should be reviewed on a regular and recurring basis for an understanding of results as they relate to continued data analysis. In addition, non-select disposition reasons may provide insight for use in discontinuing or revising initiatives.

Joint Audits with States
  1. Leads should be reviewed for potential as joint audits with partner states. If selected, they require management involvement prior to any compliance action. Note: Leads in inventory may be filtered periodically by partner state to be classified in their entirety rather than classifying them as they fall out under other filters.

  2. The following steps should be completed for all leads selected as joint audit cases:

    1. On the classification checksheet, include a statement that the case is recommended for joint audit processing. If the case is currently open, recommend joint audit processing as appropriate for the status of the case.

    2. Include in the first worksheet in the case file, documentation on the joint audit case process, guidance on disclosures of federal tax information to non-participating and participating state partners and state manager contact information.

    3. Update inventory to reflect the case is being processed as a joint audit.

  3. Joint audit cases approved for compliance action in the field require coordination between the field group manager, state manager, and their respective employees.

  4. Joint audits are worked as federal excise audits. Federal excise and state managers and their agents must be familiar with and understand the federal disclosure requirements. The federal excise territory manager should ensure the excise group manager and assigned excise employee are notified that the case is being assigned for joint audit. The federal excise group manager should contact the state manager to develop a comprehensive understanding of the case file, discuss the scope of the audit and next steps. The federal excise group manager is the lead on joint audit cases and directs the scope of the exam unless notified otherwise by their territory manager.

State-Only Audits
  1. State audits parallel the federal excise tax issue and are determined from the same information; however, if at any time the state needs to acquire different information to make a state determination, they must conduct a state-only examination with an approved disclosure completed prior to beginning any activity. See IRM 11.3, Disclosure, and IRM, JOC Partner Administrative Processes, for procedures.

  2. The IRS may not provide information to states that may impair federal tax information such as cases with Criminal Investigation (CI) freezes or in which there is an active criminal investigation.

Classification Research

  1. Leads have multiple data points that should be reviewed prior to determining dispositions including:

    • All Other Initiatives - Consider leads from other initiatives for each entity classified. Coordination with other classifiers with initiative expertise may be necessary to ensure appropriate processing when more than one initiative identifies the same entity. If the lead is selected for compliance action, ensure information for all related initiatives is provided in the case file.

    • ERCS

    • 637 Registrations

    • IDRS - including related entities

    • AIMS Audit History

    • Prior Classification Dispositions

    • Accurint/YK1

    • FinCEN

  1. Review ERCS match information to identify related names, multiple employee controls, and non-master file periods such as MFT B0, B1 and B5 that do not appear on IDRS AMDISA.

  2. Review ERCS information to determine dispositions.

  3. If ERCS TIN match and the ERCS status is under 14, case disposition is Forward. These do not require further case controls. Process as follows:

    1. If the case is in status 08, update the IMS wall inventory case file with new information.

    2. If above status 08, email controlling excise group manager with a cc to employee assigned to the case (if known) providing the additional case data for their open examination.

    3. Provide coordination instructions when there are multiple MFTs or excise employees if applicable.

  4. If ERCS TIN match and ERCS status is higher than 13:

    1. Determine disposition in conjunction with current ERCS status.

    2. Consider materiality of issues identified.

    3. If selected and case has been closed, consider reopening procedures.

  5. If no ERCS match found, classify to determine disposition.

  6. If related entities are identified, case control coordination is required. Information on related entities should be documented on the checksheet to ensure excise employees are aware of the relationships and to allow for appropriate coordination. See IRM, Multiple Employee Case Controls, for more information.

637 Registrations
  1. Research the IMS team website querying the 637 tab by EIN.

  2. If there is a 637 registration and the case is accepted for processing, place a note on the checksheet as to the 637 activity letter status.

IDRS Research
  1. Research IDRS to verify:

    • Entity information (including related entities), filing requirements, employment codes

    • Income tax controls

    • Filing history

    • Audit history

    • Freeze codes

    • Industry type

    • Large case (CIC)

    • Collectibility

    • 637 status

    • Statutes

    • Grade of case

    • 637 status

  2. Entity validation, filing requirements and employment codes - INOLES is used to validate current name, address, filing requirements (to gauge the type of entity) and employment codes (such as non-profit, government, etc.; INOLEX – shows multiple related entities up to 51 EINs; IRPTRO shows W-2 and 1099 information.


    BMFOLI may show the entity is filing forms not necessarily required to be filed as shown on INOLES along with types of filings and freeze codes.

    If unable to validate:

    1. Research BMFOLE for name changes (usually on the second or third page) and 637/CEP indicators/ North American Industry Classification System (NAICS) codes.

    2. Research NAMEE/ EINAD on geographic location for BMF and/or NAMEI for IMF.

    3. Consider Internet or Accurint business or people searches. The Internet can be used to develop further information about the taxpayer including alternate addresses and locations. Accurint may reflect TIN/name/address geographically or name-linked and may show employees at a given company or location that can then be researched on IRPTRO to identify W-2's, K1's and the correct TIN.

  3. BMFOLI or BMFOLT - to obtain current tax module information

  4. If no EIN is identified but an SSN is available, process as follows:

    1. Verify the SSN, name, and address of the taxpayer.

    2. Contact the Cincinnati Accounts Management Center (CAMC) Employer Identification Number Program Entity Unit to obtain an EIN.

    3. Send an email to the Entity Unit with the name, address and SSN (if applicable) and the form for which the EIN is needed along with required filing year indicators.

  5. The Entity Unit will assign an EIN to the taxpayer and provide a completion message response. The new EIN will only be viewable on IDRS via Command Code ENMOD for the first two weeks. It is suggested that the account and new EIN be held for two weeks until fully established on IDRS.

  6. If the lead cannot be validated, it should be rejected.


    See CAMC contact listing for EIN Program Entity Unit contact.

  7. Income Tax Controls - AMDISA is used to identify current income tax controls. Note that automated ERCS information is provided through the automated match to other internal data for PBC 214 only. Income tax controls are used for coordination on CIC cases. If income tax controls show a CIC case, reject the lead. Forward all information available to the WSD SRS Coordinator for use when the SRS referral on the CIC case is received under the mandatory referral program.

  8. Filing History - BMFOLI is used to identify filing history and if collectibility issues are present. IMFOLI provides individual MFT 30 filing information with Subsection C1 showing Schedule C business information and Subsection F1 showing Schedule F business information.

  9. Audit History - BMFOLZ and AMDISA is used to review audit history.

  10. Freeze Codes - BMFOLI is used to identify freeze codes which may then be researched in Document 6209, IRS Processing Codes and Information, to determine further processing. See IRM, Freeze Codes, for additional information. Certain freeze codes require coordination with other offices before selecting leads. Some may require suspending leads for a time. Common freeze codes include:

    • -C, Combat Zone Suspense, - examinations should not be conducted during the period of time a taxpayer is deployed in a Combat Zone. See IRM, Combat Zone, for procedures.

    • -O and -S, Disaster Suspense, - see IRM, and IRM, Disaster Relief and Emergency Relief - Program Guidelines, for further information.

    • Z-, Criminal Investigation Hold, - see IRM, Z Freeze, for further information. Contact the HQ Excise Tax Fraud Coordinator for instructions whether to continue processing or reject the lead.

  11. Industry Type, CIC. 637, and Collectibiity- BMFOLE is used to determine:

    • NAICS codes

    • CIC or Coordinated Examination Program (CEP) indicator

    • 637 indicator

    • Collectibility - see IRM, Returns with Collectibility Indicators,IRM 4.20, Examination, IRM, General Collectibility Considerations, and IRM, Pre-Audit Issues Collectibility, which contain a listing and definition of Currently Not Collectible (CNC) closing codes and steps to take when evaluating collection potential.

  12. Tax assessments often result in an increase in the inventory of cases in Collection. A significant number of these assessments result in uncollectible accounts. In the continuing effort to reduce Collection inventory and currently not collectible (CNC) accounts, the Service must strive for quality assessments and promote an increased emphasis on early collections. Taxpayers should be educated as to the benefits of paying a proposed tax deficiency in full or informed as to the availability of other arrangements (e.g., installment payments).

  13. A CNC account is a taxpayer account determined to be uncollectible for one or more of the following reasons:

    • Hardship

    • Insolvency/defunct corporation

    • Bankruptcy

    • Decedents (having no assets)

    • Unable to locate taxpayer

    • Unable to contact taxpayer

    • In business (hardship)

    • Other (de minimus/statute expired which in active status)

  14. Ensure classification checksheets are documented to reflect an overriding compliance justification for conducting an examination on a taxpayer with low collection potential. Collectibility indicators appear on AMDISA as BANKRUPTCY, CURRNOTCOLL, or COLLSTCD26. If no AMDISA data is available, use BMFOLI to see the V and W freeze codes regarding Bankruptcy, use BMFOLE for CNC and BMFOLI for T freeze codes (T Line). For leads selected for examination, the classifier must document the consideration of the collectibility indicator in the remarks section of the checksheet. A statement such as "Collectibility Indicator considered in selecting this case " should be included on the checksheet.

  15. Statutes - BMFOLT is used to determine the assessment statute expiration dates (ASED). IRM 25.6.1, Statute of Limitations Processes and Procedures, provides guidance on verifying SOL dates. Failure to protect the period of limitations can result in disciplinary action.

  16. Grade of Case - RTVUE and BRTVUE are used to identify the grade of case. Grade of case is dependent upon the taxpayer's industry/occupation and size. Grade of case generally should be the same as the grade of the primary income tax return; however, see IRM, Assignment and Grade level of Form 637 Registration Initial Applications, Compliance Reviews, and Other and IRM, ExSTARS Workload Selection and Assignment, for information on the standardization of IRC Section 4101 compliance work. BMFOLE is also used to review the most recent income tax module to determine assets and gross receipts along with NAICS codes. See IRM, Grade Level of Work for Field Examiners, for additional information. If there is insufficient information to make a determination, set at GS11.


    Group managers may change grade of case if local knowledge warrants.

  17. 637 Registration Status - BMFOLE may provide information on registration status. This information ties into the overall knowledge of the entity such as for imported trucks, no registration suggests the imported product may be non-taxable.


    If 637 information is desired for a specific initiative, include the data in the lead output from the JOC.

Audit History/Prior Classification Dispositions
  1. Audit history and prior classification dispositions for the same entity may assist with classification dispositions. Review command code BMFOLZ to identify audit results including closing codes. Review ECS inventory for historic classification dispositions.

  2. The following should not prevent selection of a case for examination for the same MFT and tax period:

    • Audit indicator for income or employment tax examination

    • Audit indicator for an excise tax penalty or terminal/carrier review examination closed over a year ago

    • Audit indicator for any other non-excise tax examination control

  3. The following could prevent selection of a case for examination:

    • Audit indicator for a primary excise tax MFT if occurring in the last 3 years

    • Large case indicators if the lead is not from the SRS system

    • Audit indicator for current fraud case; however, consider lead information for coordination with the Excise Fraud Coordinator.

  4. If a case is not selected based on the above guidelines, consider for selection if the potential adjustment exceeds the current tolerance set by management.

  1. Used to identify entities and relationships as follows:

    • Accurint - a commercial product requiring OL5081 to access. It may be used to find TINs when NAMEE and NAMEI are not successful.

    • YK1 - an IRS program requiring OL5081 to access. It allows for research on relationships based on various forms with Schedule K-1 that are used to report partner, beneficiary and shareholder reporting the distributive share of income, credits, etc. and Form 851, Affiliations Schedule, where the parent corporation of an affiliated group files Form 851 with its consolidated income tax return to identify the parent and affiliated members, report allocated amounts of payments, and determine that each subsidiary qualifies for the affiliated group.

  1. FinCEN is an on-line database containing reports of cash transactions in excess of $10,000. Cash transactions include deposits, withdrawals, check cashing, wire transfers, sales and redemption of money orders, travelers’ checks or stored value, casino activity, payments for certain services and information on foreign bank accounts. In addition, FinCEN contains reports of cash and/or other monetary instruments in excess of $10,000 used as payment for certain goods.

  2. FinCEN provides the following forms::

    • FinCEN Report 112, "Currency Transaction Report," for cash transactions in excess of $10,000, filed by financial institutions and non-bank financial institutions.

    • FinCEN/IRS Form 8300, "Report of Cash Payments Over $10,000 Received in a Trade of Business," filed by businesses when cash and/or monetary instruments of $10,000 or more are received for goods or services.

    • FinCEN Form 103, "Currenty Transaction Report by Casinos," filed by casinos or card clubs for cash transactions (cash in or cash out) in excess of $10,000.

    • FinCEN Report 114, "Report of Foreign Bank and Financial Accounts," filed by an individual, if the aggregate value of foreign accounts exceeds $10,000.

    • FinCEN Form 105, "Report Of International Transportation Of Currency Or Monetary Instruments" . This form is filed by anyone carrying cash or monetary instruments in excess of $10,000 into or out of the country.

    • FinCEN data can be used to generate leads for potential unreported income, money laundering transactions and other tax avoidance schemes.

    • Consider FinCEN activity in relation to the overall financial status of the taxpayer. FinCEN "hits " along with Information Returns Processing (IRP) documents, CDE three year facsimiles, and taxpayer locator data will provide a better picture of the taxpayer’s financial situation. Compare the contents of these case building tools with the return.

Disasters and Other Significant Emergencies

  1. IRM 25.16.1, Disaster Assistance and Emergency Relief, provides policies and procedures employed by the Disaster Assistance and Emergency Relief Program office for responding to federally-declared disasters and other significant emergencies in disaster areas. When the President declares a federal disaster or emergency, the Director of the Federal Emergency Management Agency (FEMA) will assign a designation of "Individual Assistance" and/or "Public Assistance" to define the type of relief offered to a specific disaster area. This information is cascaded through management via a Disaster Relief Memorandum. The information includes the affected zip codes, relief to be provided and duration of the relief. The IRS will issue a supplemental memorandum if additional information indicates a need for extended relief. NOTE: Not all disaster areas have compliance activity suspended.

  2. WSD shall process leads and cases meeting disaster relief criteria as follows:

    1. Review disaster relief memorandums to identify leads/cases requiring suspension of case issuance.

    2. Review IDRS for freeze codes requiring specific actions. The -S freeze on the IDRS account stops interest and penalties for a determined timeframe but does not stop compliance activities or notices. The -O freeze on the account stops interest and penalties for a determined timeframe, stops compliance activities, and stops most notices. See also IRM, Disaster Indicators and IDRS Freeze Codes, for information on freeze codes.

    3. Coordinate with inventory gatekeepers to suspend leads meeting relief criteria from referral for classification until the suspense period expires.

    4. Identify open ERCS status 08 cases affected by the disaster declaration and email CSTO to suspend case processing where applicable.

    5. Suspend new uncontrolled cases from compliance action until their related freeze periods expire.


      Certain cases, including unpaid claims and whistleblower claims, may be issued during disaster freeze periods with WSD group manager approval.

Fraud Development

  1. Employees must be alert to indicators of tax evasion. See IRM 25.1, Fraud Handbook, for guidance on recognizing and developing a fraud case.

  2. Tax fraud is an intentional wrongdoing on the part of a taxpayer, with the specific purpose of evading a tax known or believed to be owing. Tax fraud requires both a tax due and owing and fraudulent intent. See IRM, Definition of Fraud, for more information.

  3. When employees encounter behavior or indicators of fraud, they shall immediately consult with their group manager to determine the proper course of action.

  4. The employee's and their group manager will jointly ensure that they have sufficiently documented the appropriate factors or information and consult with a Fraud Technical Advisor (FTA).

Processing Leads Selected for Compliance Action

  1. Leads selected as cases for compliance action usually require case file documentation, ERCS case controls and IMS case creation depending on the type and ERCS status as follows:

    • New - require ERCS controls, IMS case creation and ecase referral.

    • Forward - New case information for entities with existing excise-related ERCS controls require sending case file documentation to the field, if applicable, but any new ERCS controls or IMS case creations are at the discretion of the field.

    • Expedite - New case information for entities without existing excise-related ERCS controls require sending case file documentation to the field. New ERCS controls may be requested by WSD or the field, but IMS case creation is at the discretion of the field.

    • Survey - New action on case previously disposed of as a "New" disposition. The request to revise the ERCS status will be reviewed by the WSD group manager. See IRM, Surveys, for information on this process.

  2. The table below depicts where ecase files, ERCS controls and IMS case creations are processed by case type:

    Case Type Ecase File Created by ERCS Controls Created by IMS Case Creation/ECase File Upload by
    Forward WSD Field Discretion Field Discretion
    Expedite WSD WSD/Field Field
    Survey Not applicable CSTO Not applicable
  3. For cases that will have ERCS only and ERCS and IMS information processed by CSTO, a daily report is emailed to CSTO with case files posted to a shared server for IMS upload. IRM, Creating Case Files, for information on creating case files.

Classification Documentation

  1. All lead classification decisions (selected or not selected) must be documented. Leads selected for examination must have a classification checksheet documenting the reason the lead was selected.

  2. The classification checksheet contains information for inventory update used to request case controls and create case files. The current approved checksheet may be found at the ECS SharePoint ECS Forms library.

  3. Classifiers must provide their name or Standard Employee Identifier (SEID) on each checksheet to ensure the person who classified the return is not the examiner of the return.

  4. The checksheet will be included with the case file and includes classifier comments in the Field Notes section as needed.

  5. Leads that are not selected should be documented on the inventory lead list with the appropriate disposition code and reason for non-selection. See IRM, Classification, for information on completing the inventory lead list with classification dispositions including the reason for any non-selects.

Requests to CSTO for ERCS and IMS Creation

  1. Requests for ERCS case controls and IMS case file uploads are sent to CSTO and should provide information in a format coordinated with HQ Campus Exam Process and Specialty Policy. Case files to be uploaded to IMS should be complete with no additional information to be added by CSTO.

  2. Post case files to the CSTO shared server.

  3. ERCS controls and IMS case upload request reports should be generated as directed by the WSD group manager.

Case Coding

  1. Case coding is essential to accurately monitor resources. The use of AIMS and ERCS case codes including project, tracking and source codes is the joint responsibility of ECS and Excise Policy.

  2. To create, revise or delete case codes:

    1. Prepare a dated, written request for case code changes that includes the rationale for the request, how it should be used and the date it should go into effect. For new codes, provide a descriptive title.

    2. Email the request through management chain of command for coordination and approval with ECS, Excise Tax Policy and Fuel Tax Policy program managers.

    3. Coordinate implementation of approved requests with the AIMS HQ analyst for update to the AIMS listing.

    4. Coordinate posting the approved request with the ECS SharePoint Business Unit Representative as an audit trail.

    5. Provide a copy of approved requests to the Excise Tax Knowledge Base coordinator for posting to the appropriate excise tax book.

  3. All case controls requested by ECS require Project Code 0137, ECS Initiatives, unless a specific project code has been designated such as training cases. Project Code 0137 allows a summary association of case results with ECS.

  4. All case controls requested by ECS require a tracking code determined by the following order:

    1. Leads Identified Outside of ECS - Use the tracking code designated for the specific projects such as SRS, Whistleblower or Information Reports even if a related ECS initiative lead is also selected for the case file.

    2. Leads Identified Within ECS - Use the tracking code for the ECS initiative. Cases identified by multiple ECS initiatives should use the tracking code associated with the primary initiative other than WRS. The WRS tracking codes should only be used if no other initiative identified the case.

  5. Establish case controls on Facility Control Numbers (FCN) by creating a substitute EIN with three leading zeroes and the six numerical digits from the terminal’s FCN number. See IRM, ExSTARS Examination Return Control System (ERCS) Procedures, for additional information.

  6. Per IRM, Excise Examinations Relating to Structured Settlement Factoring Transactions, leads for excise tax on structured settlement factoring transactions should be controlled on AIMS and ERCS on Non-masterfile as non-filer leads using MFT 27, Abstract Code 034.

  7. For case control procedures related to claims, see IRM, Excise Claim Classification and Control Procedures.

  8. For a list of approved codes, see the Codes and Procedures page on the Examining Taxes website at http://mysbse.web.irs.gov/exam/mis/default.aspx.

Creating Case Files

  1. Case files should describe how and why a case was selected. They should be created in a standard electronic format (ecase) that provides a consistent product so that users are familiar with contents and can easily see if information is missing.

  2. Data used to identify the case lead that is not available to the case examiner should be included in the case file. This data includes transaction records on taxable events such as imports, third-party reporting, ExSTARS records, etc.

  3. The ecase file should include the following information:

    • Case Assignment Sheet

    • Classification Checksheet

    • Lead Data - summary and detail data on potential tax, product analyzed, analyst notes on special issues, etc.

    • Data Dictionary, if available

    • Joint Audit Information - where applicable

    • Special Attachments - including forms 5346, questionnaires, policy information and information on specific issues not explained elsewhere such as Chief Counsel memos, special feedback requested, etc.

  4. Save case files using the standard naming convention TIN/Name Control/Tax Period/Date.

  5. Case files that will have ERCS and/or IMS case creation processed by CSTO should be posted to the CSTO shared server.

  6. Case files that will have ERCS and/or IMS case creation processed by the field should be emailed to the excise group manager.

Related IRMs

  1. The following IRMs contain information related to classification:

    • IRM 4.1.5, Classification and Casebuilding

    • IRM 4.2.1, General Examination Information

    • IRM 4.4, AIMS Procedures and Processing Instructions

    • IRM 4.7, Examination Return Controls System (ERCS)

    • IRM 4.8, Technical Services

    • IRM 4.17, Compliance Initiative Projects

    • IRM 4.20, Examination Collectibility

  2. Specific information available in IRM 4.4.1, AIMS Procedures and Processing Instructions - Introduction :

    • Master File Tax Account Codes and Form Numbers

    • Non-Master File Tax Account Codes and Form Numbers

    • Area and Campus Codes

    • Special Messages

    • Activity Codes

    • Source Codes

    • Examination Results

    • Disposal Codes

    • AIMS Assignee Codes

    • Status Codes

    • Project Codes

    • Push Codes

    • Special Handling Message Codes

Case Coordination

  1. Case coordination should take place whenever certain conditions exist including, but not limited to, the following issues:

    • Return Preparer Coordinator

    • Indian Tribal Government

    • Multiple Employee Case Controls

    • Inadequate Records Notice

    • Doubt as to Liability

    • Erroneous Refund

    • Technical Guidance

Return Preparer Coordinator

  1. The WSD Return Preparer Coordinator (RPC) is responsible for coordinating excise tax return preparer penalty cases. The RPC supports and guides employees regarding preparer penalty cases and:

    1. Provides assistance regarding audit techniques, questions, and general directions.

    2. Assists excise employees in identifying, working, and closing client and preparer penalty cases.

    3. Advises if the return preparer is being investigated by Criminal Investigation Division (CI), the Lead Development Center, or one of the Income Tax examination areas.

    4. Provides coordination if more than one investigation is ongoing or contemplated.

  2. The field group manager will contact the RPC prior to initiating any penalty investigation to ensure there is no open case or investigation.

Program Action Case
  1. A Program Action Case (PAC) is an investigation where clients of questionable preparers are examined to determine whether preparer penalties and/or injunctive actions against the preparer(s) are warranted. Approved PAC cases are forwarded to the WSD Return Preparer Coordinator per IRM, Program Action Case (PAC) Procedures for Excise Tax.

  2. For additional information, see IRM, Program Action Cases Overview, which contains general procedures for conducting a PAC.

Indian Tribal Governments

  1. Indian Tribal Governments (ITG) cases related to wagering require coordination pursuant to an MOU found at www.irs.gov/Government-Entities/Indian-Tribal-Governments/ITG-Memorandum-of-Understanding/. The MOU between ITG and the Office of Specialty Programs (formerly known as the Office of Excise Taxes or OET) provides guidance for employees with regard to examination and education activities relating to the federal excise tax responsibilities of Indian tribal governments. See IRM, Responsibilities and Procedures, for information on coordination activities.

Multiple Employee Case Controls

  1. Multiple employee case controls require coordination when the following conditions exist:

    • One entity (single TIN) with more than one excise employee assigned

    • Multiple entities (more than one TIN) for related entities such as when both the parent and subsidiary TINs are controlled to different employees or one terminal filer EIN files for multiple Facility Control Numbers (FCN).

    • Multiple entities (more than one TIN) for related tax issues such as in whipsaw cases.

    See also IRM, Case Coordination for Examinations and Related Forms 720 -TO/CS Reviews.

  2. Complete the classification checksheet with the primary and/or related indicator as appropriate.

  3. Email all group managers with case controls and assigned examiners to inform them that, "Group managers should ensure coordination is conducted when multiple employee assignments exist for a given taxpayer or when related entities with multiple TINs are involved such as parent/subsidiary relationships or where one terminal operator filer files for multiple terminals. Group managers should coordinate to determine whether one of the cases will be transferred or the cases will be worked independently. "

  4. If a Form 720TO case is a CIC entity currently under examination, all related terminal reviews should be directed by the excise employee assigned to the CIC case. Send all cases to the Excise manager of the CIC case (whether open or not) to coordinate the reviews of FCNs related to that Form 720TO.

  5. Open ERCS controls as appropriate. If the lead tax period is in ERCS, Status 90, reject the lead but consider reopening procedures for significant materiality.

Inadequate Records Notice

  1. Inadequate records notices place taxpayers on notice that their record keeping practices are deficient and must be improved to meet the requirements of the law. The issuance of an Inadequate Records Notice may result in a follow-up examination and is a tool to enforce taxpayer compliance with legal requirements to keep adequate records and properly report tax liabilities. Generally, Letter 979, Inadequate Record Notice, requesting a follow-up statement of corrective action from the taxpayer within six months is used to notify the taxpayer.

  2. If the taxpayer is within the racketeer classification, engaged in illegal activities, or is willfully disregarding the law, the examiner will prepare Form 2807, Agreement to Maintain Adequate Books of Account and Records, and Letter 978, Notice of Inadequate Records, which includes a description of exact records required and penalties for failure to keep records.

  3. Execution of Form 2807 is not necessary to close the case. Whether or not the taxpayer signed the form will be noted on Letter 978. If the taxpayer does not execute the form and the case is unagreed, the taxpayer will be informed of the further opportunity to discuss the matter at an Appeals conference. An Appeals conference is not given to taxpayers who agree to proposed adjustments but do not execute the form.

  4. Letters 978 and 979 are issued by field agents with the WSD Inadequate Records classifier as the designated contact who is responsible for coordinating and monitoring future compliance requirements.

  5. Notification of inadequate records cases will be received on Form 5346, Examination Information Report, or via the copy of letters 978/979. Process such cases as follows:

    1. Use command code "ACTON" to input the letter number (978 or 979), date of the letter, underlying tax period(s) giving rise to the inadequate records determination and whether or not Form 2807 was secured on the taxpayer’s entity section (ENMOD) of IDRS.


      Placing the information on the entity module would be a benefit in that the particular tax period does not have to be known in order to retrieve the inadequate records historical information which is relevant to the taxpayer.

  6. Where statements from the taxpayer are required but not timely received, call the taxpayer or issue Letter 1022, Inadequate Records Notice Follow-up, allowing the taxpayer an additional 15 days to provide a response regarding actions taken to improve their recordkeeping.

  7. If no response is received to the Letter 1022 or if a response is received from the Letter 978/979 not complying, classify a subsequent period for examination by the field. If the examiner concludes the taxpayer is not substantially complying with requirements to keep adequate records, consideration of additional enforcement measures, such as the assertion of penalties, is warranted.

  8. If a response is received indicating compliance, accept with no further classification.

  9. For additional information, refer to IRM, Inadequate Records Notice, and IRM, Inadequate Records Notices: Overview.

Doubt As To Liability (DATL)

  1. A Doubt as to Liability (DATL) Offer in Compromise (OIC) case exists where there is a genuine dispute as to the existence or amount of the correct tax debt under the law. Taxpayers who have a legitimate doubt that they owe part or all of a tax debt may file an OIC under the DATL basis. The Tax Increase Prevention and Reconciliation Act (TIPRA) of 2005 established legislation requiring the Service to render a decision and notify the taxpayer on all OIC requests within 24 months of the date the Service received the offer or the offer will be considered to be accepted (IRC 7122(f)).

  2. Per IRM, Offer in Compromise, the Examination function is responsible for processing and investigating offers submitted based on DATL. Doubt as to Liability offers, except offers with a trust fund recovery penalty issue, are forwarded to the centralized DATL processing unit located at the Brookhaven Campus for screening and processing.

  3. If the DATL group makes the determination the offer is valid, it is sent to WSD to be processed as follows:

    1. Verify the TIPRA statute date to identify if it will expire in less than 12 months.

    2. Review the offer to determine if it is appropriate for assignment to an excise field group. If the offer is not acceptable, return it to the centralized DATL processing unit. Determinations must be made within 10 days of receipt.

    3. Update the Automated Offer in Compromise (AOIC) assignment number to 1901165901 for all cases returned to the centralized DATL processing unit.

    4. Enter information in the AOIC remarks section regarding the reason the case was returned.

    5. If the case belongs in ETE, request case controls on all quarters involved (those with a TC480) using Source Code 73 and Tracking Code 6506.


      The DATL group will input TC 480 prior to sending the case to WSD.

    6. Request the original case file work papers.

    7. Email the ETE group manager that an OIC DATL case has been assigned to their group, and forward the case file via Form 3210.

    8. Update the AOIC remarks section to reflect the appropriate EGC and a contact point.

    9. Monitor the AOIC database and TIPRA statute date monthly to ensure all cases assigned to ETE are being worked.

    10. Once the field examiner has examined the offer and determined the disposition, they should close the case and forward it to WSD.

    11. If the offer is rejected, WSD will forward the case via Form 3210 to the Excise Policy SME for an independent review. Refer to the SBSE Examining Excise Taxes SME contact web page for a list of SME contacts.

    12. If the offer is withdrawn, no review is required.

    13. Once the case file is received by WSD, either from the field examiner or the reviewer, the administrative input to the AOIC database is completed for closing. The case file should then be transferred to Technical Services for review and shipment to Appeals or Closed Case Processing depending on the disposition.

  4. For additional information, refer to IRM, Procedural Guidance Relating to Offers in Compromise and Doubt as to Liability (DATL).

Erroneous Refunds

  1. IRM, Erroneous Refunds Overview, provides that erroneous refunds must be recovered with a deficiency assessment through an examination. Erroneous refund cases require coordination with ETE.

  2. Case controls should be established and copies of the original documents secured and sent to the field with the case file.

Technical Guidance

  1. When technical guidance information is received that may affect examinations such as Chief Counsel Advice, revenue rulings, tax law changes, policy changes, etc., it should be considered for how it will be shared with related case file recipients and ECS employees.

  2. Coordination should be conducted with the policy analyst assigned to the related abstract to ensure the information is shared appropriately including the following forums:

    • Case file attachment – may require a revised Case Assignment Sheet or separate document

    • MySBSE web page - requires expiration date

    • SharePoint

    • Management memo

    • Interim Guidance Memorandum

    • Annual CPE

    • New or revised Audit Technique Guide

Coordination with Centralized Specialty Tax Operations

  1. Excise tax work performed by CSTO under Campus Examination/AUR is coordinated through HQ Campus Exam Process and Specialty Program Policy who provide campus employees with IRM guidance on such areas as:

    1. Claims

    2. Taxpayer correspondence

    3. Correspondence audits

    4. ERCS/AIMS controls

    5. IMS controls and case file uploads

    6. Case Closures

  2. Campus compliance work related to excise tax may include such processes as soft notices, telephone contact, correspondence audits, and claims processing. Work expectations should be provided in writing including:

    • Data to be provided, where it will be posted, how often shared

    • Specific excise-related IRM procedures to be used

    • Results data to be captured and how it should be shared

    • Technical issue coordination

    • Specific case feedback

  3. Coordinate with HQ Campus Exam Process and Specialty Program Policy when process changes and/or training are required. Examples where coordination may be needed are revising claims selection criteria and correcting continued case control errors. The HQ office coordinates with the CSTO operations manager to ensure campus workgroup understand process changes.

  4. Email coordination with the campus AIMS/ERCS team may be conducted directly to correct minor case control errors that do not appear to require training. Form 10904 is completed by the campus and forwarded to the HQ AIMS analyst to correct controls such as EIN or tax period changes. For additional information, see IRM, Deleting AIMS Records on Error Accounts.

JOC State Partner Processes

  1. The JOC is a partnership between federal and state motor fuel taxing authorities. The JOC was officially established in 2007 with the signing of an MOU and bylaws between the IRS, the Federal Highway Administration (FHWA), and initial member states. The governing rules of the JOC are part of the JOC by-laws. JOC members’ responsibilities, disclosure, safeguards and record keeping requirements are included in the JOC MOU. The JOC bylaws give authority to the JOC Steering Committee to provide initial approval of new state members.

  2. Agencies must complete a questionnaire indicating interest in learning more about joining the JOC. The questionnaire solicits information from the agency regarding:

    1. Organizational contacts

    2. Operations information

    3. Technical structure

  3. An agency completing the questionnaire confirms that agency executives responsible for committing resources are aware of the application submission and the potential commitment of resources in the future.

  4. Questionnaires are reviewed by the JOC Steering Committee with rejected questionnaires resulting in an oral and written notification to the agency from the Steering Committee.

  5. Approved questionnaires result in the forwarding of a letter of application to the agency for membership into the JOC. Applications received must them be forwarded to the IRS HQ Governmental Liaison (HQ GL).

  6. The Steering Committee will review application for membership and respond to applicants within 30 days of receipt. If membership application is approved, coordination shall take place with the HQ GL to secure MOU and Bylaws signatures.

  7. Approval of membership applications requires a two-thirds majority by the Steering Committee. There are no predefined criteria against which an agency's application will be evaluated. A portfolio approach based on existing agency members along with agencies to be added will be used to evaluate applicants. Considerations will include, but not be limited to:

    • Similarities/differences to existing state members

    • Point of taxation

    • Landlocked versus coastal agency

    • Neighboring agencies (with existing member agencies or other agency applicants)

    • Fuel tax strategies utilized

    • Agency data available

    • Commitment of resources

New Partner Requirements

  1. New state taxing agency partnership requirements are to:

    • Have a current Basic and Implementing Agreement with the IRS for sharing confidential information.

    • Sign the JOC Memorandum of Understanding (MOU) and Bylaws.

    • Provide a list of individual representatives and team members to the IRS disclosure managers and the agency disclosure officers in the affected jurisdictions. A copy of the list must be submitted to the JOC Steering Committee cochairs and published as team rosters to be distributed to all JOC team members.

    • Be in compliance with federal safeguards requirements including receiving confirmation from the IRS Office of Safeguards that the agency has a current, approved Safeguard Procedures Report (SPR) to cover the self-disclosure process and use of federal tax information.

  2. If the agency does not meet these basic requirements, they are ineligible to join the JOC. The agency will be notified of their ineligibility.

  3. For more information, refer to IRM 11.3.32, Disclosure of Official Information - Disclosure to States for Tax Administration Purposes, for the specific sub-sections related to Basic and Implementing agreements and MOUs.

  4. For more information related to Safeguards requirements, refer to IRM 11.3.36, Safequards Review Program.

Partnership Coordination with Privacy, Governmental Liaison, and Disclosure Office (PGLD)

  1. Coordination with the PGLD should be initiated whenever agencies indicate a sincere interest in joining the JOC. When questionnaires or letters of application are provided by the JOC to an agency, the ECS employee will notify the PGLD office of the agency name, date, and agency employee contact. The PGLD will contact the local field PGLD to alert them that the agency has received the questionnaire/letter.

  2. If necessary, the local field PGLD can research the status of the agency's Basic and Implementing agreements, the status of the Office of Safeguard issues, any Office of Disclosure issues, and any relationship issues with the agency.

  3. If the agency contacts the field PGLD with questions they cannot answer, the field PGLD will contact the JOC. Field PGLD employees are relationship managers, facilitators, and marketers of all the initiatives stakeholders. The field PGLD will facilitate a call with the JOC point of contact and the agency to answer questions.

  4. When the agency is notified of the JOC Steering Committee decision to accept/reject the application, the HQ and field PGLD offices should also be notified. If the agency is accepted, the field PGLD will provide copies of the IRS/FHWA signed MOU and Bylaws to the state and initiate the process to secure agency signatures on the JOC MOU and Bylaws as well as the completed Safeguards Procedure Report (SPR) certification.

State Partner Disclosure Requirements

  1. The JOC MOU Section 9A states that agencies that access federal tax information are subject to the provisions and safeguards of IRC 6103, Confidentiality and Disclosure of Returns and Return Information. The participating agency employees will initially have access to federal tax information as contractors to the IRS under provisions of IRC 6103(n), Certain Other Persons. All participating agency personnel who are designated as IRS contractors must receive security clearances prior to having access to federal tax information.

  2. For state disclosure procedures, see IRM, State Partner Disclosure Requirements.

State Partner Safeguards Requirements

  1. All information obtained by the agencies must be safeguarded in accordance with the contract language for general services contained in exhibit 5 (or as may be renumbered and updated) of Pub 1075, Tax Information Security Guidelines for Federal, State and Local Agencies and Entities, and the agency’s current Safeguard Procedures Report (SPR). An agency’s SPR must describe their current operating procedures and safeguards measures.

  2. Agencies are required to amend or revise their SPR to include a full description of the self-disclosure process and use of the federal tax information. They must include the name, title, and phone number of the person within the agency who coordinates and logs the receipt as well as the distribution of the federal tax information self-disclosed.

  3. A copy of the signed and dated MOU must be included with the amendment or their revised SPR. The SPR or its amendment must be submitted to the IRS Office of Safeguards within 30 days after the MOU becomes effective.

Quality Review

  1. The JOC and WSD group managers (or designees) will conduct reviews of employee job performance including review for adherence to fairness in case selection standards. Refer to IRM, Fairness in Case Selection, for additional information.

  2. Evaluative process review is critical in achieving the highest quality cases. Review should be documented and include, but not be limited to:

    • Charters - are charters and associated initiative documentation current and were necessary approvals obtained?

    • Data Analysis - do data analytics adhere to documented selection criteria?

    • Initiative Results Review - are initiative results properly organized, contain relevant source data and timely provided to WSD?

    • Classification - are case selection factors utilized accurately and consistently, and is all reference information appropriately considered? Are classification decisions completed timely and properly documented in inventory?

    • Lead Recommendations – do rejected or suspended leads contain accurate reasons for non-selection or being placed into suspense? Do suspense dispositions contain expiration dates?

    • Case Files - is data provided sufficient and adequately described for use by case file recipients? Do spreadsheets appear correct, understandable and timely posted?

    • Inventory monitoring - are reports accurate, timely produced and posted?

  3. The JOC and WSD group managers will evaluate a sample of work to determine whether the employee made an appropriate decision. Written reviews should be conducted that consider whether the employee is maintaining a high level of proficiency, exercising good judgment, and effectively using his or her time.

Terms/Definitions and Acronyms

Acronym Definition
ACIS AIMS Computer Information System
AOIC Automated Offer in Compromise
AIMS Audit Information Management System
CAS Case Assignment Sheet
CBP Customs and Border Protection
CDW Compliance Data Warehouse
CIC Coordinated Industry Case
CIP Compliance Initiative Project
CNC Currently Not Collectible
CSTO Centralized Specialty Tax Operations
DATL Doubt as to Liability
DMV Department of Motor Vehicles
DW Data Warehouse
DYEDIS Dyed Diesel Inspection System
ECS Excise Case Selection
EDI Electronic Data Interchange
EITCRA Earned Income Tax Credit Referral Automation
ERCS Examination Returns Control System
ETE Excise Tax Exam
ExFIRS Excise File Information Return System
ExSTARS Excise Summary Terminal Activity Reporting System (ExSTARS)
FIDGAP Excise Inspection Data Gathering Project
FSB WPA Field Exam Specialty BSA Workload Planning and Analysis
FTA Fraud Technical Advisor
FTI Federal Tax Information
GII Generalized IDRS Interface
GL Governmental Liaison
IAT Integrated Automation Technologies
IBMIS Issue Based Management Information System
IMS Issue Management System
IPS Integrated Procurement System
IT Information Technology
JOC Joint Operations Center
LOA Letter of Application
MOU Memorandum of Understanding
NAICS North American Industry Classification System
OCS Office Communicator System
ODB Operational Database
OIC Offer in Compromise
OOB Out of Business
PAC Program Action Case
PGLD Privacy, Governmental Liaison, and Disclosure Office
POC Point of Contact
RAR Revenue Agent Report
RFI Request for Information
RPC Return Preparer Coordinator
SARP State Audit Report Program
SEE Symantec Endpoint Encryption (SEE) application
SDT Secure Data Transfer
SME Subject Matter Expert
SMEC Subject Matter Expert Coordinator
SPR Safeguards Procedures Report
SRS Specialist Referral System
TIPRA Tax Increase Prevention and Reconciliation Act
USACE US Army Corps of Engineers
VIN Vehicle Identification Number
VON Vessel Operator Number
WC WSD Whistleblower Coordinator
WIP Work in Process
WORTS Work Order Request Tracking System
WO Whistleblower Office
WSD Workload Selection and Delivery