4.32.3 Coordination and Roles of Cross-Functional Units

Manual Transmittal

June 07, 2012

Note:All future releases of this IRM will be electronic only.

Purpose

(1) This transmits revised IRM 4.32.3, Abusive Transactions, Coordination and Roles of Cross-Functional Units.

Material Changes

(1) Minor editorial changes have been made throughout this IRM. Website addresses, legal references, and IRM references were reviewed and updated as necessary.

(2) Throughout this IRM, references to Large and Mid Size Business (LMSB) were updated to the new organizational name Large Business and International (LB&I).

(3) Significant changes to this IRM are reflected in the table below:

Reference Description
IRM 4.32.3.1 Added section to explain cross-functional units and use of terms ATTI, ATAT, and AT. Remaining sections were renumbered.
IRM 4.32.3.2 Replaced the term ATG Coordinator with Technical Services Coordinator throughout.
IRM 4.32.3.2.1 Deleted paragraph 1.
IRM 4.32.3.2.2 Revised paragraph 4.
IRM 4.32.3.2.3 Added paragraph 3.
IRM 4.32.3.2.3.1 Revised this section to remove references to Appeals participating on IMTs.
IRM 4.32.3.3 Added information regarding Frivolous Return Program.
IRM 4.32.3.4 Added new website link.
IRM 4.32.3.5.1.1.1 Deleted old section and renumbered.
IRM 4.32.3.5.1.1.1 Revised title to reflect new committee name.
IRM 4.32.3.5.3 Corrected reference to SCS, ESC, and AT issues.
IRM 4.32.3.6.2 Removed paragraphs (3) and (4).
IRM 4.32.3.6.3 Corrected processes for CI to initiate parallel examination.
IRM 4.32.3.7 Renumbered section.
IRM 4.32.3.8 Corrected titles.
IRM 4.32.3.8.1 through IRM 4.32.3.8.1.9 Added these subsections.
IRM 4.32.3.9 Describes the role of the Alternative Resolution Implementation Program within Technical Services.

Effect on Other Documents

IRM 4.32.3, dated 03-30-2006, is superseded.

Audience

This section provides guidance for Small Business and Self-Employed (SB/SE) Examination area office employees, Tax Exempt and Governmental Entities (TE/GE) employees, and Large Business and International (LB&I) examiners.

Effective Date

(06-07-2012)

Tamera L. Ripperda
Director, Abusive Transactions and Technical Issues SE:S:E:ATTI
Small Business/Self-Employed

Definitions of Cross-Functional Units

  1. For ease of use of this document, the following cross-functional unit names and acronyms are provided:

    • Small Business/Self-Employed (SB/SE) Abusive Transactions and Technical Issues (ATTI)

    • Collection Abusive Tax Avoidance Transactions (ATAT)

    • Office of Appeals

    • Large Business and International (LB&I)

    • SB/SE Division Counsel (ATAT)

    • LB&I Division Counsel

    • Tax -Exempt and Government Entities (TE/GE) Counsel (ATAT)

    • Criminal Investigation (CI)

    • Tax-Exempt and Government Entities (TE/GE) (ATAT)

    • Department of Justice (DOJ)

  2. When referring to a specific cross-functional unit, the most appropriate acronym will be used (i.e., ATTI or ATAT).

  3. When a more generic term is necessary, Abusive Transactions or AT may be used.

Appeals

  1. The Office of Appeals (Appeals) has authority to consider and negotiate tax and penalty settlements as outlined in:

    • Delegation Order 8-8 (formerly DO-66, Rev. 15). See IRM 1.2.47.9, Delegation Order 8-8.

    • Policy Statement P-8-47, Consideration to be Given to Offers of Settlement. See IRM 1.2.17.1.6, Policy Statement 8-47.

  2. See IRM Part 8, Appeals, for a description of Appeals' mission, jurisdiction, and program.

Appeals Role

  1. Appeals provides an independent assessment of litigating hazards related to abusive tax avoidance transactions.

  2. This role is accomplished by using traditional appeals hearings and alternative dispute resolution (ADR) tools.

Appeals Issue Coordination

  1. Appeals coordinates AT issues where there is an approved Coordinated Issue Paper (CIP), otherwise known as a Compliance Coordinated Issue. Appeals also independently coordinates issues that have wide impact or importance, otherwise known as an Appeals Coordinated Issue (ACI). Appeals develops settlement guidelines for each CIP or ACI.

  2. Once there is an approved CIP or ACI, the Appeals Technical Services Coordinator generally has review and concurrence authority for all settlements of the issue. See IRM 8.7.3, Technical Guidance and International Programs, for additional information.

  3. Appeals also identifies emerging issues that are not officially coordinated within Compliance. This determination is based on the need to address some of the key aspects of an issue with appeals officers, assist them in the early stages of consideration of an issue, and promote consistency in the treatment of the issue in Appeals. In these cases, the Appeals Technical Services Coordinator serves as an information resource.

Alternative Dispute Resolution Tools

  1. Appeals has additional tools available for moving cases through the system: Fast Track Mediation, Fast Track Settlement, and Servicewide Delegation Order 4-25. See IRM 1.2.43.26, Delegation Order 4-25 (Rev. 2).

  2. Fast Track Mediation (FTM) - Appeals facilitates communication between taxpayers and SB/SE Compliance to help resolve factual issues. FTM, described in Rev. Proc. 2003-41, Appeals Fast Track Mediation Procedure, is designed to help SB/SE taxpayers resolve disputes resulting from examination and collection actions. Most non-docketed cases qualify for FTM.

  3. Announcement 2008-105 provides an opportunity for entities with issues under examination by the Tax Exempt and Governmental Entities Division (TE/GE) to use Fast Track Settlement (FTS) to expedite case resolution.

  4. Fast Track Settlement (FTS), described in Rev. Proc. 2003-40, LMSB/Appeals Fast Track Settlement Procedure, is a broader process that can be elected by taxpayers. FTS is a collaborative alternative dispute resolution process that uses mediation techniques to focus on issues and lead the parties to earlier resolution of the dispute. FTS takes place while the case is in Compliance jurisdiction and is designed to be completed in approximately 120 calendar days. Refer to IRM 4.51.4, LMSB/Appeals Fast Track Settlement Program (FTS), for further information on the FTS process.

    Note:

    While the title of the division has changed from Large and Mid Size Business Division (LMSB) to Large Business and International (LB&I), as of the date of publication the title of IRM 4.51.4 remains as shown.

  5. Under Servicewide Delegation Order 4-25 Rev. 2, Settlement Offers, Closing Agreements, and Settlement Agreements under Section 6224(c) in Cases with Technical Advisor (TA) Program Issues and Appeals Technical Guidance Program (Compliance Coordinated and Appeals Coordinated) Issues, LB&I team managers and SB/SE territory managers offer a settlement using an approved Appeals Settlement Guideline (ASG). The manager must get the review and concurrence of both the Technical Services Coordinator and the SB/SE program analyst or LB&I technical advisor for the specified industry or issue before finalizing a settlement with a taxpayer.

  6. Under Servicewide Delegation Order 4-25, IRM 1.2.43.26 (14)Settlement Offers, Closing Agreements, and Settlement Agreements under Section 6224(c) in Cases with Technical Advisor (TA) Program Issues and Appeals Technical Guidance Program (Compliance Coordinated and Appeals Coordinated) Issues, technical advisors and managers may offer a settlement using an approved ASG, without need for concurrence of the Technical Services Coordinator, for specific coordinated issues designated by the Chief Appeals.

Appeals Interaction with Abusive Transaction Issues
  1. Appeals no longer participates on Issue Management Teams.

  2. Appeals interaction includes:

    • Tax administration within Appeals;

    • Providing direction to appeals officers as quickly as possible about potentially significant or strategically important issues;

    • Identifying inventory that may be forthcoming in Appeals;

    • Listening to factual and legal presentations, making inquiries to facilitate understanding or clarification of facts surrounding a particular issue, and reviewing redacted or non-case specific forms, pro-forma revenue agent reports, and coordinated issue papers;

    • Issuing an Appeals Settlement Guideline (ASG) or determining an Appeals Settlement Position (ASP) where the issue is not well -defined by Compliance and Counsel has not addressed the legal aspects of the issue(s) raised by Compliance;

    • Evaluating and resolving issues on a case-by-case basis where no uniform settlement position has been identified and approved;

    • Obtaining information from outside stakeholders via taxpayer protests, alternative dispute resolution programs (see IRM 4.32.3.2.3, Alternative Dispute Resolution Tools), hosting external stakeholder meetings, soliciting information directly from external stakeholders, and adopting other approaches as deemed necessary.

    • Providing information about Appeals, alternative dispute resolutions, Delegation Order 4-25 and taxpayers' appeal rights, as explained in Pub 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree, and Pub 4227, Overview of the Appeals Process Brochure; and

    • Assisting in writing settlements and/or resolutions that are simple to administrate, as well as easily understood by Compliance, Appeals and taxpayers.

Campus

  1. Participant/investor case building is centralized to better facilitate the initiatives for abusive tax avoidance transactions. The Ogden Campus builds participant/investor cases from lists secured from promoter investigations. The ATTI Senior Program Analyst assigned to perform listkeeper functions works closely in conjunction with Campus and PSP operations to facilitate case selection and classification. For additional information regarding case building and participant lists, see IRM 4.32.2.13, Participant/Investor/Advisee Lists.

  2. The Campus Frivolous Return Program (FRP) also coordinates with AT investigations. The FRP identifies individuals or promoters preparing or promoting frivolous returns, claims or documents and educates them on their tax responsibilities.

  3. All frivolous documents received in the Campuses are processed at the Ogden Compliance Services Campus.

  4. The program participates in coordinating new system identification of frivolous filings whenever possible and makes referrals to affected stakeholders such as OPR, CI, SB/SE LDC, OTSA and Communications and Government Liaison.

  5. For additional information regarding the FRP, see IRM 4.32.2.4, Frivolous Return Program (FRP).

Collection

  1. Collection’s early involvement is an important and necessary step in working ATAT cases to ensure all issues are addressed.

  2. SB/SE should coordinate with the Area ATAT Collection Coordinator at the start of a promoter investigation. A list of Collection ATAT Coordinators can be found on the IRWeb at MySB/SE, Abusive Transactions and Technical Issues, Collection AT Contacts.

  3. Area Collection Coordinators will in turn determine if an ATAT revenue officer should be assigned to assist in the investigation. If deemed beneficial to the investigation, the ATAT Collection Coordinator will assign the case to a revenue officer.

  4. LB&I Team Managers assigned to promoter investigations also should coordinate with the Area ATAT Collection Coordinator whenever the collectibility of a potential penalty is in question or assistance from Collection would be beneficial.

  5. SB/SE and LB&I should contact the ATAT Collection Coordinator and request that a revenue officer be assigned to assist in the investigation when the following circumstances are present:

    • The promoter has existing balance due liabilities.

    • The examiner is having difficulty locating the promoter and requests assistance.

    • The examiner has knowledge the promoter is liquidating assets or otherwise attempting to place them beyond the reach of the government.

  6. If a revenue officer is assigned to assist in the investigation, the SB/SE or LB&I examiner is responsible for arranging a meeting with Collection to be held within two weeks of case assignment. The purpose of these meetings is to exchange information between Examination or LB&I and Collection and to formulate a promoter investigation strategy. The attendees generally include the examiner, the revenue officer, their respective managers, Counsel and, if possible, the Area ATAT Collection Coordinator. The revenue officer should be prepared to identify any outstanding assessments against the promoter, and the examiner should be prepared to provide information available in the investigation case file.

  7. If it is determined the Service’s ability to collect is jeopardized by the promoter moving assets outside the reach of the Service, the examiner is responsible for any jeopardy assessment actions. The revenue officer is responsible for any required jeopardy levy actions. The examiner and revenue officer should coordinate their respective actions.

  8. When the examiner has completed the promoter investigation and is considering asserting penalties under IRC 6700 or IRC 6701, the examiner should notify the local Collection ATAT Coordinator, who, in most cases, will assign a revenue officer if one has not already been assigned.

  9. Current collectibility should not be a consideration when determining whether to assert a penalty under IRC 6700 or IRC 6701. There may be rare situations when it is appropriate to consider collectibility, such as when the promoter is deceased and there are no assets in the promoter's estate. Unless such a rare situation exists, the penalty should be assessed regardless of current collectibility.

  10. Refer to IRM 5.20.8, Promoter/Preparer Investigations, for more information on Collection ATAT casework.

Counsel

  1. This section provides information on Counsel's role in the ATAT process.

SB/SE Division Counsel

  1. SB/SE Division Counsel provides legal support and guidance during each step of a promoter investigation and/or a participant examination case.

Servicewide Support
  1. SB/SE Area and Division Counsel are integral partners in the Service’s efforts to combat abusive tax avoidance transactions. SB/SE Counsel coordinates with the Department of Justice (DOJ) and all operating divisions, counsel divisions and Associate Chief Counsel offices. SB/SE Counsel provides coordination and guidance on the early identification of abusive tax avoidance transactions, including formulation of policy and legal positions and continues its support throughout the ATAT process.

Servicewide Compliance Strategy Executive Steering Committee (SCS ESC)
  1. SB/SE Division Counsel serves as a member of the SCS ESC, which provides leadership, Servicewide coordination, and policy regarding the Service’s methods of addressing abusive tax avoidance transactions.

Emerging Issues Group
  1. SB/SE Division Counsel receives information on emerging abusive tax avoidance transactions, refers that information to the Senior Counsel to the Chief Counsel, and provides early leadership and guidance regarding appropriate methods to address ATAT issues.

Issue Management Teams (IMT)
  1. SB/SE Counsel attorneys serve as supporting members and legal advisors on all IMTs.

SB/SE Lead Development Center (LDC)
  1. SB/SE Counsel provides program advice to the SB/SE LDC on promoter investigations (authorizations, processing and closing). SB/SE Counsel also assists in SB/SE training programs and interactive video teletrainings (IVTs).

Promoter/Preparer Investigations
  1. SB/SE Counsel attorneys provide legal support and guidance to the Service’s promoter investigations, including first amendment issues. Counsel assists the Service as necessary in every aspect of its ATAT investigations. Examiners, revenue officers, and other support functions should not hesitate to call on SB/SE Counsel for advice.

Initiation of Investigation
  1. SB/SE Area Counsel attorneys and managers provide input and guidance during six-way conferences and examination/collection meetings.

Promoter Meetings
  1. SB/SE Area Counsel attorneys generally review and provide assistance in preparing information document requests (IDRs), summonses, and interview questions.

  2. SB/SE Area Counsel attorneys are available to attend initial meetings with promoters or preparers, to answer questions, and to assist examiners in interviewing promoters or preparers.

Summonses
  1. SB/SE Area Counsel attorneys review and refer all summonses related to promoter investigations directly to Department of Justice (DOJ) Civil Trial Section, Central Region for summons enforcement. This directive does not change any of the general rules regarding level of review or required coordination within Chief Counsel, e.g., John Doe summonses or cases involving first amendment issues.

Ongoing Investigation
  1. SB/SE Area Counsel attorneys are an integral part of the Service’s team and are available to provide assistance during each ATAT investigation.

Injunction Referral to Counsel
  1. SB/SE Area Counsel attorneys assist examiners in determining whether there is sufficient evidence to refer a case to Area Counsel to prepare an injunction suit letter to DOJ.

Injunction Referrals to DOJ
  1. Once a promoter case is referred to SB/SE Area Counsel, the assigned attorney analyzes the evidence to determine if is sufficient to warrant an injunction. If the evidence is deemed sufficient, the Area Counsel attorney prepares an injunction suit letter and refers the case directly to DOJ, Civil Trial Section, Central Region.

  2. Counsel, designated as the referral authority pursuant to IRC 7401, authorizes DOJ through the injunction suit letter to file a complaint for injunctive relief against the promoter under one or more of the following code sections:

    • IRC 7402

    • IRC 7407

    • IRC 7408

  3. SB/SE Area Counsel provides a copy of all injunction suit letters to the SB/SE LDC Senior Program Analyst. The attorney assigned should coordinate with the Issue Management Team (IMT), if one has been established, and also should provide a copy of the injunction suit letter to the IMT Lead Counsel. If no significant issue requiring Associate Chief Counsel office review is involved, SB/SE Area Counsel may send a shorter, less detailed injunction suit letter to DOJ. These referrals are sometimes called expedited referrals.

  4. If a promotion involves a significant issue requiring Associate Chief Counsel office review, it is deemed a coordinated referral case. SB/SE Area Counsel attorneys must coordinate technical legal positions in these cases with the IMT Lead Counsel, or, if none, with the SB/SE Assistant Division Counsel, ATAT, and the appropriate Associate Chief Counsel Office as early as possible. Counsel prepares a more detailed injunction suit letter in these cases and follows existing Chief Counsel coordination procedures before referring these cases to DOJ.

Post Referral
  1. SB/SE Area Counsel continues to assist examiners and DOJ throughout the litigation process.

Penalties
  1. SB/SE Area Counsel provides advice regarding promoter and participant penalty assessments.

Examination of ATTI Participants
  1. SB/SE Counsel is available to provide support for ATTI participant examinations, such as:

    • Summons language and enforcement

    • Taxpayer meetings

    • Statutory Notice of Deficiency language

    • Designating cases for litigation

Litigation
  1. SB/SE Area Counsel defends the Service’s positions and facilitates its goals through litigation and other alternatives.

Collection of Assessments
  1. SB/SE Division and Area Counsel provide guidance on the collection of assessments, liens, levies, other collection avenues, and program management.

  2. See IRM 4.32.3.4, Collection, and IRM 5.20, Abusive Tax Avoidance Transactions (ATAT), for further information on the role of Collection in the ATAT process.

Bankruptcy
  1. The United States Attorney's Office, including certain SB/SE Counsel attorneys designated as Special Assistant United States Attorneys (SAUSAs), represent the United States in Bankruptcy Court to protect the Service’s claims and interests regarding AT penalties and unpaid taxes arising from participation in abusive tax avoidance transactions.

LB&I Division Counsel

  1. LB&I Division Counsel advises the LB&I member of the Servicewide Compliance Strategy Executive Steering Committee (SCS ESC) and helps to coordinate a Servicewide response to abusive tax avoidance transactions and promotions.

LB&I Oversight
  1. LB&I Division Counsel has involvement in the following LB&I functions.

LB&I Tax Shelter Steering Committee
  1. LB&I Division Counsel serves as a member of the LB&I Tax Shelter Steering Committee, which provides leadership and executive oversight in implementing LB&I’s tax shelter program. For more information on the LB&I Tax Shelter Steering Committee, see IRM 4.32.2.3.3.2, LB&I Tax Shelter Committee.

Office of Tax Shelter Analysis (OTSA)
  1. A Special Counsel designated by the LB&I Division Counsel serves as counsel to OTSA, which plans and coordinates LB&I’s tax shelter operations. For more information on OTSA, see IRM 4.32.2.3.3, Office of Tax Shelter Analysis (OTSA), LB&I Tax Shelter Committee and LB&I Technical Tax Shelter Promoter Committee (TTSPC).

  2. The designated LB&I Special Counsel works with OTSA and the LB&I Emerging Issue Process Group to identify, coordinate, and gather information on emerging tax shelter issues. The issues are referred to the Chief of Branch 3 in the Office of Associate Chief Counsel (Passthroughs and Special Industries), who forms task forces including LB&I and LB&I Division Counsel personnel to determine the Service’s response to the issues.

Executive Issue Owners
  1. Within LB&I Division Counsel, attorneys are assigned to serve as counsel to the Executive Issue Owners by the LB&I Tax Shelter Steering Committee when a particular issue becomes significant enough to warrant executive oversight and direction. See IRM 4.32.1.4, Issue Management Team, for more information on IMTs. Contact OTSA for more information on Executive Issue Owners.

Assistance to Audit Teams and Coordination
  1. LB&I Counsel attorneys are available to provide legal support and guidance to audit teams during each step of a promoter investigation and/or a participant examination. They may also coordinate with LB&I technical advisors, Executive Issue Owners, OTSA, and other Counsel divisions and Associate offices, as appropriate.

Coordination with the Department of Justice (DOJ)
  1. LB&I Division Counsel confers with the DOJ on a regular basis to coordinate the litigation of ATAT cases and provides cohesive processes in promoter cases.

  2. LB&I Division Counsel attorneys serve on DOJ trial teams for selected ATAT cases.

  3. LB&I Division Counsel coordinates with DOJ on a continuing basis regarding the issuance and enforcement of promoter summonses.

Promoter Investigations
  1. This section provides information on LB&I Counsel's role in LB&I promoter investigations.

LB&I Technical Tax Shelter Promoter Committee (TTSPC)
  1. Area Counsel for Financial Services and the Special Counsel designated by LB&I Division Counsel are members of the LB&I TTSPC, which serves under the LB&I Tax Shelter Steering Committee and is authorized to approve all LB&I tax shelter promoter contacts and investigations. The Financial Services Industry Director is the chairperson of the LB&I TTSPC.

Initiation of Approved Promoter Investigations
  1. Once the LB&I TTSPC has approved a promoter investigation, LB&I Area Counsel assigns an attorney to provide legal assistance to the examiner conducting the investigation.

Promoter Meeting
  1. Information Document Request (IDR) Assistance - Area Counsel attorneys work with examiners to obtain any necessary documentation from promoters, including assisting in the drafting of language for IDRs.

  2. Assigned attorneys assist examiners in conducting interviews of promoters, investors and third parties. Interviews may or may not be conducted pursuant to summons. Servicewide Delegation Order 25-1, Summons, Oaths, Certifications and Related Functions, authorizes LB&I Counsel attorneys to take testimony from a summoned witness.

  3. During promoter investigations, the assigned attorney, team manager, and examiner may meet with the promoter to discuss the status of the investigation and give the promoter an opportunity to provide documents requested or to present arguments about why a penalty or other actions should not be imposed.

Summonses
  1. Area Counsel attorneys assist examiners in preparing and issuing administrative summonses, including dual purpose, third-party, and "John Doe" summonses to promoters.

  2. All summonses in promoter cases must be pre-reviewed by LB&I Area Counsel, the LB&I Area Counsel for Financial Services, LB&I Division Counsel and then sent to DOJ for pre-issuance review.

  3. To ensure prompt enforcement of any summonses, promoter teams should follow the best practice of also obtaining pre-service review of summonses by the Office of Associate Chief Counsel (Procedure and Administration) of the Chief Counsel’s Office.

  4. See IRM 25.5, Summons, for additional information on summonses.

Penalty/Injunction Determination
  1. Area Counsel attorneys assist examiners in determining if penalties or injunctive relief are applicable to a promoter. If the evidence is deemed sufficient, the attorney prepares an injunction suit letter for referral of the case to DOJ, Civil Trial Section, Central Region.

  2. Counsel, designated as the referral authority pursuant to IRC 7401, authorizes DOJ through the injunction suit letter to file a complaint for injunctive relief against the promoter under one or more of the following code sections:

    • IRC 7402

    • IRC 7407

    • IRC 7408

  3. Area Counsel attorneys must coordinate technical legal positions in these cases with the IMT Counsel, or, if none, with the LB&I Division Counsel and the appropriate Associate Chief Counsel Office as early as possible. All existing Chief Counsel coordination procedures must be followed before referring the case to DOJ, and a copy of the injunction suit letter should be sent to the TTSPC.

Referral to Criminal Investigation (CI) / Office of Professional Responsibility (OPR)
  1. Area Counsel attorneys assist examiners in determining whether a referral to CI and/or the OPR is warranted.

Final Memorandum
  1. Area Counsel attorneys assist examiners in preparing a final memorandum to the LB&I Director of Field Operations recommending action to be taken against the promoter.

TE/GE Division Counsel/Associate Chief Counsel

  1. TE/GE Division Counsel/Associate Chief Counsel (TE/GE Counsel) provides legal support and guidance throughout each step of promoter investigations and participant examination cases that involve either TE/GE Operating Division taxpayers or issues within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel. See IRM 4.70, TE/GE Examinations, for additional TE/GE procedures.

Servicewide Support
  1. TE/GE Counsel is an integral partner in the Service's effort to combat ATATs. TE/GE Counsel coordinates with the Department of Justice (DOJ) and all operating divisions, counsel divisions and Associate Counsel offices. TE/GE Counsel provides coordination and guidance on the early identification of technical shelters, including formulation of policy and legal positions, and continues its support throughout the ATAT process.

TE/GE Compliance Issues Council
  1. TE/GE Counsel serves as a member of the TE/GE Compliance Issues Council (CIC), which provides leadership and executive oversight in implementing TE/GE's ATAT program.

Servicewide Compliance Strategy Executive Steering Committee (SCS ESC)
  1. TE/GE Counsel serves as a member of the SCS ESC, which provides leadership, Servicewide coordination and policy regarding the Service's methods of addressing abusive tax avoidance transactions.

Emerging Issues Group
  1. TE/GE Counsel receives information on emerging abusive tax avoidance transactions and refers that information to the Senior Counsel to the Chief Counsel and provides early leadership and guidance regarding appropriate methods to address ATAT issues.

Issue Management Teams (IMT)
  1. TE/GE Counsel attorneys serve as supporting members and legal advisors on all IMTs that involve either TE/GE Operating Division taxpayers or issues within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel.

Promoter/Preparer Investigations
  1. TE/GE Counsel attorneys provide legal support and guidance to the Service's promoter investigations, regardless of which Operating Division is conducting the investigation, whenever the investigation involves either a TE/GE Operating Division taxpayer or an issue within the topical jurisdiction of TE/GE Counsel as an Associate Chief Counsel. TE/GE Counsel assists the Service as necessary in every aspect of its ATAT investigations. Examiners, revenue officers, and other support functions should not hesitate to call TE/GE Counsel for advice.

Penalties
  1. TE/GE Counsel provides advice regarding promoter and participant penalty assessments.

Examination of ATAT Participants
  1. TE/GE Counsel is available to provide support with ATAT participant examinations, such as:

    • Summons language and enforcement

    • Taxpayer meetings

    • Statutory Notice of Deficiency language

    • Designating cases for litigation

Litigation
  1. TE/GE Counsel defends the Service's positions and facilitates its goals through litigation and alternatives to litigation.

Criminal Investigations (CI)

  1. This section describes roles that the CI Operating Division plays in the ATTI process.

Notification to CI by the Civil Operating Divisions

  1. The SB/SE LDC and OTSA forward a recommendation memorandum summarizing their findings to the CI LDC and stating their desire to open an investigation under IRC 6700, IRC 6701, IRC 6707, and/or IRC 6708.

  2. See IRM 4.32.2.3, Lead Identification and Investigation Authorization, for further information.

Role of the Designated CI LDC

  1. The CI LDC is responsible for coordination with SB/SE and LB&I.

  2. When the CI LDC receives a memorandum from the SB/SE LDC or OTSA, Criminal Investigation Management Information System (CIMIS) research is conducted. The preliminary deconfliction process simply involves a search by name and taxpayer identification number, associate identity or DBA for any numbered CI investigation. If the CIMIS check fails to disclose any open investigations or associate identities, the CI LDC sends a memorandum to SB/SE LDC/OTSA advising that there is no conflict in proceeding with a civil promoter investigation under IRC 6700, IRC 6701, IRC 6707, or IRC 6708.

  3. If the CI LDC CIMIS check discloses an open investigation or associate identity, a memorandum is forwarded to the Special Agent in Charge (SAC) of the respective Field Office requesting a determination whether there is a "conflict" or "no conflict" between the proposed civil action and the criminal investigation. A "conflict" determination means that a civil investigation would greatly harm the ongoing criminal investigation. A "no conflict" determination means that pursuing a civil investigation (parallel investigation) would not harm the criminal investigation.

  4. See the following IRM sections for further information on CI’s involvement in the ATTI process:

    1. IRM 4.32.2.3.5, Coordination with Criminal Investigation (CI)

    2. IRM 4.32.2.6.3, Six-Way Conference

    3. IRM 4.32.2.6, Parallel Investigations

CI Field Office Actions

  1. The SAC makes a conflict/no conflict determination within 10 days of receiving the CI LDC memorandum and faxes the determination to the SB/SE LDC or OTSA. See IRM 4.32.2.3.5, Coordination with Criminal Investigation (CI), for further information on CI's involvement in determining if a parallel investigation should be initiated.

  2. If the Field Office opens a Primary Investigation (PI) after the IRC 6700, IRC 6701, IRC 6707, and IRC 6708 investigation has started, the Special Agent and immediate supervisor are responsible for scheduling and conducting a six-way conference. This conference assists CI in evaluating criminal potential and provides an opportunity to discuss conducting parallel civil and criminal investigations.

  3. If a fraud referral has been developed with the assistance of a Fraud Technical Advisor (FTA) or by the referring Division, CI handles it as a regular fraud referral. See IRM 25.1.3, Criminal Referrals, for additional information.

  4. See IRM 4.32.2.6.3, Six-Way Conference.

Referrals to the Department of Justice (DOJ)

  1. IRC 7401 authorizes the Secretary to make referrals to the Attorney General to bring civil suit.

  2. All promoter and preparer injunction cases are referred to the DOJ Civil Trial Section, Central Region.

  3. Attorneys in DOJ Tax Division bring injunctive actions in federal district court under one or more of the following code sections:

    • IRC 7402, Jurisdiction of District Courts

    • IRC 7407, Action to Enjoin Tax Return Preparers

    • IRC 7408, Actions to Enjoin Specified Conduct Related to Tax Shelters and Reportable Transactions

  4. A DOJ trial attorney from the Civil Trial Section generally makes all the court appearances and prepares the pleadings, motions, etc. In some cases the local US Attorney's Office, a branch of DOJ, makes court appearances on behalf of DOJ.

Steps in an Injunction Case

  1. The steps in an injunction case involve several actions that the DOJ trial attorney deems appropriate and necessary. These actions are determined by the DOJ trial attorney based on evidence that examiners have accumulated.

    1. The DOJ trial attorney may request that the examiner perform additional case development.

    2. The initial action taken by DOJ is the filing of a complaint in the appropriate federal district court. The complaint contains a written narrative describing the conduct of the promoter and the attributes of the promotion or transaction being promoted.

    3. If the conduct of the promoter is so egregious and the harm to the government is significant, damaging, and ongoing, DOJ may ask for an immediate halt to the promoter's activities through a request for a temporary restraining order (TRO). TROs are only in effect for a short time, usually no more than 30 days.

    4. If DOJ does not believe a TRO is warranted or it is not granted by the court, a motion for a preliminary injunction is usually filed with the court. DOJ will determine the best time to file this motion, either simultaneously with the complaint or at a later date. The filing of a motion for a preliminary injunction begins a series of events that could culminate in terminating the actions of the promoter.

    5. The court order for a preliminary injunction, orders the promoter to immediately terminate the promotion activities in order to prevent continuing harm to the government. However, as the name implies, it is only preliminary. DOJ generally files a motion for summary judgment, asking the court for a permanent injunction without a trial.

  2. If, after the promoter has been enjoined by the court, the IRS learns that a promoter has violated the terms of the injunction order, contempt proceedings may be instituted. Promoters are subject to either civil or criminal contempt charges based on the judgment of the DOJ attorney. Penalties for violating court orders include fines, imprisonment, or both.

Requests by DOJ Trial Attorneys

  1. The DOJ trial attorney assigned to the injunction case may continue to request other evidence, documents, testimony, and requests for other assistance from the IRS throughout the litigation process. These requests may include:

    1. Requests for IRS assistance in preparing declarations to be filed with the court. A declaration is a summary of the examiner’s portion of the case and contains relevant information vital to obtaining an injunction against the promoter. The declaration generally is drafted by the DOJ attorney assigned to the case.

    2. Requests related to depositions. Examiners may be deposed under oath by promoters or their representatives once DOJ has filed the complaint. This happens in the discovery phase of the injunction process and may occur on more than one occasion. Examiners should never appear at a deposition without the presence and counsel of a DOJ trial attorney.

    3. Requests related to hearings. DOJ attorneys may request that examiners testify in court during court hearings. Examiner testimony usually occurs at hearings for requests for preliminary injunctions. Examiners prepare to testify with the assistance of attorneys from DOJ and the Office of Chief Counsel.

Tax Exempt and Government Entities (TE/GE)

  1. The TE/GE Compliance Issues Counsel (CIC) is responsible for formulating a uniform and consistent approach to ATATs involving TE/GE entities and TE/GE issues. It is a resource for, and coordinates among, the various TE/GE functions: Government Entities, Employee Plans and Exempt Organizations. The following are members of the TE/GE CIC:

    • Division Commissioner

    • Deputy Division Commissioner

    • Senior Technical Advisor to the Division Commissioner

    • TE/GE Division Counsel/ Associate Chief Counsel

    • Director – Exempt Organizations (EO)

    • Director – of EO Exam

    • Director – of EO Rulings and Agreements (R&A)

    • Director – Employee Plans (EP)

    • Director – Government Entities (GE)

    • Director – Indian Tribal Governments (ITG)

    • Director – Tax Exempt Bonds (TEB)

    • Director – Federal, State & Local Governments (FSLG)

    • Representatives from the various abusive transaction and emerging issue committees

  2. The TE/GE CIC also addresses issues raised by the Servicewide Compliance Strategy Executive Steering Committee.

  3. The TE/GE Senior Technical Advisors' Office to the Division Commissioner or delegate coordinates the dissemination of reports and other activities between the TE/GE functions and the SB/SE LDC and OTSA.

  4. For additional information and points of contact related to abusive transactions and emerging issues contact the appropriate function through the links on TE/GE Emerging Issues Intranet page.

Coordination of Procedures between TE/GE and SB/SE

  1. The purpose of this section is to outline the procedures for TE/GE and SB/SE regarding promoter investigations involving TE/GE taxpayers or issues. This section is intended to effectively provide support and efficiently allocate resources to ensure proper consideration, development and exchange of information on TE/GE-related promotions and promoters.

Identification of Promoters and Participants
  1. As TE/GE identifies potential promoter leads, it will submit referrals to the SB/SE LDC.

    Note:

    The referral form is located on the LDC webpage of MySB/SE.

Receipt of Referrals and Development of Leads
  1. The SB/SE LDC will coordinate with the appropriate TE/GE point of contact when developing any lead or referral that involves a TE/GE-related promotion or taxpayer.

  2. TE/GE has prepared a criteria matrix to assist TE/GE and the SB/SE LDC in determining which division will take the lead on a promoter investigation. The criteria matrix may be accessed via the TE/GE ATAT Portal webpage.

  3. De-confliction—TE/GE contacts and TE/GE Counsel will assist with the de-confliction process. De-confliction is a cross-functional process designed to ensure that the beginning of an investigation will not interfere with another operating division’s investigation or examination.

Organizational Points of Contact
  1. TE/GE will annually provide the names and contact information for the following personnel:

    • Executive Issue Owner

    • TE/GE Promoter Investigation Coordinator

    • Assistant TE/GE Promoter Investigation Coordinator

    • TE/GE Counsel

    • TE/GE Functional Promoter Coordinators for EO, EP and GE (ITG, TEB and FSLG)

  2. SB/SE will annually provide the names and contact information for the following personnel:

    • SB/SE Abusive Transactions and Technical Issues Director

    • SB/SE LDC

    • SB/SE Counsel

    • SB/SE AT Senior Program Analysts

    • SB/SE AT Listkeeper

Assignment of Authorized Investigations
  1. The SB/SE LDC will contact the appropriate TE/GE point of contact once an investigation has been authorized and provide a copy of the authorization memo and attachments to the TE/GE Promoter Investigation Coordinator. For additional information, please see IRM 4.70.

  2. If it is determined that TE/GE will be the lead operating division, the TE/GE Promoter Investigation Coordinator or the functional point of contact will provide the SB/SE LDC with contact information for the TE/GE revenue agent and the TE/GE Counsel attorney assigned within 30 days of receipt of the case file. If TE/GE determines SB/SE assistance is necessary, TE/GE will contact the SB/SE LDC. The SB/SE LDC will coordinate with the appropriate AT territory manager to provide such assistance within 30 days of notification.

  3. If it is determined that SB/SE will be the lead operating division, the SB/SE LDC will provide the TE/GE Promoter Investigation Coordinator with contact information for the SB/SE examiner and SB/SE Counsel attorney assigned within 30 days of case opening by SB/SE. The SB/SE LDC will track promoter investigations involving TE/GE taxpayers or issues and provide monthly reports to TE/GE. See IRM 4.32.3.8.1.8, Information Sharing. The TE/GE Promoter Investigation Coordinator or functional point of contact will provide SB/SE with the contact information of the TE/GE revenue agent and TE/GE Counsel attorney assigned to assist on the investigation within 30 days of case assignment.

  4. TE/GE – Tax Exempt Bonds will continue to use its existing TEB § 6700 Committee to receive, review, authorize, and assign ATAT promoter and penalty cases.

Cooperative Investigations and Case Coordination
  1. TE/GE led investigations:

    • TE/GE revenue agents will contact TE/GE Counsel within two weeks of receiving the investigation assignment.

    • The TE/GE revenue agent, TE/GE Counsel, and relevant SB/SE personnel (legal, technical, revenue agent, or other) and appropriate management will hold a planning conference within 60 days after the SB/SE LDC coordinates with the appropriate SB/SE AT territory manager to provide assistance to TE/GE.

    • An investigation action plan will be developed within 30 days of the planning conference and shared as appropriate to ensure proper coordination.

  2. SB/SE led investigations:

    • SB/SE examiners will contact SB/SE Counsel within two weeks of receiving the investigation assignment.

    • The SB/SE examiner, SB/SE Counsel, and relevant TE/GE personnel (legal, technical, revenue agent, or other), and appropriate management will hold a planning conference within 60 days after the TE/GE Promoter Investigation Coordinator and other appropriate TE/GE points of contact have been informed that TE/GE assistance with the investigation is needed.

    • An investigation action plan will be developed within 30 days of the planning conference and shared as appropriate to ensure proper coordination.

  3. Tax Exempt Bonds will coordinate as appropriate with the SB/SE LDC and SB/SE Counsel when taking the lead on a promoter investigation.

Client Lists and/or Participant Lists
  1. TE/GE will provide the SB/SE AT Listkeeper with client and participant lists within 30 days of receipt. See IRM 4.32.2.13, Participant/Investor Lists, for additional information.

Releasing Jurisdiction of Taxable Returns to TE/GE to Conduct Supporting Examinations
  1. Participant examinations may be necessary to support promoter investigations. If the promoter is a TE/GE taxpayer, and TE/GE takes the lead on the investigation, TE/GE may request SB/SE’s assistance in the examination of related returns under SB/SE jurisdiction. Examples include but are not limited to the result of a revocation or other findings giving rise to a potential tax liability.

  2. TE/GE will request SB/SE assistance with participant examinations by completing Form 6229, Collateral Examination. The Form 6229 should be sent to the SB/SE Planning and Special Programs (PSP) territory manager (TM) with jurisdiction for the geographic area of the taxpayer to be examined. See the PSP Staff page on MySB/SE to determine the appropriate office.

  3. If SB/SE is unable to initiate an examination within 30 days, TE/GE may request that SB/SE release its jurisdiction over the participant. TE/GE should direct the request to the appropriate PSP TM.

  4. TE/GE should obtain a release of jurisdiction in writing before opening up the return for examination.

  5. This process does not apply in the case of discrepancy adjustments for Form 1040, U.S. Individual Income Tax Return and Form 1120, U.S. Corporation Income Tax Return without flow-through issues, which are not deemed examinations, and which are already under TE/GE jurisdiction.

Information Sharing
  1. The SB/SE LDC will track promoter investigations involving TE/GE taxpayers or issues and provide reports to the TE/GE Promoter Investigation Coordinator on a monthly basis. These reports will mirror the monthly reports issued by the SB/SE LDC to SB/SE areas.

  2. The TE/GE points of contact and the SB/SE LDC will conduct quarterly conference calls to share best practices, discuss promoter investigations, and address case and issue coordination matters.

  3. The TE/GE Promoter Investigation Coordinator and/or appropriate TE/GE representatives will visit the SB/SE LDC periodically to review in-process leads that, if approved, may fall under the jurisdiction of TE/GE and provide requested TE/GE issue training to the SB/SE LDC.

Monitoring
  1. TE/GE currently receives monthly reports from the SB/SE LDC regarding promoter investigations with TE/GE issues or TE/GE taxpayers. TE/GE will validate this data and notify the SB/SE LDC of any changes or updates to the database.

Technical Services (TS)

  1. Technical Services (TS) supports the ATTI program by conducting in-process case reviews and examination end processes where the authority for such processes is delegated to TS managers and its employees. Alternative Resolution Implementation (ARI) Program represents Technical Services as a member of the ATTI Issue Management Teams or Programs. ARI assists in the implementation of approved settlement strategies such as Commissioner’s Initiatives, Global Settlement Initiative, Appeals Settlement Guidelines and other alternative resolutions. The role of ARI is to continually engage the Issue Management Teams (IMT) to provide technical and procedural guidance to assist with the development, coordination and implementation of alternative resolution strategies and procedures as it relates to abusive transactions. ARI ensures Technical Services groups are consistent in applying processes and procedures to specific abusive transactions. For example, Technical Services will:

    • Conduct in-process case reviews where agreed to by the TS Director and the Examination Area Director or upon a specific request and agreement by the Examination Area Director to the TS Territory Manager (TSTM). See IRM 4.8.7.2.4, In-Process Case Reviews, and IRM 4.8.2.2, Cases Requiring Action By Technical Services.

    • Perform Closed Case Reviews by coordinating with Issue Management Teams, Counsel and Appeals. See IRM 4.8.1.4.1, Case Reviews, IRM 4.8.2.7, General Case Review Procedures, and IRM 4.8.5, Post Examination Case Processing Requirements.

    • Prepare and issue Notices of Deficiency with ATTI approved language for various abusive transactions. See IRM 4.8.9, Statutory Notices of Deficiency.

    • Review and execute Closing Agreements using ATTI pre-approved language. See IRM 4.8.8.3, Closing Agreements, and IRM 8.13.1, Closing Agreements.

    • Suspense promoter or investor cases in bankruptcy, IRC 1254, fraud, or grand jury suspense statuses where agreement to place cases in suspense has been reached between the TSTM and the Area Territory Manager (TM) assigned ATTI program oversight. See IRM 4.8.2.10, Suspense Cases, and IRM 4.8.5, Post Examination Case Processing Requirements.

      Note:

      parallel investigation cases are suspended at the group level.

    • Coordinate technical assistance at a local level upon specific request where agreed to by the TSTM and the Area TM assigned ATTI program oversight. See IRM 4.8.7.2.3, Technical and Procedural Inquiries.