4.24.21 Case Closings

Manual Transmittal

May 12, 2017

Purpose

(1) This transmits revised IRM 4.24.21, Case Closings.

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 the significant changes in content.

IRM Section Number Description of Change
4.24.21.1 General Overview Title changed to Program Scope and Objectives. New content added about information involving internal controls placed under this subsection to comply with rules and requirements under 1.11.2.1. Prior content updated and moved to 4.24.21.2.
New 4.24.21.1.1 Title added Background. New content added about background to comply with rules and requirements under 1.11.2.1.1.
New 4.24.21.1.2 Title added Authority. New content added about legal authorities to comply with rules and requirements under 1.11.2.1.2.
New 4.24.21.1.3 Title added Responsibilities. New content about responsibilities added to comply with rules and requirements under 1.11.2.1.3.
New 4.24.21.1.4 Title changed to Program Objectives and Review. Information from 1.11.2 and IRM 1230, Internal Management Document System Handbook, added to comply with rules and requirements under 1.11.2.1.4.
New 4.24.21.1.5 Title added Terms/Definitions/Acronyms. A list of frequently used terms and definitions in the IRM process, including those related to management and internal controls, added to comply with the rules and requirements under 1.11.2.1.5 and 1.11.2.1.6.
New 4.24.21.1.6 Title added Related Resources. Information about technical guidance and information processing steps and methods for other excise tax abstracts other than general program added to comply with rules and requirements under 1.11.2.1.7.
4.24.21.2 Case Closing Timeframes Title changed to Closing Information for Excise Tax Returns. New content moved from 4.24.21.1. Prior content moved to 4.24.21.3.
4.24.21.2.1 20 Day Timeframe for Closing Agreed and/or No Change Cases Subsection removed. Prior content moved to 4.24.21.3.1.
4.24.21.2.2 Timeframe for Closing Agreed Cases with Unpaid Deficiencies of $100,000 and Greater Subsection removed. Prior content moved to 4.24.21.3.2.
4.24.21.2.3 Timeframe for Closing Unagreed Cases Subsection removed. Prior content moved to 4.24.21.3.3.
4.24.21.3 Preparing for Case Closing Title changed to Case Closing Timeframes. New content moved from 4.24.21.2. Prior content moved to 4.24.21.4.
4.24.21.3.1 Paper Closing / Electronic (IMS) Closing Title changed to 20 Day Timeframe for Closing Agreed and/or No Change Cases. New content moved from 4.24.21.2.1. Prior content moved to 4.24.21.4.1.
4.24.21.3.2 Obtain Necessary IDRS Transcripts Title changed to Timeframe for Closing Agreed Cases with Unpaid Deficiencies of $100,000 and Greater. New content moved from 4.24.21.2.2. Prior content moved to 4.24.21.4.2.
4.24.21.3.3 Form 3198 - Special Handling Notice for Examination Case Processing Title changed to Timeframe for Closing Unagreed Cases. New content moved from 4.24.21.2.3. Prior content moved to 4.24.21.4.3.
4.24.21.3.4 Form 5344 - Examination Closing Record Removed subsection. Prior content moved to 4.24.21.4.4.
4.24.21.3.5 Form 5351 - Examined Non-Examined Closings Record Removed subsection. Prior content moved to 4.24.21.4.5.
4.24.21.4 Closing Procedures by Type of Closure Title changed to Preparing for Case Closing. New content moved from 4.24.21.3. Prior content moved to 4.24.21.5.
4.24.21.4.1 Closing Procedures for Surveyed Returns Title changed to Paper Closing / Electronic (IMS) Closing. New content moved from 4.24.21.3.1. Prior content moved to 4.24.21.5..1.
4.24.21.4.1.1 Survey of Excise Return and Pick Up of Later Period Removed subsection. Content moved to 4.24.21.5.1.1.
4.24.21.4.2 Closing Procedures for No Change Examinations Title changed to Obtain Necessary IDRS Transcripts. New content moved from 4.24.21.3.2. Prior content moved to 4.24.21.5.2.2.
4.24.21.4.2.1 Closing Procedures for Partially Agreed and Excepted Agreed Examinations Removed subsection. Content moved to 4.24.21.5.2.1.
4.24.21.4.3 Closing Procedures for No Change Examinations Title changed to Form 3198 - Special Handling Notice for Examination Case Processing. New content moved from 4.24.21.3.3. Prior content moved to 4.24.21.5.3.
4.24.21.4.4 Closing Procedures for Unagreed Examinations Not to be Forwarded to Appeals Title changed to Form 5344 - Examination Closing Record. New content moved from 4.24.21.4. Prior content moved to 4.24.21.5.4.
4.24.21.4.5 Closing Procedures for No Liability Closures Title changed to Form 5351 - Examined Non-Examination Closings Record. New content moved from 4.24.21.5. Prior content moved to 4.24.21.5.5.
4.24.21.5 Case Closing Procedures for Managers Title changed to Closing Procedures by Type of Closure. New content moved from 4.24.21.4. Prior content moved to 4.24.21.6.
4.24.21.5.1 Case Documentation Title changed to Closing Procedures for Surveyed Returns. New content moved from 4.24.21.4.1. Prior content moved to 4.24.21.6.1.
New 4.24.21.5.1.1 Title added Paper Survey Procedures. Content clarified so that information formerly characterized for “Surveyed Returns” distinguishes “Paper,” which are “Hard Copy” Returns, from “Paperless,” which are “Electronically Filed” Returns.
New 4.24.21.5.1.2 Title added Paperless Electronic Survey Procedures. Information previously on My SB/SE Webpage moved to IRM because it addresses primary instructions for closing a paperless electronic survey. For purposes of IMS, the excise examiner is directed to upload a Form 2503 that was signed and approved by the group manager into IMS for record.
New 4.24.21.5.1.3 Title added Survey of Excise Return and Pick Up of Later Period. Content moved from 4.24.21.41.1.
4.24.21.5.2 Review of Case Title changed to Closing Procedures for Agreed Examinations. New content moved from 4.24.21.4.2. Prior content moved to 4.24.21.6. 2.
New 4.24.21.5.2.1 Title added Closing Procedures for Partially Agreed and Excepted Agreed Examinations. Content moved from 4.24.21.4.2.1.
4.24.21.5.3 Grade of Case Title changed to Closing Procedures for No Change Examinations. Content moved from 4.24.21.4.3. Prior content moved to 4.24.21.6. 3.
New 4.24.21.5.4 Title changed to Closing Procedures for Unagreed Examinations Not to be Forwarded to Appeals. Content moved from 4.24.21.4.4.
New 4.24.21.5.5 Title changed to Closing Procedures for No Liability Closures. Content updated and moved from 4.24.21.4.5. New content added from SB/SE 04-1016-0053 issued on October 11, 2016.
New 4.24.21.6 Title added Case Closing Procedures for Managers. Content moved from 4.24.21.5.
New 4.24.21.6.1 Title added Case Documentation. Content moved from 4.24.21.5.1.
New 4.24.21.6.2 Title added Review of Case. Content moved from 4.24.21.5.2
New 4.24.21.6.3 Title added Grade of Case. Content moved from 4.24.21.5.3.
New Exhibit 4.24.21-1 Added table for acronyms and their definitions used in this IRM.

Effect on Other Documents

This material supersedes IRM 4.24.21 dated February 11, 2016, and SBSE IGM 04-1016-0053, Interim Guidance Procedures for Closing No Liability Substitute for Return (SFR) Non-Filer Examinations, dated October 11, 2016.

Audience

This section is for SB/SE excise tax managers (excise managers) and excise tax examiners (excise examiners).

Effective Date

(05-12-2017)

Alfredo Valdespino
Director, Examination - Specialty Policy
Small Business/Self Employed

Program Scope and Objectives

  1. General Overview - This IRM provides specific information and procedural guidance about closing excise examination reports (excise reports) in terms of content and format. A taxpayer has the right to appeal an IRS decision in an independent forum, which allows for a fair and impartial administrative appeal.

  2. Purpose - For compliance purposes, it is essential managers, senior-level officials and excise examiners understand and correctly follow the technical guidance and closing processes explained in this IRM section so that accurate excise reports result. Executed excise reports, unlike workpapers, are legally binding documents and serve as the basis for assessment and collection action.

  3. Audience - This IRM is for excise managers and excise examiners who close excise reports.

  4. Policy Owner - Director, Examination - Speciality Policy is responsible for the administration, procedures and updates related to closing excise reports.

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

  6. Primary Stakeholders - Appeals, AWSS, Counsel, Specialty Examination, SB/SE Examination Quality & Technical Support and LB&I are the primary stakeholders for this IRM.

Background

  1. The processes and procedures provided in this IRM are consistent with the objectives or goals for Excise Tax Examination that are addressed in IRM 1.1.16.3.3.1, Organization and Staffing, Small Business and Self/Employed (SB/SE), Excise Tax Examination.

Authority

  1. IRC 7522 requires that certain notices describe the basis for and identify the amounts of the tax due, interest, additional amounts, additions to tax and assessable penalties included in such notice. The notices specified include the first letter of proposed deficiency offering a review by Appeals, a notice of deficiency and notices of tax due. While the statutory requirement is limited to the specified notices, the conference report notes the desire of Congress that the Service make every effort to improve the clarity of all explanations sent to taxpayers. H.R. Conf. Rep. No. 1104, 100th Cong., 2nd Sess., pt. 2, at 219, 1988-3 C.B. 473, 481.

Responsibilities

  1. Director, Examination - Specialty Policy is the executive responsible for Excise Tax Examination policy and procedures.

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

  3. Chief, Excise Tax Examination is responsible for ensuring that information about closing excise reports is communicated to and carried out by excise managers and excise examiners.

Program Objectives and Review

  1. Program Goals - The processes and procedures provided in this IRM are consistent with the objectives or goals for Excise Tax Examination that are addressed in IRM 1.1.16.3.3.1, Organization and Staffing, Small Business and Self/Employed (SB/SE), Excise Tax Examination.

  2. Program Reports - Information regarding the reporting of program objectives are included on, but not limited to Headquarters Examination Monthly Briefing, Program Manager Monthly Briefing, Examination Operational Review and Business Performance Reviews, which are provided to Director, Examination - Specialty Policy.

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

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

Terms/Definitions/Acronyms

  1. The following chart contains terms and their definitions used throughout this IRM.

    Term Definition
    AMDISA Command code so that, if the modifer “A” is added to CC AMDIS and input with the TIN, File Source, MFT (or Plan Number) and Tax Period, then up to seven screens will be output.
    BMFOLI Command code to request on/off line status of entity and tax modules.
    BMFOLR Command code to request Business Master File (BMF) return screen information.
    BMFOLT Command code to request Business Master File (BMF) tax module screen information.
    BRTVU Command code to gain read-only access to the tax return data submitted by business taxpayer.
    CFINK Command code to research the Central Authorization File (CAF).
    INOLES Command code to display specific data for the account addressed.
    TXMODA Command code to request for display all tax module information for a specific tax period.

Related Resources

  1. Refer to IRC 7803, which is also known as The Taxpayer Bill of Rights (TBOR), for information about how IRS employees are expected to carry out their duties with integrity and fairness. The IRS must administer the law with Integrity and fairness to all taxpayers. Under TBOR, IRS employees must exercise professional judgment in conducting enforcement activities.

  2. Refer to IRM 4.24.2, Form 637 Excise Tax Registrations, for information about completing Form 637 registration program compliance cases.

  3. Refer to IRM 4.24.8, Examination Guidance for Excise Claims for Refund or Abatement, for information about closing excise tax claim cases.

  4. Refer to IRM 4.24.10, Appeals Referral Procedures, for information about closing unagreed cases (other than claims) to Appeals.

  5. Refer to IRM 4.24.17, Excise Summary Terminal Activity Reporting System (ExSTARS) Compliance Examination Procedures, for information about closing fuel terminal and carrier compliance cases.

Closing Information for Excise Tax Returns

  1. This section provides information on procedures for closing an examination of excise tax returns (excise returns).

  2. All excise tax field groups (groups) should send excise reports on agreed, no change and surveyed excise tax cases (excise cases) to Cincinnati Centralized Case Processing (CCP) via Form 3210, Document Transmittal.

Case Closing Timeframes

  1. Taking timely actions on an excise case is an essential element of managing the examination cycle time and is key to taxpayer satisfaction. Nationally mandated timeframes dictate when the excise examiner should initiate, follow up, or complete certain actions.

  2. The current National Standard Timeframes may be found in IRM Exhibit 4.8.1-1, which is at http://irm.web.irs.gov/Part4/Chapter8/Section3/IRM4.8.3.asp#4.8.3-1. Specific excise case closing timeframes are indicated below.

20 Day Timeframe for Closing Agreed and/or No Change Cases

  1. Generally, the excise examiner has 10 calendar days to close an agreed or no change excise case to the excise manager. The 10 calendar days are measured from the date the closing status is determined to the date the excise case is mailed to the excise manager or closed off Issue Management System (IMS) to the excise manager, whichever is earlier.

  2. Generally, the excise manager has 10 calendar days to close an agreed or no change excise case from the group. The 10 calendar days period is measured from the date the excise case is received by the excise manager or closed off IMS to the excise manager, whichever is earlier to the date the excise case is updated to status 51 and closed from the group. At no point should the excise case be updated to status 51 until it is ready to be transferred to CCP. While the excise manager reviews the excise case, it should remain in status 12. The update to status 51 should be the last step before transferring controls to CCP.

  3. The timeframe is calculated beginning the day immediately following the occurrence of one of the events described immediately above.

  4. Delays in meeting the timeframe must be documented on Form 9984, Examining Officer’s Activity Record, by the excise examiner and/or excise manager. The excise manager may utilize whatever features are available in IMS to make comments (e.g., Case Comments via the time sheet on a For 9984 or Case Level Activities at the Team Web Site). Documentation must explain the facts and circumstances that caused the delay. Timeframes may be extended whenever documentation establishes the excise examiner and/or excise manager exercised ordinary care and prudence.

Timeframe for Closing Agreed Cases with Unpaid Deficiencies of $100,000 and Greater

  1. Currently, the excise taxes that are subject to the provisions for unpaid deficiencies of $100,000 and greater are administered by TE/GE not Excise Tax Examination.

  2. The only excise taxes subject to these procedures are under Chapters 41 - 44 on certain exempt organizations and employee plan transactions.

Timeframe for Closing Unagreed Cases

  1. The excise examiner and excise manager have 20 calendar days to close an unagreed excise case measured from the earlier of:

    • The date Letter 950-E, 30 Day Letter - Straight Deficiency or Overassessment for Excise Tax Examination Cases, or

    • The date the request for an Appeals conference is received from the taxpayer to the date the excise case is forwarded to Technical Services (Tech Services).

  2. The timeframe is calculated beginning the day immediately following the occurrence of one of the events described immediately above.

  3. Delays in meeting the timeframe must be documented on Form 9984 by the excise examiner and/or excise manager. The excise manager may utilize whatever features are available in IMS to make comments (e.g., Case Comments via the time sheet on a Form 9984 or Case Level Activities at the Team Web Site). Documentation must explain the facts and circumstances that caused the delay. Timeframes may be extended whenever documentation establishes the excise examiner and/or excise manager exercised ordinary care and prudence.

Preparing for Case Closing

  1. Once the excise examiner has issued the report, the excise case must be prepared for closing.

  2. The following topics address the general steps to prepare the excise case regardless of the type of closing.

Paper Closing / Electronic (IMS) Closing

  1. The excise case closing process requires a paper file closing and a separate IMS closing. The excise examiner will attempt to close both IMS and paper files at the same time.

  2. The excise examiner will include all key documents in the IMS file. The excise examiner will also print and organize all key documents into the paper file, which will be mailed to the excise manager for further processing. Key documents will include, but are not limited to, work papers or supporting documentation (or portions thereof) detailing all proposed adjustments. The excise examiner should apply judgment as to what information is necessary to include in both IMS and paper files. The excise manager’s advice should be sought if any question exists as to whether the document should be included.

  3. The excise manager will review the closed excise case upon receipt. Review of the excise case will include a comparison by the excise manager of the paper file to the IMS file. If any inconsistencies exist, the excise manager will return the excise case file to the excise examiner for correction. The excise manager will document all closing actions in IMS on Form 9984 or through Case Level Activities at the IMS Team Web Site. If the excise manager added or changed any documents, those documents must be uploaded or saved in the IMS file and printed for the paper file.

  4. The status of the IMS file must be updated to “closed” by the excise examiner when instructed by the excise manager. The excise manager must then complete the managerial actions in IMS. After the excise manager has completed the review of the excise case, the paper file should be mailed to CCP, Tech Services, or Workload Selection and Delivery (WSD) for further processing and final closing.

Obtain Necessary IDRS Transcripts

  1. The excise examiner should verify the correct statute of limitations (SOL) period for assessment of tax date is reflected on all transcripts. Transcripts must be less than 30 days old but preferably less than one week old.

  2. The excise examiner should include the following IDRS material in the closed excise case:

    • AMDIS

    • AMDISA for each period

    • BMFOLI

    • INOLES

    • CFINK, if there is a representative

    • TXMODA (Current within 30 days of closure)

      Note:

      An original excise return should be used when appropriate. TXMODA may not always be present for an excise return. For example, TXMODA is not present for a Substitute for Return (SFR). In some situations, TXMODA may not be present for a filed excise return. If TXMODA is not present, the excise examiner should substitute BRTVU for TXMODA.

  3. The excise examiner should verify the transaction codes are generated properly on Form 5344, Examination Closing Record, generated by IMS.

Form 3198 - Special Handling Notice for Examination Case Processing

  1. The excise examiner is responsible for completing Form 3198, Special Handling Notice for Examination Case Processing.

  2. Form 3198 provides closing instructions to CCP, Tech Services, or WSD.

  3. Most excise case closing reports are generated in Notebook. However, Form 3198 may be prepared in either Notebook or IMS.

  4. Although the excise examiner may use either program, IMS will automatically populate Form 3198 and itemize the closing data. This will generally result in improved accuracy. If Form 3198 is generated by Notebook, the excise examiner will need to manually complete the fields and itemize the closing data.

    Note:

    For example, the Failure to File, Failure to Pay and Failure to Deposit penalties are individually entered in IMS as IRC 6651(a)(1), IRC 6651 (a)(2) and IRC 6656. These penalties are then listed separately on Form 3198 when generated in IMS. Additionally, if no penalties are asserted, IMS allows the excise examiner to report zero for the assessed penalty.

  5. Under Notebook, the penalties are combined on Form 3198 into one dollar amount. The penalties are not itemized.

  6. If the excise examiner uses Notebook to deploy Form 3198, the excise examiner must manually itemize the penalties and enter zero for penalty non-assertion.

  7. Under both IMS and Notebook, the excise examiner must identify and check the closing letters to be issued by CCP on Form 3198 or indicate no letter is to be sent by CCP. Closing letters must be prepared, signed and included in the paper file for CCP to date stamp and mail. Envelopes should be included when appropriate.

  8. If Form 3198 is not annotated correctly with all closing actions, the excise case closing could be delayed and the excise case returned to the group for additional closing actions.

  9. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/job/default.aspx “My SB/SE Preparing Reports and Closing an Excise Tax Case - Job Aids” webpage for more information about preparing Form 3198 for closing.

Form 5344 - Examination Closing Record

  1. Form 5344 is used as an input document for the Audit Information Management System (AIMS), which captures the closing information on examined cases. The system also transmits Form 5344 adjustment information to the Master File to update taxpayer account records.

  2. The IMS file cannot be closed until a closing document is generated. The excise examiner is responsible to verify that all transaction codes are properly completed on Form 5344.

    Note:

    Closing documents include Form 5344, Form 5351, Examination Non-Examined Closings, and Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties.

  3. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/job/default.aspx “My SB/SE Preparing Reports and Closing an Excise Tax Case - Job Aids” webpage for more information about preparing Form 5344 for closing.

Form 5351 - Examined Non-Examination Closings Record

  1. For surveyed excise cases, the excise examiner must generate Form 5351 in IMS.

  2. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/job/default.aspx My SB/SE Preparing Reports and Closing an Excise Tax Case - Job Aids webpage for more information about preparing Form 5351 for closing.

Closing Procedures by Type of Closure

  1. This section provides information for closing excise cases under IMS and/or Notebook based on the type of closure.

  2. The excise examiner is responsible to select those forms and letters that apply to the taxpayer’s situation. The excise examiner must complete those forms and letters that are not automatically populated and review and correct them for accuracy. During the course of the examination, the excise examiner must selectively issue forms and letters directly to the taxpayer and selectively forward letters to CCP to be issued to the taxpayer when the excise case fully closes.

  3. Notebook will deploy standardized forms and letters based on the type of closure.

  4. Refer to the five sections immediately below and the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/default.aspx“My SB/SE Preparing Reports and Closing an Excise Tax Case” webpage for more information about closing forms, letters and procedures for surveyed, agreed, partially agreed and excepted agreed, no changed, unagreed and no liability closures.

Closing Procedures for Surveyed Returns

  1. If the taxpayer has not been contacted, taxpayer books and records have not been inspected and an examination will most likely not result in a material change to the taxpayer’s tax liability, the excise examiner should survey the return after assignment by completing Form 2503, Survey After Assignment - Excise or Employment Tax.

  2. To support the decision to survey the return after assignment, the excise examiner must ensure the case file has been documented with all actions taken, which led to this conclusion, including, but not be limited to, consideration of Large, Unusual or Questionable items (LUQs), completion of required filing checks, consideration of collectibility, evaluation of audit potential, repetitive audits and other materials that influenced his or her decision.

  3. Paper surveys are required for unpaid claims and cases with original returns in the case file. If not required, paperless electronic survey procedures can be utilized.

  4. Disposal Code (DC) 31 should be used for excise returns surveyed before assignment. DC 32 should be used for excise returns surveyed after assignment.

  5. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/surveyed/default.aspx“My SB/SE Preparing Reports and Closing An Excise Tax Case - Surveyed” webpage for more information about closing forms and procedures for surveying excise cases.

Paper Survey Procedures
  1. To process a paper survey, complete and upload the following documents into IMS and assemble the paper file as follows:

    1. On front of the case file (top to bottom), attach Form 3210 and Form 895, Notice of Statute Expiration, if applicable.

    2. Inside the case cover on the left (top to bottom), attach AMDISA and INOLES that are less than 30 days old.

    3. Inside the case cover on the right, attach labels, if available.

    4. Inside the case file, attach Form 5351, Form 2503, the tax return or BRTVU, Form 9984, Examining Officer’s Activity Record, and miscellaneous case documents.

      Note:

      Remove unnecessary documents, duplicates and fasteners.

    5. On the front of the return or BRTVU, nothing should be attached.

    6. On the back of the return or BRTVU (face in), attach Form 5546, Examination Return Charge-Out Sheet, if available.

    7. On the back of the return or BRTVU (face out), attach TXMODA that is less than 30 days old.

      Note:

      If TXMODA is not found on IDRS, the excise examiner can attach a BMFOLT that is less than 30 days old and a BMFOLR (for a filed return only).

  2. Close the case to the group manager for further processing.

Paperless Electronic Survey Procedures
  1. Certain non-examined cases can be closed in a virtually paperless fashion, if the original return was never requested. Generally, a paperless electronic survey is used when the return was established on AIMS and the original return was never requested.

  2. Only Form 5351 and Form 3210 are submitted to CCP for a paperless electronic survey.

    Note:

    For purposes of IMS, in addition to Form 5351 and Form 3210, Form 2503 must be completed, submitted to the group manager for approval and a signed copy uploaded for record into IMS even though it is not submitted to CCP nor will it be accepted by CCP.

  3. Form 5351 and Form 3210 are to be e-mailed to the Examination Cincinnati Centralized Case Processing site mailbox at *SBSE CCP Exam Cinncinnati. CCP has 45 days from the receipt to process these cases.

  4. Field offices are still required to do the following:

    1. Update ERCS to Status 51.

    2. Use only one MFT per Form 5351.

    3. Use of more than one disposal code is allowable.

    4. Include Form 3210 listing all appropriate TINs.

    5. An electronic signature by the group manager is required on Form 5351.

  5. If the return was requested when the case was established on ERCS/AIMS (All DIF and Automatic Openings request the return) the case cannot be closed as a paperless electronic survey. Before requesting a paperless electronic closure, pull an AMDISSA and if the words “Return Requested” appear on page 2 - line 8, a paperless electronic survey cannot be requested.

  6. An electronic print can be surveyed using the paperless electronic survey process, if there is no requirement to attach any documentation to the survey.

  7. Only survey cases at the group level with DC 31 or DC 32 can use the paperless electronic survey process.

Survey of Excise Return and Pick Up of Later Period
  1. A period may become overaged, which means an un-started excise case has remained in an excise examiner’s inventory for 210 days or more. For this reason, the excise examiner may decide to request examination controls on a later period to be more current. When these periods are surveyed and a subsequent period is requested, the excise examiner will follow the procedures listed below to comply with the provisions of the IRS Restructuring and Reform Act of 1998:

    1. When surveying the original period, the excise examiner will maintain and include the original Form 5346, Examination Information Report, and include it in the excise case file of the subsequent period.

    2. When completing Form 5345-D, Examination Request-ERCS (Examination Returns Control System) Users, for the subsequent period, the excise examiner will write on Form 5345-D"previous period surveyed-requesting subsequent period. "

    3. DC 31 should be used for excise returns surveyed before assignment. DC 32 should be used for excise returns surveyed after assignment.

    4. Refer to the Source Code Job Aid at http://mysbse.web.irs.gov/examination/mis/data/25840.aspx for more information about determining the correct source code for excise returns.

Closing Procedures for Agreed Examinations

  1. If the taxpayer agrees to all of the proposed adjustments, the excise case is agreed.

  2. DC 03 should be used for excise returns closed agreed prior to the issuance of 30 Day Letter. DC 04 should be used for excise returns closed agreed after the issuance of a 30 Day Letter.

  3. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/agreed/default.aspx “My SB/SE Preparing Reports and Closing an Excise Tax Case - Agreed” webpage for more information about closing forms, letters and procedures for agreed excise cases where the taxpayer fully agreed to all proposed adjustments.

Closing Procedures for Partially Agreed and Excepted Agreed Examinations
  1. If the taxpayer agrees to some but not all of the proposed adjustments, the excise case is partially agreed. In this situation, two excise reports are prepared, an agreed excise report for those proposed adjustments to which the taxpayer agreed and an unagreed excise report for those proposed adjustments to which the taxpayer did not agree.

  2. For those proposed adjustments to which the taxpayer agreed, DC 03 should be used if the agreement was reached prior to the issuance of 30 Day Letter. DC 04 should be used for those proposed adjustments reached after the issuance of a 30 Day Letter. For those proposed adjustments to which the taxpayer did not agree, DC 08 should be used.

  3. The excise examiner is encouraged to secure a partial agreement in an unagreed excise case. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/partiallyagreedexcepted/default.aspx“My SB/SE Preparing Reports and Closing and Excise Tax Case - Partially Agreed and Excepted Agreed” webpage for more information about closing forms, letters and procedures for partially agreed and excepted agreed excise cases.

  4. If the taxpayer executes a partial agreement, procedures for partial assessment must be followed. Refer to IRM 4.4.9, AIMS Procedures and Processing Instructions, Delinquent and Substitute for Return Processing, and IRM 4.4.12, Examined Closings, Surveyed Claims, and Partial Assessments. This information is applicable to all cases. There are no special procedures for excise cases.

  5. Refer to IRM 4.24.10.2, Appeals Process, to ensure adequate time remains under the SOL to forward the unagreed portion of the excise case to Appeals.

  6. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/part/default.aspx “My SB/SE Preparing Reports and Closing an Excise Tax Case - Partial Assessments” webpage for more information about closing forms and procedures for partial assessments.

  7. After the partial assessment is assessed, the excise examiner can proceed with the unagreed excise case closing.

Closing Procedures for No Change Examinations

  1. If there is no change in the proposed tax liability, the excise case is no changed.

  2. DC 01 is used for no change examinations with adjustments. DC 02 is used for no change examinations.

  3. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/nc/default.aspx“My SB/SE Preparing Reports and Closing an Excise Tax Case - No Change” webpage for more information about closing forms, letters and procedures for no change excise cases where the taxpayer is not liable for excise tax in the period examined.

Closing Procedures for Unagreed Examinations Not to be Forwarded to Appeals

  1. If the taxpayer does not agree to the proposed adjustments, the excise case is unagreed.

  2. Refer to IRM 4.24.10.2 for information about the required time frames that must remain on a SOL before an excise case may be forwarded to Appeals.

  3. DC 08 is used for unagreed examinations when the taxpayer did not sign an excise report or request an Appeals conference.

  4. This section addresses the forms, letters and procedures for unagreed excise cases that are not controlled under the Appeals Process described in IRM 4.24.10. This category of unagreed excise cases has less than 365 days remaining on the statute when it is received at Appeals or is one where the taxpayer did not timely respond to a 30 Day Letter, which requires an assessment.

  5. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/unagreed/default.aspx“My SB/SE Preparing Reports and Closing an Excise Tax Case - Unagreed” webpage for more information about closing unagreed excise cases where the taxpayer disagrees with the proposed adjustments and either did not file an acceptable protest, or the SOL will not have 365 days remaining on the excise case when received at Appeals and the taxpayer will not or cannot extend the SOL.

Closing Procedures for No Liability Closures

  1. No Liability SFR Non-Filer excise cases are to be closed using DC 02. This applies only to excise cases where the excise examiner has taken actions that may include, but is not limited to, conducting an interview, reviewing books and records and ultimately making the decision that the taxpayer is not liable for excise taxes.

    Note:

    In situations where no examination of books and records occurred, the excise examiner or excise manager will follow paperless electronic survey procedures, using non-examined DC 31 or DC 32. The taxpayer will not receive any correspondence for a non-examined closure.

  2. Closing out the IMS file and the paper file to CCP requires the actions described in the paragraphs that follow.

  3. Letter 930, Non-Filer No Liability Substitute for Return (SFR) Transmittal Letter Procedures for No Liability SFR Non-Filer Examinations:

    1. The excise examiner must prepare an original and a copy of Letter 930 advising the taxpayer there is no liability for the excise tax indicated and an envelope addressed to the taxpayer.

    2. Letter 930 will be signed by the excise manager on behalf of the Chief, Excise Tax Examination.

    3. Both copies of Letter 930 and the addressed envelope will be placed in the paper file.

    4. The excise examiner will note under the Letter Instructions for the CCP section on Form 3198 “Other Instructions” box, “No Liability SFR - Issue Letter 930 to the taxpayer.”

    5. CCP ensures the original letter is mailed to the taxpayer and the copy remains in the paper file.

  4. IMS Case Closing:

    1. Established no change IMS excise case closing procedures are followed for no liability SFR examinations, including all excise case documentation that is in the paper file.

    2. Both the IMS file and the paper file must contain documentation to support the no liability determination.

    3. The IMS file serves as the historical record for all excise examiner actions, findings and determinations that is essential background, if that excise case is subsequently identified and/or classified.

  5. Case File Assembly Procedures - At a minimum the paper file, as well as the IMS file, will contain:

    1. A copy of the BMFOLT for the periods involved that show the Transaction Code (TC) 150 posting for the SFR and AMDIS to show the module is fully established on AIMS. The excise examiner should also check TXMODA to ensure there are no pending transactions.

    2. Letter 930 (two copies) with proper signature and an addressed envelope with current taxpayer address.

    3. Form 3198.

    4. Form 5344.

    5. Supporting documentation explaining the reasons for the no liability closure, such as Form 9984 and any lead sheets or workpapers.

  6. Excise Report - If an SFR examination results in a decision that the taxpayer is not liable for an excise tax in the tax period examined, no excise report is required. Letter 930 is all that is necessary because the taxpayer did not file an excise return.

  7. After the excise manager completes the review, the secretary or designated group closing official will update the status of the excise case in Examination Returns Control System (ERCS) to status 51 and the excise case will be shipped to CCP for closure. Changing the status in ERCS to status 51 should be the last update prior to mailing the paper file.

  8. SFR Filing Requirement Indicator - If the taxpayer is not liable for any excise tax, the excise examiner will prepare Form 3177, Notice of Action for Entry on Master File. This is necessary to release the expectation that the taxpayer should file excise returns. Enter the following appropriate TC and Closing Code in the “Other” field:

    1. If the taxpayer is not liable for the tax period(s), enter TC 590 in the TC column and type “Closing Code 75” in the space provided.

    2. If the taxpayer is not liable for the tax period(s) and will not be liable for any subsequent tax period(s) for the same MFT, enter 591 in the TC column and type “Closing Code 75” in the space provided.

      Note:

      On Form 3198 in the “Forms Enclosed” section, the excise examiner must check the 3177 box to indicate that Form 3177 is in the excise case.

  9. Refer to the following link at http://mysbse.web.irs.gov/examination/specialty/excise/close/nl/default.aspx “My SB/SE Preparing Reports and Closing an Excise Tax Case - No Liability” webpage for more information about no liability closures.

Case Closing Procedures for Managers

  1. Upon receipt of the closed excise case, the excise manager should review and close the excise case within the recommended timeframes. See IRM 4.24.21.2.3.

  2. The excise manager must ensure all IMS required closing actions are completed when the excise case is closed from the group. For detailed guidance, see the IMS User Job Aid at the IMS Excise SharePoint site at http://mysbse.web.irs.gov/examination/specialty/excise/library/default.aspx.

Case Documentation

  1. The excise manager must document the excise case review on either Form 9984 through case comments in IMS on the time sheet or the IMS Case Level Activities found at the IMS Team Web Site.

  2. The excise manager must document and explain all delays (i.e., shipment of the paper file, remote excise manager travel, etc.) from the date the excise case is closed to the excise manager to the date the excise case is closed from the group.

Review of Case

  1. The excise manager should review the completed excise case, including but not limited to, Form 3198, Form 5344 and work papers or supporting documentation (or portions thereof) detailing all proposed adjustments.

  2. At a minimum, the excise manager should review the current AMDISA, TXMODA, BMFOLI, BMFOLR, BMFOLT, CFINK and INOLES (less than 30 days old) to verify the accuracy of the balance on the account, all prior assessments have been acknowledged and used in computations and to confirm the correct SOL is being used in all systems, reports and excise case closing documents.

Grade of Case

  1. The excise manager determines the grade of case for all excise returns.

  2. Refer to IRM 1.4.40, Resource Guide for Managers - SB/SE Field and Office Examination Group Manager, and Document 6036, Examination Division Reporting Codes Booklet, for more information about recording grade of case on Form 5344.

  3. The case grading guidelines may be used at any point in the examination process. However, at assignment, only the excise return information will be available. Development during the course of the examination may more fully disclose the final grade of case. Final grading factors take into account excise return information, work papers and the excise report. Thus, the final grade may differ from grade at assignment. The final grade is entered by the excise manager in box 32 on Form 5344.

Acronyms

The following table contains acronyms and their definitions used throughout this IRM.

Acronym Definition
AIMS Audit Information Management System
AMDIS Audit Management Display Information System
AWSS Agency-Wide Shared Services
BMF Business Master File
CC Command Code
CCP Centralized Case Processing
DC Disposal Code
DIF Differential Index Function
ERCS Examination Returns Control System
IDRS Integrated Data Retrieval System
IMS Issue Management System
INOLES Information On-Line Entity
LB&I Large Business and International
MFT Master File Tax
SFR Substitute for Return
SOL Statute of Limitations
TC Transaction Code
TE/GE Tax Exempt & Governmental Entities
TIN Taxpayer Identification Number