4.38.1 Organization and Responsibilities

Manual Transmittal

March 28, 2024

Purpose

(1) This transmits new IRM 4.38.1, Centralized Case Processing (CCP), Organization and Responsibilities

Material Changes

(1) New IRM for Small Business/Self-Employed (SB/SE) CCP.

Effect on Other Documents

This material incorporates Interim Guidance Memorandum SBSE-04-0922-0038, Interim Guidance on Centralized Case Processing (CCP) Electronic Case Files Initiative (ECFI) for Small Business/Self-Employed (SBSE) Field Examination Cases dated 09/19/2022.

Audience

SB/SE CCP operations

Effective Date

(03-28-2024)

Heather J. Yocum
Acting Director, Examination Field and Campus Policy
Small Business/Self-Employed Division

Program Scope and Objectives

  1. General Overview - This IRM section contains information for Centralized Case Processing (CCP) Examination about processes and procedures performed throughout various phases of an examination.

  2. Purpose - To provide guidance needed to properly code and close field examination cases.

  3. Audience - The primary audience for this IRM is the Cincinnati, Memphis, and Ogden employees assigned to Centralized Case Processing.

  4. Program Owner - Director, Small Business/Self-Employed (SB/SE), Headquarters, Examination - Field and Campus Policy.

  5. Policy Owner - Director, Small Business/ Self-Employed (SB/SE), Examination.

  6. Primary Stakeholders - Program Manager, Campus Examination and Field Support

  7. Program Goals - The program goals are consistent with the objectives or goals addressed in IRM 1.1.16, Organization and Staffing, Planning and Performance Analysis, Campus Reports and Plans.

  8. Contact Information - To recommend changes or make other suggestions to this IRM section, refer to IRM 1.11.6, Providing Feedback About an IRM Section - Outside of Clearance.

Background

  1. CCP is responsible for closing field examined and non-examined returns, and their corresponding penalty records, that are controlled on Examination Returns Control System (ERCS).

  2. This IRM provides an overview of the responsibilities that examiners should understand and apply in the performance of their duties.

Authority

  1. By law, the IRS has the authority to conduct examinations under Title 26, Internal Revenue Code, Subtitle F - Procedural and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Sub chapter A, Examination and Inspection.

  2. The Taxpayer Bill of Rights (TBOR) lists rights that already exist in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. Refer to IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights.

  3. IRM 1.11.2.2.1, Supplemental Sources of Guidance, provides that organizations may issue supplemental guidance and local procedures to employees when the primary guidance is in the IRM. Supplemental guidance contains information that details how to perform or review a task. Supplemental sources comply with published guidance and do not supersede the IRM.

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

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

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

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

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

Responsibilities

  1. The Director, Examination Headquarters, is the executive responsible for providing policy and guidance for CCP employees and ensuring consistent application of policy, procedures, and tax law to affect administration while protecting taxpayers’ rights. Refer to IRM 1.1.16.5.5, Examination Headquarters for additional information.

  2. The Director, Examination Field and Campus Policy, report to the Director, Examination Headquarters, and is responsible for the delivery of policy and guidance that impacts the CCP process. Refer to IRM 1.1.16.5.5.1, Examination Field and Campus Policy, for additional information.

  3. Campus Exam and Field Support, which is under the Director, Examination Field and Campus Policy, is the group responsible for providing policy and procedural guidance on standard examination processes to CCP employees.

Terms

  1. Imminent Statute - A statute which is due to expire within 60 days.

  2. Manual Assessment - The method used to assess tax, whether part or all of the tax is assessed.

    Note:

    The terms "prompt" assessment and "quick" assessment are used interchangeably with manual assessment throughout this IRM.

  3. Manual Refund - Method of issuing a refund to a taxpayer when a systemic refund cannot or should not be issued.

  4. Partial Assessment - An assessment where only part of the total potential tax is agreed and requires assessment.

  5. Survey - A non-examined closure where the field group determines no audit is warranted.

  6. Unpostable - A transaction which cannot be posted to the Master File.

Acronyms

  1. The table below lists acronyms used in this IRM and their definitions.

    List of Acronyms

    Acronym Definition
    AAC AIMS Assignee Code
    AC Action Code
    ACA Affordable Care Act
    ACT Automated Computational Tool
    AIMF Audit Information Management File
    AIMS Audit Information Management System
    AMS Account Management System
    ASED Assessment Statute Expiration Date
    AUR Automated Underreporter
    BBA Bipartisan Budget Act of 2015
    BFS Bureau of Fiscal Services
    BMF Business Master File
    BOD Business Operating Division
    CADE Customer Account Data Engine
    CB Carry Back
    CC Command Code
    CCA Case Control Activity System
    CCP Centralized Case Processing
    CEAS Correspondence Examination Automation Support
    CI Criminal Investigation
    CIO Centralized Insolvency Office
    CISO Centralized Innocent Spouse Operation
    CNC Currently Not Collectible
    COB Close of Business
    COBRA Consolidated Omnibus Budget Reconciliation Act
    CRN Credit Reference Numbers
    CSED Collection Statute Expiration Date
    CPF Campus Pass-through Function
    CVPN Civil Penalty Name Line
    DC Disposal Code
    DLN Document Locator Number
    DMI Decision Modeling Inc.
    DSUE Deceased Spouse Unused Exemption
    EFT Electronic Funds Transfer
    EGC Exam Group Code
    EIN Employer Identification Number
    EITC Earned Income Tax Credit
    EMRT Erroneous Manual Refund Tool
    ERCS Examination Returns Control System
    FFTF Fraudulent Failure to File
    FMS Financial Management Services
    FORT Field Office Resource Team
    FPP Foreign Payment Practice
    FTD Failure to Deposit
    FTF Failure to File
    FTHBC First-Time Home Buyer Credit
    FTP Failure to Pay
    FUTA Federal Unemployment Tax Act
    FY Fiscal Year
    GAO General Accounting Office
    GII Generalized IDRS Interface
    GUF Generalized Unpostable Framework
    HCO Human Capital Office
    HIRE Hiring Incentives to Restore Employment
    IA Installment Agreement
    IAT Integrated Automation Technologies
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IMS Issue Management System
    IRA Individual Retirement Account
    IRAF Individual Retirement Account File
    IRC Internal Revenue Code
    IREF Item Reference
    IRM Internal Revenue Manual
    IRN Item Reference Numbers
    IRSN Internal Revenue Service Number
    ISTS Innocent Spouse Tracking System
    ITIN Individual Taxpayer Identification Number
    ITM IAT Task Manager
    LB&I Large Business and International
    LCU Large Corporate Underpayment
    LIN LB&I Imaging Network
    LQMS LMSB Quality Management System
    LTA Local Taxpayer Advocate
    M/S Mail Stop
    MeF Modernized e-File
    MF Master File
    MFT Master File Tax
    NAICS North American Industry Classification System
    NCAL Non-Assessed Closure Listing
    NMF Non-Master File
    NMFT Non-Master File Tax
    NOL Net Operating Loss
    OIC Offer in Compromise
    OJI On-the-Job Instructor
    OVDI Offshore Voluntary Disclosure Initiative
    PBC Primary Business Code
    PC Priority Code
    PCC Processing Campus Code
    PCOR Patient-Centered Outcomes Research
    PCS Pass-through Control System
    PFY Prior Fiscal Year
    POA Power of Attorney
    PRN Penalty Reference Number
    PSP Planning and Special Programs
    RAR Revenue Agent Report
    RC Reason Code
    RDD Return Due Date
    RGS Report Generation Software
    RRA Restructuring and Reform Act of 1998
    RSED Refund Statute Expiration Date
    SBC Secondary Business Code
    SBSE Small Business / Self-Employed
    SC Source Code
    SFR Substitute For Return
    SRC Survey Reason Code
    SSA Social Security Administration
    SSN Social Security Number
    TBOR Taxpayer Bill of Rights
    TC Transaction Code
    TCO Tax Compliance Officer
    TE Tax Examiner
    TEFRA Tax Equity and Financial Responsibility Act of 1982
    TIN Taxpayer Identification Number
    TOP Treasury Offset Program
    TS Technical Services
    TSPC Technical Services Pass-through Coordinator
    ULC Universal Location Code
    UPC Unpostable Code
    USR Unit Security Representatives
    WEIIC Withholding Exchange and International Individual Compliance
    WH Withholding
    XSC Excess Collections
    XSF Excess Collections File
     

Related Resources

  1. Instructions for CCP users for navigating the ERCS programs can be found in the CCP Tax Examiner Training Guides found at each CCP Exam site.

  2. Helpful instructions may be found on websites, including, but not limited to the following:

    1. Audit Information Management System (AIMS)

    2. Centralized Case Processing Knowledge Management

    3. Examination Return Control System (ERCS)

    4. Forms, Publications, and Documents

    5. Internal Revenue Manual (IRM) Online

    6. irs.gov

    7. Report Generation Software (RGS) and Correspondence Examination Automation Support (CEAS)

    8. Virtual Library Homepage

Introduction to CCP

  1. This chapter contains information and procedures on SB/SE Exam Centralized Case Processing (CCP). The term “CCP” is used throughout the text, and it applies to all Campus sites (Cincinnati, Memphis, and Ogden) unless noted. Otherwise, the procedures are the same.

  2. CCP is the only source for closing field examination audits for Small Business/ Self-Employed (SB/SE), Large Business & International (LB&I) , Specialty Examination, and International Examination: Withholding Exchange & Individual International Compliance (WEIIC) and Foreign Payment Practice (FPP) and inputs them into Integrated Data Retrieval System (IDRS), Report Generation Software (RGS), and Examination Returns Control System (ERCS) for final case closure.

  3. The procedures in this chapter are primarily applicable to CCP employees.

  4. Generally, this information is forwarded to CCP utilizing the paperless / virtual processes. They are received in either a specialized mailbox or via fax transmission at the CCP locations. The status of the case is updated to Status 51 prior to sending.

The Role of Centralized Case Processing

  1. CCP Exam Operations are currently located at three sites:

    1. Cincinnati,

    2. Memphis, and

    3. Ogden

  2. After the examination is completed and the outcome of the examination (no-change, agreed, or unagreed) has been determined,

    1. The revenue agent will prepare the necessary forms and create the closing letters that will be mailed to the taxpayer. Form 3198 and Form 5344 are not sent to the taxpayer.

      Note:

      The most important of these forms are Form 3198, Special Handling Notice Examination Case Processing, which contains instructions from the field about how the case should be handled, and Form 5344, Examination Closing Record, which is the document from which CCP will input the information to close the examination.

      Note:

      The revenue agent is responsible for transmitting closing letters for electronic cases. For LB&I cases, the LB&I revenue agent will mail the closing letters when the case is closed to CCP by the exam team.

    2. The revenue agent will submit the completed case file to their group manager for approval, and the case will be logged and tracked in AIMS and ERCS as it is sent to Centralized Case Processing.

  3. Once the case arrives in CCP, all of the following actions must take place:

    1. The case file will be assigned to a tax examiner in ERCS,

    2. The case will be analyzed to verify that the penalties and adjustments requested by the revenue agent are compliant with current tax law, and the revenue agent’s figures will be verified for accuracy,

    3. The CCP Tax Examiner will research the case file to ensure that there are no conflicts with Statutes of Limitations that will prevent the assessment or abatement request(s) from being processed,

    4. The CCP Tax Examiner will finish completing Form 5344 , if applicable, and input all the tax, penalties, interest, and any other transactions so the taxpayer receives an accurate bill or refund, and

    5. The case file that was sent by the revenue agent will be organized, assembled, and prepared to be archived or forwarded to Files, as appropriate.

    6. The CCP Tax Examiner must return a revised Form 5344 to the LB&I examiner/manager for electronic cases maintained in IMS once a case is closed, if applicable.

  4. There are several other functions performed by CCP based on requests submitted by revenue agents for cases that are not ready for closure, such as:

    1. Master File transaction entries,

    2. Entity information changes,

    3. Credit transfers, and/ or

    4. Levy information entry

Systems

  1. CCP uses the following systems to monitor and process the work received by Field Examination:

    1. AIMS,

    2. ERCS,

    3. Tableau Production,

    4. IAT,

    5. IDRS, and

    6. RGS

Audit Inventory Management System (AIMS)

  1. AIMS contains all data elements from the Audit Information Management File (AIMF). These data elements are described separately in IRM 2.8, Audit Information Management Systems (AIMS).

Examination Returns Control System (ERCS)

  1. ERCS is an automated inventory management system used by field personnel in both the SB/SE and LB&I Operating Divisions. It is used for controlling tax returns and technical time charges from the time returns arrive until they are closed on the Audit Information Management System (AIMS).

  2. Refer to IRM 4.7.8, Examination Returns Control System (ERCS), Centralized Case Processing.

Tableau Production (Reports)

  1. Tableau Production is a server application used by the AIMS/ERCS analyst to create views, workbooks, and dashboards from information in the ERCS database.

  2. The CCP AIMS/ERCS analyst prepares and runs reports for CCP Exam’s inventory.

Integrated Automation Technologies (IAT)

  1. IAT is used by CCP to work their cases and assign work.

  2. IAT tools simplify processing by assisting clerks and tax examiners in CCP with Information Data Retrieval System (IDRS) research and input.

    1. The tools reduce the chance of errors and improve productivity.

  3. When an action must be taken and an IAT tool is available, CCP employees with access to IAT tools are required to complete the action using the IAT tool.

  4. If an IAT tool is not available, the case should be processed through IDRS following established guidelines.

    1. A notation should be made in the case file (on Form 9984), Examining Officer’s Activity Record, if an IAT tool is not used.

  5. Please refer to IRM 4.38.1.3.4.1 for Required IAT Tools, IRM 4.38.1.3.4.2 for Optional IAT Tools, and the IAT Website for more information and job aids for each tool.

Required IAT Tools
  1. The following table contains IAT tools that must be used when appropriate:

    Action IAT Tool
    Move one or more payments from one module to another Credit Transfer Tool
    Process various Exam letters, identify a Power of Attorney (POA) on file, or to send copies of the letters. This feature should only be required for letters prepared and issued by CCP (i.e., L-3535). CCPE Letters Tool
    To update an address or name information Address Tool
    Move credits to Excess Collections or return documents to Files (Form 9856), Attachment Alert Fill Forms Tool
    Input manual examined (AMCLS) or non-examined (AMSOC) case closures Closures Tool
    Resolve issues surrounding IDRS refunds. This tool should be accessed when it is necessary to stop a scheduled refund (CC NOREF), recover an erroneous refund, or to trace a missing refund. Refund Suite
    Assign work to an employee or update the status codes, program codes, etc. Examination Control Returns System (ERCS) Assign Tool
    Input credit/action trail codes to IDRS (i.e., Transaction Codes (TC’s) 560, 570, 971, 972, etc. REQ77 Tool
    Input TC 29X adjustments REQ54 Tool
    Open or close a control base and input histories on multiple accounts, MFREQ an account not on IDRS, or personalize and save features for future use ACT ON Tool
    Display the original tax, additional tax assessments and payments, net tax assessed on Automated Information Management Systems (AIMS), CFINK, ENMOD and posted return information all in one screen CCPE Research Tool
    Assist with the monitoring of manual refunds Erroneous Manual Refund Tool (EMRT)

Optional IAT Tools
  1. There are additional IAT tools that are available and, although not mandated for use in CCP, it is suggested they be used when applicable. They are as follows:

    Action IAT Tool
    Generate any IDRS output Quick CC Tool
    Determine what an IDRS indicator or transaction code means Search 6209
    Generate various IDRS prints Quick CC Tool
    Assist tax examiners in research, decisions and repetitive tasks related to unpostable cases Universal Unpostable Tool
    Secure a return from Files ESTAB Tool
    Complete all the routine IDRS security tasks required of managers and Unit Security Reps (USR) Managers Security Tool

Integrated Data Retrieval System (IDRS)

  1. IDRS is a system which enables employees in the Campuses and the Area Offices to have instantaneous visual access to certain taxpayer accounts.

  2. Some capabilities of the system include:

    1. Researching account information and requesting returns.

    2. Entering transactions such as adjustments, entity changes, etc.

    3. Entering collection for storage processing in the system.

    4. Automatically generating notices, collections documents and other outputs.

  3. AIMS is accessed through IDRS, which is a program designed to give the Examination Division information about the returns open to Examination.

  4. IDRS has multiple uses in CCP:

    1. Research of various command codes to ensure adjustments are correct.

    2. Input of closing command code.

    3. Update of AIMS database for final closure.

Report Generation Software (RGS)

  1. RGS is a comprehensive program used throughout the SB/SE and LB&I WEIIC examination process to perform a variety of audit and review tasks.

  2. RGS is utilized in the examination process to compute proposed tax adjustments, interest, and penalties.

Issue Management System (IMS)

  1. IMS is a computer application for revenue agents, specialists, managers and others. IMS consists of a laptop application and a centralized data repository. The laptop application provides the tools to support planning, selection and examination. The centralized data repository feature allows LB&I to better capture issue information. IMS is an official electronic record-keeping system used to store federal electronic records.

Managing Examination Inventory

  1. There are two systems used to manage examination inventory: Audit Inventory Management System (AIMS) and Examination Returns Control System (ERCS).

    1. AIMS is the system used to control the inventory of cases while under Examination. AIMS is a database through IDRS but is a separate system.

    2. ERCS is examination’s control system and controls all of examination’s inventory. It is also the primary system used to control CCP inventory. It enables management, clerks, and tax examiners to identify inventory assigned at the employee level and generates detailed inventory reports. ERCS and AIMS update to each other, but unlike AIMS, ERCS is accessed separately from IDRS.

Source Codes

  1. Source Codes are used to identify why examinations are being conducted.

  2. This information can be found on IDRS using Command Code (CC) AMDIS as well as ERCS.

  3. For additional assistance in determining the appropriate source code, refer to the Source Code job aid at: Source Code Job Aid in the AIMS/ERCS book of the Exam Procedures Knowledge Management Base.

Status Codes

  1. Status Codes are used to identify the progress of the examination process.

  2. This information can be found on IDRS using Command Code (CC) AMDIS as well as ERCS.

  3. For a list of disposal codes used in Centralized Case Processing, refer to IRM 4.7.8, Exhibit 1, CCP Program Numbers and Suspense Types.

Disposal Codes

  1. Disposal Codes are used to identify how cases are being closed from the AIMS system.

  2. This information can be found on IDRS using Command Code (CC) AMDIS and TXMOD as well as ERCS.

  3. For additional assistance in determining the appropriate disposal code, refer to the Document 6209, Section 12, Examination, Examined/Non-Examined Disposal Codes.

Hold Codes

  1. Hold Codes are used to prevent or delay the issuance of a refund and/or notice.

  2. This information is found on IDRS using Command Codes (CC) TXMOD.

  3. Refer to IRM 4.38.1.7.3.1.17 for a description of hold codes.

Priority Codes

  1. Priority Codes are used to post adjustments to the Master File (MF) when certain module conditions exist.

  2. Failure to use a priority code will cause transactions to unpost, create erroneous notices, and cause issues with refunding or billing where multiple adjustments and/or credit transfers are being processed.

  3. This information is found on IDRS using Command Code (CC) TXMOD.

  4. Refer to IRM 4.38.1.7.3.1.19 for a description of priority codes.

Clerical Responsibility and Procedures

  1. Clerical staff is responsible for the following tasks:

    1. Assigning cases to tax examiners,

    2. Acknowledging Form 3210, Document Transmittal, via ERCS, received that day,

    3. Picking up any incoming mail from the mail room.

    4. Preparing carts to be transferred to Files for the mail run.

      Note:

      Cases received by CCP can be either paper or electronic. This IRM subsection will provide procedures for both.

Assigning Cases

  1. Field Exam updates ERCS records to Status 51 and sends closing documents to CCP via paper or electronic means depending on the CCP site. For those cases sent to CCP electronically, the case file is maintained electronically in IMS or RGS.

    Reminder:

    The paper case file is NOT shipped to the CCP site at all.

  2. All non-examined Field Exam cases must be updated out of Status 51 within 3 days of receipt (stamp date) in CCP.

  3. All mail receipts will be handled by the Clerical function. Each case will be listed on Form 3210 and will be verified, checked off as received and initialed.

  4. All Acknowledgement copies will be maintained in ERCS electronically daily for the Field Exam groups to review.

  5. There are certain cases that are excluded from paperless closure and will be closed with a physical paper case file. Both the RGS case and the physical case file will be forwarded to Memphis CCP from Field Exam.

    Caution:

    It is the clerk’s responsibility to assign the correct ERCS program per the box checked by the group on Form 3198, Special Handling Notice for Examination Case Processing.

  6. For cases received via electronic means, the clerk will do all of the following:

    1. Open eFax in mailbox.

    2. Acknowledge F3210 in ERCS.

    3. Assign cases on ERCS with IAT tool.

    4. Forward documents to TE via email.

    5. Move original eFax to TE folder in mailbox (do not delete the original eFax).

      Note:

      The clerk should not print Form 3210 on an electronic receipt.

  7. For all cases received, the following procedures apply:

    1. Statute cases are to be verified by the clerk on the Form 3198.

    2. Statute cases within 120 days of the ASED should be identified before assigning.

    3. Statute cases within 60 days of the ASED with assessments are sent to the Lead.

      Note:

      If you have questions, please refer to the Lead or Statute SME.

  8. The clerk will hold cases that are pending managerial approval for 24 hours. AMDISA will show Status 10 or 12.

    1. If the case is still pending after 24 hours, take the case to your Lead with an ERCS print on top.

    2. Initial the ERCS sheet so the lead will know who gave them the case.

    3. If a case is received in any other status, go to the Lead with an ERCS print showing the current status.

    4. If a case is in an area that CCP does not work, go to your Lead for handling.

Acknowledging Form 3210, Document Transmittal

  1. The Forms 3210 are acknowledged only after all cases have been assigned that were received during the day.

    1. If the Form 3210 can be acknowledged electronically in ERCS, you do not have to retain the Form 3210 and it may be securely destroyed.

    2. If you are unable to electronically acknowledge the Form 3210 and are mailing the Form 3210 back to the group, file the Recipient copy in the file cabinet by the release date.

  2. When checking the mail (whether physically or electronically), a Form 3210 must be associated with the case in ERCS. If no Form 3210 is found, please consult your Lead.

  3. If a physical case was received, verify the package is addressed to CCP Exam before opening the package. If it is not, take the case back to the mail room as misrouted mail.

    1. You also need to verify the package inside is addressed to CCP Exam. If sent to CCP Exam incorrectly, route to the correct area listed on the Form 3210.

  4. For all physical cases received, keep all Form 3210 with the attached received cases until all cases listed are checked in and assigned.

  5. Form 3210 Acknowledgements are mailed back to the groups daily if not acknowledged electronically via ERCS.

    1. After all Form 3210 Acknowledgements are mailed back to the sender, place them with the originator copy in a separate bin designated by management.

ERCS Electronic 3210 Acknowledgement Job Aid
  1. To acknowledge the Form 3210 on ERCS, follow these steps:

    1. On the main page of ERCS, select Option 4, "Transfer, Close, Establish Control" .

    2. Then choose Option 8, "3210 Acknowledgement/View Status" .

    3. Verify all of your cases are present and notate any discrepancies between the Form 3210 and what was actually received, select Option 1, "Acknowledge Pending 3210’s" .

    4. The first screen will ask for your Primary Business Code (PBC) and Secondary Business Code (SBC). After you enter the PBC and SBC, press "Y" to continue.

      Note:

      Refer to Table below for input information: IRM 4.38.1.5.2.1

    5. Enter the "Number of the 3210" . This is located below the Transmittal Code in the upper right-hand corner of the Form 3210. Press "Enter" .

    6. The next screen is to acknowledge the Form 3210 received on ERCS. Follow the instructions to acknowledge or reject the individual Form 3210.

    7. You will need to "Review Selections" . Press "N" to continue if all is correct. Press "Y" to complete the acknowledgement process and return to the "Acknowledge Pending 3210’s" screen and continue with your next Form 3210.

      Reminder:

      If the Form 3210 was acknowledged electronically, it is not necessary to mail the paper copy back to the sender. You may securely dispose of it.

    PBC / SBC for CCP Exam

    Campus PBC SBC
    Cincinnati 296 89700
    Memphis 297 89700
    Ogden 298 89700
     

Closing Cases

  1. IRM 4.38.1.7.3, Examined Closings, Surveyed Claims, and Partial Assessments, has more information on these subjects.

  2. When closing cases, the following command codes are used: AMSOC and AMCLSE.

    Note:

    You must be signed into IAT and IDRS for the following procedures.

AMSOC
  1. Pull work from the Kansas City cart each day.

  2. The sequence number must always start with 0000.

  3. If a case rejects, print and initial the reject sheet and place it on top of the case before placing the case in the AMSOC Reject bin.

  4. After this step, you must close the case off ERCS to Status 90.

    Reminder:

    The case must be closed on ERCS the same day it is closed on AIMS / AMDISA.

AMCLSE
  1. Your sequence number must always start with 0000.

  2. Close the statute and old age cases first.

  3. Place a "Do Not Pull for Quality Review" sign on any COBRA or RGS long closure cases.

  4. After this process is completed, start with the oldest dates on the closing cart.

  5. If a case rejects, print the reject sheet and place it on top of the case.

  6. You may return it to the TE directly if they are available or place it in the AMCLSE Reject bin with the reject sheet on top with your initials on it. The lead will return these cases to the TEs for correction.

    Reminder:

    ERCS must be closed on the same day you close the case on AIMS / AMDISA. This will place the case into Status 90 and a Form 3210 is created.

Paper Closures Going to Files
  1. Place the closed cases in an adjustment folder with yellow label Form 6502, Employee Source Document Folder Label, in upper right corner.

    1. This label must have the employee IDRS number, category "AMCLSE" or "AMSOC" , current date and sequence numbers 0000 - XXXX.

  2. Place the case on the closing cart going to Files.

    1. If no folders are available, please use a cover sheet with a yellow source document label in the upper right corner.

  3. On top of the cart, place the sheet that says FILES and notate the team number, the number of carts being sent and check what types of closures are on this cart (AMCLSE or AMSOC).

  4. Form 3210 transmittals, are generated through ERCS. Place the Recipient and Acknowledgement copies on the closing cart. The Originator copy is filed in a designated drawer.

  5. If carts are shared between multiple examiners, work should be separated by examiner.

Sequence Numbers
  1. It is very important to pay attention to the sequence number when closing. A sequence number may change in error when a case rejects from the closing process. This may cause a duplication of the sequence number, or it will be skipped altogether.

Procedures for Working Status 51 In-Transit Listing (CCP Exam Memphis Office Only)

  1. The Status 51 In-Transit Listing is the responsibility of both the field and CCP. At a minimum, this listing should be worked on a weekly basis. However, when the volume of overage cases (greater than 30 days old) is greater than 50 cases, this listing should be worked daily. This will allow the listing to be current with the cases received in CCP. The following guidelines should be followed when working this listing:

    1. This listing will be provided by the CCP AIMS/ ERCS Analyst by Monday morning of each week.

    2. The AIMS/ERCS Analyst will identify cases with ASED dates within 15 days of the date the report is pulled. This will allow for the case to be located, updated and if necessary, contact to be made with the field if the case is not received timely so a quick assessment can be input to protect the assessment, if applicable.

    3. The AIMS/ERCS Analyst will highlight cases that CCP should not receive (i.e., DC’s 28-33 and 36-41). These should all be handled by the local AIMS/ERCS Analyst and processed via Form 10904, Request for Record Deletion from AIMS/ERCS. Also DC’s 20 and 21, which should be handled/closed by Area PSP.

    4. The AIMS/ERCS Analyst will then distribute the listing to the appropriate team for the designated employee(s) to work.

    5. The listing should first be reviewed to research/locate any statute cases and/or the highlighted cases that have been identified by the AIMS/ERCS Analyst as not belonging to CCP.

    6. This research should include IDRS, ERCS, and Form 3210, as appropriate.

    7. If the statute case(s) can be located, the case(s) should be given to the Clerical Manager to be assigned to the designated team for appropriate action. If the case(s) cannot be located, consult with the FORT manager to determine what actions are necessary.

    8. The cases that have been highlighted and identified as not belonging to CCP should be located and given to the team Lead for updating back to the group. If the cases are still in Clerical, the Clerical Team Lead would be responsible for updating. If the case is related to another tax year or case and didn’t get assigned, the team Lead for the employee assigned the related cases would be responsible for updating.

    9. All other cases should be researched on AIMS and ERCS to determine if the case could possibly have been closed on AIMS and not on ERCS. If it is determined that research indicates that the case was closed on AIMS, but not on ERCS, the case should be closed on ERCS by the team/TE that closed the original case to resolve the issue.

    10. If the case was closed, the date of closure should be notated on the listing.

    11. If the research on AIMS and ERCS does not yield any results, then the ERCS Form 3210 should be researched to determine if the case was actually received in CCP. If it is determined that the case was never received in CCP, contact should be made with the field to determine if they have an acknowledged ERCS Form 3210 from CCP.

    12. If a Form 3210 is located in ERCS, CCP will make every effort to locate the case. This should include CCP Management staff and Leads to search and/or locate the missing the case.

    13. If the case can be located, the team should take appropriate actions to update ERCS. If the case cannot be located, determine if the case was received with other tax years. If so, and those have been closed, those years should be ordered back from Files to determine if the missing case is with those years. If nothing is obtained from the closed cases, then the case information should be pulled down from RGS, ERCS, and AIMS to reconstruct the case. The case should then be updated to Status 59 for any FORT to determine the actions to take on the case. It should be very rare for the field to be contacted when a case is missing. However, it would be up to the FORT to make that decision.

    14. At no other time should a case in Status 51 be updated to Status 59 unless a physical case (reconstructed case) is being sent to the FORT. Cases should not be updated to Status 59 just because the field inquires about a specific case and CCP can’t locate it at the time the field calls. Status 59 is for actual case files only.

    15. If the case was reconstructed and sent to the FORT for resolution, actions should be notated on the listing with the date the case was updated to the FORT.

    16. If a Form 3210 cannot be located and there is no indication that CCP received the case, CCP should make contact with the field as soon as it becomes known that this is the issue and request an acknowledged Form 3210. If the field does not provide a response within 48 hours, the case should be updated back to the prior status. CCP must ensure that if the case came from Technical Services (TS) or PSP, that the status is updated back to 21 or 41, respectively and not Status 12. Always verify on AMDISA what the prior status was before returning the case to the field to ensure the proper status is used. However, if the prior status was 10, CCP is only able to update to Status 12.

    17. If contact is made with the Field, notations should be made on the listing as to who the contact was with and the actions taken.

    18. In instances of non-examined (survey) cases, now that CCP receives mostly paperless surveys, the Field will have to be contacted for a copy of the Form 5351, Examination Non-Examined Closings, to be e-faxed to CCP to input the closure. For any paper survey cases received, information can be pulled from AIMS, IDRS, and ERCS to close the case to Status 90 with the appropriate disposal code, as reflected on ERCS.

    19. These listings must be maintained for at least one year.

Procedures for Working Status 51 In-Transit Listing (CCP Exam Cincinnati Office Only)
  1. These procedures are different from IRM 4.38.1.5.4 as CCP Exam Cincinnati does not have their own Clerical team or a Field Office Resource Team (FORT).

  2. The following list explains the changes to the Procedures for Working Status 51 In-Transit Listing for the CCP Exam Cincinnati Office ONLY:

    1. This listing will be generated on Monday morning of each week and worked by the Cincinnati CCP AIMS/ERCS Analyst.

    2. The AIMS/ERCS analyst will identify cases with ASED dates within 30 days of the date the report is pulled. This will allow for the teams to locate, update and, if necessary, contact to be made with the field. If the case is not received timely, this allows a quick assessment to be input to protect the assessment, if applicable.

    3. Cases that should not have been updated to Status 51 for closure by CCP should be returned to the originating area’s status code in ERCS (i.e., DC’s 28-33 and 36-41), to be handled by the local AIMS/ERCS analyst and processed via Form 10904. This includes closures with Disposal Codes 20 and 21, which are handled/closed by Area PSP.

    4. Case research should include IDRS, ERCS, Form 3210 and RGS (if applicable).

    5. Cases will be highlighted in green when the status is updated out of 51 to indicate completion.

    6. A Form 3210 should be created and saved in ERCS with comments for any status update back to the Field.

    7. If a case was misrouted to Cincinnati CCP, an email should be sent to the field group and the AIMS/ERCS analyst at the correct site when the case is returned to the field and updated accordingly on ERCS.

    8. Cases should be researched on AIMS and ERCS to determine if the case could possibly have been closed on AIMS and not on ERCS. If it is determined that research indicates that the case was closed on AIMS, but not on ERCS, the case should be updated to Status 90 on ERCS by the team/TE that closed the original case.

    9. If the research on AIMS and ERCS does not yield any results, then the ERCS Form 3210 should be researched to determine that the case was never received in CCP, contact should be made with the field to determine if they have an acknowledged ERCS Form 3210 from CCP.

    10. If a Form 3210 is located in ERCS, CCP will make every effort to locate the case. This should include CCP Management staff and Leads to search and/or locate the missing case.

    11. If a missing case is located, the team should update ERCS to the appropriate status code and employee number. If the case cannot be located, determine if the case was sent with other tax periods. If so, the paperwork for those periods should be checked to determine if the missing case is attached. If nothing is found with the other periods, then the case information should be pulled down from RGS, ERCS and AIMS to reconstruct the case. The AIMS/ERCS analyst may contact the field for documentation if necessary.

    12. If the case was reconstructed, actions should be notated on the listing with the appropriate dates.

    13. If a Form 3210 cannot be located and there is no indication that CCP received the case, CCP should make contact with the field as soon as it becomes known that this is the issue and request an acknowledged Form 3210. If the field does not provide a response within 48 hours, the case should be updated back to the prior status. CCP must ensure that if the case came from Technical Services or PSP, that the status is updated back to 21 or 41, respectively and not Status 12. Always verify on AMDISA what the prior status was before returning the case to the field to ensure the proper status is used. However, if the prior status was 10, CCP is only able to update to Status 12.

    14. Whenever contact is made with the field, notations should be made on the listing as to whom the contact was made with, the date, and the actions taken.

    15. If a paperless survey cannot be located in the email box, contact the field to have it resubmitted. For any paper survey cases received, information can be pulled from AIMS, IDRS, and ERCS to close the case to Status 90 with the appropriate code, as reflected on ERCS.

    16. These listings must be maintained for at least one year.

Procedures for Working Status 51 In-Transit (CCP Exam Ogden Office Only)
  1. These procedures are for use by CCP Exam Ogden employees ONLY.

  2. The following procedures should be used while working the Status 51 In-Transit Listing:

    1. The Status 51 In-Transit Report will be generated at the beginning of each week, from the Tableau Report System, by the CCP AIMS/ERCS Analyst.

    2. The In-Transit Report will be placed on the OCEA Team 8330 SharePoint each Monday (or Tuesday, if Monday is a holiday)

    3. A case on the In-Transit Report is considered old age once it has been in Status 51 for 30 days. The In-Transit Employee will contact the Field Office Group to resolve In-Transit cases prior to the case becoming old age.

  3. The In-Transit employee will address cases, which are showing 15 days old on the date the report is generated

    1. Research AMDISA to determine whether the case has been 90 Closed.

    2. If the AIMS is 90 Closed, the In-Transit employee will close the ERCS record to Status 90, through the ERCS Transfer/Close screen, using the disposal code from AIMS.

    3. If the In-Transit employee does not have ERCS write permissions to close the ERCS record, notify the AIMS/ERCS Analyst who can update the status to 90 on ERCS.

    4. Once AIMS and ERCS are 90 closed, notate in comments on the Status 51 In-Transit Report.

    .

  4. Research ERCS for the Form 3210 routed with the case.

    Form 3210 Verification Process Address and AIMS/ERCS Status Verification
    Verify the Form 3210 was correctly addressed to Ogden CCP Mail Stop (M/S) 4030.
    1. If Form 3210 was addressed in error, email the sending group to notify them that AIMS/ERCS are being updated back to their group.

      Note:

      It is the sending groups’ responsibility to locate and correctly send the case to Ogden CCP.

    2. If the Form 3210 was addressed to another CCP site, notate this in the comments on the Status 51 In-Transit Report.

    If Form 3210 was addressed correctly, identify if there were other cases on the transmittal.
    1. If those cases are still open on AIMS and are in CCP Inventory (Status 52 - 59), locate to whom the cases were assigned, and check with them for the missing case file.

    2. If those cases have been closed, refer immediately below:

      • If closed by one of the CCP TEs, AIMS and ERCS will be updated to that TE, with the CCP received date stamped on the Form 3210.

      • Notify the CCP TE, by email, the case has been updated to them. The CCP TE will be responsible to locate the closing documents or have the file rebuilt.

  5. The In-Transit employee will research the prior status on AIMS and ERCS to determine whether the case is coming from a Field Exam office or from a Technical Services office. Contact will be made, with the sending office, on open AIMS cases 15 days or older.

    AIMS/ERCS Status Code Field Exam or Technical Services Field Exam or Technical Services Contact Information Details
    AIMS/ERCS Prior Status 10 through 19 Email Field Office Revenue Agent and Group Manager
    1. Revenue Agent name can be obtained from the first page of the ERCS full screen, by looking up the ERCS Employee ID number, as well as on Form 3198.

    2. The Field Office Group Manager can be located from the AIMS/ERCS Contact List by looking at Group AIMS Assigned Code (AAC).

    AIMS/ERCS Prior Status 21 through 39 Email Technical Services Office
    1. The Technical Services employee can be located on the second page of the ERCS full screen, by looking up the ERCS Employee ID number.

    2. If the In-Transit employee cannot determine which office sent the case, they should research for the ERCS transmittal, from the sending office, and make email contact.

  6. Initial Contact must state:

    1. Ogden Centralized Case Processing (CCP) has not received the case listed below, which was updated to Status 51 on (enter the status date from the In-Transit Report).

    2. Insert in the email: TIN/EIN, MFT, Tax Periods, and Full Taxpayer Name and,

    3. The following statement: Please provide CCP with the case, in the proper mailbox, depending on the type of case (*SBSE Ogden CCP Paperless Examine Cases Only, *CCP Ogden, or *LB&I CCP).

    4. Please respond by close of business, include the date, which is 72 hours from initial contact.

      Note:

      Follow-up flag should be set to alert the email recipient after 24 hours. The initial email should remain in the sent folder, as the second contact should be issued as a forward using that same email.

  7. Second Contact must state:

    1. Ogden Centralized Case Processing (CCP) has not received a response from the initial contact email dated (date of initial email).

    2. Please respond to the request below. If we have not received a response within 24 hours, the AIMS and ERCS will be returned to your office.

    3. If no response is received, the In-Transit Employee will then follow the transfer procedures for returning the AIMS and ERCS to the sender.

  8. Resolving Responses:

    1. If Form 3210 shows shipment was to an office other than Ogden CCP, the sender will be notified, by email, the AIMS and ERCS will be updated back to their office to locate the case and correctly ship to Ogden CCP.

    2. If the case was updated to Status 51, but not sent to Ogden CCP, the AIMS and ERCS will be updated back to the sending group so the updates will correctly show when the case was sent to Ogden CCP

    3. If the case is subsequently received from the group or Technical Services after email contact, the local clerk can assign out to a TE.

Assigning Cases on ERCS Using the IAT Tool

  1. This subsection outlines the procedures for assigning CCP cases to individual tax examiners using the ERCS Assign Tool.

First Time Setting Up the ERCS Assign Tool
  1. Follow these steps when you set up the ERCS Assign Tool.

    1. Sign onto IDRS, ERCS, and IAT.

    2. Click on the ITM in the IAT Tool Manager box.

    3. Click on Settings.

    4. Click on the General Info tab (include your Name, Mailing Address, and Manager’s Information).

    5. Click on the Work Info tab.

      Work Info Tab
      In the Organizational Information box, use the drop down to choose the following:
      • BOD

      • Title

      • Team Number

      • Badge Number

      • EGC

      When finished, choose "Save."

      Note:

      Please consult with your manager and/or lead to get the correct information to include.

    6. Click on ERCS Assign.

      ERCS Assign Steps
      1. Click on File and choose ERCS Assign setup and Form 3210 remarks.

      2. In the box, fill in the information for all Tax Examiners (TE) that you will be assigning cases (ERCS number and Technician’s name).

        Note:

        Ensure to press "save" after each TE’s information is entered. Retrieve ERCS numbers from Lead.

      3. Click on Options.

      4. Click on "Your PCC" .

      5. Click on the appropriate PCC for your area.

      6. Exit out of ERCS Assign to reset the tool.

      7. Click on ERCS Assign.

      Note:

      You are now able to assign cases on ERCS.

Assigning Cases
  1. You will need to log into ERCS first.

    1. Type "2 - ERCS," then press Enter.

    2. Type "1," then Enter.

    3. Type "10," then Enter.

      Note:

      You should now be on the Examination Main Menu Screen. This is the starting screen for assigning cases.

IAT Tool "ERCS Assign" Screen
  1. Open the ERCS Assign Tool.

  2. On the Case Info Screen, type the following:

    1. TIN,

    2. MFT, and

    3. Tax Period

      Note:

      The case information is located on the Form 3198.

  3. Click "Add."

  4. Ensure the information in the box that appears is correct.

    • If you determine the case information is incorrect, check the box in front of the incorrect TIN and click "Remove."

  5. ERCS Assign: select the Tax Examiner (TE) that you will assign the cases. Locate the TE’s name on the Form 3210 with the case.

  6. Received Date: This will be the date the email or eFax was received by CCP.

    Exception:

    For resolved rejected cases, check the date on the Form 3198 and input that date.

  7. Click on "Research."

    Note:

    At this point IAT is researching IDRS for case information and cases placed on the WATCH FOR list on TXMODA for LQMS, HIRE 1080 Cases, or Examiners waiting on a certain case to come in, a screen with the relevant information will appear.

  8. Next, IAT will research ERCS for case information. If the Status Code and/or PBC are incorrect, an ERCS Error Screen will appear.

    Note:

    Refer to Mail Reject Instructions for Errors.

  9. Print any boxes that pop up for WATCH FOR, LQMS, ERCS Error Screens.

  10. When done researching, review the information that is located on the right-hand side of the ERCS Assign window. Be sure to click on every case. If each case is not individually reviewed, the IAT Assign Tool will not assign the cases.

  11. When reviewing the cases you need to identify any:

    1. Short statute dates that are 12 days or less.

    2. AIMS and ERCS Status Code is 51. If both are not in 51, it needs to be rejected immediately.

    3. If ERCS is in 51 and not Managerial Pending and the AIMS Status is 10 or 12, you will use AMSTU AIMS to update the status to 51 and continue assigning.

  12. If all case information is correct, click on "Assign All."

  13. Cases are assigned on IDRS/AIMS first, except for Penalty cases.

    • Penalty cases have no records on IDRS, so they are only assigned on ERCS.

  14. When IAT starts updating ERCS there will be 3 boxes that pop up for each case being updated.

  15. Box 1 - "TE’S NAME is associated with ID 00000. Is this correct? (Y/N)"

    • Type 1 or Y for Yes.

    • Type 2 or N for No. (This will cancel the assigning).

  16. Box 2 - "Form 3210 is pending acknowledgement for the return. Mark as received? Y."

    • Type 1 or Yes for Yes.

  17. Box 3 - "Please allow a few seconds for the ERCS system to process your response. Press "OK" when the ERCS screen appears ready to continue."

  18. When ERCS is done assigning all cases, a window will pop up displaying the ERCS prints.

    • Click on the print icon on the top left corner.

    • Click OK on the print box.

    • Click OK to close the window.

  19. The window for the Form 3210 will pop up.

    • Then the print box will pop up. Click OK to print.

  20. Go to "File."

  21. Click on what you need printed.

  22. Click "Clear All" to assign your next case.

    Note:

    Please refer to your manager to determine whether printing of the Form 3210 is required. A Form 3210 sent electronically or virtually is not typically printed.

Case Did Not Update on AMDISA
  1. If during the assigning process the ERCS Assign Tool states there was an issue updating AIMS even though it is in Status 51, it is because there is a -R Freeze on the account.

  2. The Tax Examiners (TE) will take care of the -R Freeze. Clerks should assign the case as normal on ERCS and the TE will fix AIMS.

Statute Cases
  1. When assigning cases, IAT will identify all numeric and alpha ASED dates within 120 days of expiration.

  2. If the ASED is fully numeric and within 120 days of expiration, then the case should be assigned to a Restricted Interest Tax Examiner.

  3. If the ASED is within 30 days of expiration (numeric or alpha), then the clerk must personally identify the ASED as statute imminent to the assigned CCP Tax Examiner (TE).

    • If the CCP TE is away or off-duty, then the case must be provided to the Team Manager or Lead of the applicable TE.

Tax Examiner Responsibilities

  1. Tax Examiners ,TEs, have many responsibilities in CCP Exam. However, none are more important than closing examination cases from Field Examination groups.

    • This information can be found in IRM 4.38.1.7.3.1, Examined Closures, IRM 4.38.1.7.3.2, Surveyed Claims, and IRM 4.38.1.7.3.3, Partial Assessments.

  2. Other responsibilities include:

    1. Protecting the Statute of Limitations,

    2. Manual (Quick) Assessments,

    3. Non-Examined Closures,

    4. Manual Refunds,

    5. Jeopardy Assessments, and

    6. Miscellaneous IDRS Inputs

Case Closure Process

  1. Cases are closed through two means:

    1. Paper or

    2. Electronic

  2. These IRM sections will differentiate the procedures where necessary.

Statute of Limitations

  1. The following table shows the various alpha codes that may be encountered while working CCP cases.

    Alpha Codes Alpha Code Definitions Alpha Code Resolutions
    AA Claim for refund/credit issue only No update needed. If there is an assessment, return to Group.
    AB Assessment Statute of Limitation Waived By Properly Executed Closing Agreement Update 1 Year from Commissioner’s signature date on the signed Form 906, Closing Agreement on Final Determination Covering Specific Matters
    AC TEFRA-Entity Statute Protected at the Partner Level N/A
    AD Employment Tax Return Examination Limited to IRC 3121(q) N/A
    BB Loss Carryback - IRC 6501(h) Reset to ASED of carryback year
    CC Joint Investigation Refer to Form 895, Notice of Statute Expiration, for ASED update
    DD Credit Carryback - IRC 6501(j) Same as BB
    EE No Return Filed - IRC 6501(c)(3) SFR - Do not update, unless original return is received.
    FF Reference Return If the source code has been updated to 45, then this case with Alpha FF can be closed as a Survey (DC 45) and the FF must be removed
    GG Investor Level Statute Control (ILSC) Pass-Through 6 months from current month, or if non-taxable, reset to the original. If it is with the related 1040, update to the ASED of that return.
    HH TEFRA Investor Reset to original ASED if PCIF = 5. If PCIF = 1, return to Group.
    II Form 1040, U.S. Individual Income Tax Return - Other Taxes Update statute to 180 days past the 23C date
    JJ Non-taxable Fiduciary, or Deceased Spousal Unused Exclusion-related returns Statute date determined by returns of the beneficiaries receiving flow-through items of the Form 1041, U.S. Income Tax Return for Estate and Trusts
    KK Bankruptcy Suspension New statute date determined when bankruptcy is lifted
    LL Third Part Summons Suspension - IRC 7609(e) N/A
    MM Activity Not Engaged in for Profit - IRC 183(e)(4) Update statute 7 - 10 years. There should be documentation in the case.
    NN Substantial Omission of Items - IRC 6501(e) Update 6 years from due date of return
    OO False or Fraudulent Return - IRC 6501(c)(1) 180 days from last day of current month
    PP Intentionally allowing the Statute to Expire N/A
    QQ Docketed Cases If in Status 80 - 82, return to Tech Services.
    If not, update 1 year from the date Tech Services signed Form 906
    RR Various Other IRC’s that Override IRC 6501(a) 6 months from last day of current month
    SS Financial Disability - IRC 6511(h) N/A
    TT Mitigation - IRC 1314(b) 1 year from received date on Form 2259, Agreement as Determination Pursuant to Section 1313(a)(4) of the Internal Revenue Code
    UU Failure to Notify Secretary of Foreign Transfers - IRC 6501(c)(8) N/A
    VV Gifts Not Adequately Disclosed on Return - IRC 6501(c)(9) 6 months from end of current month
    WW Failure to Disclose Information with Respect to "Listed Transactions" - IRC 6501(c)(1) N/A
    XX Return Preparer, Promoter and Aiding/Abetting Penalties (Only used for ERCS Controls, not an AIMS entry) N/A
    YY Participation in Abusive Offshore Arrangements OVDI - Update 1 year from Commissioner’s signature date
    ZZ AIMS Database Transfer - Temporary ASED Alpha Code (Not to be used/input unless receiving (gaining) unit approves) Used to transfer between areas where there is less than 13 months on Statute. Refer to case file for new ASED date.

Statute Expiration Date 60 Days or Greater
  1. Close case using normal procedures for Statute Expiration Date(s) greater than 60 days in the future.

  2. Use 90 days if closing cases in the month of December.

Statute Expiration Date 60 Days or Less
  1. Close case using manual assessment procedures for Statute Expiration Date(s) less than 60 days in the future. Refer to IRM 4.38.1.7.1.1.4 for Manual Assessment responsibilities.

Statute Expiration Date is TODAY and it is After-Hours
  1. Follow procedures for After-Hours Assessments if after 3:30 p.m. local time and manual assessment procedures are required.

    1. Refer to IRM 4.38.1.7.1.1.4 for more information about Manual Assessment procedures.

  2. If the need arises for an after-hours assessment, follow the guidelines below:

    1. The Manual Assessment Originator will contact the Revenue Accounting "After Hour Assessment" telephone number for the local site and follow the instructions provided.

    2. Prepare paperwork using manual assessment procedures.

Manual Assessments
  1. This section defines CCP Department Manual Assessment responsibilities and complies with IRM 4.38.1.7.2. This includes processing procedures to manually assess an adjustment.

  2. CCP Tax Examining Clerks are responsible to:

    • Send Form 2859, Request for Quick or Prompt Assessment, to Accounting daily and obtain Form 3210 reflecting Accounting’s "date received" stamp reflecting the Document Locator Number (DLN) of the Manual Assessment, and Form 3552, Prompt Assessment Billing Assembly, from Accounting.

    • Date stamp each document with "CCP Received Date" and provide to the Team Lead.

  3. CCP Tax Examiners are responsible to:

    1. Prepare Form 2859 and all required attachments.

    2. Place Manual Assessment Package in Team Lead’s designated area for review.

    3. Maintain a separate copy of Form 2859 in a monitor folder until the approved Manual Assessment Package is received from the Team Lead.

      Note:

      If an approved copy is not received prior to the 23C date, it is the responsibility of the technician to follow up with the Team Lead to obtain an approved copy.

    4. Use processing procedures below titled Information Data Retrieval System (IDRS) Control Procedures to open a control base on IDRS and notate history items.

    5. Monitor for the Form 3210 reflecting a date received stamp by Accounting.

      Note:

      If a copy of the Form 3210 reflecting a "date received" stamp is not received prior to the 23C date, it is the responsibility of the technician to follow up with the Accounting Team to obtain the transmittal reflecting the "date received" stamp before the 23C date.

    6. Associate Form 3210 reflecting the date received stamp with the monitor file and Form 2859 until the Form 3210 reflecting the DLN is received.

    7. Associate Form 3210 reflecting the DLN with the monitor file and Form 2859 until the Form 3552 is received.

      Note:

      This is no longer the Lead’s responsibility.

    8. Associate Form 3552 with the original Form 2859 and Form 3210 reflecting the DLN in the monitor file until the assessment posts to IDRS.

    9. After the Manual Assessment has posted to Master File, Form 2859, Form 3552, and Form 3210, can be destroyed.

    10. File DMI history per Alert 13 procedures. The history sheet should be filed within one week of the assessment’s posting.

    11. Input the following on Automated Information Manager System (AIMS):

      If the case is not being full closed, AMAXU the current Manual Assessment amount, plus any prior Manual Assessment amounts posted after the current Transaction Code (TC) 420. This is completed using Command Code (CC) AMAXUE - Item 35.
      If the case is being full closed, Enter the current Manual Assessment amount, plus any prior Manual Assessment amounts that posted after the current TC 420, in Item 35 of the Form 5344.

      Note:

      The Manual Assessment amount input should be for the tax period you are working only.

      Note:

      Input dollars only. Do not input cents.

  4. If the Assessment Statute of Expiration Date (ASED) expires on the same day as the 23C date:

    1. Prepare the Form 2859, and all required attachments.

    2. Deliver the completed Manual Assessment Package to Team Lead for review.

    3. Ensure faxed copy of Form 3210 is received back with a DLN the same day.

  5. CCP Team Leads are responsible to:

    1. Review the Form 2859. This review should be a thorough review of all of the required boxes, amounts and attachments to prevent the Form 2859 from being rejected from Accounting.

      Reminder:

      Do not review interest computations.

    2. Sign and date Form 2859.

    3. Prepare three (3) copies of Form 3210, for each Manual Assessment Package.

    4. Send the Manual Assessment Package to the appropriate Accounting SharePoint site.

    5. Provide a copy of the Form 3210 reflecting the date received stamp, the Form 3210 reflecting the DLN of the Manual Assessment, and the Form 3552 from Accounting to the applicable TE within 24 hours of receiving each form back from Accounting.

  6. IDRS Control Procedures

    • Open an IDRS control base on all Manual Assessment cases to ensure an appropriate audit trail and visual comments for anyone needing to verify current activity.

    Actions to Take
    Input Status "M" on any follow up actions made after the stamped transmittal is received.
    Input Status "C" when the assessment posts.

    Note:

    Control base must stay open on IDRS until the assessment is posted.

    The category control for CCP cases is SPC4.

  7. IDRS Control Activity and IDRS History must include:

    1. MAAS23Cdate (i.e. MAASMMDDYY)

    2. HOLD4DOC51

  8. Special Notes:

    1. Elevate to the Team Lead or Manager any manual assessment that does not post within the 6-8 week time period, including those in an unpostable status.

    2. File DMI history per Alert 13 procedures. The history sheet should be filed within one week of assessment’s posting.

  9. Follow the processing procedures below in situations where it is discovered (before the 23C date) the amount of a manual assessment request is incorrect.

    Assessment is Incorrect Actions to Take
    If the requested amount assessed is too low, withdraw the entire Form 2859, with a written request to Accounting. The written request for withdrawal of the Form 2859 should be faxed to Accounting and contact should be made to the Lead, Manager or TE to ensure Accounting is adequately alerted. Verify the request is received and acknowledged by Accounting. Prepare a new Form 2859, with the correct assessment amounts following the above procedures. Update the history section of the IDRS account reflecting the correction and resubmission of the corrected Form 2859.

    Note:

    This situation should rarely occur.

    Note:

    If the TC 370 has already posted, you cannot withdraw the Form 2859t . Complete a new Form 2859, for the additional amount.

    If the requested amount is too high, allow the assessment to post and make corrections manually to the account after the manual assessment has posted.

  10. Accountability:

    1. TEs are responsible for ensuring the Form 2859 and the Form 3210 reflecting a date received stamp is received prior to the expiration of the 23C date.

    2. Accounting is accountable for the manual assessment from the time they received and date stamp the Form 3210 for receipt of the Form 2859 until the assessment is journaled into Interim Revenue Accounting Control System (IRACS) and subsequently to IDRS.

    3. In unpostable situations, Accounting may make contact with the initiator to obtain information to correct the unpostable condition. The TEs are responsible for a case assessment until it posts. TEs will monitor unpostables created by Accounting and assist in the resolution of the unpostable, if needed.

Statute Expiration Date is Questionable
  1. Memphis CCP Tax Examiners (TE) should send a technical request to the FORT team for clarification on any Statute Expiration Date that is questionable. The CCP Statute Coordinator will verify what the valid statute expiration date is.

Barred Statutes
  1. If a CCP employee discovers a potentially expired statute, the Tax Examiner (TE) should complete a CCP Exam Field Office Resource Team (FORT) Referral Form. The TE needs to identify that this is an expedite statute case. In the additional case information box, write "Potential Barred Assessment" and immediately send the form to their manager. The manager will initial and date the bottom of the referral form. The manager will follow procedures outlined in Alert 14 and work the CCP Department Manager and CCP Statute Coordinator to take appropriate action.

    Exception:

    Cincinnati CCP Exam should provide the information to their Field Liaison as they do not have a FORT team.

  2. Find the definition of a Barred Statute in IRM 25.6.1.13.2.4, Statute of Limitations Processes and Procedures.

Manual (Quick) Assessments

  1. Manual assessments should be limited to those cases meeting one of the following criteria:

    1. Imminent Statute - There is a deficiency, and the statute is due to expire within 60 days or will not be received in CCP before the statute is within 60 days of expiration.

    2. Agreed Unpaid Deficiency over $100,000 - If there is a deficiency over $100,000, which is agreed and unpaid, that will not be received in CCP for final closure within 30 days of the agreement date.

      Note:

      Due to the critical nature of these cases, manual assessments will be given a higher priority than partial assessments.

  2. When submitting a request for a manual assessment, Field Groups should:

    1. Contact the Field Office Resource Team (FORT) Manager for SB/SE or LB&I cases or CCP Field Liaison for Specialty cases to notify them a manual assessment will be needed on the case. Please find the FORT/Field Liaison Contacts here.

    2. Send CCP the required information, depending on the site’s requirements.

    3. Do not ship the entire case file.

    4. Do not update ERCS out of the group status.

    5. In the subject line of the email or eFax, notate" Manual Assessment Request."

  3. ’CCP will:

    1. Acknowledge the request within 48 hours of receipt.

      Note:

      Requests received on Friday afternoon will be acknowledged by Close of Business (COB) Monday.

    2. Complete the assessment within five (5) business days of receipt, whenever possible. Assessments involving complex and restricted interest computations may take longer.

    3. Mark Form 5344, Request Completed.

    4. E-Fax or email a copy of the Form 5344 back to the group for association with the original case file to verify the assessment was completed.

  4. Please allow at least 10 business days from your original request before following up with CCP.

    Note:

    For multiple manual assessments being sent to either Cincinnati or Memphis CCP, the field groups should contact the CCP Field Liaison or FORT Manager to inform them that the assessments are being sent using overnight mail. Overnight mail should only be used when the faxing of multiple assessment documents would be too time consuming and inefficient.

    Note:

    The Field Office should not route the case file to CCP or any other function until verification of Request Completed has been received and associated with the case file.

  5. The following steps are needed to complete a Form 2859 to send to Accounting for a manual assessment.

    1. Field Exam updates ERCS records to Status 51 (only if it is a final closure) and sends closing documents to CCP Exam. Paper files remain in the field group and are not shipped to CCP Exam.

    2. The CCP Process involves clerks, tax examiners, RGS cases, IMS cases, closing letters, and other pertinent information.

      Required Participant are Actions Needed
      Clerk
      1. Opens eFax in mailbox.

      2. Acknowledges Form 3210 in ERCS.

      3. Assigns cases on ERCS with IAT Tool.

      4. Forwards documents to TE via email.

      5. Moves original eFax to TE folder in mailbox.

        Reminder:

        Do NOT delete.

      Tax Examiner
      1. Works case.

      2. Inputs closure (or sends to file server for International).

      3. Updates ERCS to Status 90 (on a final closure only) and generates Form 3210 as a PDF.

      4. Saves the edited Form 5344, Form 3198 history sheet, and closing Form 3210 in their team’s Closure folder on the Common Drive.

      For RGS Cases Only
      1. Manager / Lead and Clerk run RGS GII.

      2. Clerk notifies TE and manager of any rejected closures.

      3. Clerk updates ERCS to Status 90 (only if a final closure) and generates Form 3210 as PDF.

      4. Clerk saves RGS closure listing and Form 3210 in their team’s Clerical folder on the Common Drive.

      For IMS Cases Only - Form 5344
      1. CCP Tax Examiner must return a revised Form 5344 to the LB&I examiner/manager for electronic cases maintained in IMS after the case is closed, if applicable.

      2. Refer to IRM 4.46.5.11.2, General Information for all Paperless Case Closures, for additional information.

      Closing Letters
      1. The Revenue Agent or TCO will mail the closing letter when the case is closed out of Field Exam.

      2. The LB&I revenue agent will also mail the closing letter to the taxpayer when the case is closed to CCP by the exam team. Refer to, IRM 4.46.5.11.2.2(2), General Information for all Paperless Case Closures, for additional information.

      Other Pertinent Information Case Document Retention:
      1. Each team will have a folder on the Common Drive for closures (for edited Forms 5344, 3198, history sheet, and closing 3210, as closed by TEs)/

      2. Documents in these files can be accessed by managers and PAS for quality review.

      3. Original eFax’s will be retained in the mailbox folders.



      Sample Review:
      1. After Accounting inputs the assessment and the case is closed by the Tax Examiner, sample review is performed just as on any Examined Closure. Please refer to IRM 4.38.1.7.5.1 for more information about CCP sample review procedures.

Examined Closings, Surveyed Claims and Partial Assessments

  1. This IRM subsection will explain the general procedures and information for Centralized Case Processing (CCP) Tax Examiners to work the following types of cases received from Field Examination and Technical Services.

Examined Closures
  1. Examined case closings must contain any one of the following items:

    1. Original Paper return or copy of the return for a paper case,

    2. Electronic print (i.e., RTVUE/BRTVU, TXMODA, etc,) or

    3. SFR.

Forms to be Used
  1. Form 5344 and Form 3198 are required when closing examined closures.

  2. Form 15292, Case Closing Cover Sheet, is used by LB&I to close cases electronically.

Form 5344 Entries
  1. The following items must be completed before the form can be input for closing. Report Generation Software (RGS) carries over items from Form 4549, Report of Income Tax Changes, and other fields within RGS such as grade of examiner, hours, etc. to the Form 5344.

Item A: CC TSCLS
  1. Depending on the function closing the case to CCP, a check mark will be placed in the box if the Form 5344 is for a full closure of any Pass-through Control System (PCS) linked investor. CC TSCLS releases a freeze on AIMS to allow the return to close. A PICF Code 4, 5 or 6 denotes an investor case is linked through Pass-through Control System (PCS) and prevents the premature closing of the investor return until all necessary pass-through adjustments from the related key-case(s) to the investor return have been resolved. CC TSCLS must be entered at the terminal before a final closure of a PCS linked case. CC TSCLS should not be input if a partial assessment is appropriate and the case is being transferred to the Campus Pass-through Function (CPF), or it is being closed to Appeals. When entered, the CC TSCLS will automatically check all of the investor’s linkages to determine if they have been closed. If all linkages are closed, then CC TSCLS will set the PN-SUM-CLOSED-IND on the partner PCS record. The PICF-DC will update to a closed status 7 or 8 on the PCS and AIMS databases. When the “Request Completed” message is transmitted to the IDRS screen, CCP can proceed to enter the CC AMCLS.

    Note:

    The PICF code can be located on page 1 of the AMDISA screen, Line 14.

  2. Should all linkages not be properly closed upon input of the CC TSCLS, the error message “Cannot Close, PCS Control” will be displayed on the IDRS screen. CCP will input CC TSUMY, secure a print, attach it to the Form 5344 and route the case file back to the originator for resolution.

  3. All Pass-through Control System linkages must be released before the investor return can be surveyed. Partnership Inventory Control File (PICF) Codes 4, 5 and 6 prevent the premature closing of the investor return until all necessary pass-through adjustments from the key case(s) to the investor return have been resolved. Command Code (CC) TSCLS releases the freeze on AIMS to allow the input of CC AMSOC. When CC TSCLS is entered, it will automatically check all the of the investor’s linkages to determine if they have been closed. If all linkages have been closed, then CC TSCLS will set the PN-SUM-CLOSED-IND on the partner record and the PICF-CD to a closed status on the PCS and AIMS databases. When the "Request Completed" message is transmitted to the screen, the operator can proceed to enter the CC AMSOC.

  4. Should all linkages not be properly closed, upon input of the CC TSCLS the error message "Cannot Close, PCS Control" will be displayed on the screen. Secure a CC TSUMY print, attach it to the closing request and route the case file back to the originator. The file should be suspended by the appropriate function. Coordination with the Technical Services Pass-through Coordinator (TSPC) may be required to transfer the file to the Campus Pass-through function (CPF).

P 1-6: CC AMCLS
  1. Add the definer to CC AMCLS depending on the type of closure. Definers are:

    1. E = Examination (Long Closure),

    2. F = Examination/Appeals (Partial Assessment),

    3. I = IRAF (Individual Retirement Account File),

    4. S = Separate Spousal Agreement (MFT 31 adjustment), or

    5. U = Unpostable (input of correction).

      Note:

      For RGS users, the AMCLS definer is input by CCP. If you are trying to set up an MFT 31 case on RGS, the Form 5344 will have to be manually prepared for input of the AMCLSS closure.

AMCLSS P-56
  1. AMCLSS is the command code used to send an adjustment to an MFT 31 module for an assessment, abatement, refund, or surveyed claim. MFT 31 modules are not controlled on AIMS. The AMCLSS is input on the MFT 30 module which sends the adjustment to the MFT 31 module. Some examples of why an MFT 31 account may be necessary are:

    1. An individual assessment on a joint account,

      Example:

      One taxpayer agrees to the tax deficiency and one taxpayer does not agree to the tax deficiency and requests to go Appeals (An MFT 31 account is created for the agreeing spouse).

    2. An individual assessment on a joint account where one taxpayer agrees to the tax deficiency and one taxpayer does not agree and petitions tax court as a result of a Statutory Notice of Deficiency (an MFT 31 account is created for the agreeing spouse),

    3. An innocent spouse case where an assessment is being made against only one taxpayer (An MFT 31 account is created for the agreeing spouse), and

    4. Criminal Restitution assessments.

  2. MFT 31 accounts created by Examination are not mirrored accounts. Therefore, interest may need to be manually computed. If any of the following conditions apply, annotate Form 3198 with "Interest may need to be manually computed and restricted due to (List reason why)"

    1. Interest-free refunds,

    2. Refunds with interest,

    3. -I Freeze on MF, or

    4. Taxpayer filed an extension (TC 460).

  3. Enter a "P" if the assessment is against the primary taxpayer. Enter an "S" if the assessment is against the secondary taxpayer.

AMCLSS P-57
  1. If an "S" is entered in Item 56, the name control of the secondary spouse is required in Item 57. This is to prevent unpostables when the taxpayer’s last names are not the same.

P 7-34 TIN, MFT, Tax Period, CD/NC
  1. Complete Positions 7-34 and Item B using the following instructions.

P 7-18: TIN
  1. Enter either an EIN or SSN. The first digit of the number must be entered in the left most position

    1. EIN Format is NN-NNNNNNN.

    2. SSN Format is NNN-NN-NNNN.

    .

  2. Form 706, U.S. Estate Return: the SSN of the decedent must be used followed by the letter "V" or "W" .

  3. Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return: the SSN of the donor must be used, followed by the letter "V" or "W" .

  4. Non-Master File (NMF): an "N" must be entered immediately after the EIN or SSN.

  5. A temporary TIN secured through the AIMS command code AMTIN7 will be entered with no hyphens followed by a - (dash) and the letter "D," for example: 123456789-D. The AMTIN7 command code is only available to the Area Office AIMS/ERCS analysts. Contact your local AIMS/ERCS analyst for assistance if you need to secure a temporary TIN through AMTIN7.

    Note:

    An assessment cannot be made against an SSN followed by a D because this SSN is not on Master File.

  6. If an asterisk (*) is present indicating an invalid SSN, correction may have been made since the original opening. Research both the valid number and the invalid number to determine whether the account has been corrected.

    1. If information has been secured to resolve the invalid SSN, contact should be made with the Entity Function at the campus. The Austin, Cincinnati, Fresno, and Ogden Campuses have entity contacts. The contacts can be located on the Area and Campus Program Contacts in the Audit Information Management System (AIMS) book of the Exam Procedures Knowledge base.

    2. An invalid SSN may also involve a duplicate filing condition caused by returns of two different taxpayers trying to post the same account.

    3. Do not attempt to correct the invalid condition with Form 2363, Master File Entity Change. When an account number is changed, all data posted to the incorrect number is transferred to the correct number. Carefully study transcripts of all accounts involved before making any adjustments.

  7. If it has been determined that a return has posted to a different taxpayer’s account, refer to IRM 4.38.1.10.2, Credit Transfers and IRM 4.38.1.10.3, Reprocessing Returns, for closing instructions.

Taxpayers with no TIN
  1. When the taxpayer does not have a TIN and an adjustment needs to be made to the taxpayer’s account on Master file the following options are available:

    1. The taxpayer may request a temporary TIN called an IRS Individual Taxpayer Identification Number (ITIN). The ITIN is given by the IRS, not the Social Security Administration (SSA), and begins with the number "9."

    2. The IRS may request a TIN for the taxpayer called an Internal Revenue Service Number (IRSN).

  2. If the taxpayer does not have an EIN or SSN and refuses to file Form SS-4, Application for Employer Identification Number, the examiner can secure an IRSN by completing Form 4442, Inquiry Referral, or Form 9956, Request for Temporary SSN. Follow the instructions below:

    1. Form 4442, Inquiry Referral, is faxed to the Entity function at the Cincinnati Campus or Ogden Campus for BMF taxpayers.

    2. Form 9956, Request for Temporary SSN, is faxed to the Entity function at the Austin Campus or Fresno Campus for IMF taxpayers.

    3. Instructions for completion of Form 4442, Inquiry Referral, are included on the form. In addition, when requesting an EIN for a BMF taxpayer, include your request in "Section B - Taxpayer Inquiry/Proposed Resolution" stating you are requesting an IRSN for a BMF taxpayer and request the account be established on Master File.

    4. When completing Form 9956 be sure to check the "YES" box next to the question: "Would you like the account established on Master File?"

  3. For additional information on TINs, refer to IRM 3.13.2, BMF Account Numbers, and IRM 3.13.5, Individual Master File (IMF) Account Numbers.

MFT
  1. Enter the Master File Tax Code (MFT) or Non-Master File Tax Code (NMFT) for the tax return.

P24 - 29 Tax Period
  1. Enter tax period using YYYYMM format.

    Example:

    Enter 201312 for a 2013 calendar year return.

  2. Use the following information for these forms:

    1. For Form 706, U.S. Estate Tax Return, enter all zeroes (000000).

    2. Form 11-C, Occupational Tax and Registration Return for Wagering, Form 730, Monthly Tax Return for Wagers, or Form 2290, Heavy Highway Vehicle Use Tax Return, can have different month ending tax periods depending on the situation. For example, Form 2290 could have a tax period of 201407 if a vehicle was first used during the month of July in 2014.

Check Digit/Name Control (CD/NC)
  1. Enter the check digit in positions 33 and 34. If the check digit is not available, the name control should be used. If the check digit was used to establish the account, the check digit must be used at closing.

Item B: Name
  1. Enter the name of the taxpayer as shown on the tax return. If necessary, edit the name not to exceed 35 characters.

  2. Enter the name as follows:

    Individual Master File (IMF) Business Master File (BMF)
    Enter the last name (comma), first name, then the middle initial, if any. Enter the name as it appears on the return.

P36: Batch Position Indicator
  1. Only NMF accounts require a batch position indicator. This field is used to indicate whether the record being processed is the first, last, continuation, addition to a block, or a single closing of a block.

  2. Valid indicators are as follows:

    1. "F" - first closing within a block. After this record is processed, the computer will change the F to a C.

    2. "C" - continuation with a block as interrupted and left open.

    3. "L" - last closing within the block. If this is not entered with the last closing, it is not possible to begin a new book.

    4. "R" - reopen a previously closed book. After this record is processed, the computer will change the R to a C.

    5. "S" - single closing (one case for the block). This indicator will open the block, process the account, and close the block.

P38-40: Blocking Series Number
  1. All closures require a blocking series number. For a list of blocking series, refer to Document 6209, Section 12, Examination.

P45-48: Sequence Number
  1. This field is used by the terminal operator to number the input documents.

Item 01: Secondary Spouse SSN
  1. Enter the SSN of the spouse when there is an adjustment to the spouse’s Individual Retirement Account (IRA).

Item 02: Penalty Reason Code
  1. The Penalty Reason Code is a two-digit number and a required entry if penalties are being abated.

  2. Refer to IRM 20.1.1, Introduction and Penalty Relief, for procedures pertaining to penalties.

  3. For additional information on penalty reason codes, refer to Section 10-9 in Document 6209.

Item 03: Letter Date (Large Corporate Taxpayer C-Corporations BMF Only)
  1. When preparing Form 5344 for any partial assessment or final closing, input of this date causes the taxpayer’s account to reflect a Master File Status 30. If the C-Corporation taxpayer does not pay the balance timely, 30 days are added to this date to establish a Large Corporate Underpayment (LCU) trigger date. The accuracy of this date is critical because once the 30th day from the notice date elapses without a payment, the taxpayer is subject to an underpayment interest rate which is 2% higher than the normal interest rate until the account is full paid.

  2. Refer to IRM 20.2.5, Interest, Interest on Underpayments, Large Corporate Underpayments (LCU) Introduction, for all procedures pertaining to interest.

Item 04: Letter Amount
  1. When Item 03 is entered, Items 04 and 05 must also be completed.

  2. The amount must be over $100,000 in tax.

  3. Item 04 letter amount must equal the tax amount on the earliest 30 or 90-day letter sent to the "C-Corporation" taxpayer.

  4. Refer to IRM 20.2.5.8, Interest, Interest on Underpayments, Large Corporate Underpayment (LCU) Introduction, for all procedures pertaining to interest.

Item 05: 2% Int Date
  1. This entry must be 30 days later than the date entered in Item 03 and serves as the trigger date for LCU interest accrual. Entry in this item requires a TC 340 for interest and Item 6A "Debit Interest to Date" . CCP will enter the TC 340 amount and the Item 6A date.

  2. Refer to IRM 20.2.5.8, Interest- Interest on Underpayments, for all procedures pertaining to interest.

Item 6A: Debit Interest to Date
  1. Refer to IRM 20.2.5, Interest, Interest on Underpayments, for all procedures pertaining to interest.

Item 6B: Credit Interest
  1. Refer to IRM 20.2.4, Interest, Overpayment Interest, for all procedures pertaining to interest.

Item 6C: Computer Interest Amounts
  1. Refer to IRM 20.2.8.11, Interest, Restricted Interest, Non-Restricting Transaction Code (TC 340), for all procedures pertaining to interest.

Item 07: Hold Code
  1. Hold codes, ranging from 1 through 5, are used to restrict certain Master File actions with the posting of adjustment transactions. Only use one of the following when applicable.

    Code Action
    0 No Hold Code
    1 If net module balance after posting is a credit, holds credit until: Doc. Code 24 or 34 posts, TC 820 or 830 posts, TC 29X or 30X posts, Doc. Code 51 with secondary TC 300 posts, or total module balance becomes zero or debit. Set -K freeze.
    2 Same as "1" but holds notice and credit.
    3 Prevents the issuance of the adjustment notice for the adjustment transaction on which it is entered. It does not prevents the issuance of any other notice.
    4 Same as "1" except that a notice will not be issued at any time. MFT 61 and 63 only: suppresses CP 243.
    5 MFT 61, 63 only: suppresses CP 243. If both Hold Codes 4 and 5 should be used, use Hold Code 4.

    Note:

    Provided to the right of the hold code field for a short explanation of why the hold code is necessary. The remarks will assist the unpostable examiner if the transaction unposts.

Hold Notices
  1. Hold Code 2 - If the module balance after posting the adjustment is zero or debit, a notice is not issued, and no credit freeze is set. If the module balance after posting the adjustment is a credit, neither a refund nor an overpayment notice will be issued until one of the following occurs:

    1. A record with Document Code 24 or 34 posts.

    2. TC 29X, 30X, 820, or 830 posts.

    3. The net module balance becomes zero or debit (releases notice freeze).

    4. Enter Hold Code 2 on all second adjustment Form 5344, when a quick assessment is made unless a manual offset is involved or an overassessment was processed using quick assessment procedures.

    5. Do not use Hold Code 2 on partial assessments unless it has been specifically requested on Form 3198 that the taxpayer not receive a notice.

  2. Hold Code 3 - A notice is not issued at any time for this adjustment. Also allows any credit to refund when assessing a partial.

  3. Hold Code 4 - If the module balance after posting the adjustment is a credit, a notice is not issued at any time, and a refund is not issued until one of the following occurs:

    1. A Record with Document Code 24 or 34 posts.

    2. TC 29X, 30X, 820, or 830 posts.

    3. The new module balance becomes zero or debit.

  4. Hold Code 5 will suppress a CP 243 notice. CP 243 will be generated if the adjustment takes the module balance from debit to zero or credit. If both Hold Codes 4 and 5 are applicable, use Hold Code 4.

Item 08: Agreement Date
  1. This date is used at Master File (Waiver 870 date) to identify if the agreed and unpaid assessment was posted to the account within 30 days of the waiver being signed. If the date of the agreed and unpaid assessment (known as the 23C date) is later than the waiver plus the 30-day date, then interest on the agreed amount is suspended from the 30th day after the agreement, until full paid, or the 23C date of the assessment.

  2. Only returns with an MFT of 02, 05, 12, 30, 31, 51, and 52 require an agreement date. If an agreement date is entered other than for the MFTs above, Master File will allow for an interest-free period, which is not correct.

  3. An agreement date is required to be entered on agreed deficiency cases if the disposal code is 03, 04 or 09 and Item 12 contains an increase in tax and the MFT is 02, 05, 12, 30, 31, 51, or 52.

    Note:

    For MFT 30 returns, the agreement date cannot be earlier than the return due date or return filed date, whichever is later.

    Note:

    An agreement date will not be allowed if the disposal code is 08, 10 or 13.

How to Determine Date
  1. The agreement date is generally considered to be the IRS received date. If the received date is missing or illegible, enter the postmark date (excluding meter mail) or the signature date, whichever is closer to the current date.

  2. For Form 870-PT, Agreement for Partnership Items & Partnership Level Determinations as to Penalties, Additions to Tax, and Additional Amounts and Form 870-LT, Agreement for Partnership Items & Partnership Level Determinations as to Penalties, Additions to Tax and Additional Amounts and Agreements for Affected Items, it is the date these forms were executed by an authorized person on behalf of the Commissioner.

Effective Date
  1. When the agreement form contains instructions as to the effective date of the agreement, that effective date should be entered. This date cannot be greater than the current date.

Payment In Lieu
  1. When payment is accepted in lieu of a signed agreement, do not enter an agreement date in Item 08. Use Disposal Code 08 to close the case.

    Types of Cases Action Taken
    IRC Section 6603 Deposit (formerly known as Cash Bond) IRC Section 6603 deposits do not constitute a payment in lieu of an agreement.
    90-Day Cases Payments in lieu of an agreement are not valid for 90-day cases. Refer to IRM 4.8.9, Technical Services - Notice of Deficiency, for more information.
    Agreement Received After Payment Use the received date of the agreement. MF will use the TC 640 date and the "870 Date" to compute interest correctly.
    Multiple Signed Agreements If a second signed agreement is secured for an amount greater than the first agreement, enter the most recent agreement date.

    Note:

    If the first signed agreement is not full paid, then underpayment interest has to be manually calculated and input using a Non-Restricting TC 340 whenever possible. CCP will make this computation.

    Employment Tax Cases Do not enter an agreement date since there is no interest-free period for employment tax cases.
    Claim for Refund, Overassessment or Abatement Cases Do not enter an agreement date for claim for refund/abatement cases if entering TC 301 or TC 309.
    Surveyed Claims Do not enter an agreement date for surveyed claims.
    No Signed Agreement Do not enter an agreement date when there is no signed agreement. If full payment of tax and penalties is received in lieu of a signature, use Disposal Code 08 to close the case.

Item 09: Priority Code
  1. These codes must be used to post adjustments to the Master File (MF) when certain conditions exist. Failure to use the priority code when specified will cause the transactions to unpost, causing erroneous notices, refunding or billing especially in cases where multiple adjustments and/or credit transfers are being processed. If an adjustment needs a priority code it may indicate that Collection, Examination, or Statute should be consulted. It may also question the validity of a tax abatement, such as an abatement of tax on a return with a Collection Field Function Secured Return Code, no math error code, and the module is in Status 60 is questionable as the return was assessed as filed, filed late, and contained the information the taxpayer wanted the Revenue Officer to review.

  2. Priority Codes (PC) 1, 2, 3, 4, 5, 6, 7, 8, or 9 must be used with extreme care. Priority Codes are input by CCP.

  3. The table below provides an explanation of the priority codes, when to use them and which Unpostable Code (UPC) with the applicable Reason Code (RC) will be bypassed when you enter a particular PC.

    Code Action Bypassed UPC
    1 Bypass TC 97X freeze UPC 160 RC 4; UPC 150 RC 3
    2 Settlement Amount - no longer valid for Exam UPC 143
    3 Amended Return - use when inputting an overpayment adjustment which is IRS initiated to consider the 45-day interest-free back off periods. UPC 160 RC 4
    3 Bypasses the unpostable which would be caused if there is an amended return freeze at MF and a TC 30X is attempting to post.
    Use when inputting an overpayment adjustment which is IRS initiated to consider the 45- or 180-day interest-free back off periods.
    N/A
    3 For MFT 30 and 31. It causes MF to compute the credit interest from the normal start date to the 23C date minus 58 days. IRM 20.2.4.5.5., 45-Day Rule and IRS Initiated Adjustments.
    Use when inputting an overpayment adjustment which is IRS initiated to consider the 45- or 180-day interest free back off periods.
    N/A
    3 Effective 1/1/2009 - IMF: bypasses the amended return freeze and computes FTP back to RDD for TC 30X adjustment.
    Use when original return is an SFR. This also ignores the agreement date.
    UPC 160 RC 4
    4 Amended return - partial assessment UPC 160 RC 4
    5 FTP penalty or interest - causes assessment of accruals N/A
    6 Setting the 2/10 Year settings of the EIC Recertification Indicator. 30X with a 765 and reference code 680 with an amount or zero with a priority code 6, MF will assert the 2-year ban on the appropriate tax year account. N/A
    7 Setting the 2/10 Year settings of the EIC Recertification Indicator & bypass amended return freezes - 30X with a 765 and reference code 680 with an amount or zero with a priority code 7, MFT will assert the 2-year ban on the appropriate tax year account & bypass amended return freeze. N/A
    7 Amended Return UPC 160 RC 4
    7 TC 421 UPC 160 RC 4
    8 CREF 806/807 no TC 17X - If Estimated Tax Indicator is present - must enter TC 17X or PC 8. A TC 30X with a PC 8 releases the TDI/DEL RET Refund Freeze. UPC 158 TC 0; UPC 160 RC 4
    9 FTP back to RDD for TC 300 adjustment - only necessary on IMF. BMF automatically generates FTP from RDD unless TC 270 is input. Entering a TC 270 amount will prevent MF from computing back to RDD even though PC 9 is input.
    Use when inputting a return or adjustment, if the module contains an SFR, to compute FTP from return due date.
    UPC 189
    9 Use if agreement date is entered and push code 036 is on the module. This prevents the agreement date from going to Master File. Therefore, interest will be computed correctly.
    Use when inputting a return or adjustment, if the module contains an SFR, to compute FTP from return due date.
    N/A
    9 Use to bypass UPC 168 for MFT 31 TC 30X with a reference number 765, 767, and 807.
    Use when inputting a return or adjustment, if the module contains an SFR, to compute FTP from return due date.
    UPC 168

Additional Processing Procedures and Information
  1. The following additional information is provided when using priority codes:

    1. A restricted module, such as a TC 270 or TC 271, means the computation of the FTP penalty will not automatically be calculated by the computer. If the tax module contains a TC 270 or TC 271 and a G- freeze, the computation of the FTP penalty must be done manually. If there is a TC 340 or TC 341 and a -I freeze, interest must be manually computed and input.

    2. A notice to the taxpayer may be suppressed by input of an appropriate hold code with the adjustment. Accruals will be assessed whether or not a notice is issued. Hold codes can be found in Document 6209, IRS Processing Codes and Information, Section 8C-8.

    3. There may be instances where Form 3870, Request for Adjustment, is used to input a TC 29X (Doc Code 54). The priority codes used by AIMS (TC 30X, Doc Code 47) are not always the same as the priority codes used on Form 3870, Request for Adjustment. Refer to Document 6209, Section 8C for additional information.

      Note:

      Form 3870, Request for Adjustment, should only be used to request adjustments to accounts where there is no -L freeze on the module or to affect account transactions (i.e., credit transfers, freeze releases, etc.).

Item 11: Interest Computation Date
  1. For Cases closed with a TC 304, 305, 308, or 309, CCP will enter the interest computation date which identifies the interest start date for the tax adjustment amount entered with a TC 304/305/308/309.

    Note:

    RGS requires an entry in Item 11 when the Carryback Adjustment pop up box is completed. For carrybacks, it is the loss year return due date. The examiner will enter the interest start date and CCP will verify this entry. When the interest start date is other than the loss year return due date, interest may need to be manually computed with a TC 770.

Interest Computation Date for Erroneous Refund Cases
  1. Enter the interest start date when the erroneous refund is supposed to be paid back.

    Note:

    If the interest start date is not known, Field Exam should make the following notation on Form 3198 in "Other Instructions" under the "Special Features" section, "Interest Start Date for Erroneous Refund, Use 23C Date." CCP will need to close the case manually.

  2. Do not use TC 304 in Item 12 because it will go unpostable unless there is a TC 305 or TC 295 on the module.

  3. Do not use TC 340 in Item 12 for an erroneous refund case because there is no reason to compute restricted interest or restrict the tax module.

  4. Refer to IRM 20.2.9, Interest on Carryback of Net Operating Loss, for additional information and special rules applying to overpayment interest. Also refer to IRM 20.2.10.5.1, Underpayment Adjustments on Employment Taxes, where the interest computation date would be different than the return due date.

Item 12: Tax, Penalty, and Interest Adjustments
  1. This field is used to enter the examination adjustments. This entry is dependent on the disposal code.

    If the disposal code is: THEN:
    01 - Item 12 may be blank. The computer will generate a TC 300 for zero.
    02 - if Item 12 has an entry, the net result of all Item 12 entries must equal zero.
    02 - if Item 12 is blank. The computer will automatically generate a TC 300 for $0.00.
    03, 04, 08, 09, 10, 12 or 13 - Item 12 may or may not be entered. A terminal reject will occur if no Exam Results are entered at closing.
    34 - An amount must be entered in Item 12 and/or 15, and the net amount must be negative. For example, Item 12 may contain a tax increase if Item 15 contains an increase in a refundable credit in an amount greater than the tax increase in Item 12.

Item 12 Entries
  1. The majority of Form 5344 entries are generated through a report writing program, for example, Report Generation Software (RGS). Therefore, the entries in Item 12 would be automatically populated on the Form 5344 based on the information contained on Form 4549, Report of Income Tax Examination Changes.

  2. If more than one deficiency is determined due to multiple agreement dates, Form 5344 should reflect the total tax change and/or penalty. However, interest must be computed manually using the separate agreement dates and a combined interest amount will be entered with TC 340. Check the box on the second page of Form 5344 in the "Special/Restricted Interest Features" section for "Multiple Agreements: Date of first RAR."

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Tax Adjustments
  1. The following transaction codes are used when making an adjustment to tax:

  2. TC 300: Assesses an Examination tax deficiency on a tax module containing TC 150.

    IF there is THEN the TC 300 will
    Amended Return Freeze Post only if a priority code is used. PC 1&3 releases the freeze, PC 4 does not.
    Interest Due Generate TC 336 (assessment of interest)
    -L Freeze Generate TC 421 (unless CC is AMCLSF which is used to input a partial assessment) to release -L freeze if the Disposal Code is 1-4, 8-10, 12, 13 or 34
    TC 470 Release TC 470 (claim pending)
    TC 570 Release TC 570 freeze (additional liability pending) and refund hold
    TC 640 Releases TC 640, advance payment of determined deficiency freeze
    TC 680 (IMF Only) Releases TC 680, interest payment, invalid SSN, and account reactivation freezes
    TC 720 Release TC 720, refund payment freeze
    TC 840 Release TC 840, refund prior to final settlement
    TC 841 Releases TC 841, canceled refund check freeze
    TC 842 (BMF) Release TC 842, refund deletion and Joint Committee only freezes

  3. TC 301 -Abates previously posted TC 150, 290, and/or 300 in full or in part. The TC 301 amount cannot be more than the total tax on the module which is the sum of the TC 150 amount, and all TC 29X and TC 30X amounts. It releases the same freezes and holds as TC 300.

  4. TC 337 - Generates a TC 337, abatement of computer-generated interest, if applicable.

  5. TC 304 - Adjusts a previously posted tentative allowance input with TC 295 or 305.

    1. TC 295 or 305 must be present in the module.

    2. TC 304 amount cannot exceed the sum of the TC 295 and 305 amounts.

    3. Contains an interest computation date (interest start date) entered in Item 11 of Form 5344.

    4. Otherwise, same as TC 300.

  6. TC 305 - Inputs a tentative allowance from Form 1045, Application for Tentative Refund, or Form 1139, Corporation Application for Tentative Refund, or from an amended return.

    1. Contains an interest computation date (interest start date) entered in Item 11 of Form 5344.

    2. Valid only with Tax Class 2 or 3.

    3. Otherwise, same as TC 301.

  7. TC 308 - Assesses an Examination tax deficiency on a tax module containing TC 150, must include an interest computation date, entered in Item 11 of Form 5344, can be used with penalty and interest transactions, and same as TC 300 with the following exceptions:

    1. Must include an interest computation date, entered an Item 11 of Form 5344 .

    2. Can be used with penalty and interest transactions.

    3. Same as TC 300.

      Exception:

      Can be used with another tax adjustment code, except TC 304 or 305.

      Exception:

      If the TC 301 is more than the TC 308, interest has to be restricted

      Exception:

      If there are multiple TC 308s, CCP can cycle each assessment rather than restricting the module.

      Note:

      Refer to IRM 20.2.9, Interest on Carryback of Net Operating Loss and IRM 20.2.10.5, Employment Taxes.

  8. TC 309 - Input an Examination Overassessment of tax to a module with a TC 150.

    1. Must include an interest computation date, entered in Item 11 of Form 5344.

    2. Can be used with penalty and interest transactions.

    3. Same as TC 301 with the following exceptions:

      Exception:

      Can be used with another tax adjustment code, except TC 304 or 305.

      Exception:

      If the TC 309 is more than the TC 300, interest has to be restricted. TC 300 and 309 may be input on the same adjustment document with an interest computation date. Interest should NOT be manually computed unless the module is already restricted as MF is capable of calculating the correct interest. TC 309 will post to the module provided the amount is not greater than the net of all TC’s 150, 29X, and 30X, INCLUDING the TC 300 processed on the same adjustment document.

      Exception:

      If there are multiple TC 309s, CCP can cycle each assessment rather than restricting the module.

    .

Interest Transaction Codes
  1. The combined total of the penalty and interest transaction codes input per adjustment document is limited to four. The following table details the actions necessary with each transaction code related to interest.

    Transaction Code Actions to Take
    TC 340
    • Assesses manually computed restricted interest

    • After this transaction has posted, no interest for the same module will be assessed or abated by the computer, except as explained below.

    • Any other interest adjustments must be computed manually and input with TC 340 or 341.

      Note:

      Use a non-restricting TC 340 whenever possible. Refer to IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340.

    TC 341
    • Abates previously posted TC 190, 196, 336, or 340 in full or in part.

    • Cannot be more than the total interest (TC 19X, 33X, and 34X).

    • Interest need not be permanently restricted when a TC 341 is input. Use of a cycle delayed non-restricting TC 340, where MF uses the COMP-INT-AMT and its DB-INT-TO-DT to systemically update interest, will remove the interest restriction. Refer to IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340.

    TC 342
    • Removes the restriction on computation of debit TC 340 interest and allows normal recomputation of interest.

      Caution:

      Only use if the account was erroneously restricted. TC 342 may not be input without first securing the source document for the TC 340/341 that created the interest restriction. Refer to IRM 20.8.8.3(13)(a), Manual Computations. If unsure, use a non-restricting TC 340 instead.

    TC 770
    • Credits the tax module to allow interest on an overpayment that is manually computed.

    • Interest may be allowed when an overpayment is refunded and/or offset.

    • When manually computed interest is posted to a tax module with TC 770, overpayment interest is not computer-generated until the module balance reaches zero.

    TC 772
    • Reverses a TC 770 or TC 776 in whole or in part.

    • Represents manually calculated debit interest that is charged at the credit interest rate when netting is applicable.

    • Cannot exceed the total of TC 770 and TC 776.

    TC 720
    • Represents a refund payment and may be associated with a TC 772 reversing the credit interest allowed with the refund.

    Reminder:

    TC 680 - the posting of a TC 680, designating interest payment, generates TC 196, interest assessment in the same amount as the TC 680.

    Reminder:

    IMF Only - TC 150 with Condition Code Z, Combat Zone taxpayer, generates TC 340 for zero amount, turning on debit restricted interest indicator and restricted FTP penalty. TC 500 (military deferment) also generates TC 340.

Penalty Transaction Codes
  1. The combined total of the penalty and interest transaction codes is limited to four.

    Note:

    Penalty transaction codes are not allowed on Employment tax returns with an Employment Code of "F."

    Transaction Code Actions to Take
    TC 160
    • Assesses manually computed delinquency penalty.

    • After a TC 160 posts to a module, all subsequent adjustments to the delinquency penalty must be manually computed.

    Substitute for Return (SFR) or Delinquent Return
    • On an SFR or delinquent return, the delinquency penalty, TC 160, must be reflected on the Form 5344, even if no penalty is asserted. This excludes Disposal Codes 01 and 02.

    • The first page of the AMDISA has a field titled, "DELQ-RET-IND" . If the delinquent return indicator is a "1" , the delinquency penalty must be addressed on the Form 5344. There must be a TC 160 or TC 161 in Item 12. If no delinquency penalty is to be asserted, enter TC 160 for 0.00.

    TC 161
    • Abates a previously posted TC 160 or 166 (computer-generated delinquency penalty) in full or in part.

    TC 162
    • Removes restriction on computation of Failure to File Penalty (FTF) on previously posted TC 160 or 161.

    • Causes recomputation and allows normal computation of FTF penalty.

    TC 170
    • Assesses manually computed estimated tax penalty applicable to Form 1040, U.S. Individual Income Tax Return, Form 1120, U.S. Corporation Income Tax Return, Form 990-C, Farmer’s Cooperative Association Income Tax Return, and Form 8804, Annual Return for Partnership Withholding Tax (Section 1446).

    • After a TC 170 posts to a module, all subsequent adjustments to the estimated tax penalty must be manually computed.

    • To increase a previously posted TC 170 or 176 (computer generated estimated tax penalty), enter TC 170 for the additional amount of the penalty.

    • If there is no previously posted TC 170 or TC 176, the penalty is assessed with a TC 170 in the normal manner.

    TC 171
    • Abates previously posted TC 170 or 176 in full or in part.

    TC 180 (BMF Only)
    • Assesses the Failure to Deposit (FTD) penalty for insufficient and/or untimely deposit of taxes.

    • Applies to MFT Codes 01, 03, 09, 10, 11, 12, or 16.

    • To adjust TC 180 or TC 186 (computer generated FTD penalty), follow procedures for adjusting TC 170 or TC 176. Refer to IRM 20.1.4, Penalty Handbook - Failure to Deposit Penalty.

    • After a TC 180 posts to a module, all subsequent adjustments to the FTD penalty must be manually computed.

      Note:

      FTD penalty is not allowed on Employment tax returns with Employment Code "A" or "F."

    TC 181 (BMF Only)
    • Abates a previously posted TC 180 in full or in part.

    • To adjust TC 181, follow procedures for adjusting TC 171. Refer to IRM 20.1.4, Failure to Deposit Penalty.

    TC 200 (IMF Only)
    • Assesses a penalty for failure to furnish requested identifying numbers.

    TC 201 (IMF Only)
    • Abates a previously posted TC 200 in full or in part.

    TC 234 (BMF Only)
    • Assesses a manually computed $20 daily delinquency penalty up to a maximum of $10,000.

    TC 235 (BMF Only)
    • Abates previously assessed daily delinquency penalty, TC 234 or TC 238 (computer generated penalty) in whole or in part.

    TC 240
    • TC 240 is a computer-generated miscellaneous penalty not identified with its own transaction code or reference number. The TC 240 is generated based on the Penalty Reference Number (PRN) entered in Item 15 of Form 5344.

    • TC 240 is also used to assess the IRC 6698, Failure to File Partnership Return, and IRC 6699, Failure to File S Corporation Return when the penalty is asserted for failure to include all required information with Form 1065, U.S. Return of Partnership Income or Form 1120S, U.S. Income Tax Return for an S Corporation. However, special procedures apply for these assessments. Refer to IRM 20.1.2.3, Penalty Handbook - Failure to File / Failure to Pay Penalties, Failure to File a Partnership Return-IRC 6698, and IRM 20.1.2.5, Penalty Handbook-Failure to File/Failure to Pay Penalties, Failure to File S Corporation-IRC 6699.

    • TC 240 should be used rarely. The majority of penalties now have their own penalty reference number (PRN). The PRN should be entered in Item 15 of Form 5344 with the corresponding amount of the penalty.

    TC 241
    • Input the penalty reference number with a minus in Item 15 of Form 5344 and the computer will generate a TC 241. This action will abate a previously posted TC 240 in full or in part.

    TC 270
    • Assesses manually computed penalty for FTP tax.

    • After TC 270 posts, all subsequent adjustments to penalties must be manually computed.

    • Restricts penalty computation for the same module.

    • TC 150 with Condition Code Z (combat zone) generates TC 270 for zero amount.

    TC 271
    • Manual abatement of previously assessed FTP penalty. Restricts penalty computation for the same module.

      Exception:

      TC 271 does not restrict penalty computation if the penalty was abated for reasonable cause with Reason Code 062.

    TC 272
    • Removes restriction on computation of FTP penalty on previously posted TC 270 or 271.

    • Causes recomputation and allows normal computation of FTP penalty.

      Exception:

      TC 272 does not cause recomputation if the penalty was abated for reasonable cause with Reason Code 062. If the penalty was abated in error, it must be manually reassessed.

    TC 281
    • Abates previously posted TC 280 (manually computed penalty) and TC 286 (computer generated penalty) in full or in part.

    • Will post prior to return (account with no TC 150) if it is the only transaction with TC 290, and the module contains TC 280 or 286 of equal or greater amount.

    TC 310 (IMF Only)
    • Assesses penalty for failure to report tip income.

    TC 311 (IMF Only)
    • Abates previously posted TC 310 in full or in part.

    TC 320
    • Assesses fraud penalty.

    • Restricts FTP penalty.

    • May not be used with another penalty except TC 160, TC 170, or TC 180.

    TC 321
    • Abates previously posted TC 320 in full or in part.

    • Releases the restrictions on FTP penalty.

    TC 350
    • Assesses negligence penalty for returns prior to 1989.

    • A TC 350 and a TC 320 may be asserted on the same module but on different portions of the tax. Refer to IRM 20.1.5, Penalty Handbook, Return Related Penalties, for more information.

    TC 351
    • Abates previously posted TC 350 in full or in part.

    • For tax years prior to 1988 the penalty includes 50% of the interest. This needs to be considered when abating part of the TC 350.

    • For more information, refer to IRM 20.2.5.3, Interest - Interest on Underpayments, Interest on Penalties and Additions to Tax.

Disposal Code
  1. 01-04, 09, 10, 12, 13, or 34 is required on all examined closings.

Validity Checks
  1. Certain validity checks must be met, or the document will reject at the terminal.

  2. Disposal Codes 03, 04, 10, 12, 13, and 34 require Examination Results.

  3. Disposal Codes 09 and 10 (all pertaining to Statutory Notices of Deficiency) are not valid with MFT codes in which stat notices are not issued (MFTs 01, 04, 09, 10, 11, 14, 16, 17, 18, 19, 71, 72, or 80).

  4. If Disposal Code is 01, 02, or Item 12 and/or Item 15 must not contain an amount that represents tax, penalty, or credits.

  5. If Disposal Code is 01, Item 12 must be blank, but Item 15 may contain an entry other than credit reference numbers 301, 302, 303, 304, 307, 310, 312, 318, 680, 681, 682, 685, 686, 764, 765, 766, 767, 806 and 807.

Agreed
  1. Use Disposal Codes 03, 04, 08 or 09.

Changed Case/No Dollars
  1. Use Disposal Code 12.

  2. A changed case with no results requires an amount of $1 in Item 35, Manual Assessment Amount and Disposal Code 12 in Item 13. Some examples of these types of cases are:

    1. Barred assessment cases

    2. Interest assessment only

    3. Tax assessments offset by credits in the same tax period

    4. Penalty assessment only

  3. If applicable, enter an agreement date in Item 08.

Defaulted Statutory Notice of Deficiency
  1. Use Disposal Code 10.

No Change
  1. Use Disposal Code 01 or 02.

  2. PC 5 is automatically generated on all DC 01 and 02 returns. This allows the computer to automatically update the FTP penalty.

Partial Assessments
  1. Only 03, 04, 08, 09, 10, and 13 are valid.

Surveyed Claims
  1. Use Disposal Code 34.

  2. A claim amount must be present on AIMS.

  3. The net of tax and penalties in Item 12 and/or 15 must be negative or a positive credit amount.

  4. Items 12, 13, 15 (if applicable), 21 and 36 are required.

Undeliverable Statutory Notice of Deficiency
  1. Use Disposal Code 13.

Other IRM References
  1. Refer to IRM 4.4.1, Audit Information Management System (AIMS) - Validity and Consistency, Introduction for further information.

Item 14: Statute Extended to
  1. If the statute expiration date has been corrected or extended, and has not been updated on AIMS, enter the extended date in Item 14.

  2. Failure to input a numeric date will cause an unpostable condition if the MF statute date has expired and an assessment attempts to post.

  3. Item 14 is a required entry if making an adjustment to an Individual Retirement Account (IRA) MFT 29 module.

Alpha Codes
  1. If an assessment is input and the AIMS base contains an alpha character in the statute date that date must be updated to a numeric date prior to closing.

    Exception:

    When the input is a partial assessment, currently a statute date with an alpha code of EE does not need to be updated to a numeric date. Effective 1/1/2016 a statute date with an alpha code of EE does not need to be updated to a numeric date for a final closure with an assessment.

  2. AIMS does not send a statute update to Master File if the AIMS statute date contains alpha codes.

  3. It is not necessary to update the alpha date on no change cases. AIMS does not send an alpha code to Mater File and a TC 300 for zero will not unpost if the assessment statute expiration date (ASED) is expired.

Claims
  1. Timely filed examined claims that result in a refund will post to Master File even when the ASED has expired.

Form 872, Consent to Extend Time to Assess Tax
  1. If there is a valid Form 872, in the file, if the correct ASED is not on AIMS, then the extended statute date must be entered to ensure Master File is correct.

Form 872-A, Special Consent to Extend the Time to Assess Tax
  1. If there is a valid Form 872-A, in the file, if the correct ASED is not on AIMS, then the extended statute date must be entered to ensure Master File is correct.

TC 560
  1. When the entry in Item 14 is input and it is not the same date as the current ASED on AIMS, it will generate a new assessment statute expiration date (ASED/TC 560) on the Master File.

SFR Posted
  1. If the TC 150 is an SFR, an ASED date is not computed at Master File. Refer to IRM 25.6.1.9.4.5, Statute of Limitations Processes and Procedures, Substitute for Return (SFR), for more information.

Consent Indicator
  1. An indicator of X or R will appear after the ASED in the following situations:

    INDICATOR EXPLANATION
    X The statute date has been changed, for example, 04152015X.
    R The statute date has been updated with a Restricted Extension (Statute restricted to a set of issues or flow through entities.)

More Information
  1. Refer to IRM 25.6, Statute of Limitations, for more information.

Item 15: Credit and Tax Computation Adjustments
  1. Entries in this item are used to:

    1. Update information fields on Master File (not applicable for non-taxable returns),

    2. Adjust credits on individual, fiduciary and corporation returns,

    3. Post changes to adjusted gross income or self-employment tax on individual returns,

    4. Provide Master File a means to distinguish certain miscellaneous penalties on which to generate interest, and

    5. Adjust and identify the types of tax being adjusted on excise or employment tax returns.

Maximum Number of Entries
  1. Eight entries can be input at one time.

  2. The examiner will identify the reference numbers that do not impact tax or penalties. For examiners using RGS refer to the RGS article, RGS Form 5344 - Help Sheet for SBSE and refer to Important Information for information regarding the maximum entries in Item 15 of Form 5344. Be sure to annotate Form 3198 in the "Special Features" section on page 1 and check the box for "F5344, Item 15 more than 8 ref codes (REQ54 req’d)" .

  3. When there are more than eight references that impact tax (example: Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return), partial procedures will be used by CCP.

Special Validity Checks
  1. A terminal reject will occur if any of the following conditions do not occur:

  2. Disposal Code 01

    • MFT 03: Item 15 may be entered but the net total of all Item 15 entries must equal zero.

    • MFT (other than 03): an amount may be entered if it is other than a reference number that represents a penalty or credit, such as 680 or 806.

FUTA State Code (also known as State Credit Reduction)
  1. Federal Unemployment Tax Act (FUTA) state code is valid for MFTs 05, 10 and 30 and is required if the Disposal Code is equal to 03 or 12. The state code is the postal two-letter state abbreviation.

    Example:

    The state code for Colorado is CO.

  2. FUTA state code is invalid if the Disposal Code is 01 or 02.

  3. If you are adjusting FUTA Tax, a "T" for "taxes" for the primary taxpayer will be entered or a "Z" for taxes for the secondary taxpayer will be entered. If you are adjusting FUTA Wages, a "W" for "Wages" for the primary taxpayer will be entered or a "Y" for wages for the secondary taxpayer will be entered.

  4. The total of FUTA State Code amounts for codes beginning with a "T" or "Z" must equal Item 12 Tax transaction amounts.

    Example:

    To enter an adjustment for FUTA taxes for the primary taxpayer in Item 15, enter at the left most position under "Ref. No." TCO which stands for "Tax Colorado" and the amount of FUTA taxes. The entry would appear as 15-TCO/100000. The corresponding Item 12 entry would be a TC 300 for 100000. For a tax adjustment for the secondary taxpayer, substitute a Z for the T.

  5. The total of FUTA State Code amounts for codes beginning with a "W" or "Z" will be entered in Item 15 as follows:

    Example:

    To enter an adjustment for FUTA wages for the primary taxpayer in Item 15, enter at the left most position under "Ref. No." WCO which stands for "Wages Colorado" and the amount of FUTA wages. The entry would appear as 15-WCO/7500000. For an adjustment to wages for the secondary taxpayer, substitute a Z for the W.

Reference Number Definitions
  1. Refer to Document 6209, IRS Processing Codes and Information, Section 8C, Master File Codes, for a complete listing of Reference Numbers for several types of returns.

Item C: Operator Employee No.
  1. This item is entered by the employee inputting Form 5344.

  2. The entry should include the operator’s employee number and the date of input.

Item D: Rej.
  1. This item is only to be completed if the Form 5344, is rejected at input.

  2. The employee enters the date rejected, the item number that rejected or a screen print of the reject message.

  3. The employee who corrects the item writes the correction date in Item F block and returns the form for input.

Item E: Document Locator Number (DLN)
  1. A fourteen-digit number by which returns can be stored and associated.

Master File Cases
  1. A portion of the DLN is assigned by the computer. The remainder of the DLN (last digit or the block number, two-digit serial number, and year digit) is assigned during the end of day computer processing.

  2. The refile DLN is not entered on Master File closing documents.

  3. The first two digits of the computer assigned DLN is normally the File Location Code (FLC) or Campus Code. The computer keeps track of assigned blocks. When additional blocks are needed to accommodate the volume of closings being processed, the computer will continue to use a District Office Code or Universal Location Code (ULC), beginning with the lowest progressing sequentially to the highest numbered District Office Code valid for that campus.

  4. Refer to Document 6209 , Section 4 - Document Locator Number, for additional information.

Non-Master File (NMF) Cases
  1. The renumbered DLN will be entered for NMF examined closings.

Item F: Cor.
  1. The date the correction is made will be placed in the corrected block by the person making the correction to the item rejected.

  2. The Form 5344 will then be reinput.

Item 19: NAICS
  1. Valid only for MFT’s 01, 02, 04, 06, 10, 11, 14, 16, and 30 for tax periods 199812 and subsequent.

  2. If the NAICS Code is not accurate on the AIMS database, enter Reference Number 410 and the 6-digit NAICS Code in Item 19.

Item 20: Claim Rejection Date
  1. Enter the agreement date of the formal claim disallowance form, e.g., Form 2297, Waiver of Statutory Notification of Claim Disallowance, if the taxpayer signed the waiver.

  2. If the taxpayer does not agree, enter the date the formal claim disallowance letter is sent to the taxpayer.

  3. If this item is entered, Item Numbers 22, 23, 24 and an amount claimed are also required.

  4. If a date is entered, the Disposal Code must be 01, 03, 04, 08, 09, 10, 12 or 13.

Item 21: Amount Claimed
  1. Enter the amount of the claim as defined in IRM 4.10.11.2.2.1, Claims for Refund - Forms. The claim amount is only tax and cannot exceed the amount paid by the taxpayer.

    Note:

    Do not enter a claim amount for audit reconsideration cases.

$1 on Database
  1. If $1 was entered on the database (AMDISA) due to a protective claim, then the correct amount of the claim must be entered when closing the case.

Source Code 31
  1. No entry is made when the Source Code is 31 (paid claim for refund).

Revenue Base Protection Section (Claim for Refund Disallowed)
  1. Protection of the revenue base is the work performed by Examination personnel to prevent the release of money from the Treasury to a taxpayer.

  2. The most common example is the examination of a claim for refund filed by a taxpayer. If the claim is disallowed, Examination is preventing the release of money from the Treasury. The protection of revenue is measured through the completion of the Revenue Base Protection (RBP) Section of Form 5344 Items 20-24.

Outstanding Balance on Account
  1. If there is an outstanding balance due on the account and the taxpayer’s claim for refund includes the balance due, the RBP amount will not be the entire amount of the claim. A calculation must be performed to determine how much of the claim qualifies as RBP. Since the taxpayer can be making payments on the outstanding liability while the examination is taking place, the calculation must be made by the examiner when the examination is completed.

    Example:

    The $10,000 Claim for Refund filed by the taxpayer consists of a request for an abatement of tax for $8,000 plus a refund of an additional $2,000. The RBP is the refund requested and disallowed and does not include the $8,000 request for abatement.

Example of Non-RBP
  1. Reduction of a carryforward to a future return that has not been filed.

  2. Audit reconsideration (if the tax has not been paid). Since examination received credit for this closure when it was originally closed, if the audit reconsideration is being referred to Appeals, enter $1 in Item 18 of Form 5344. Entering the amount of the audit reconsideration "claim" will cause duplicate results.

    Note:

    This is handled by Technical Services, not Centralized Case Processing (CCP). It is included here for informational purposes only.

  3. Innocent spouse claims since this does not increase or decrease the actual liability.

Source Code
  1. Not all claims are considered RBP, therefore, a claim amount may or may not be present for all other AIMS source codes.

Item 22: Dollars Protected
  1. Enter the dollar amount of the refund requested by the taxpayer that was protected (disallowed) from leaving the Treasury. This amount cannot exceed the amount claimed (Item 21 or claim amount on AMDISA).

    Note:

    Do not enter an amount in Item 22 if the claim was originally paid and the amount paid on the original claim is now being disallowed (recaptured). Item 22 is only completed for unpaid claims.

Required Entries
  1. If Item 22 is entered, Item Numbers 23 and 24 are also required.

Claim Allowed in Full
  1. Item 22 must be zero if the claim was allowed in full and/or there are no offsetting issues.

    Example:

    A taxpayer filed a claim for $5,000. It was allowed in full. The final adjustment is -$5,000. The amount claimed ($5,000) is entered on Item 21 of Form 5344. $0 was disallowed and this is entered on Item 22. The final adjustment is entered on Item 12 as -$5,000. This is the same amount entered as a Transaction Code (TC) 301.

Claim Allowed in Part
  1. This is to reflect the amount of the claim that was prevented (disallowed) from leaving the Treasury.

    Example:

    A taxpayer filed a claim of $5,000. $3,000 of the claim was disallowed. This means the final adjustment was -$2,000. The amount claimed ($5,000) is entered on Item 21 of Form 5344. $3,000 was disallowed and this is entered on Item 22. The final adjustment is entered on Item 12 as -$2,000. This is the same amount entered as a TC 301.

Claim Allowed in Part plus Additional Adjustments in the Taxpayer’s Favor
  1. Follow this example when the claim is allowed in part, and you have additional adjustments in the taxpayer’s favor.

    Example:

    A taxpayer filed a claim of $5,000. $4,500 of the claim was allowed. However, the taxpayer also had $1,500 of other adjustments. Therefore, the final adjustment is $6.000. Enter $5,000 in Item 21 of Form 5344 for the amount claimed. In Item 12, the Final Adjustments is entered as -$6,000. $0 is entered on Item 22.

    Note:

    Explanation: While $500 of the $5,000 claim for refund was disallowed, we did not prevent the release of any money from leaving the Treasury.

Claim Allowed is Greater than Other Adjustments
  1. Follow this example when the claim allowed equals the other adjustments:

    Example:

    A taxpayer filed a claim for $5,000. $4,000 of the claim was allowed. However, $1,000 of tax is due on other adjustments. The final adjustment is -$3,000 ($4,000 - $1,000). The claim amount disallowed is $2,000 ($5,000 - $3,000). On Form 5344 enter $5,000 on Item 21 for the amount claimed, -$3,000 in Item 12 / TC 301 for the final adjustment amount, and $2,000 in Item 22 for the claim amount that was disallowed.

Claim Allowed is Less than Other Adjustments
  1. Follow this example when the claim allowed is less than the other adjustments.

    Example:

    A taxpayer has filed a claim for $5,000. $4,000 of the claim was allowed. However, the taxpayer owed $7,000 of tax due on other adjustments. The final adjustment is $3,000 ($7,000 - $4,000). The claim amount that was disallowed is $5,000 (equal to the full amount claimed as the amount of claim allowed did not offset the total amount due). You will enter $5,000 on Item 21 of Form 5344,$3,000 on Item 12 / TC 300, and $5,000 on Item 22.

    Note:

    Explanation: While $4,000 of the $5,000 claim for refund was allowed, all of the $5,000 was prevented from leaving the Treasury because the taxpayer owes an additional $3,000.

Item 23: RBP Hours
  1. The first five digits represent whole hours.

  2. The right most digit:

    1. For field EGCs enter 0, 3, 5 or 7 which represents quarter hours (0; 15; 30 and 45 minutes).

      Note:

      Do not include time entered in Item 28.

Item 24: Claim Type
  1. An alpha code (A-Z) that identifies the type of claim for refund. Please refer to IRM 4.38.1.7.1 for more information.

Item 28: Examiner’s Time
  1. The Examiner’s time is a required entry made up of the total amount of time spent on non-revenue base protection issues for each return examined. Field groups can only enter time in 15-minute increments.

  2. The first five digits represent whole hours

  3. Enter one of the following numbers in the right most digit to indicate the fraction of an hour charged:

    1. 0 for 00 minutes,

    2. 3 for 15 minutes,

    3. 5 for 30 minutes, and

    4. 7 for 45 minutes.

    .

Reopened/Returned from Appeals Cases
  1. If the return has been reopened from Status 90 using CC AMSTUR, or returned from Appeals using CC AMSTUB, the total time from both closings must be entered in this field. The computer will net the amount entered in Item 28 with the amount that is on the database from the prior closure and the correct amount will be reflected on the Examination tables. Because of the automatic netting, the computer will require the amount entered in Item 28 to be equal or greater than the time entered on the original closing. The computer will also prevent a correction to the time field on the database before the case is closed.

  2. Refer to IRM 4.4.26, AIMS Procedures and Processing Instructions, Reopening/ Reclosing/ Reinputting Records.

Item 30: Examination Technique Code
  1. An entry of 1-4 or 6-9 is required for all examined returns.

Claims
  1. No entry is made for surveyed claims (Disposal Code 34).

Revenue Agent (EGC 1XXX)
  1. Enter "3" for Revenue Agent.

Tax Compliance Officer/Tax Resolution Representative (EGC 2XXX)
  1. Valid Technique Codes are:

    1. 1 = Interview Held During Examination,

    2. 2 = Closed by Correspondence / No Interview,

    3. 6 = No Show / No Response. Only valid with Disposal Codes 01, 08, 10, 12 or 13, and

    4. 7 = Undeliverable Mail. Only valid with Disposal Codes 01, 10 or 13.

Item 31: Examiner’s Grade
  1. Enter the grade of the examiner who closed the case.

  2. The entry must be two digits, 03 - 14 are valid entries.

Revenue Agent
  1. Entry of 05, 07, 09, 11 - 14 required.

Tax Compliance Officer/Tax Resolution Representative
  1. Entry of 03-09 or 11 required.

Item 32: Grade of Case
  1. Group managers determine grade of case for all returns with a 1XXX employee group code.

  2. The final grade level of difficulty is determined when the examination has been completed. The manager will consider both the primary and related returns to determine the grade level.

Primary Returns
  1. The entry for the primary return is composed of 3 digits and must be entered by Field Exam starting in the left most position. This is generally the return that started the audit.

Related Returns
  1. The related returns are graded to be the same as the primary return. Therefore, the same three-digit code is used followed by an "R" .

    1. The primary return information is entered in Items 405-408 for each related return.

  2. No matter how selected or when assigned, returns may be included as follows:

    1. Returns filed for prior or later tax periods for the same taxpayer,

    2. Related returns for the same tax period as the primary return, and

    3. Related returns for prior or later tax periods than the primary return.

  3. When the related entities are examined by other examiners, each field manager grades the separate entities as separate cases, and the "R" is not entered.

Item 33: Examiner’s Name
  1. This item is required for area examinations only. The examining revenue agent must enter their last name and first initial only.

Item 34: Adjustment Amount
  1. This field is used to reflect adjustments to non-taxable returns to estimated tax results. It is the revenue agent’s responsibility to verify the adjustment amount is accurate.

  2. This is a dollars only field - Do not enter cents.

Item 35: Manual Assessment Amount
  1. Enter the net of all adjustments that are processed using the quick (manual) assessment procedures. For information on quick assessments, refer to IRM 4.38.1.7.3.4, Quick Assessments.

  2. If more than one quick assessment has been processed, ensure that this entry is the total of all assessments processed. Refer to IRM 4.38.1.7.3, Examined Closings, Surveyed Claims, and Partial Assessments, Reopened Cases.

Tax Adjustments
  1. Include the net total of all tax adjustments.

Penalty Adjustments
  1. DO NOT INCLUDE penalty adjustments (i.e., TC 160, 320, Credit Reference Numbers 680, 681, 683, 780, 781 and 786-792, etc.).

Tax Credit Adjustments
  1. Include the net total of all credits (i.e. Reference Numbers 258, 259, 764, 765, 806, 807, etc.) if processed as part of the quick assessment.

Interest Adjustments
  1. Do not include interest adjustments.

MFT 31
  1. If the same tax will be assessed against both taxpayers, such as petitioning/non-petitioning spouse cases, do not enter the MFT 31 assessment amount in Item 35. The tax amount for the taxpayer going to Appeals (petitioning spouse) will be entered in Item 18, Unagreed Amount by Technical Services. Otherwise enter the MFT 31 amount in Item 35. Refer to IRM 4.8.9.27.8.1, Statutory Notices of Deficiency, Split Spousal Assessments. For additional information on MFT 31, refer to IRM 4.19.10.7, Liability Determination, Examination General Overview, Master File Tax (MFT) 31, and IRM 21.6.8, Individual Tax Returns, Split Spousal Assessments (MFT 31).

Non-Master File (NMF) Assessments
  1. For returns controlled on NMF AIMS (indicated by an "N" after the TIN, i.e., 123-45-6789N and MFT 20 for an IMF return), if the same tax will be assessed against both taxpayers, do not enter the NMF assessment amount in Item 35 because the tax amount will be entered on the MFT 30 (master file) account of the appropriate taxpayer.

  2. For returns controlled on NMF AIMS, if a different tax will be assessed such as culpable spouse cases, enter the amount of the NMF assessment in Item 35.

  3. For information on processing NMF assessments, refer to IRM 4.38.1.8.2, Non-Master File Assessments and Abatements.

Reference Number Adjustments
  1. Do not include reference number adjustments which are only used to update information fields on Master File or alert Master File to make special interest computations (i.e. Reference Numbers 221, 320, 878, 881, 882, 885, 886, 887, 888, 889, 890, and 999).

Reopened Cases
  1. Include prior manual or quick assessments on reopened cases if the case was reopened with AMSTUR (TC 300 indicator will be = 6 on page 1 of AMDISA). Do not include prior manual assessment amounts on reopened cases if the case was reopened with AIMS command code AM424.

Validity Checks
  1. AIMS contains numerous computer checks that are based on the disposal code and the Examination Results.

  2. No Change cases - A manual assessment amount is not valid on:

    1. No Change (Disposal Code 01 or 02) cases, or

    2. Non-taxable returns (Activity Codes 224, 234, 288-290, 481-483, 489, 497, 498 and 992).

  3. Changed Cases/No Examination Results - There are cases that are truly changed cases, but have no examination results. These cases will require an amount of $1 in Item 35 with a Disposal Code 12 in Item 13. Some examples of these cases are:

    1. Barred assessment cases,

    2. Interest assessment only,

    3. Tax assessments that are offset by credits in the same tax period, and

    4. Penalty Only cases.

Item 36: Hash Total
  1. All items that are to be included in the hash total are listed on the Form 5344 under Item 36, Hash Total. The Hash Total will include the following items from Form 5344:

    1. P24-29 - Tax Period,

    2. 12 - Tax, Penalty and Interest Adjustments,

    3. 15 - Credit, Tax Computation Credit Adjustments and Penalties with REF Numbers,

    4. 18 - Unagreed Amount Appealed/Petitioned,

    5. 21 - Amount Claimed,

    6. 22 - Dollars Protected,

    7. 23 - RBP Hours,

    8. 28 - Examiner’s Time,

    9. 34 - Adjustment Amount,

    10. 35 - Manual Assessment Amount,

    11. 44 - NOL CF Disallowed Amount,

    12. 46 - Credit CF Disallowed Amount,

    13. 402 - International Examiner Time,

    14. 403 - International Exam Results,

    15. 404c - Form 720, Abstract Time,

    16. 404d - Form 720, Abstract Examination Results,

    17. 404e - Form 720, Abstract Claim Time,

    18. 414 - Delinquent Return Amount,

    19. 415 - Amended Return Amount, and

    20. 418 - 3121Q Amount.

      Note:

      For items 12 and 15, include only the amounts to the right of the transaction code and ignore the decimal point.

  2. The computer will compare the hash total entered in Item 36 to the total of individual items as entered by the terminal operator. This will ensure the accuracy of the input of individual entries.

Item 37: Delinquent Return
  1. Item 37 must always be completed when closing delinquent returns picked up during the examination and sent to the campus of a posting for TC 150.

  2. This entry gives Examination credit for a delinquent return pick-up on Table 37.

  3. If the delinquent return is incorporated into the examination, this item must be blank.

  4. If a TC 150 SFR has posted, this item must be left blank.

  5. If Item 37 is entered, Item 414 is required.

Valid Code
  1. Separate the delinquent returns secured by MFT code. For each MFT code:

    If there is Then enter a
    One delinquent return "T" in Item 37
    More than one delinquent return "T" on 1st Form 5344 and an "R" on all subsequent returns

Item 38: Fraud
  1. "F" will be entered if criminal prosecution has been successfully concluded.

  2. "C" will be entered if the 75% fraud penalty was asserted under IRC 6663.

  3. "B" will be entered if both criminal and civil apply.

Item 39: Disclosure Code
  1. The appropriate three-digit state agency code is entered when disclosure is made to a state agency. The entry of this field causes a TC 120 to be generated. Refer to IRM 11.3.37-4 State Agency Codes, for a list of the codes.

Item 41: No Change Issue Codes (IMF ONLY)
  1. Identifies examined issues that resulted in no change to taxable income. The no-change issue codes are stored at Master File and can be viewed using IMFOLZ/BMFOLZ. If a subsequent return is examined, these codes are printed on the Form 5546, Examination Return Charge-Out Sheet.

  2. The codes are entered by the RA/TCO without periods or dashes from Pub 1102, Uniform Issue List.

  3. Alpha codes are valid in Item 41.

  4. Up to five entries may be made. If there are more than five no change issues, the five most significant issues may be entered.

No Change Disposal Codes
  1. No Change Issue Codes are required when closing examinations with DC 01 or DC 02.

Changed Disposal Codes
  1. A No Change Issue Code should be used with other examined disposal codes if one or more classified issues result in no change to taxable income.

Adjusted Issues with a No Change Disposal Code
  1. In some cases, all examined issues are adjusted yet the return is closed as a Disposal Code 01 or 02 due to other circumstances, such as negative taxable income, offsetting adjustments or the deficiency is less than tolerance. In these cases, all 9’s will be entered in Item 41.

Item 53: Posting Delay Code
  1. The posting of the adjustment can be delayed from 1-6 cycles. CCP will enter a posting delay code when necessary.

Item I: Reviewer
  1. Reviewer’s signature and date must be entered in this field if the return was reviewed.

Item K: Tax Examiner
  1. The name of the tax examiner that processed the Form 5344 must be entered in the space provided.

Items 51, 52 and 53: Reason Code
  1. A three-digit numeric code that indicates the reason a particular adjustment is being made or why a particular reference number is being used. There are several reason codes valid on master file. However, only the reason codes listed below are valid on AIMS.

  2. The same reason code can appear only once in Items 51-53. Valid reason codes are:

    1. First-Time Homebuyer Credit (FTHBC): 109-110, 112-123, 125-129, 130, 132 and 133. Requires a credit reference number in Item 15 of Form 5344.

    2. 2010 Gulf Region Oil Spill: 135. There is no associated credit reference number with this reason code.

    3. Affordable Care Act (ACA): 136 and 137. Requires a credit reference number in Item 15.

    4. Identity Theft: 139. There is no associated credit reference number with this reason code.

    5. Criminal Restitution: 141-148. There are no associated credit reference numbers with these reason codes.

  3. For additional information, refer to the Issues and Procedures tab, Close a Case, on the Examination home page, Form 5344 Items 51-53 Valid Reason Codes.

Item 404: Form 720, Quarterly Federal Excise Tax Return
  1. When a Form 720 is established on AIMS, the database contains only one abstract code which is located in the activity code field. All activity codes that were examined must be entered in Item 404.

  2. Entries for the total time spent on the case and all assessments are made on the front of the Form 5344.

  3. Entries for AIMS statistical reporting purposes are made in Items 404a - 404e on the back of the form.

Item 404a: Abstract Code
  1. The abstract code for each abstract that was examined will be entered.

  2. If more than one abstract code was examined, an abstract code that was no-changed on the first line of 404a should be entered, unless the disposal code that was entered on the front of the Form 5344 is also a no-change disposal code. Field Exam will enter the abstract code that resulted in a change on the first line if the disposal code on the front of the Form 5344 is a changed disposal code. If the disposal code for the first abstract code is not consistent with the disposal code entered in Item 13, the case will appear on the Accomplishment Error Register and the results of the audit will not be reflected on the AIMS tables until the correction is input.

Item 404b: Disposal Code
  1. The appropriate disposal code for each abstract code examined will be entered.

Item 404c: Abstract Time
  1. The time charged to the examination for each abstract code examined will be entered.

  2. The total of all Item 404c entries must total the amount entered in Item 28.

    • Time can be reported in 15-minute intervals. Enter the following number in the fraction section of Item 28:

    Time Code Equivalent (in minutes)
    Enter a "3" 15 minutes
    Enter a "5" 30 minutes
    Enter a "7" 45 minutes

Item 404d: Abstract Examination Results
  1. The tax adjustment amount for each abstract code examined will be entered.

  2. The total of all Item 404d entries must equal the total of the computer-generated Examination results.

Item 404e: Abstract Claim Time
  1. Item 404e should reflect the hours entered in Item 23. If there are no claim time hours entered in Item 23, a 0 (zero) must be entered in Item 404e.

    Note:

    Item 404e, Abstract Claim Time, only applies to time spent examining an unpaid claim on Form 720.

    Note:

    Refer to IRM 4.24.8, Examination Guidance for Excise Claims for Refund or Abatement, for more information.

Flip/Flop Issue
  1. When a taxpayer has reported an excise tax under an incorrect abstract number, Examination will adjust the excise tax to report it under the proper abstract. In such cases, there will be no additional tax that is assessed. These offsetting adjustments are closed with Disposal Code 01. Item 15 will reflect the decrease (-) to the incorrect abstract number and the corresponding increase (+) to the correct abstract. Item 404a-c will reflect the abstract codes, disposal code and abstract time for each abstract reflected in Item 15. However, the exam results entered in Item 404d is zero. Zero abstract results are entered because the Item 404 results must equal the Exam Results which in flip-flop cases are zero.

Multiple Abstracts Examined
  1. Below are procedures for processing returns with multiple abstract codes.

    1. No Change Abstract: If multiple abstract codes are examined and one is a no-change, do not list the no-change abstract code first in Item 404a. If the disposal code entered in Item 13 is greater than 02, the case will appear on the accomplishment error register.

    2. If more than 9 abstract codes are examined, Field Exam will check the box in the lower right portion of Section 404, "Check if continued on attached page" , and attach an additional Form 5344 as necessary.

    3. Secured Delinquent Return: Item 404 must not include the amount of the delinquent return. The balance due or refund of the delinquent return secured by Examination and forwarded to the Campus for posting of the TC 150 must be entered in Item 414.

Items 405 - 407: Related Returns Section
  1. When the entry in Item 408 is an "S" , Items 405-407 are a required entry for all examined returns worked by:

    1. Revenue Agents in 1XXX Employee Group Codes,

    2. Tax Compliance Officers/Tax Resolution Representatives in 2XXX Employee Groups Codes, and

    3. LB&I examiners in PBC’s 320 - 328 and 330.

  2. Exempt from this requirement are CPF cases in 54XX, 57XX and 58XX employee group codes. EGC 54XX is for ILSC cases and 57XX is for BBA Ch2/2A cases. All three EGCs are for CPF controlled cases.

  3. The information entered must be from the primary return which is the initial return that started the examination.

  4. If several returns were assigned initially, the Examining Officer will designate one return as primary.

  5. Missing or conflicting information will cause a terminal reject.

  6. Item 405 is for the TIN of the primary return.

  7. Item 406 is for the MFT of the primary return.

  8. Item 407 is for the Tax Period of the primary return.

Item 408: Related Return Alpha Code
  1. An entry of "P" indicates Primary Return and Items 405-407 must be left blank.

  2. An entry of "S" indicates Secondary Related (return). The Primary Return information must be entered in Items 405-407.

Item 411: Payment Code
  1. Required entry on all cases (except employee group code 58XX). This code is used to monitor the number of cases in which Examination has secured a payment and whether the payment has resulted in the account being full paid, full paid due to an offset or part paid.

  2. To determine whether the account is full paid or part paid, Field Exam will consider the tax, penalty, and interest, adjusted by credits per the Examiner’s report. Use the interest amount from the Examiner’s report even if a payment is secured at a later date.

    Example:

    Examiner’s report dated June 1, 2014, shows a balance due of $5,000 and interest is $100. A check is received on August 1, 2014, for the entire amount per the RAR. Consider this full paid even though there will be two more months of interest charged after the assessment is made.

    1. Select the code based on the payment status of the account at the time of closing from the group.

    2. No other codes may be used without Headquarters approval.

Valid Codes
  1. The following are the ONLY valid payment codes.

    1. F (Full Paid) - Amount shown on RAR paid in full; may be unpaid accruals; Frozen refund, withholding, or payments which cover the balance due in full.

    2. P (Part Paid) - Includes frozen refund, withholding, payments, or an offset from another tax period which does not completely satisfy the balance due.

    3. N (No Payment) - Changed cases where there was frozen refund, payment, or offset from another tax period to satisfy the balance due. Also used for no change cases and overassessment cases if no payment is received.

    4. O (Total Offset) - Offsets from other tax periods that will satisfy the balance due in full.

Item 412: Installment Agreement Code
  1. Required on all Field Exam cases.

  2. Field Exam should include the code based on the information below:

    1. I = Installment agreement request received (this includes Estate Tax Return installment agreement requests under IRC Section 6166).

    2. C = Coordinated with collection (no installment agreement request received).

    3. N = No installment agreement request received (includes a statement by the taxpayer they will pay within 120 days or are unable to pay.

Item 414: Delinquent Return Amount
  1. This item is for delinquent returns secured by Examination and forwarded to the campus for posting of the TC 150.

  2. Do not input if an SFR TC 150 DLN is posted to the module.

Taxable Returns
  1. Field Exam will enter the balance due or refund amount (excluding penalties and interest) per the delinquent return. If this amount is zero, enter $1.

Non-Taxable Returns
  1. Field Exam will enter the amount of the ordinary net income/loss or special allocation items per the delinquent return If this amount is zero, enter $1.

Excise Tax Returns
  1. Field Exam will enter the total of all abstract codes in Item 414. Do NOT make an entry in Item 404 for the delinquent amount. The amount entered in Item 414 will be credited to the Activity/Abstract Code that appears on the AMDISA. Field Exam must change the Activity/Abstract Code if the delinquent return should be credited to a different abstract code.

AIMS Checks
  1. If Item 414 is entered, Item 37, Delinquent Return Code, must also be entered and vice versa.

  2. If Item 414 is entered, Item 13, Disposal Code, must be 01 or 03, 04, 05, 06, 08, 09, 10, 12, and 13 (not valid with Disposal Codes 02 and 34).

Item 418: 3121Q Amount
  1. Reflects the amount of FICA adjustment made by issuing notice and demand to the business for employer’s share of FICA on unreported tips.

  2. Only valid for MFT 01, 11, or 14.

Item 422: Applicable Credit Adjustment Amount
  1. Reflects dollars protected during audits of Estate and Gift Tax returns for Disposal Code 01 cases, which do not necessarily yield tax dollars at the present time but do reflect a tightening of the tax gap.

  2. Only valid for MFTs 51, 52, 53 and 54.

Item 425: DSUE Amount
  1. Reflects the Deceased Spouse Unused Exemption (DSUE) Amount from audits of Estate and Gift Tax returns.

  2. Only valid for MFTs 51, 52, 53 and 54.

Surveyed Claims.
  1. This section contains instructions for the preparation of Form 5344 when closing surveyed claims.

Form to be Used
  1. Form 5344 is used for closing surveyed claims. Surveying a claim is considered an examined closure, not a non-examined closure. The purpose of surveying the claim is to allow the entire refund requested by the taxpayer. The only way to allow the refund it is to complete Form 5344. The form has indicators next to the item numbers to indicate required (#) and optional (&) item numbers when using Disposal Code 34.

Valid Item Numbers
  1. Item numbers 12, 13, 21 and 36 are required on Form 5344.

  2. Item numbers 02, 6A, 6B, 6C, 07, 09, 11, 15, 19, 39, and 43 are optional on Form 5344.

Partial Assessments
  1. A partial assessment can be input if the status code on AIMS is less than 80.

Procedures for Sending Partial Assessments to CCP
  1. When it becomes apparent that the case has an imminent statute date and an assessment is needed for part of the tax, the Field must contact the Field Office Resource Team (FORT) Manager for Small Business/Self-Employee (SBSE) and Large Business & International (LB&I) cases or CCP Field Liaison for Specialty cases to notify them that a partial assessment is needed on the case.

    Note:

    Please refer to, Contacts for Field Office Resource Team (FORT) for the appropriate contact information.

  2. Email or eFax CCP (depending on the site requirements):

    1. Form 4549, Report of Income Tax Examination Changes, or equivalent. Be sure to include the taxpayer’s signature, as well as any relevant tax and/or penalty computations needed to process the assessment,

    2. Form 5344, Examination Closing Record,

    3. Form 3198, Special Handling Notice for Examination Case Processing, and

    4. Form 2285, Concurrent Determinations of Deficiencies, whenever carryback and restricted issues may apply.

  3. In the subject line of the email or eFax, notate "Partial Assessment Request."

    Note:

    Partial assessments that meet manual assessment criteria should be identified as a "Manual Assessment Request."

  4. Do not ship the entire case file.

  5. Do not update Examination Return Control System (ERCS) out of the group status.

  6. CCP will:

    1. Acknowledge the request within 48 hours of receipt.

      Note:

      Requests received on Friday afternoon will be acknowledged by Close of Business (COB) Monday).

    2. Complete the assessment within five business days of receipt in the FORT, whenever possible. Assessments involving complex and restricted interest computations may take longer.

    3. Stamp Form 5344Request Completed.

    4. E-Fax a copy of the Form 5344 back to the group for association with the original case file to verify the assessment was completed.

  7. Please allow at least 10 business days from your original request before following up with CCP.

    Note:

    The group should update the Report Generation Software (RGS) electronic case prior to sending to CCP for final closure.

Form to be Used
  1. Form 5344, Examination Closing Record, is used to input a partial assessment. The Form 5344 has indicators next to the item numbers that are required (*) and optional (&) when making a partial assessment.

Valid Item Numbers
  1. Item numbers 02-09, 11-15, 36 and 38 are valid. Refer to specific instructions below.

Credit Balances
  1. Check tax module for credit balances. If a hold code is present, refer to the following instructions.

Hold Credit Balance
  1. A Hold Code 1 is automatically generated to prevent the release of an advance payment pending the processing of the final adjustment return.

  2. When a partial assessment is processed as a quick assessment, after Centralized Case Processing (CCP) has processed the quick assessment with Form 2859, Request for Quick or Prompt Assessment, prepare Form 3177, Notice of Action for Entry on Master File, requesting input of Transaction Code (TC) 570. The TC 570 will prevent the erroneous refund of a credit balance and advance/subsequent payment that may be on the tax module. Form 3177 should be e-Faxed to your CCP site. E-Fax numbers for CCP can be found at: CCP eFax Numbers.

Release Credit Balance
  1. If the Examination groups wants a credit balance to be released, they must advise CCP accordingly. Notation should be made on Form 3198, Special Handling Notice for Examination Case Processing, in the "Other Instructions" section. Refer to the instructions below:

    1. If a partial overassessment is to be released and Command Code (CC) AMCLSF is used, annotate Form 3198 requesting input of Hold Code 3 on Form 5344. Hold Code 3 will allow systemic release of the refund, eliminating the need for cycling and subsequent input of a TC 290 for zero to release the refund.

    2. If a partial overassessment is to be refunded using manual refund procedures, annotate Form 3198 with "manual refund requested" . Form 5344 for the partial overassessment must be processed within four weeks from the schedule date of the manual refund to prevent the taxpayer from receiving a bill resulting from a debit balance when the manual refund posts to Master File (MF).

      Note:

      A regular refund can be processed through AIMS and IDRS up to $10 million. Therefore, the only time a manual refund would be necessary is if the refund meets the requirements of IRM 21.4.4.2, Refund Inquiries, Manual Refund.

  2. If the final closure will result in a credit balance that the taxpayer wants to offset to another module, annotate on Form 3198 with "Move overpayment to MFT and Tax Period XX/XXXXXX" . For BMF returns, offsets have to be manually moved if the debit balance module has a -E freeze or is being assessed at the same time.

Amended Return Freeze
  1. When a partial assessment is necessary on a module with an amended return freeze, CCP will input Priority Code 4. This will allow the partial to post without releasing the MF freeze.

  2. On Individual Master File (IMF) partials, if the failure to pay (FTP) penalty should be assessed and there is an amended return on the module, CCP will input Priority Code 3.

PCS (Pass-through Control) Linkages
  1. When a partial assessment has been input and there is an open PCS linkage, an original and copy of the closing document must be included in the case file. The copy of the closing document will remain with the case file which will be forwarded to the Campus Pass-through Function (CPF). Technical Services will provide CPF transfer guidance on the second page of Form 3198. The original Form 5344 must be forwarded to the campus files area as the source document after terminal input.

  2. CC TSCLS should not be input if only a partial assessment is appropriate, or the case is being transferred to the CPF.

Final Disposition After Input of Partial Assessment
  1. Another Form 5344 must be prepared for the final closure. Refer to the information below for Form 5344 instructions.

    1. If there are no additional adjustments to the tax previously assessed as a partial, enter a TC 300 for 0.00 in Item 12, use the agreement date from the partial assessment previously input in Item 08 and use Disposal Code 03, 04 or 09 in Item 13. Complete the remainder of Form 5344 items as required (i.e. TIN, MFT, tax period, etc.).

    2. If there are additional adjustments to the tax previously assessed as a partial, enter only the increase or decrease from the amount processed as a partial assessment. Complete the remainder of Form 5344 items as required using the applicable disposal code. Depending on the final resolution of the additional adjustments, the return will either be forwarded to CCP (for an agreed closure) or to Technical Services (for an unagreed closure).

    3. If the final closing is to Appeals, Item 12 must be left blank and the unagreed amount entered on Item 18 must not include the amount of tax previously assessed as a partial assessment. Complete the remainder of Form 5344, entries as required.

    Note:

    If using RGS to generate the Form 5344 uncheck the partial agreement indicator.

  2. If a situation exists where the final closing is ready to be processed at the same time as the partial assessment, CCP will cycle the final closing Form 5344 using a Posting Delay Code of 1 which delays the final closing one cycle after input of the partial assessment.

Examination Results
  1. All partial assessments processed through AIMS using CC AMCLSF will be reflected in the EXAM-CUM-ASSMNT-AMT field found on Page 3 of an AMDISA print. Upon the final closing, this field will be included in the AIMS/Exam Results field.

  2. If a partial was assessed as a manual or quick/prompt assessment, be sure to enter the net of all tax adjustments in Item 35, Manual Assessment Amount, of Form 5344. Manual and quick/prompt assessments are not input through AIMS. Therefore, entering the appropriate amount in Item 35 gives Examination credit for the tax.

    Reminder:

    Do not include penalties and interest in Item 35.

Additional Information
  1. Additional information for partial assessments can be found on the CCP Knowledge Management SharePoint site: Quick Prompt and Partial Assessments.

Quick Assessments
  1. Quick assessments are prepared to protect the IRS’s interest, when a statute expires in 60 days or less or the assessment of taxes or credits is in jeopardy.

    Note:

    During the month of December, CCP is required to follow quick assessment procedures for cases with less than 90 days on the Assessment Statute Expiration Date (ASED). This allows the organization time to fix an unpostable situation once the January dead cycles have ended.

Special Processing - Assessments $100,000,000 or Greater
  1. Quick assessments cannot be transferred to Master File (MF) for amounts of $100,000,000 ($100 million) or more.

  2. If the case is being worked in CCP, they will split and process these as multiple assessments on separate documents. CCP will also alert the campus accounting function by phone that the assessment is being split due to the large assessment.

Case File Not Ready for Final Closure, CCP Responsibility
  1. Upon receipt of the e-Faxed documents from Field Exam, CCP will:

    1. Acknowledge your request within 48 hours of receipt.

      Exception:

      Requests received on Friday afternoon will be acknowledged by close of business the following Monday.

    2. Complete the assessment within 5 business days whenever possible. Assessments involving complex and restricted interest computations may take longer.

    3. Stamp Form 5344, "Request Completed."

    4. E-Fax a copy of Form 5344 back to the group for association with the original case file to verify the assessment was completed.

Quick Assessments on Civil Penalties, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties
  1. Prepare Form 2859, Request for Quick or Prompt Assessment, according to the Form 8278.

  2. Civil penalties are not controlled on AIMS. Therefore, after a civil penalty quick assessment has been input to MF, the entire civil penalty file will be sent to Files in the campus for refiling under the quick assessment Document Locator Number (DLN).

Research and Actions Required Prior to Quick Assessment
  1. Research IDRS Command Code (CC) TXMOD to determine if a payment has been made on the account, but has not posted to MF.

  2. Input a history item on CC TXMOD, "MAAS with the 23C date," to alert other IRS employees that an assessment is in the process of being posted. The history item will also prevent a manual refund of any payments sitting on the account that should be used to pay the deficiency.

  3. Also input on CC TXMOD, "HOLD4DOC51," which translates to holding for the Document Code 51 (assessment document). This action will cause the module to stay active on IDRS until a Doc Code 51 posts to MF.

  4. Research CCs INOLES, IMFOLE, BMFOLF, AMDIS or ENMOD to verify the most current address for the taxpayer.

23C Date
  1. Following is a table used to determine the 23C date based on when the assessment statute will expire:

    STATUTE DATE 23C DATE
    IF the statute date will expire: THEN the 23C date will be:
    Within two days The same day that the assessment is e-Faxed to the accounting function
    In more than two days The fifth workday after the assessment is e-Faxed to the accounting function

Excess Credits on Account
  1. If excess credits are on the account requiring a quick assessment, enter a TC 570 with a zero amount to prevent the credit(s) from refunding.

Deficiency/Overassessment
  1. Prompt or quick assessments may sometimes involve a deficiency for one tax period and an overassessment for another tax period. Refer to IRM 20.2, Interest, regarding debit and credit interest computations and dates to use for offsetting. In addition, process these situations as follows:

    1. For the overassessment tax period(s), manually compute the interest and enter it with the applicable transaction code on the adjustment document along with a Hold Code 2.

    2. Make the appropriate credit transfers on IDRS. If there is a Form 3870, Request of Adjustment, in the case file, make the appropriate credits transfers according to the form.

    3. Enter the following caption on Form 2859 to alert the accounting branch of the available credit: Credit of $ (amount) being transferred from (period)”. Attach the Form 2859 to the deficiency year and forward to the accounting branch.

    4. Forward the overassessment document for processing.

Delinquent Return Quick Assessment
  1. When the quick assessment is for tax shown on a secured delinquent return (for example agreed/unpaid deficiency over $100,000), process the return the same as for a deficiency, except for the following:

    1. CCP will enter the tax shown on the delinquent return in Part C, Item 3a (Tax-Original Return-TC 150) on Form 2859.

    2. CCP will enter the return received date in Part C, Item 3b (Return Received Date) on Form 2859.

  2. Do not forward the secured delinquent return to the campus for processing.

Forwarding Quick Assessments to the Campus
  1. E-Fax or scan quick assessments to the Campus Accounting Branch using the following procedures.

    1. Assign a control number for each Form 2859 that is e-Faxed, i.e., FAX 49-055-1. The 1st and 2nd digits are the processing campus code, the 3rd, 4th and 5th digits are the Julian date that the Form 2859 is actually e-Faxed; the last digit(s) is the number of the Form 2859. The control number will continue sequentially throughout the calendar year and will start over each January 1st. The control number should be entered in bold print on the top of each Form 2859.

  2. Prepare Form 3210 for each type of tax return. List the following:

    1. Name Control,

    2. MFT,

    3. TIN,

    4. Tax Period, and

    5. In the remarks area, enter the 23C date and the note FAX QUICK ASSESSMENT.

  3. Address Form 3210 to the appropriate function. If you are e-Faxing the request, include the originator’s complete address, mail stop, and eFax number in the "FROM" section for e-Faxing back the received Form 3210.

  4. E-Fax the assessment forms in the following order with a cover sheet:

    1. Form 3210, and

    2. Form 2859.

Follow-up on Quick Assessment Form 3210, Document Transmittal
  1. Receipt of the acknowledged Form 3210 is verification that the quick assessment request(s) was received in the accounting function. Follow-up if the acknowledgement is not received by noon the day after transmission.

Quick Assessment Verification Form 3552, Prompt Assessment Billing Assembly
  1. Receipt of a copy of Form 3552, Prompt Assessment Billing Assembly, is verification the assessment has been made.

  2. Upon receipt, verify the accuracy of the assessment amount, as well as the name, address, TIN, and tax period on Form 3552 for consistency with Form 2859.

  3. If any errors are detected on Form 3552 IMMEDIATELY contact the campus accounting function for issuance of a corrected bill.

Follow-up on Form 3552
  1. A manager or designated employee must follow-up with the campus if verification of the assessment is not received.

    1. Follow-up on statute cases in sufficient time to prevent barred assessments.

    2. Follow-up on non-statute cases three weeks from the 23C assessment date.

      Note:

      All follow-up actions should be documented on Form 2859.

  2. Upon receipt of verification, the statute control examiner will be notified in order to close the case from the open statute control file.

Second Adjustment Document, Form 5344, Examination Closing Record
  1. When a return is ready to be closed on AIMS after a quick assessment, the second adjustment document Form 5344 should not be input until after verification of the Form 3552 and a DLN is obtained from Accounting.

  2. Once the Form 3552 is received, prepare the second adjustment document and process it through IDRS to generate a refile DLN.

    Note:

    For electronic cases closed via RGS, include a a copy of Form 2859 in Case File Documents as a permanent record before closing on AIMS. For cases closed with a paper case, attach a copy of the Form 2859 to the front of the first page of the return as a permanent record before closing on AIMS.

Form 5344, Examination Closing Record, Entries
  1. Verify there is an entry in Item 35, Manual Assessment Amount, or enter the manual assessment amount if it is blank, the net tax adjusted by prepayment credits that was processed using quick assessment procedures. This step applies for quick assessments done on Non-Master File returns also.

  2. Enter the applicable disposal code in Item 13.

  3. Enter applicable reference numbers in Item 15.

  4. Following is a table to determine the correct Item 12 and/or 15 entries on Form 5344:

    Item 12 and/or 15 Entries Entry Codes
    IF the sum of the adjustments, in Item 12 and/or 15, is a THEN enter:
    Net increase
    1. TC 300 with zero amount in Item 12.

    2. If there is a credit balance on MF, enter Hold Code 2 in Item 7.

    Net increase AND there is a decrease in tax
    1. TC 301 with the decrease amount and TC 770 with zero in Item 12.

    2. Hold Code 1 in Item 7, or Hold Code 2 if there is a credit balance on MF.

    Net decrease
    1. If the tax liability is to be decreased, enter TC 301 and amount in Item 12. Otherwise, enter TC 300 with zero amount is entered and there is a credit balance on Master File, enter Hold Code 2 in Item 7.

    2. If penalty or interest is to be decreased, enter and code the amount in Item 12.

    3. If credit is to be increased, enter the amount and appropriate credit change reference number in Item 15.

    4. Hold Code 1 in Item 7.

Processing Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return
  1. When adjustments to Form 940, are processed as a quick assessment, the accounting function must ALWAYS be provided with the amount of the TOTAL CORRECTED 940 WAGES.

  2. If a credit reduction state is involved, the accounting function must also be provided:

    1. The credit reduction wages,

    2. The state(s) the credit reduction wages applies to, and

    3. The total credit reduction amount.

Form 2859, Request for Quick or Prompt Assessment, Part D Entries
  1. The following items will be entered on Form 2859 Part D:

    1. Enter in Item 23, the total corrected 940 wages.

    2. Enter in Item 24, the total credit reduction amount.

    3. Enter in Item 25a, the two-digit state abbreviation, and in Item 243, the amount of credit reduction wages paid to each state. The total of the credit reduction wages entered in Item 24 must also be provided to the accounting function.

Reopening/Reclosing/Reinputting Records
  1. This chapter explains how to reopen and reclose Examination records, also referred to as "cases" or "returns" that have been previously closed and the impact these actions have on the Audit Information Management Systems (AIMS) tables.

  2. This chapter also covers reinputting Form 5344, Examination Closing Record, after Integrated Data Retrieval System (IDRS) Command Code (CC) TERUP or QRACN was input.

Impact of Reopening Records
  1. Examination records that were closed (Status Code 90), but still on AIMS, can be reopened using IDRS CC AMSTUR. Examination records that were closed to Appeals (Status Code 8X), can be returned to Examination from Appeals using IDRS CC AMSTUB.

  2. Input of the CC AMSTUR generates a TC 420 to Master File. It does not generate a request for the return.

    Caution:

    Generally the AIMS database DOES NOT need to be reopened or returned to Examination to make corrections. Returns in Status Code 8X or 90 can be corrected using IDRS CC AMAXUE. Refer to IRM 4.4.34, AMDIS Procedures and Processing Instructions, Updating/Correcting AIMS Database, for the procedures and a list of the items that can be corrected.

Exceptions to Reopening a Record
  1. Examination records in Status Code 90 with a prior Status Code of 8X (Appeals) cannot be reopened. You must wait until the case ages off of AIMS before reopening the return. The case will age off AIMS after the third report extraction cycle after the case was closed by Appeals (approximately 3 months).

Statute Considerations
  1. Verify AIMS reflects the correct Assessment Statute Expiration Date (ASED) prior to reopening the case. If the ASED is incorrect, complete Form 5348, AIMS/ERCS Update (Examination Update) to update AIMS before the case is reopened.

  2. ERCS users may update the statute date on ERCS when re-establishing controls.

Impact on Exam Results
  1. When a case is reopened in the same fiscal year, the Exam Results are deleted from the AIMS tables. If the case is reopened in a subsequent fiscal year, the results cannot be deleted. Therefore, the results will be netted when the case is reclosed.

  2. When a case is returned from Appeals (even if the case has been transferred to another Appeals Office), the database will automatically revert back to the Exam office that closed the case to allow for the record to be deleted from the ORIGINAL closing office’s AIMS table. If the case is in an Appeals office that is serviced by another campus, the case will automatically start the transfer process to the closing office’s campus the weekend after CC AMSTUB was input.

    Note:

    It is important to secure an AMDISA before the AMSTUR is input. Attach the AMDISA to the inside of the case folder. This will help to ensure the correct amounts are reinput upon final closure.

Impact on Cycle Time
  1. Cycle time is computed from the original Exam Start Cycle until the final closing.

    Example:

    The original closing has an Exam Start cycle of 200906. The case was closed in June 2010 making the cycle time one year. The case was reopened 6 months later (December 2010) and reclosed in June 2011. The new cycle time would be 2 years even the case was in a closed status for 6 months. If the case has aged off the AIMS database, the case cannot be reopened but must be established as if it were a new opening using IDRS CC AM424.

Impact on Exam Tables
  1. Reopening a return affects the accomplishment tables of the Closing Primary Business Code (PBC) office. How the tables are affected depends on whether the return was reopened or returned from Appeals in the same fiscal year or subsequent fiscal year.

    Reopened in the Same Fiscal Year Reopened in a Subsequent Fiscal Year
    If a case is reopened or returned from Appeals in the same fiscal year (this includes the extended fiscal year which ends after the November report extraction cycle) in which it was closed into either Status Code 8X or 90, the original closure is totally eliminated (deleted) from the closing PBC’s accomplishment tables and the record is added back into the inventory tables. If a case is reopened or returned from Appeals after the end of the extended fiscal year of the original closing, the original closure cannot be deleted from the closing PBC’s accomplishment tables since the fiscal year tables have been finalized. The record is added back into the inventory tables, and the record is counted again when it is subsequently reclosed.
    AIMS retains the Examination Time, Cumulative Assessment Amount, and Manual Assessment Amount from the original closure. All other accomplishment data is deleted from the AIMS record. Refer to IRM 4.4.26.9.3, AIMS/Processing Handbook - Reopening/ Reclosing/ Reinputting Records, for reclosing instructions. All Prior Fiscal Year (PFY) AIMS information is stored on the history file which the AIMS program uses to NET the figures when the reopened record is subsequently reclosed. Refer to IRM 4.4.26.9.3, AIMS/Processing Handbook - Reopening/ Reclosing/ Reinputting Records, for reclosing instructions.

Reopening Restrictions
  1. Restrictions are based on whether the original closing was an examined or no-examined closing.

Reopening Examined Closures
  1. AIMS uses the Report Extraction Code to determine when a case can be reopened. If the code indicates that the record has been reversed on the AIMS tables (code is not equal to "1" ) then a CC AMSTUR can be reinput if the current date is at least 21 days from the Status Code 90 date. If the Report Extraction Code is a "1" , you will have to wait 40 days from the Status Code 90 date. For more information on the Report Extraction Code Indicator, refer to IRM 4.4.1-1, AIMS Procedures and Processing Instructions, Introduction.

Reopening Non-Examined Closures
  1. Non-examined closures do not require a waiting period prior to reopening.

Approvals Required
  1. The Field Exam manager and PSP Support Manager, or Campus AIMS Coordinator must approve the reopening request.

Identifying Reopened Records
  1. There are two indicators that reflect if a return has been reopened or backed down from Appeals - the Reopening Indicator and the TC 300 Indicator.

  2. The Reopening Indicator will be set when a return is reopened on AIMS. It remains set after the case is reclosed. The table below provides the definitions for the reopening indicators. This information is also contained in IRM 4.1.1, AIMS Procedures and Processing Instruction, Introduction.

    Indicator Definition
    0 Account never reopened
    1 Account reopened using CC AMSTUR
    2 Case backed down from Appeals using CC AMSTUB
    3 Case has been reopened and backed down

  3. The TC 300 Indicator is set to a "6" if a return has been reopened or backed down from Appeals. The table below provides the definitions for the TC 300 indicators. This information is also contained in IRM 4.4.1, AIMS Procedures and Processing Instructions, Introduction.

    Indicator Definition
    1 IMF/BMF Assessment
    2 IRAF Assessment made against primary SSN
    3 IRAF Assessment made against secondary SSN
    4 IRAF Assessment made against both SSNs
    5 The TC 300 indicator has been reset using CC AMAXU causing the return to appear on the Non-Assessed Closure Listing (NACL)
    6 The TC 300 indicator has been reset using CC AMSTUR (a Status Code 90 case being reopened by Exam) or CC AMSTUB (case returned to Exam from Appeals

Reopening Records, AIMS Users
  1. The need to reopen a return on Audit Inventory Management System (AIMS) in Centralized Case Processing (CCP) Exam should be rare.

  2. These cases would need to be reopened on AIMS using Command Code (CC) AMSTUR.

    1. This should only be done if the Tax Examiner (TE) cannot use CC TERUP / QRACN to delete their erroneous entry on the date of input.

  3. CCP Tax Examiners (TE) will only reopen cases that are in Status 90 if they were closed incorrectly and there is a need to reclose them.

    1. These situations are non-examined cases and cases that have been closed on Examination Return Control System (ERCS) but are still open on AIMS.

    2. CC AMSTUR is used when closed examination records are in Status 90, but are still on AIMS. TEs will need to complete Form 5348, AIMS/ERCS Update (Examination Update), and submit the form per local procedures.

      Note:

      Returns that are no longer on AIMS cannot be reopened. Please refer to the Lead if this situation occurs.

Reopening Records, ERCS Users
  1. For Examination Return Control System (ERCS) users, controls may be requested using Form 5345-D, Examination Request- ERCS (Examination Returns Control System) Users. Input of Form 5345-D, Examination Request- ERCS (Examination Returns Control System) Users, eopens the ERCS controls only. Procedures for reopening depend on whether the return is still on AIMS.

Return on AIMS
  1. If the return still has an AIMS record (AMDIS) the user will use the "Re-establish" option to regain control of the return in the group. This option does not produce an AMSTUR. Therefore the group must complete Form 5348 and fax or e-mail the request to their local AIMS/ERCS analyst to re-open the AIMS controls.

    Note:

    The case(s) will be reopened on ERCS with all prior examination hours.

Return Not on AIMS
  1. If the return is longer on AIMS (no AMDIS available) the user must request a second exam using the "Request Tax Return" option. This will generate the AM424 or AMNON command code to establish the return on AIMS.

Charge-Out and Labels
  1. Charge-outs and labels are not generated when a return is reopened on AIMS. Use CC AMLAB if labels are needed.

Source Code, Group Procedure
  1. When reopening a return, you must enter the appropriate source code. The following examples provide guidance for determining the source code.

    1. The return is on AIMS (AMDIS available), use the same source code (SC) as the original opening, unless the original closure was non-examined in which case use an appropriate source code.

    2. The return is not on AIMS (no AMDIS available), use an appropriate SC.

  2. For additional assistance in determining the appropriate source code, refer to the Source Code job aid at: Source Code Job Aid in the AIMS/ERCS book of the Exam Procedures Knowledge Management Base.

Reclosing Reopened Cases, Group Procedures
  1. Reopening in the same fiscal year or subsequent fiscal year has no bearing on how the case should be reclosed.

  2. A non-examined closing must be reclosed as examined.

    Exception:

    A SC 45 return can be reopened and reclosed as SC 45.

When to Reclose
  1. If you reopened the case the same month as the original closure, you can immediately reclose the case.

  2. If you reopened the case in a reporting cycle after the cycle of the closure, you must wait until the end of the next reporting cycle before the return can be restored. This is to allow the original closure to be removed from the Exam tables.

Form to Use
  1. Form 5344 is used to reclose all records. All returns once reopened must be reclosed using Command Code AMCLSE. Form 5344 must be prepared using normal procedures as though the previous closing had not been done with the following exceptions:

    Note:

    If using Report Generation Software (RGS), you must manually input the correct amount.

Reclosing Instructions
  1. The cumulative amounts of ALL Form 5344 entries, excluding Items 12, 15 and 35, must be reinput.

    Form 5344 Entry Action
    Items 12 and 15: Assessment Information
    • Because CC AMSTUB/R does not reverse Items 12 and 15 from the original closing, the Exam Cumulative Assessment Amount (shown on page 3 of CC AMDISA) is retained on the AIMS database when a case is reopened. Therefore, only additional adjustments should be entered in Item 12 and Item 15 of the Form 5344.

    Item 13: Disposal Code
    • All prior non-examined closings must be reclosed as examined.

    • No change from original closing - enter the original disposal code.

    • A change from original closing - enter the new disposal code based on the new closure.

    • Abatement in full - enter the DC 12 and enter $1 in Item 35, or process the full abatement using CC AMCLSF, then enter the AMCLSE using a no-change DC.

    • A closure to Appeals, if the tax was assessed and Exam is not abating the assessment - DC 07, 11 or 12 and enter $1 in Item 18.

      Note:

      For Audit Reconsideration cases, only use the original disposal code if there is no change to the original determination.

    Items 23 and 28: Examiner’s Time
    • The total time from both closings must be entered in this field. The computer will net the amount entered in Item 23 and/or Item 28 with the amount that is on the database from the prior closure and the correct amount will be reflected on the Examination tables. Because of the automatic netting, the computer will require the amount entered in Item 28 to be equal or greater than the time entered on the original closing. The computer will also prevent a correction to the time field on the database before the case is closed.

    Item 34: Exam Adjustment Amount
    • The Exam Adjustment Amount is not retained on the AIMS database. Re-enter the amount from the original closure.

    Item 35: Manual Assessment
    • The manual assessment amount is retained on the AIMS database. IF additional manual assessments were made after the case was reopened, re-enter Item 35 with the total of all TC 30X adjustments. Even though you may be reversing the manual assessment by inputting a TC 301, you still must enter the manual assessment or you end up with negative results rather than zero results.

    Item 414: Delinquent Return Amount
    • The Delinquent Return Amount is not retained on the AIMS database. Re-enter the amount from the original closure plus additional amounts if applicable.

    Item 415: Amended Return Amount
    • The Amended Return Amount is not retained on the AIMS database. Therefore, re-enter the amount from the original closure plus additional amounts if applicable.

Impact on Tables
  1. How the reclosure affects the tables depends on whether the reopening was in the same fiscal year of the prior closing or for a subsequent fiscal year.

    Fiscal Year Reopening Action
    Returns Closed and Reopened in the Same Fiscal Year (FY)
    • Since the original closure was totally eliminated from the AIMS accomplishment tables, all the results from the reclosure will be sent to the accomplishment tables.

    Returns Closed and Reopened in Different Fiscal Years
    • How the reclosure affects the tables depends on whether the total examination results of the subsequent closure are more or less than the prior year’s closure.

    • Example with Additional Dollars FY 2012 closure = $10,000 and 10 hours FY 2013 closure = $4,000 and 5 hours Total = $14,000 and 15 hours (The computer will NET the FY 2013 closure against the FY 2012 history file resulting in the FY 2013 table reflecting only $4,000 and 5 hours since credit was already received for the $10,000 and 10 hours in the FY 2012 tables).

    • Example with Less Dollars FY 2012 closure = $10,000 and 10 hours FY 2013 closure = -$4,000 and 5 hours (Since the FY 2012 tables cannot reduce the FY 2012 tables after November, and prior year results are not backed our from current year figures, an amount of $0 and 5 hours appear on the FY 2013 table).

Reinputting Form 5344, Examination Closing Record, after CC TERUP/QRACN, CCP/ Campus Procedures
  1. IDRS Command Codes TERUP and QRACN are used to correct AIMS Exam results and prevent the transaction(s) from going to Master File.

    Note:

    IDRS Command Code TERUP allows an employee to delete an erroneous entry on the date of input. Refer to IRM 2.4.13, IDRS Terminal Input, Command Code TERUP, for additional information.

    Note:

    IDRS Command Code QRACN is a quality review command code used to perform an action upon the transaction(s) being quality reviewed. The reviewer can accept, reject or review the specific transaction screen input displayed. Refer to IRM 2.4.5, IDRS Terminal Input, Command Codes QRADD, QRADDO, QRNCH, QRNCHG, RVIEW, QRACN, and QRIND for the IDRS Quality Review System, for additional information.

  2. The procedures to follow when reinputting the assessment depend on whether the original input was a final closure (CC AMCLSE) or partial assessment (AMCLSF).

    Reinputting the Assessment Actions To Take Impact on Exam Results
    Final Closure (CC AMCLSE) Since the case is in Status Code 8X/90, the following steps are required in order to reinput a long closure (using CC AMCLSE) that was deleted by a CC TERUP/QRACN.
    • Reset the TC 300 Indicator to a 5 using CC AMAXU.

    • Reinput the Form 5344 using CC AMCLSU -L.

    • If the AMCLSU is not input the same week that the TC 300 Indicator was set to a 5, the record will appear on the NACL. Refer to IRM 4.4.27, AIMS Procedures and Processing Instructions, Reports, for information on the NACL.

    • The computer must remove the amount that was "torn-up" by CC TERUP or QRACN from the Cumulative Assessment Amount field (which is one of the components that make up the Exam Results, page 3 of the AMDISA). This is done automatically when CC AMCLSU-L is input. The computer deletes the amount that appears in the "Last Amt Put in Cum" field (page 3 of the AMDISA) from the Cumulative Assessment Amount field and replaces it with the new amounts reinput.

    Partial Assessment (CC AMCLSF) The following steps are required in order to reinput a partial assessment that was deleted by CC TERUP/QRACN.
    • Reinput CC AMCLSF with the amounts necessary to reverse the deleted AMCLSF, IMMEDIATELY FOLLOWED BY CC TERUP OR QRACN. This is necessary to delete the original torn-up input from the Cumulative Assessment Amount field.

    • Reinput the corrected CC AMCLSF.

    • The "torn-up" transaction is not automatically deleted from the Cumulative Assessment Amount field when reinputting a partial assessment.

      Reminder:

      Failure to follow the instructions under "Actions to Take" will cause duplicate results.

Installment Agreement Procedures
  1. The following procedures have been implemented to allow Collection CCP to provide support to the field groups regarding the input of Transaction Code (TC) 971, Action Code (AC) 043. The field groups should email or fax the completed Form 3177, Notice of Action for Entry on Master File, to have the TC 971 / AC 043 input within 24 hours.

  2. The Collection eFax number is 855-389-1533. Collection CCP would prefer that documents be emailed to *CTR PHI CS GCP.

    1. Documents should be e-Faxed to 855-389-1533, Attn: GCP (General Case Processing).

    2. Field Exam must include initiator information (name, phone number, employee SEID), the date, the taxpayer name, and the EIN/SSN.

    3. The other, section of Form 3177, Notice of Action for Entry on Master File, must specify TC 971/AC 043, and include MFT and all tax periods that apply.

  3. Field Exam and Specialty Tax will eFax Form 433-D, Installment Agreement, Form 2159, Payroll Deduction Agreement, and Form 9465, Installment Agreement Request to Collection Compliance Service Collection Operation (CSCO) Memphis at 855-381-6514, per IRM 4.20.1.4.5(6).

Non-Examined Closures

  1. Non-Examined Closures are those cases that are closed without going through an examination. Separate procedures are required than those for Examined Closures.

Overview
  1. This chapter covers the various ways of closing cases as non-examined closures and the deletion of records on Audit Information Management System (AIMS).

    1. Deleting accounts: error accounts and missing returns.

    2. Surveyed returns: DCs , 31, 32, 35, 42 and 45. Refer to IRM 4.38.1.7.3.1.22.7, Surveyed Claims for DC 34.

Forms to Use
  1. Refer to the applicable section for the form to use to request a non-examined closing.

Special Conditions That Prevent Non-Examined Closures
  1. Certain conditions prevent closing a case as non-examined. The condition must be resolved before a database can be closed as non-examined.

No Return Secured - Credits on the Module
  1. Other than the Transaction Code (TC) 640 credit that must be resolved before the case can be closed as non-examined, leave other credits on the module. The credits will be systemically moved to the Unapplied Statute Credits Account after the refund statute expires. Refer to IRM 4.4.21.1.2.4, TC 640, for information.

Reopened Records - TC 300 Indicator Present
  1. Records closed and then reopened cannot be reclosed as non-examined. Refer to IRM 4.4.26, Reopening/ Reclosing/ Reinputting Records.

Assessment on AIMS (Audit Information Management System)
  1. You cannot close a case as non-examined if there is an amount in the EXAM-ASSESS-CUM-AMT field on page two (2) of the AMDISA.

TC 640
  1. Records cannot be closed non-examined if there is an advance payment, TC 640, on the module. The TC 640 must be resolved.

  2. You must determine the reason(s) the taxpayer made an advance payment of deficiency on a tax period that is being surveyed.

    1. Research Information Data Retrieval System (IDRS) and AMDIS to determine if posting errors, cycling problems or examination errors caused the advance payment to post to an incorrect tax module.

    2. Check the spouse’s taxpayer identification number (TIN) for possible posting of the payment.

    3. Secure the payment document to screen for use of the wrong TIN, tax period, or other data that caused the TC 640 to be posted incorrectly.

    4. Contact with the taxpayer may be necessary to determine why the payment was made.

  3. If the TC 640 was used in error, reverse the TC 640 to post the correct transaction as appropriate by submitting Form 3870 Request for Adjustment.

  4. If the payment was posted to the incorrect module, determine the correct TIN or tax period and input a credit transfer. Refer to IRM 21.5.8, Account Resolution - Credit Transfers, for procedures on credit transfers.

  5. If research indicates the TC 640 posted correctly but there is no correlating posted or pending assessment on the module and the assessment statute expiration date (ASED) is imminent, determine whether a quick assessment is required. Take all appropriate measures to ensure that any required assessment is posted to the account and/or assigned a timely document locator number (DLN) prior to the expiration of the ASED.

Amended Return Freeze
  1. A case cannot close as non-examined if there is a TC 976 or TC 977 freeze on AIMS (Freeze Code "-A" ).

  2. Generally, the amended return or duplicate return must be secured to determine the correct disposition of the case.

PCS Linkages
  1. All Pass-through Control System (PCS) linkages must be released before the investor return can be surveyed. Partnership Investor Control File (PICF) Codes 4, 5 and 6 prevent the premature closing of the investor return until all necessary pass-through adjustments from the key case(s) to the investor return have been resolved. Command Code (CC) TSCLS releases the freeze on AIMS to allow the input of CC AMSOC. When CC TSCLS is entered, it will automatically check all of the investor’s linkages to determine if they have been closed. If all linkages have been closed, then CC TSCLS will set the PN-SUM-CLOSED-IND on the partner record and the PICF-CD to a closed status on the PCS and AIMS databases. When the "Request Completed" message is transmitted to the screen, the operator can proceed to enter the CC AMSOC.

  2. Should all linkages not be properly closed upon input of the CC TSCLS the error message "Cannot Close, PCS Control" will be displayed on the screen. Secure a CC TSUMY print, attach it to the closing request and route the case file back to the originator. The file should be suspended by the appropriate function. Coordination with the Technical Services Pass-through Coordinator (TSPC) may be required to transfer the file to the Campus Pass-through function (CPF).

Non-Filer Account Closures
  1. This section provides procedures for closing cases where no return has been filed and a examination is not warranted.

Forms to Use
  1. Form 10904, Request for Record Deletion from AIMS/ERCS, will be used for Area closures.

  2. Form 5351, Examination Non-Examined Closings will be used for CCP closures.

  3. A detailed explanation and sufficient documentation should be provided that allows the AIMS/ERCS Analyst or CCP examiner to evaluate the closing request.

  4. For area closures, the complete package will be forwarded to the Area AIMS/ERCS Analyst following the area procedures.

Surveys
  1. This section covers the procedures for closing surveyed returns.

  2. The applicable disposal codes are 31, 32, 42 and 45.

Forms to Use
  1. Three forms can be used to request a non-examined closing:

    1. Form 4251, Return Charge-Out, (LIN non-examined closings),

    2. Form 5351, Examination Non-Examined Closings, and

    3. Form 5546, Examination Return Charge Out

Managerial Approval
  1. Managerial approval is required for all non-examined closures .

  2. The manager’s signature and date are entered on the applicable form.

    If the request form is from then the approval must be from the
    the Examining Officer, Group Manager.
    Centralized Case Processing Case Processing Support Manager or designee.

Form 4251, Return Charge-Out
  1. This form is used for LB&I Imaging Network (LIN) closings.

  2. Enter the two-digit disposal code on the form.

  3. Attach the prepared Form 4251 to the return or electronic print.

Form 5351, Examination Non-Examined Closings
  1. Only one type of tax (Master File Transaction-MFT) can be used on each form.

  2. Each form can be used to transmit up to 20 closings when the MFT is the same. Additional pages can be attached so that up to 100 closings of the same MFT can be transmitted at the same time.

  3. If more than one page is used, indicate the page number and the total number of pages (maximum of five) in the upper right corner of the form.

  4. More than one disposal code may be used.

  5. Enter the requester’s initials, organization routing symbols and date.

  6. Attach the "Audit" label of the case being closed.

  7. Enter the two-digit disposal code in the lower left of the label below "Status." If you do not have a label, write "DC XX" (where XX is the disposal code) in the lower left corner of the block for that specific taxpayer.

    Note:

    After closing each case through AIMS (CC AMSOC), note the side of Form 5351 with the IDRS employee number, date, and document sequence number.

Form 5546, Examination Return Charge Out
  1. Enter the two-digit disposal code in the space on the second line of the form that follows the words "Non-Examined Disposal Code."

  2. Attach the prepared Form 5546 to the return or electronic print.

Type of Return
  1. Cases that contain an original return, a substitute for return (SFR), an electronic print, or those that are paperless can be surveyed.

Paper Case File
  1. Attach Form 4251, Form 5351, or Form 5546 to the return or electronic print and forward to CCP.

  2. If there are workpapers or other documentation (no original return) which must be retained and the information should be retained, send to Files in the Campus. The case can be closed non-examined using a non-examined disposal code (except 28 or 33) with an electronic print. Forward the case to CCP for closure.

Paperless Case File - Group Procedures
  1. If the only paper in the case file is an electronic print (BRTVUE, CDE, TRDBV, TRPRT, TRDBV, IMFOLT, TXMOD) and no Form 1900, Income Tax Survey, no workpapers, etc., and the original return was NOT requested (line 8 on page 2 of the AMDISA does not state "Return Requested" ), a paperless closure can be requested.

    Note:

    LIN Images are considered an electronic print for purposes of this section.

    Note:

    If the return was requested but the return was identified as an Electronic Filing System (ELF) or Modernized E-File (MeF) return, the words "MeF/ELF Return Requested" will be displayed and a paperless closure is allowed. If an original return has been requested, then the paperless process cannot be used.

  2. The disposal codes to be used on a paperless closure are: 31, 32, and 42.

    Note:

    For LB&I cases, LB&I requires a Survey Reason Code (SRC) for all DC 31/32 closures. If the SRC is "E" (Other), an LB&I Survey Form or is also required and will be maintained in CCP along with the Form 5351 for three years.

  3. Prepare Form 5351 as stated above and Form 3210 .

  4. Update the return to Status Code 51 on ERCS.

  5. E-Fax the Form 5351 and Form 3210. E-Fax numbers are located in Contacts in the Exam Centralized Case Processing (CCP) book of the Exam Procedures Knowledge Base.

  6. Shred the electronic print. Do not send to CCP.

Paperless Case File - PSP
  1. Close the case on ERCS to Status Code 90 using Disposal Code 20 - 22, 25, 31, 32, 35, and 42.

  2. Do not update the ERCS status code to 51.

  3. Do not fax any documents to CCP.

Blocking Series (CCP/PSP)
  1. For Individual Master File (IMF) returns, use Blocking Series 130 - 179 for non-TEFRA (Tax Equity and Fiscal Responsibility Act) surveys and 190 - 199 for TEFRA surveys.

  2. For Business Master File (BMF) returns, use Blocking Series 28X.

    1. Close BMF cases directly on AIMS.

    2. Do NOT close BMF cases through ERCS.

Disposition of the Forms
  1. In accordance with IRM 1.15.23, Records Control Schedule:

    If source document is then the form must be
    sent to the Campus for filing (original/facsimile), forwarded with the file.
    maintained in the Area (no return), attached to the source documents and destroyed 1 year after terminal input.
ZAP Approvals
  1. Occasionally, due to program problems, records are unprocessable which means the only way to remove the record is to request a "ZAP." This is a special utility that only the IDRS User Support Staff at the campus can input. Refer to the following link for the contact list for the campus IDRS user support: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡AIMS Contact Listing.

Approvals
  1. Approval by SB/SE Headquarter AIMS Analyst must be secured before the ZAP request can be completed.

  2. Follow local procedures on obtaining the ZAP approval. Some Area Offices request the ZAP approval before they submit the paperwork to the IDRS staff. Other offices have the IDRS staff request the ZAP approval.

  3. ZAP approval will not be given if the AIMS record can be removed in any other manner such as CC AMSOC/ CC AMCLS or allowing the AIMS record to age off of the database.

Forms to Use
  1. Form 6759, Request for Taxpayer Data, is used to request an account be zapped.

  2. Attach the following supporting document to the request:

    1. Current IDRS printout of AMDISA,

    2. Written explanation of the ZAP request, and

    3. IDRS number of the requester

Electronic Case Files Closing Procedures

  1. This IRM section provides procedures for closing SB/SE Field Examination paperless electronic case files in Centralized Case Processing (CCP).

CCP-Program Analysis System (PAS) Pulls
  1. The Tax Examiner (TE) records the electronic closures on the TE Daily Manual Closures Spreadsheet in the Training Materials book of the ECFI Exam Procedures Knowledge Management. At the end of each day, the TE mails the spreadsheet to their team lead and manager.

    1. The TE begins each day with a new spreadsheet.

    2. Paper closures are included in the spreadsheet on the day they are brought to the POD.

  2. The team’s lead or manager consolidates all TE Daily Manual Closure spreadsheets and forwards to the Clerical Team Manager.

  3. The Clerical Team Manager runs the total number of closed cases through the randomizer calculator to get the two random numbers and identifies the selected cases.

    Note:

    For Electronic Closures – The clerical team completes the Transcript Virtual Case Sample Fill in Form in the Training Materials book of the ECFI Exam Procedures Knowledge Management to submit it to PAS through the CQRSS SharePoint site. PAS uses the information to open the electronic case in CEAS View Case and review the necessary documents/forms.

    Note:

    For Paper Closures – The clerical team scans the following documents and uploads them to the CQRSS SharePoint site:

    1. Form 5344,

    2. RAR,

    3. Signed agreement,

    4. Form 3198, and

    5. Form 895, if applicable

    Note:

    Certain clerks within the CCP operation have permissions to upload documents to CQRSS. If others need to gain access, they must complete ITM course 70049 and forward the completion certificate to the Senior Analyst, Campus Exam Quality Staff.

Civil Penalty Cases (Form 8278 or Form 3870)
  1. When inputting the assessment to IDRS, the Tax Examiner enters the following on the ADJ54 input screen:

    1. In the ACTIVITY field enter "E8278-CEAS" (or "E3870-CEAS").

    2. In the SOURCE-DOC-ATTACHED? field enter "N".

    3. In the REMARKS field enter "NSD - Electronic Form 8278 [or 3870] on CEAS".

      Example:

      SOURCE-DOC-ATTACHED>N REMARKS>Electronic Form 8278 on CEAS

  2. Archive the RGS file after inputting the adjustment.

Employee Audit Cases (TE)
  1. The TE is responsible for sending employee audit information to requesting offices (For example, Labor/Employee Relations, Treasury Inspector General for Tax Administration (TIGTA), or other requesting offices).

    Note:

    Locate the instructions from Technical Services on the first page of Form 3198, in the "Forward to Technical Services" section.

  2. Send the required case documents by encrypted email following the instructions from Technical Services Employee Audit Coversheet (TS-EA Coversheet).

  3. Note the RGS Folder number in the top right-hand corner of RGS screen. For example, 1040002. The folder number may differ from case to case.

  4. Open the Case File Documents folder for the case

    1. Search your computer for the folder number, or

    2. Open File Explorer (Windows Key + E on your keyboard).

    3. Select Documents > RGS > DATA > your RGS login > Case File Number> Case File Documents.

    4. Locate the document "TS-EA COVER SHEET".

      Note:

      Send the required documents following the instructions from Technical Services.

  5. Create a zip file on your desktop (right-click > New > PKZIP File). Name it "EA Case XXXX" where XXXX is the last four digits of the TIN. For example, if the last four digits of the taxpayer’s TIN is 5678, the zip file is named "EACase5678."

  6. Select the documents from the Case File Documents folder that are listed on the cover sheet, including the EA Cover Sheet itself (hold down the Ctrl key as you click on the documents to select them).

  7. Drag and drop the selected files into the zip file you created in Step 5. When prompted for a pass phrase, enter "employee audit case."

  8. Repeat steps 6 and 7 to include the required documents from the Office Documents folder.

  9. Create an email message to be sent to the correct address listed on the bottom of the EA Cover Sheet. Prepare Form 3210 to transmit the documents.

  10. Drag and drop the zip file on the email message to attach it.

  11. Include Employee Audit in the subject line of the email message.

  12. Make sure the email is encrypted, then click Send.

  13. Delete the zip folder from your desktop.

Field Office Resource Team (FORT) Referrals
  1. Cases can be referred to the FORT electronically. The person referring the case creates a referral in IAT and saves the referral form to their SBU Data folder as "Referral – XXXX YYYY" where XXXX is the name control and YYYY is the tax year(s). List all tax years included in the referral.

  2. The referral is attached to an email along with any other relevant forms as a .zip file and sent to SBSE CCP Memphis FORT.

MFT 55 and 13 Civil Penalty Cases in RGS
  1. RGS only allows for two civil penalty MFTs (MFT 13 for BMF and MFT 55 for IMF for penalties assessed with Form 8278. There are several different MFTs available in ERCS (PZ, P6, P7, etc.). The alpha numeric MFT in ERCS won’t match the RGS civil penalty MFT. To reconcile the alpha numeric MFT with the RGS civil penalty MFT, refer to the Work Unit Codes for Civil Penalties table for WU Code and definitions. The field groups add a Work Unit (WU) Code to the RGS case as the last two digits of the Case Filename. The WU Code explains which civil penalty is being assessed.

    Note:

    Civil Penalties assessed using Form 3870 are created in RGS using MFT 99.

    Example:

    The examiner closes an income tax case and a shared responsibility payment (SRP) civil penalty case. The cases are listed in CEAS View Case as follows:

    TIN Name Ctrl Taxpayer’s Name Tax Period Location Case File Name Cycle Tax Prd Count
    012-34-5678 MAPL Maple, John & Alice 201912 Central 012345678013020191200000 00
    012-34-5678 MAPL Maple, John & Alice 201912 Central 012345678015520191200053 00

  2. The MFT and WU codes identify the first case as the income tax case (MFT 30, WU Code 00). The second case is the SRP civil penalty case (MFT 55, WU Code 53). Referring to the WU Codes Civil Penalties spreadsheet reveals that WU Code 53 is the Individual Shared Responsibility Payment (SRP). Although the Case File name has MFT 55, the SRP civil penalty closure would use MFT 35 as shown on Form 8278, Section J.

  3. When completing the civil penalty closure, the TE must use the correct MFT as shown on Form 8278 or Form 3870:

    1. MFT 13 - BMF,

    2. MFT 55 - IMF,

    3. MFT 35 - SRP Penalty, and

    4. MFT 30 - IRC 6676 penalties (MFJ).

RGS Closures

  1. Report Generation Software (RGS) is broken into two sections:

    1. Clerical Responsibilities and

    2. Tax Examiner Responsibilities.

Clerical Responsibilities during the RGS Closure Process
  1. RGS is a software program that allows clerks to control cases and assign them to tax examiners.

  2. The clerical staff at the Centralized Case Processing (CCP) sites complete closures of cases from the Audit Information Management System (AIMS), Examination Returns Control System (ERCS), and Report Generation Software (RGS).

    1. Clerks input closure data provided by tax examiners, document each closed case, and route closed cases to the Files department.

Closing Cases on RGS
  1. When examined cases are closed on RGS, the system will also close AIMS.

  2. Clerks will complete the closure process once they receive a listing of the closures from the manager:

    Step Action
    1 Create AIMS.
    2 Merge cases.
    3 Print and save rejected closures report.
    4 Print and save accepted closures report.

Create AIMS
  1. AIMS must be created.

    Step Action
    1 Click on Tools.
    2 Click on Manager/Clerk Options.
    3 Click on AIMS.
    4 Click on Create/Merge.

  2. The Create/Merge window will open.

    Step Action
    5 Select Create.
    6 Using the drop-down menu, highlight your campus.
    7 Click OK.

  3. The Confirm ALL Examiners window will open. Click Yes.

Merge Cases
  1. When merging cases, clerks will need to take the following actions:

    Step Action
    1 Click on Tools.
    2 Click on Manager/Clerk Options.
    3 Click on AIMS.
    4 Click on Create/Merge.
    5 The Create/Merge window will open. Select Merge.
    6 Click OK.

  2. The Merge process will transmit the RGS data to IDRS and AIMS.

AIMS Reports
  1. After cases have been confirmed and merged, RGS will generate three AIMS Merge Reports, clerks are required to print and save:

    1. Rejected AIMS Closures,

    2. AMCLS Records Sent to AIMS, and

    3. Accepted AIMS Closures

  2. AIMS report window will open. The box to the left of each report must be marked before selecting OK.

  3. Each report will display separately and in the order of selection. The reports must be printed and saved.

AIMS Rejected Closure Report
  1. Cases that cannot be closed will generate a Rejected Closure Report. The clerk should take the report to the lead or manager. The report, along with the case file, will then be returned to the tax examiner to correct the problem.

  2. The report and rejected cases are required to be taken to the manager or lead.

AMCLS Records Sent to AIMS
  1. This report is used to manually close cases off ERCS. The clerk will line out the periods that rejected to ensure only accepted AIMS closures are closed off ERCS. There is no requirement to keep the report after ERCS has been closed.

Accepted AIMS Closure
  1. Cases that were successfully closed generated a report. The report is used in lieu of Form 3210 which goes to Files with the closed cases.

    1. The sequence number from the report must be written on the Form 5344.

    2. Clerks will use the report to close the cases off of ERCS.

Closing Cases off ERCS
  1. After closing the case off RGS, the clerk will need to close the case off ERCS.

Examination Main Menu
  1. Using the report just printed, the next step is to close cases off ERCS. Starting from Examination Main Menu:

    Step Action
    1 Select Transfer, Close, Establish Control.
    2 Select Transfer/Close.
    3 Enter the TIN for each case in the same order as the AMCLSE/AMSOC report.

  2. After each entry, use the Enter key to add the TIN to the list. Once all of the TINs are listed, enter "N" to advance to the next screen.

Close the Case for Each Tax Period
  1. Select Returns to Transfer or Close screen will display. All tax periods for each TIN that have an ERCS record will be listed. Scroll through each tax period and enter Y in the Select column for each return that should be closed and N for returns that should not be closed.

Update to Status 90
  1. The final step in closing cases on ERCS is updating them to Status "90."

Case File Assembly.

  1. Case File Assembly is important as a standard guideline to ensure all necessary documents are present for each case.

Reasons for Case Assembly
  1. When case files leave CCP, they must be in a specific order.

    Reminder:

    Uniform case assembly procedures ensure that all necessary documents are included with each case file, and that all vital information is readily accessible.

Case Types for Examined Paper Closures Case File Assembly

  1. The following Examined paper case types will follow these procedures:

    1. No-Change Cases,

    2. Agreed,

    3. 90-Day Unagreed,

    4. 90-Day Agreed,

    5. Claims, and

    6. Surveyed Claim closures.

Document Order for Single Year Paper Cases
  1. When paper cases are prepared for closing, they are removed from their case file folder and the documents are placed in the following order (from top to bottom):

    1. Form 5344, Examination Closing Records - If a prior audit or adjustment occurred, staple the old Form 5344 to the back of the current Form 5344.

    2. Tax Return - This could be either the original tax return, a copy of the tax return, or a RTVUE/BRTVU or MACS print.

    3. Form 5546 or AMDIS Print - only include this form or print if it was provided by the field.

    4. Closing Examination Report (Form 4549, Report of Income Tax Examination Changes).

      Note:

      Form 870, Waiver of Restrictions on Assessment & Collection of Deficiency in Tax & Acceptance of Overassessment, might have been the signature document.

    5. Other forms, letters, and documents enclosed in the case folder.

    6. Form 9984, Examiner Officer’s Activity Record.

    7. Form 3198, Special Handling Notice for Examination Case Processing.

      Note:

      Non-examined case files may not contain Form 3198. The field determines when to enclose this form.

Document Order for Multiple Year Paper Cases
  1. When paper cases are prepared for closing, they are removed from their case file folder and the documents are placed in the following order (from top to bottom):

    1. Form 5344, Examination Closing Record

    2. Tax return - This could be either the original tax return, a copy of the tax return, or a RTVUE/BRTVU or MACS print.

    3. Form 5546, Examination Return Charge-Out Sheet, or AMDIS print - only include this form or print if it was provided by the field.

    4. Copies of Closing Examination Report (Form 4549.)

  2. These documents must be included in each case year assembly. It is the responsibility of the tax examiner to ensure that the report is attached to each tax year. Input TC 971/057 with the latest tax year. The most current deficiency year should contain all the workpapers.

Items that Should be Removed
  1. CCP clerks or tax examiners will remove the following items:

    1. Transcripts - These should only be retained if data on the transcripts is a part of the examination.

  2. Other unnecessary items:

    • Fasteners,

    • Rubber bands,

    • Paper clips,

    • Excessive amount of staples,

    • Duplicates of any documents,

    • Correspondence and excess printouts,

    • Labels, or

    • Transmittals.

    Note:

    It is not necessary for CCP to inspect each page to determine if a document is a duplicate.

Case Types for Non-Examined Case File Assembly

  1. The following Non-examined cases will follow these procedures:

    1. Short Closures and

    2. Survey cases

      Note:

      Please note that Surveyed Claims will not follow these procedures.

Document Order for Single Year Cases
  1. When cases are prepared for closing, they are removed from their case file folder and the documents are placed in the following order (from top to bottom):

    1. Form 5546, Place face out on top and folded so that the entity and DLN on the tax return is visible.

      Note:

      An AMDISA print is used if Form 5546 is not present.

    2. Tax return - This could be either the original tax return, a copy of the tax return, or RTVUE/BRTVU or MACS print.

    3. Form 1900, Income Tax Survey, or an Agent/Auditory Worksheet (if present).

    4. Action Sheets, Workpapers, and Miscellaneous Papers.

    5. Transcripts.

    6. Statute Control Information.

    7. History Sheet (Form 9984).

    8. Form 3198, Special Handling Notice for Examination Case Processing.

Document Order for Multiple Year Cases
  1. When cases are prepared for closing, they are removed from their case file folder and the documents are placed in the following order (from top to bottom):

    1. Form 5546 - Place face out on top and folded so that the entity and DLN on the tax return is visible and AMDISA print is used if Form 5546 is not present.

    2. Tax return - This could be either the original tax return, a copy of the tax return, or RTVUE/BRTVU or MACS print.

    3. Form 1900, Income Tax Survey , or an Agent/Auditor Worksheet (if present).

      Note:

      Input TC 971/057 for paperwork association to the latest year.

Securely Fastening Paper Case Files

  1. Clerks and Tax Examiners in CCP must ensure all paper case files are securely fastened when preparing for shipment to Files. They will:

    1. Dispose of unnecessary materials.

    2. Fasten documents.

    3. Keep related information together.

Dispose of Unnecessary Materials
  1. Remove all excess metal fasteners, paper clips, rubber bands, and staples.

  2. Discard all duplicate materials

    1. This will include old transcripts, duplicate reports and correspondence, and excess printouts, labels, and transmittals.

      Note:

      Tax examiners do not have to take apart the workpapers to get rid of duplicate information and transcripts.

    2. Transcripts with notated information written on them should be retained.

    3. Any item containing taxpayer information that is disposed of must be treated as classified waste. Classified waste is documentation containing taxpayer entity or account information that is not part of the case and is not needed for audit trail purposes. Refer to IRM 21.5.1, General Adjustments, for guidance on handling classified waste to prevent inadvertent/unlawful destruction of records.

  3. Case folders may be discarded if not reusable.

Fasten Documents
  1. Staple the case file at two separate places on the top to ensure that all documents are securely fastened together.

Keep Related Information Together
  1. Statute control sheets, mandatory review sheets, EQMS, and LQMS flag sheets are attached to the top of this case.

Multiple Year Examinations
  1. For multiple year examinations:

    1. Place a copy of the RAR with all years.

    2. Place related case files in one stack.

    3. Place earliest year on top.

    4. Place other years in sequence below it.

    5. Input TC 971 AC 057 on all years not containing the workpapers.

      Note:

      The most current deficiency year should contain all workpapers. Use the IAT Tool for input.

Tips and Techniques

  1. Here are some additional tips and techniques to assist you with the general case file assembly.

    1. Assemble cases in order to ensure all the proper documents are attached.

    2. Input all transaction codes that are applicable to final case closure.

    3. Securely fasten the case file with large rubber bands or staples to prevent lost paperwork.

      Note:

      Single year case files are assembled differently from multiple year case files.

Special Handling Procedures

  1. The following IRM section will outline procedures and processing for cases that require special handling.

  2. These items include:

    1. Manual Refunds,

    2. Non-Master File Assessments and Abatements,

    3. Master File Tax (MFT) 31,

    4. Excess Collections,

    5. Erroneous Refunds,

    6. Jeopardy Assessments/Termination Requests/ Transferor-Transferee Assessments, and

    7. Misrouted Cases.

Manual Refunds.

  1. A Manual Refund is a refund that is generated through normal Master File processing.

Purpose of Manual Refunds
  1. There are various reasons a Manual Refund would be used:

    1. To expedite the processing of a refund when it is deemed in the best interest of the taxpayer or the IRS.

    2. The refund is being sent to an entity name other than what is on Master File.

    3. The refund is not for a Master File account.

Importance of Manual Refunds
  1. Manual Refunds are important to reduce the burden to the taxpayer and to save credit interest the IRS will have to pay.

IAT
  1. Use of the Integrated Automated Technology (IAT) Refund Tool is mandated to prepare and issue all Manual Refunds.

Criteria for Issuance of Manual Refunds
  1. Some of the more common reasons a manual refund would be issued by a Tax Examiner in CCP are:

    1. The refund will be going to someone other than the entity name or address on the Master File.

    2. A hardship situation necessitates a quicker refund than normal systemic processing can allow.

    3. The refund is not for a Master File account (Non-Master File (NMF), Excess Collections).

    4. Refund over $10 million (including allowable interest).

  2. Some system limitations that prevent a normal computer-generated refund are:

    • Tentative Carryback claims.

    • Taxpayer is in Bankruptcy.

    • Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax.

  3. Taxpayer requests an Electronic Fund Transfer (EFT), Automated Clearing House (ACH) or Fedwire or Direct Deposit refund using:

    • Form 8302, Electronic Deposit of Tax Refund of $1 Million or More.

    • Form 8050, Direct Deposit of Corporate Tax Refund.

  4. Other reasons a Manual Refund may be issued are listed in IRM 21.4.4.2.

Preliminary Research of Manual Refunds
  1. When a refund is issued manually, it greatly increases the chances of a duplicate refund. Therefore, preliminary research must be performed to avoid the possibility of an erroneous refund being issued to the taxpayer.

  2. Before taking steps to issue a manual refund, research the taxpayer’s account to verify the following:

    1. Is the Refund Statute Expiration Date (RSED) still open?

    2. Are there outstanding balances on other modules?

    3. Is the credit available to refund?

    4. Has the refund already been issued?

    5. Are there any refund holds on the account?

    6. Does another area need to be coordinated with?

  3. A research checklist is located below under exhibits.

IAT Research
  1. To perform research using the IAT Tool:

    Step Action
    1 Pull up TXMOD.
    2 Click on the Manual Refund Tool. The fields will populate with information from TXMOD.
    3 Click Research. Any conditions that come up in the research field must be researched and resolved prior to continuing.

  2. Conditions that the Manual Refund Tool checks for were identified by a special team of analysts, Subject Matter Experts, and headquarters as conditions that most commonly cause duplicate and erroneous refunds.

  3. The IAT Manual Refund Tool has a demonstration and job aid. Refer to: IAT Webpage

Research of the RSED
  1. CCP tax examiners will need to determine whether the Refund Statute Expiration Date (RSED) is still open.

    1. Generally, the RSED for payments is 2 years and prepaid credits is 3 years from the return due date.

Checking for Outstanding Balances
  1. CCP tax examiners will need to ensure that there are no outstanding balances on other tax modules.

  2. Debit balances must be satisfied before a manual refund can be issued.

  3. A TC 130 with an indicator of 99 means that the freeze is the result of a state or federal agency debt on the Debtor Master File (DMF).

  4. An M freeze indicates a NMF liability may exist.

  5. If a balance due is present, satisfy the liability by transferring the credit. A TC 570 must be used on the credit transfer, or an erroneous refund may result. Refund the remaining unapplied credit.

Accounts to Research for Outstanding Balances
  1. Research of the following accounts is necessary to determine if there is an outstanding balance:

    1. IMF,

    2. BMF,

    3. CMF, and

    4. NMF.

Duplicate or Delayed Refund
  1. It is imperative that CCP tax examiners confirm that neither of the following conditions apply:

    1. Duplicate Refund, or

    2. Delayed Refund.

  2. Failure to notice either of these conditions could result in an erroneous refund.

Duplicate Refund
  1. Review the control bases or history items on TXMOD for any indication that the refund might have already been issued.

  2. Check the account for indicators that the refund is in the process of being sent out to the taxpayer.

  3. A TC 971 AC 664 indicates a Form 3753, Manual Refund Posting Voucher, has been processed by Accounting and a TC 840 will post to the account within 4 - 6 weeks.

Delayed Refund
  1. With accelerated refund processing through Customer Account Data Engine (CADE) 2, there are times accounts will not reflect the TC 846 until a systemic refund hold expires (usually one cycle).

  2. TC 570 with blocking series "55555" and a TC 971 AC 804 or AC 805 indicates a refund hold.

Coordination with Another Area
  1. There are some account conditions that will require coordination with another area before a manual refund can be requested.

  2. If coordination with another area is necessary, all information secured from these areas must be included in the manual refund package as documentation.

    1. Notate in the remarks section the contact’s name, telephone number and the date approval was given.

Types of Conditions that Require Coordination with Another Area
  1. The following all require coordination with another area.

    1. When issuing a manual refund for a Joint Committee case, a copy of the information from the Chief of Staff must be included as documentation.

    2. Manual Refunds issued to Financial Institutions (Savings and Loan, Banks, etc.) should be reviewed by classifiers or documentation authorizing the refund should be provided by the Revenue Agent.

    3. Additional account conditions requiring coordination are:

    Condition Coordinate With
    Account shows no filing requirements Scheme Development Center
    Large Corporation Technical Unit
    M- Freeze NMF
    -Z or Z- Freeze Criminal Investigation or Scheme Development Center
    -U Freeze Erroneous Refund team in Accounting
    -V Freeze Centralized Insolvency Office (CIO)
    -W Freeze Refer to IRM 21.5.6.4.46 for specific instructions depending on the TC 520 Closing Code.
    -R Freeze (TC 570 with 999 in the Julian Date field of the Document Locator Number (DLN) (digits 6, 7, and 8). Refund Hold Coordinator. These can be found on SERP under Delinquent Refund Hold Coordinators.

Miscellaneous Actions
  1. The following sections explain various miscellaneous actions that may occur when you are working a manual refund. Further explanation is provided in the subsequent IRM subsections:

    1. Tax Adjustment,

    2. Offsetting Credit,

    3. Entity not on ENMOD,

    4. IDRS Control,

    5. Monitoring, or

    6. Other Requirements.

Tax Adjustment
  1. When a tax or credit adjustment is being input with Form 5344, Examination Closing Record, a Hold Code 1, 2, or 4 must be input on the adjustment.

    1. If multiple adjustments are input, Hold Code 1, 2, or 4 must be used on all of them.

  2. This will prevent Master File from systemically issuing a refund.

  3. If Hold Codes are not input by the initiator, Accounting will reject the Manual Refund.

Offsetting Credit
  1. Where there is a balance due on another module, an offset will be needed before the manual refund can be requested.

  2. A TC 570 is required on the debit side of the credit transfer.

  3. If a TC 570 is not input on the debit side, it will release the Hold Code input on the tax adjustment and allow a refund to be systemically released. This can result in an erroneous refund.

Entity not on ENMOD
  1. Some situations will require that the refund be sent to someone other than those listed on ENMOD.

  2. An explanation must be provided on Form 5792, Request for IDRS Generated Refund (IGR), or Form 3753, Manual Refund Posting Voucher, of the reason the refund is being issued to a different entity as well as where the supporting documentation can be located.

  3. When issuing a refund to an entity other than the entity listed on ENMOD or INOLE, input TC 971 AC 037.

    1. Use the input date of CC RFUND as the transaction date, and enter the TIN of the entity receiving the refund.

  4. HOWEVER, a TC 971 AC 037 is not required on decedent returns when the refund is being issued to the surviving spouse, executor, or appointed administrator.

    1. The executor or appointed administrator must submit documentation for their appointment.

    2. A Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, is required documentation for a decedent manual refund if the refund is over $100 and it is going to a person other than the surviving spouse.

IDRS Control
  1. There must be an open control on TXMOD when the manual refund is sent to Accounting.

  2. The open control must indicate in the activity code the employee is monitoring the account for duplicate refund conditions. Some examples are:

    1. WT840,

    2. MONITOR, or

    3. IDRSREFUND.

  3. The category code will generally be "MISC," but if the case is still being worked or monitored for other reasons, the category code "MISC" is not mandated.

Monitoring
  1. All manual refunds must be monitored using the Erroneous Manual Refund Tool (EMT) case monitoring tool to ensure duplicate refunds are not sent to the taxpayer.

  2. When the manual refund tool is used to complete Form 3753, Manual Refund Posting Voucher, or Form 5792, Request for IDRS Generated Refund (IGR), the refund is automatically loaded to the EMT case monitoring tool.

  3. The lead or a designated employee will perform the required monitoring and documentation until the TC 840 posts to IDRS.

  4. Managerial review of the EMT monitoring and documentation process is also required.

Other Requirements
  1. Other situations will require additional action, such as:

    1. When issuing a manual refund for over $1 million with credit interest, there is mandatory interest review.

    2. Due to systemic limitations, a refund for $100 million and over required two or more Form 3753.

    3. Accounting must be made aware of cumulative refunds totaling greater than $50 million on any given day. Accounting has requirements to give Treasury two (2) days’ notice if issuing over $50 million and five (5) days’ notice if over $500 million.

    4. If an offset credit (TC 706) is being refunded from an IMF account, refer to IRM 21.4.6, Tax Offset Reversal, to determine when the offset must be reversed back to the original module instead of being refunded. A TC 571 input may be needed one cycle after the credit reversal.

Preparation of Manual Refund Documentation
  1. It will sometimes be necessary to prepare a Manual Refund request on cases received in Centralized Case Processing (CCP) Exam.

Requirements
  1. Preparation of Manual Refund Documents must be done through the IAT Manual Refund Tool.

  2. All manual refunds submitted to Accounting must have the required documentation attached or they will be rejected to the originator:

    1. Current prints of: TXMOD (must show open control), INOLES, IMFOL/BMFOL, ENMOD, and Automated Computation Tool (ACT)/Decision Modeling Inc. (DMI) 490 Report (if interest was calculated).

  3. Sufficient documentation to justify issuing the manual refund must also be included:

    • Taxpayer Correspondence,

    • Internal Transcript,

    • Form 8379, Injured Spouse Allocation, or the injured spouse worksheet (if applicable),

    • Form 1310, Person Claiming Refund Due a Deceased Taxpayer,

    • Form 843, Claim for Refund and Request for Abatement,

    • The taxpayer’s hardship documentation, or

    • A signed statement from the Local Taxpayer Advocate (LTA) approving the taxpayer’s hardship refund request.

  4. Accounting will reject any request that:

    1. Has white-out or strike marks on Form 5792 or Form 3753.

    2. Does not have all supporting documentation.

    3. Has missing, incomplete, or incorrect authorized approval signatures.

    4. Does not have an open TXMOD control.

When to Use Which Form
  1. CCP Tax Examiners will need to determine whether a Form 5792 or Form 3753 is required when requesting a manual refund.

Form 5792, Request for IDRS Generated Refund (IGR)
  1. Form 5792, Request for IDRS Generated Refund (IGR), cannot be used for:

    1. Refunds of $10 million or more,

    2. Refunds from Excess Collections or Unidentified, and

    3. Electronic Fund Transfers.

  2. The following items are important to know regarding Form 5792:

    1. The account must be on IDRS.

    2. The refund is input to IDRS using CC RFUND.

    3. The account will immediately reflect the TC 840 amount.

    4. The taxpayer will receive the refund within 7 to 10 days.

  3. IRM 21.4.4.5.1 lists the required entries on Form 5792.

Form 3753, Manual Refund Posting Voucher
  1. Form 3753, Manual Refund Posting Voucher, is used for:

    1. Extreme Emergency Hardship Cases,

    2. Refunds in excess of $10,000,000.00 ($10 million), and

    3. Accounts not on IDRS such as NMF and Excess Collections.

    4. Electronic Fund Transfers

  2. The following items are important to know regarding Form 3753:

    1. The account does not need to be on IDRS.

    2. Form 3753 is manually processed.

    3. The account will not immediately reflect the TC 840 amount.

    4. The taxpayer will receive the refund within 3 to 5 days (hardship cases may receive the refund within 2 to 3 days).

  3. IRM 21.4.4.5.2 lists the required entries on Form 3753.

TOP Offset Bypass Indicator (BPI)
  1. When issuing a Fedwire refund (Form 3753 the Bureau of Fiscal Services (BFS) (formerly Financial Management Services (FMS)) should be contacted to determine if a Treasury Offset Program (TOP) offset is needed. The current phone number for BFS is located at IRM 21.4.6.5.12.1.

  2. The BFS initiates refund offsets to outstanding federal agency debts or child support. These offsets are referred to as TOP offsets.

  3. Fedwire refunds do not allow sufficient time for BFS/ TOP offset processing. In the Remarks section of Form 3753 notate the date, identification number of the BFS representative, and whether a TOP offset is needed.

  4. Refer to IRM 21.4.6.4.2.1 for all Bypass Indicators that can be used on Manual Refunds.

  5. Bypass Indicators 0 and 3 are the only indicators that can be used with Form 3753:

    1. BPI 0 - Indicates TOP Offset.

    2. BPI 3 - Indicates no TOP Offset.

Form 5792, Request for IDRS Generated Refund (IGR)
  1. Form 5792, Request for IDRS Generated Refund (IGR), is used when requesting a manual refund from Accounting on a case sent to CCP Exam.

IAT
  1. The IAT Manual Refund Tool is required to complete Form 5792.

  2. Ask the lead or On-the-Job Instructor (OJI) to help set up the Manual Refund Tool for the first time.

  3. On the Fill Form screen, select the radio button.

Form 5792, Section I
  1. Form 5792, Section I, Account Information, is where the entity information as well as the amount of the refund and interest can be found.

  2. The following boxes are required entries and are auto populated by the tool: 1, 2, 3, 5, 6, 11, 14, 15, 16, 17, 18, and 19.

  3. The following boxes are required entries and are auto populated by information the tax examiner enters into the Manual Refund Tool:

    1. 7 - TC 770 amount - Compute the interest using the Automated Computation Tool (ACT)/Decision Modeling Inc. (DMI). Compute the interest to the day after the RFUNDR input.

    2. 8 - Overpayment amount - If the module is in a credit status, the tool will populate this field; verify that it is the principal amount that needs to be refunded.

    3. 9 - Line No. RFUND input - The tool has a drop-down menu of valid selections for the MFT. If you are not sure which is the correct option, click on the Line Number This will bring up the definitions.

    4. 10 - Int’st Ind - Select the correct interest indicator from the drop-down menu.

    5. 12 - Sequence Number - Will be input by the employee inputting CC RFUND.

    6. 20 - Remarks - List the reason for the refund in the remarks field. Be specific. Include all pertinent information Accounting will need to verify the interest dates and the credit is available for refund.

    7. 21 - Initiating BOD - Select SB/SE from the drop-down menu.

    8. 22 - DLN of return - There is a checkbox Do not pull DLN. If the box is checked, the DLN will need to be manually entered. If the box is not checked, the tool will pull the DLN.

Form 5792, Request for IDRS Generated Refund (IGR), Section II
  1. Section II, Manual Refund Authority, is made up of all checkboxes. All applicable boxes must be selected based on the case. All actions the checkboxes indicate must be taken.

  2. The following boxes are required to be checked:

    1. 1c - Handbook Reference (an IRM tridoc is required here),

    2. 3 - IDRS and Master File research for outstanding balances and TC 130,

    3. 4 - Transcript of debit accounts attached,

    4. 6 - Necessary supporting documents attached,

    5. 7 - Verify refund amount with source document amount,

    6. 8 - All items above completed (this box is referencing Section 1), and

    7. 13 - Control Base Opened.

  3. Any other boxes in Section II are optional and should only be checked when applicable.

  4. This section of the Form can be set up with common refund scenarios. To set up and save a scenario (on the fill forms screen), click the Edit button next to the "Refund Reason" drop-down. This will pull up a screen that allows common scenarios to be set up. After an initial setup, the scenarios will be accessible by selecting them from the drop-down menu.

  5. All checkboxes in Section II and Box 20 "Remarks" in Section I are completed on the Refund Reason screen that is accessed through the edit button. The remarks can also be edited on the fill forms screen.

Form 5792, Request for IDRS Generated Refund (IGR), Section III
  1. Data for Section III, Interest Computation, is not input on the Manual Refund Tool screens. The required boxes "Interest to date" and "Amount of interest" will be manually typed into the form after the "Fill Forms" button is clicked.

Form 5792, Request for IDRS Generated Refund (IGR), Section IV
  1. Information for the boxes in Section IV, Manual Refund Approval, is pulled from various parts of the Manual Refund Tool.

    Box Where information is pulled from
    1- Number of Employee inputting RFUND via IDRS Fill forms screen
    On the fill forms screen, next to the "IDRS Number to input RFUNDR:" field there is a checkbox labeled "fill." If the box is checked, the tool will complete box 1 in Section IV with the IDRS number input.
    • Request prepared by:

    • Phone no.

    Fill Forms Preferences Menu
    4a- Print SEID and Name of Approving Official To access and set up preferences:
    From the fill forms screen, click on the "Options" drop-down menu, select "Fill Forms Preferences," then select "Form 5792," complete the fields to match tax examiners’ needs.
    5- Date Auto fills based on tool programming.

  2. All boxes in this section are required entries. The signature, SEID and name entered in Box 4 and 4a must be identical to the information on file at the Accounting function or the manual refund will be rejected.

Important Command Codes Required for Input of Form 5792, Request for IDRS Generated Refund (IGR),
  1. Command codes that are necessary for processing manual refunds. They are:

    1. NOREF,

    2. RFUND, and

    3. CMODE.

  2. More information is provided in additional subsections.

NOREFP
  1. CC NOREFP stops an electronic paper refund (TC 846) from being issued. The initiating tax examiner or designated employee must input a NOREFP on all IMF Form 5792, refunds to prevent systemic refunds.

    Exception:

    If the module has a -V or -W freeze or contains an open TC 520 (bankruptcy).

    Exception:

    If the manual refund is being issued from a module currently in a balance due status (before the manual refund is input).

  2. The IAT Stop Refund Tool should be used to input CC NOREFP. For future reference, the tool job aid can be found on the IAT website: IAT Website Home page.

RFUND
  1. Use of the IAT Manual Refund Tool is required to input CC RFUND. Select the radio button labeled RFUNDR. The Manual Refund Job Aid, Section 3.8 CC RFUNDR input Option, explains how to use this function.

  2. On an IMF account, if CC NOREF has not been input prior to CC RFUNDR, an error message will be returned. If CC NOREF is not needed, bypass the error message. If CC NOREF is needed, exit the IAT Manual Refund Tool and input the NOREF.

  3. CC RFUNDR is used to generated IDRS manual refunds. All information input to CC RFUND is gathered from Form 5792. If the tax examiner is located at a campus that does not have an Accounting function, the CC RFUNDR will be input through CMODE.

  4. The manual refund package must be sent to Accounting the same day CC RFUNDR is input. Follow local procedures regarding timeframes that the RFUND input and manual refund package must be received in Accounting.

CMODE
  1. CC CMODE (change mode) enables IDRS users to access and update taxpayer records on another campus’ database.

  2. If CMODE is needed to input RFUNDR do the following:

    Step Action
    1 On the fill forms screen, click "Options."
    2 Select "Use CC CMODE."
    3 Select a Service Center.

  3. After the RFUNDR has been input, undo the CMODE selection. All information input to CC RFUND is gathered from Form 5792.

Form 3753, Manual Refund Posting Voucher
  1. Form 3753, Manual Refund Posting Voucher, is requested when requesting a manual refund from Accounting on a case sent to CCP Exam under certain conditions.

IAT
  1. The IAT Manual Refund Tool is required to complete Form 3753.

  2. Ask your lead or On-the-Job Instructor (OJI) to help set up the Manual Refund Tool the first time it is used.

  3. On the Fill Form screen, select the radio button for Form 3753, Manual Refund Posting Voucher .

Form 3753, Manual Refund Posting Voucher, Section I
  1. Entity information as well as the amount of the refund is input to Section I, Account Information.

  2. The following boxes are required entries and are auto populated by the tool: 1, 2, 3, 7, 8, 10a, 10b, 10c, and 14.

  3. The following boxes are required entries and are auto populated by information the tax examiner enters into the Manual Refund Tool.

  4. From and Return to - Enter your Department and Team Information:

    1. 9 - DLN of return. (On the fill forms screen, there is a checkbox Do not pull DLN. If the box is checked, the DLN will need to be manually entered. If the box is not checked, the tool will pull the DLN).

    2. 10d - Interest - Compute the interest using Automated Computation Tool (ACT)/Decision Modeling Inc. (DMI).

    3. 13 - Overpayment amount - If the module is in a credit status, the tool will populate the field. Verify that it is the principal amount that needs to be refunded.

    4. 15 - Line number - The tool has a drop-down menu of valid selections for the MFT. If not sure which is the correct option, click on the Line Number. This will bring up the definitions.

  5. If Fedwire or Direct Deposit is needed, then complete the "ABA:" and "Account:" information on the fill form screen. The tool will populate Box 11 with the information entered. Accounting will process the refund on the interest to date located in Section III. However, depending on the taxpayer’s banking, they will not receive the write transfer in their account for a day or two after the scheduled transaction date.

Form 3753, Manual Refund Posting Voucher, Section II
  1. Section II, Manual Refund Authority, is made up of all checkboxes. All applicable boxes must be selected based on the case. All actions that the checkboxes indicate must be taken.

  2. The following boxes are required to be checked:

    1. 1c - Handbook Reference (an IRM tridoc is required here),

    2. 2b - Transcript of account,

    3. 3 - Interest (select the applicable box),

    4. All items above completed (this is referring to Section I),

    5. Control Base Opened,

    6. IDRS and Master File researched for outstanding balance and TC 130,

    7. Necessary supporting documents attached, and

    8. Bypass Indicator 0 or 3. Select either Yes or No.) Refer to IRM 21.4.6 for more information.

  3. Any other boxes in Section II are optional and should only be checked when applicable.

  4. This section of the Form can be set up with common refund scenarios. To set up and save a scenario (on the fill-forms screen), click the Edit button next to the "Refund Reason" drop-down. This will pull up a screen that allows common scenarios to be set up. After initial setup, the scenarios will be accessible by selecting them from the drop-down screen.

  5. With the exception of the Bypass Indicator 0 or 3, all check boxes in Section II and "Other Remarks" in Section IV are completed on the Refund Reason screen that is accessed through the edit button. The Bypass Indicator is elected on the fill-forms screen.

Form 3753, Manual Refund Posting Voucher, Section III
  1. Data for Section III, Interest Computation, is not input on any of the Manual Refund Tool screens. The required boxes "Interest to date" and "Amount of interest" will be manually typed into the form after the "Fill Forms" button is clicked.

Form 3753, Manual Refund Posting Voucher, Section IV
  1. The Other Remarks and Initiating BOD boxes are located in Section IV. The input field for remarks is located in the Reason for Refund. Click on the Edit button next to the Reason for Refund to input any necessary remarks.

  2. The Initiating BOD can be selected from the fill-forms screen.

Form 3753, Manual Refund Posting Voucher, Section V
  1. Information for the boxes in Section V, Manual Refund Approval, is pulled from the Fill Forms Preferences Menu. Tax Examiners have the option to set this section up to autofill or complete it manually each time a Form 3753, is prepared.

  2. To access and set up the preferences from the fill form screen:

    Step Action
    1 Click on the "Options" drop-down menu.
    2 Select "Fill Forms Preferences."
    3 Select "Form 3753."
    4 Complete the fields to match tax examiner’s needs.

  3. All boxes in Section V are required entries. The signature, SEID and name entered in Box 1 and Box must be identical to the information on file at the Accounting function or the manual refund will be rejected.

Form 5344, Examination Closing Record
  1. Form 5344, Examination Closing Record, requires preparation to prevent a manual refund reject.

Preparation of Form 5344, Examination Closing Record, Regarding Manual Refunds
  1. Complete Form 5344 per normal procedures paying special attention to the following items:

    1. Item 7 - A Hold Code 1, 2, or 4 must be input, or Accounting will reject the manual refund.

    2. Item 12 - Do not input an amount for the TC 770 if it was input on the manual refund.

      Note:

      This would give the taxpayer double the amount of credit interest.

Non-Master File Assessments and Abatements

  1. Non-Master File (NMF) is a manually processed, assessment-based system. A NMF account is a collection of revenue accounting transactions for a particular Taxpayer Identification Number (TIN). Rules and regulations pertaining to Master File (MF) also apply to NMF, although different procedures may be required.

  2. This purpose of NMF is to accommodate returns that have been programmed to MF and processed through normal processing channels.

    1. Any adjustments to returns not housed on MF must be input through Automated Non-Master File (ANMF). Certain Examination deficiencies also cannot be processed to MF.

  3. Adjustments to NMF returns require different forms and procedures than adjustments to MF returns. Some additional code and edit procedures are necessary. Blocking and numbering requirements are also different.

Types of NMF Assessments
  1. There are six conditions which require NMF processing:

    1. Large Dollar Accounts - Accounts that have balances too large for the Master File to process.

    2. Overflow Accounts - Accounts that have an excessive number of transactions for the Master File to systemically process.

    3. New Legislation - Accounts that require immediate tax law implementation, but time does not permit for extensive modifications to the Master File.

    4. Immediate Legal Assessments - Accounts which require immediate (24 hours) legal assessments when the Master File would be too slow to post the assessments.

    5. Reversal of Erroneous Abatements - Accounts that require reversal of erroneous abatements when the Assessment Statute Expiration Date (ASED) has expired.

    6. Child Support Cases - Child Support cases where collection of payments has been ordered by state courts but has fallen into arrears.

Automated Non-Master File (ANMF) System
  1. The ANMF system is a standalone database, which contains all:

    1. Open,

    2. Closed, and

    3. Archived accounts.

      Note:

      ANMF does not interface with Master File. Many returns that were previously processed on NMF have been moved to Master File.

Dummy Tax Period
  1. A dummy tax period is required on NMF assessments where there are multiple assessments for the same tax period. NMF can only handle one Collection Statute Expiration Date (CSED) on each account.

  2. The dummy tax period should be followed by the true tax period under the entity section on the transcript or in the "Pds assessed:" section of the ANMF Research Screen.

  3. Each additional assessment will be given a dummy tax period.

Research and Transcripts
  1. CCP Tax Examiners will need to research all of the following:

    1. Master File,

    2. Automated Non-Master File, and

    3. NMF Transcript.

Master File Research
  1. AIMS will be established with a file source of "N" or "D."

    1. N is for non-master file (SSN or EIN).

    2. D is for AIMS dummy Taxpayer Identification Number (TIN).

  2. Check MF using CC SUMRY and TXMOD with file source of "N" to show any possible history items or case controls.

  3. A zero balance on MF with a TC 400 and an M- freeze can indicate the account was transferred to NMF.

  4. TC 400 with a blocking series of:

    1. 00 is a transfer from MF to NMF,

    2. 05 is an Offer in Compromise,

    3. 09 is a transfer from MF to NMF - Special Project, and

    4. 99 is an overflow account.

  5. Transaction Code 130 with a blocking series of 200-299 on ENMOD indicates that a NMF account is present.

Automated Non-Master File (ANMF)
  1. NMF accounts must be researched before processing any transactions. Research can be done through ANMF and analyzing transcripts.

  2. Designated tax examiners in CCP have access to ANMF. Research is done by analyzing a NMF transcript in the same way a TXMOD or ENMOD print is used for MF accounts.

NMF Transcript
  1. A current transcript (dated two weeks or less) must accompany adjustments sent to NMF for processing.

  2. Have a designated TE request a transcript using ANMF.

    1. The transcript will be faxed to the attention of the TE and fax number submitted on the request. Use this transcript to do the NMF research.

      Note:

      Because each NMF assessment must have its own account, there may be more than one transcript for each tax period. Each transcript must be used to piece together the entire picture of the tax period.

NMF Assessments
  1. NMF assessments are processed manually using Form 2859, Request for Quick or Prompt Assessment.

  2. Prompt the manual assessment document following normal procedures discussed in IRM 4.38.1.7.2, Manual (Quick) Assessments, with the following exceptions:

    1. Enter an N after the TIN.

    2. A TC 340 is always used when entering debit interest.

    3. Manager’s signature is required.

    4. In the remarks section, notate NMF and the Disposal Code (DC). ANMF is required to input an Exam disposal code with a TC 30X transaction.

    5. Information from the remarks section is added to the Cross Reference Information area on ANMF. Enter any information that is used to make the assessment and compute interest.

      Example:

      870 Waiver date xx/xx/xx. 6404(g) Notice date xx/xx/xx, TEFRA OYD xx/xx/xx.

    6. Form 3210, Document Transmittal, must accompany Form 2859. NMF Revenue Accounting will fax or route Form 3210, back to the originating TE with Document Locator Number (DLN) for the assessment. Notate the DLN on the case file and history copy of Form 2859, before taking the next actions on the case. (Closing it off AIMS or routing it to another area for handling.)

    7. Fax or route the NMF assessment package to NMF at Ogden Service Center. The completed package should contain: Form 2859, copy of Form 5344, Examination Closing Record, interest computation, back up information (Revenue Agent Report (RAR), agreement, or anything else pertinent) and Form 3210.

Monitoring Quick Assessments
  1. After the quick assessment has been faxed to Ogden, it must be monitored for posting:

    1. Do not close the AIMS record. The AIMS base will remain open until the assessment is processed at the Ogden campus.

    2. On or after the 23C date, ANMF should be reviewed to verify the accuracy of the assessment. If there are any discrepancies, contact the NMF Specialist to coordinate corrections as soon as possible. Statute cases should be verified through ANMF on the 23C date, or before the ASED to prevent barred assessments.

    3. After the assessment has been verified on ANMF, notate the DLN on the case file and history copy of Form 2859, Request for Quick or Prompt Assessment.

    4. Now the case can be closed off AIMS and ERCS or routed to another area as needed.

Abatement Procedures
  1. NMF abatements are processed manually using Form 1331-B, Notice of Adjustment. A manager’s signature is required on all NMF abatements. The manager signing must be on the authorized listing at the Ogden Service Center, and the signature must the same on all of the forms submitted.

  2. This is the procedure for NMF abatements:

    1. Request a NMF Transcript through the designated Tax Examiner. A current transcript (dated two weeks or less) must be attached to the NMF Abatement Package.

    2. If the Doc Code is 51, the NMF account is a transfer from MF, use a copy of pages 1 and 2 of the TC 150 return. The original assessment document does not need to accompany the NMF abatement package.

    3. Prepare Form 1331-B when adjusting tax, penalties, and interest. Include in the abatement package.

Resolving Credits
  1. Credit cannot be left on a NMF account. It must be offset to another liability or manually refunded:

    1. If the abatement results in an overpayment and the credit is needed on an outstanding liability, prepare Form 2424, Account Adjustment Voucher. Form 2424 must be included in the abatement package.

    2. If there is still credit available after the outstanding liability is satisfied, then a manual refund must be prepared for the remaining credit. A copy of Form 2424 must also be included with the refund package.

    3. If the abatement results in an overpayment that needs to be refunded, prepare Form 3753, Manual Refund Posting Voucher. A copy must be included in the abatement package to justify that all credits are resolved.

Abatement Package Contents
  1. All abatement and refund packages sent to Ogden must have a completed Form 3210, Document Transmittal. The following is a list of required and optional items that should be sent to Ogden with any abatement request:

    1. The abatement package will have Form 1331-B, Notice of Adjustment, interest computation, backup information such as the RAR, and Form 3210 to the Ogden Service Center.

      Reminder:

      It may have Form 2275, Records Request, Charge and Recharge, and copy of Form 3753 and Form 2424.

    2. The refund package will have Form 3753, NMF transcript, interest computation, backup information such as RAR and Form 3210 to the Ogden Service Center.

      Reminder:

      It may also have a copy of Form 1331-B and Form 2424.

      Note:

      Fax or route the completed NMF abatement and refund packages to current fax numbers and mail stops.

Closing AIMS
  1. Automated Information Management System (AIMS) is used by Centralized Case Processing (CCP) Exam to close Non-Master File (NMF) cases received from the Field.

General Information
  1. The IAT Closure Tool does not currently accept the file source "N" or "D." This means that NMF AIMS must be closed manually.

  2. NMF AIMS should never be closed with an original document. It will always be closed using the Exam Electronic Prints Blocking Series. If an original return is in the case file, refile it under is original DLN.

  3. NMF AIMS closures are separated into blocks. Each NMF block can have up to 50 documents, number from 0000 - 0049. A separate gusset is needed for each NMF block closed.

  4. AMCLS blocks will be numbered 300 for the first, 301 for the second, 302 for the third, and so on.

  5. AMSOC blocks will be numbered 100 for the first, 101 for the second, 102 for the third, and so on.

  6. Rarely is more than one block needed for AMSOC or AMCLS. When all cases have been closed in a block, the block must be closed.

AMCLS
  1. CC AMCLSE will be used to close examined NMF cases off AIMS.

    1. Sort NMFTs into separate stacks.

      Example:

      All MFT 32s in one stack; all MFT 20s in another stack.

    2. Separate the TINs ending with "N" and "D."

      Note:

      The file source D indicates a dummy TIN. An assessment can’t be made under the dummy TIN. It can either be closed No Change or DC 28.

  2. Complete Form 5344.

    • Complete the blocking series with a 300. The ending digit is a zero instead of an X. (If more than 50 documents, the next block would be 301).

    • Complete position 36 of Form 5344 with the Batch Position Indicator. This indicates whether the case is the first, continuation, last, addition to a block, or a single document of a block. Refer to the following table for additional information.

    • Items 9, 12, 15, and 41 must be blank. If a Form 2859 has been completed, enter an amount in Item 35. (The manual assessment must be posted to ANMF before AIMS is closed.)

    • Input CC AMCLSE. For examples of how to manually input the closure, refer to Exhibit H-6-1, NMF Input Format.

    • Print a copy of the REQUEST COMPLETED screen. Staple the copy to the front side of Form 5344 as proof of closure. If this step is missed, the AMDISA screen can be printed and attached.

    • Write the DLN from the REQUEST COMPLETED screen in Item E of Form 5344.

    Batch Position Indicator Definition
    F First document of a block.
    C Center or middle documents in a block.
    L Last document of a block.
    S Single document in a block.
    R Reopen to add another case to a block closed.

    Note:

    This can only be done the same day of closure.

AMSOC
  1. Form 5351, Examination Non-Examined Closings, and Form 10904, Request for Record Deletion from AIMS, are used for non-examined AIMS closures.

  2. CC AMSOC will be used to close non-examined NMF cases off AIMS.

    1. Sort closing documents by NMFT Code.

    2. Then sort by Disposal Code (DC) with Disposal Code 28 cases together and all other non-examined disposal codes in another group. Each group requires a separate block.

    3. Assign appropriate Blocking Series.

      Example:

      100 for first block, 101 for second block, and so on.

    4. Input these closures like a regular MF AMSOC. Number them the same way and write or stamp your IDRS number and date. For examples of how to manually input the closure, refer to Exhibit H-6-1, NMF Input Format.

    5. Write the generated DLN from the "REQUEST COMPLETED" screen on the closure document.

    6. On the final input document of a block, enter a Batch Position Indicator of "L" in position 7 on the AMSOC input screen.

    7. Place case in a gusset to be sent to files. (DC 28 cases will not go to files. They will be maintained in the area. Follow local procedures.)

AMBLK
  1. When all NMF cases have been closed for a particular block, the block must be closed. This is done by entering:

    1. AMCLSB (transmit) - then type,

    2. AMBLK (transmit) - the screen will show BLOCK CLOSED.

Master File Tax (MFT) 31

  1. Master File Tax (MFT) 31 is an Individual Master File (IMF) MFT account code used for split spousal assessments against an individual taxpayer on a joint module.

Purpose
  1. MFT 31 is used when only one spouse is responsible for a debt or will receive the benefits of an overassessment.

  2. For information on Innocent Spouse procedures and how they apply to MFT 31 and CCP Exam, please refer to IRM 4.38.1.9.10.

Importance of MFT 31
  1. Accounts that were previously processed as Non-Master File (NMF) can now be processed on MFT 31 and update through IDRS.

  2. In certain cases, a spouse will be relieved of liability arising from a joint income tax return. IRC 6015 amended the criteria by which the taxpayer may apply for innocent spouse relief. A Tax Examiner is responsible for the input of the adjustments from the determination.

Reasons MFT 31 is Created
  1. Per IRM 21.6.8.4, MFT 31 is created for one or more of the following reasons:

    1. Bankruptcy - involving cases when either spouse claims a bankruptcy.

    2. Offer-in-Compromise - involving cases when either spouse makes an offer on a liability and the IRS accepts it.

    3. Innocent Spouse - one spouse is fully or partially relieved of the liability for an assessment made against a joint module

    4. Tax Court - involving cases when an assessment is made against a joint module, but one spouse is relieved of the liability fully or partially.

    5. Exam/ Unagreed Cases - when only one spouse agrees to the tax deficiency, while the other spouse does not agree, but does not appeal or file a petition.

      Note:

      This could include a deceased taxpayer and neither the surviving spouse nor the executor sign the Revenue Agent Report (RAR).

    6. Criminal Restitution - an assessment of criminal restitution ordered payable to the IRS has been made.

    7. Taxpayer Assistance Order - either spouse files Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order).

    8. Installment Agreement - either spouse requests an installment agreement.

    9. Currently Not Collectible (CNC) - account qualifies for CNC based on either spouse’s financial status.

Types of MFT 31 Accounts
  1. There are three types of MFT 31 modules that function in different ways:

    1. Split/Transfer - MFT 31 accounts created or in process prior to January 2005 or a qualifying NMF 20 account (collection statute expiration date (CSED) expired after January 1, 2005). This creates one MFT 31 module for one spouse, and information does not systemically pass between the modules unless a TC 971 AC 110 is posted to the MFT 31 modules.

    2. Mirrored - A mirrored account creates two MFT 31 modules (one for each spouse), and credits and adjustments are automatically posted to both spouses’ accounts.

    3. Exam/Appeals/Automated Underreporter (AUR) - This type of account works the same way as a a split/transfer account, but has posted after January 2005.

  2. There are several conditions that create a mirrored account:

    • Bankruptcy by only one spouse,

    • Innocent spouse claim,

    • Agreement to tax adjustment by only one spouse,

    • OIC filed by only one spouse,

    • Joint OIC defaulted by one spouse,

    • Form 911 filed by only one spouse,

    • One spouse requests an installment agreement, or

    • One spouse qualifies for CNC.

  3. Examples of split/transfer account are:

    • Only one spouse is going to Appeals or petitions the Tax Court,

    • One spouse has petitioned bankruptcy court, or

    • A court ordered restitution payable to IRS in a criminal tax case.

Creation Procedures
  1. A TC 971 with action codes (AC) 100-109 establishes the MFT 31 module.

  2. TC 971 is input using command code REQ77 via IAT. For further details on the input of CC REQ77 using IAT, access the IAT REQ77 job aid at: IAT REQ77 Job Aid.

    Originating Office Action Code Mirrored (Y or N)
    Bankruptcy 100 Y
    Offer-in-Compromise 101 Y
    Criminal Restitution 102 N
    Examination/Appeals/AUR 103 N
    Innocent Spouse 104 Y
    Reserved for Examination/Appeals/AUR (mirrored) 105 Y
    Taxpayer Assistance Order 106 Y
    Installment Agreement 107 Y
    Collection Due Process 108 Y
    Currently Not Collectible (CNC) 109 Y
  3. The TIN of the obligated spouse (for whom the MFT 31 module is created) is entered in the cross-reference TIN (XREF-TIN) field. In some cases, both spouses may be obligated. If so, two TC 971s are input.

  4. The TC 971 AC 100-109 generates a TC 971 with the same AC to open the MFT account tax year. The TC 971 posts on MFT 31 with the XREF-TIN field of the primary taxpayer. This is how the primary taxpayer’s MFT 30 tax account is identified.

How MFT 31 Modules Look
  1. There won’t be a TC 150 on the MFT 31 module in all situations.

  2. When the "split" assessment is tax, based on the processing of the original return, the MFT 31 separate assessment module will reflect a TC 150.

  3. When the "split" assessment is due to an audit or other subsequent assessments (increasing tax, decreasing credits, etc.), no TC 150 will be present on the MFT 31 module.

  4. The TC 971 XREF-TIN on MFT 31 for both primary and secondary TIN will reflect the primary TIN for the joint tax account.

Action Code 110
  1. Transaction Code (TC) 971 AC 110 also plays an important role in the MFT 31 process. It links duplicate assessments between the MFT 31 and cross-reference MFT 30 modules to prevent duplicate payments.

  2. On mirrored modules, the AC 110 posts automatically. On non-mirrored modules (Action Codes 102 and 103), it will need to be input manually.

Excess Collections.

  1. The Excess Collections File (XSF) is a file within IDRS containing all non-revenue receipt credits received since January 1, 1989, in Account 6800, Excess Collections, and Account 9999, Revenue Clearance Accountability. The XSF is often referred to as the "Dump" Account.

Purpose
  1. The purpose of excess collection is to transfer unidentified, expired, or barred credits from Master File or Non-Master File (NMF) accounts.

Importance of Excess Collections File
  1. To prevent erroneous refunds of expired or barred credits and applying overpayments to Balance Due accounts when the Refund Statute Expiration Date (RSED) has expired.

Transfer of Credit to Excess Collection File (XSF)
  1. There are several procedures required when transferring a credit to the Excess Collection File.

Credit Types
  1. Before transferring a credit to XSF, the field determines if the credit or payment is barred from refund or offset.

    1. Prepaid credits are money amounts allowed to taxpayers to reduce original or additional tax liability.

    2. Payments are money amounts submitted by the taxpayer to satisfy tax liabilities.

  2. Some examples of prepaid credits and payments are:

    1. Earned Income Credit (EIC) (Transaction Codes 764 and 768),

    2. Credit from prior year (TC 710 and 716),

    3. Withholding Tax (TC 800 and 806),

    4. Federal Tax Deposit (FTD) (TC 650) (BMF),

    5. Estimated Tax Payments (TC 660),

    6. Subsequent Payments (TC 670 and 640), and

    7. General Refundable Credits (TC 766).

Credits / Payments Defined
  1. Claims for credit or refund of non-prepaid credits must be filed within 3 years from the return filed date or 2 years from the date of the payments, whichever is later.

    Example:

    A taxpayer filed their Form 1040, Tax Year 2021, return on 07/15/2022 and had only non-prepaid credits to satisfy the tax liability. The taxpayer must file a claim by 07/15/2025 to qualify for a timely filed claim.

    Example:

    A taxpayer filed their Form 1040, Tax Year 2021, return on 04/15/2022 and had only prepaid credits to satisfy the tax liability. The taxpayer must file a claim by 04/14/2025 to qualify for a timely filed claim.

    Note:

    Credits are transferred to Excess Collections by way of the IAT Tool. Refund of credit expired on Transaction Code 806.

General Refund Statute Expiration Rules
  1. General Rule:

    1. A claim for refund must be filed within 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later.

    2. If no return was filed, the claim may be allowed if filed within 2 years from the date of the payment.

    3. Exception to the general rule - An original return with prepaid credits is considered a timely claim if postmarked within 3 years from the due date, including any extensions of time for filing.

  2. Other Rules:

    1. If a taxpayer made an overpayment of tax from prepaid credits and is also liable for a deficiency of tax for the same year, the overpayment credits can be applied to the deficiency, even though the RSED has expired.

    2. An original delinquent return with prepaid credits is considered a timely claim if received (IRS received date) within 3 years from the return due date, including any extension of time for filing.

    3. A refund from a filed claim will not be allowed if the RSED has expired unless the claim is received prior to the expiration date.

    4. If a taxpayer’s return is adjusted without a claim (for example, as a result of an audit), the amount allowable cannot exceed the amount that would have been filed on the date the refund or offset of the credit is allowed.

    5. If a taxpayer agrees to an overassessment determined by IRS, a timely filed agreement or waiver is considered to be a valid claim for refund.

    6. If a taxpayer petitions the Tax Court and files a delinquent return after the issuance of a Statutory Notice of Deficiency (SNOD), the allowable credits are limited to those paid within 2 years from the date of the SNOD.

Determining Whether a Credit or Refund is Allowed
  1. The following chart is used to determine whether a credit is barred from refund or offset.

    Note:

    This information is for a Tax Decrease.

    Guidelines for Tax Decrease Actions to Take
    On a Tax Decrease, you will need to determine if the claim is timely. Was the return filed within 3 years from the received date of the original return?
    • If yes, you will need to determine if withholding, WPT, ETC, and ES payments, or FTD payments are involved (prepaid credits).

    • If no, determine if any payments are received in the last two years that pay tax (include payments that pay penalty or interest).

    No withholding, WPT, ETC, and ES payments or FTD payments are involved
    • Allow the claim as timely.

    There are withholding, WPT, ETC, ES payments, or FTD payments.
    • Determine if the claim was filed within 3 years of the due date (including extension).

    • If the claim was filed timely, allow the claim.

    • If the claim was not timely filed, disallow the claim.

      Note:

      Take into consideration any payments of tax made in the last 2 years, which could be refundable.

    If the claim was not timely, you need to determine if any payments were received in the last 2 years that pay tax, including payments that pay penalty or interest.
    • If no payments were received in the last 2 years that pay tax, disallow the tax.

    • If there were payments received in the last 2 years that pay tax, you should allow the tax decrease only up to the amount of tax paid within 2 years of the date the claim was filed.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Returns Filed Before Due Date
  1. The chart below shows the general rules for returns filed before the due date of the tax return.

    General Rules

    Return Filed Claim Filed Maximum Amount of Refund or Credit Allowable
    On or before due date Within 3 years from due date of return
    • Tax paid during the period immediately preceding filing of claim equal to 3 years plus any extensions of time for filing.

    On or before due date More than 3 years from due date of return
    • Tax paid during the 2 years immediately preceding filing of claim.

    On or before due date None
    • If allowance within 3 years from due date of return - paid during the 3 years immediately preceding each allowance.

    • If allowance more than 3 years from due date of return - tax paid within 2 years immediately preceding each allowance.

    • Advance payment is considered made on due date.

    After Due Date Within 3 years from filing of return
    • Tax paid during the period immediately preceding filing of claim equal to 3 years plus any extensions for time for filing.

    After due date More than 3 years from filing of return
    • Tax paid during the 2 years immediately preceding filing of claim.

    After due date None
    • Tax paid during the period immediately preceding filing of the return equal to 3 years plus any extensions of time for filing.

    None (e.g., deficiency assessment) Within 2 years from tax paid
    • Tax paid during 2 years immediately preceding filing of claim.

    None (e.g., deficiency assessment) None
    • Tax paid during the 2 years immediately preceding allowance.

     

Completing Form 8758, Excess Collections File Addition
  1. When the field determines a credit has expired from refunding, they provide instructions on Form 3198, Special Handling Notice for Examination Case Processing, for CCP to transfer a credit to Excess Collections File (XSF). CCP completes the Form 8758, Excess Collection File Addition, using the IAT Tool.

  2. A separate Form 8758 must be completed and faxed to Campus Accounting for each credit being transferred to XSF.

    1. A current print of TXMODA must be faxed with the Form 8758 verifying the credit.

    2. Hold Code 1 must be input on any adjustment document to prevent the credit from refunding before it is transferred to XSF.

  3. The field will issue a 105SC letter to notify the taxpayer of the full claim disallowance when the barred refund results from the processing of an original delinquent return.

  4. The following are reasons the Form 8758 may be rejected:

    1. Form 8758 is reviewed by Accounting for accuracy, completeness, and proper documentation. Accounting will reject back to the originator when line items and documentation are incorrect, incomplete, or missing. The following items are some reasons for rejection of Form 8758: IRM 3.17.220.1(2).

    2. No indication of TC 971 AC 296 added to the module whenever taxpayer contact by means of telephone or correspondence is unsuccessful. The field makes the contact. CCP is not responsible for contacting taxpayers.

    3. Remarks are unclear as to why the credit was unresolved or assessment was not made prior to the Statute expiration.

    4. Documentation is not attached to Form 8758 as required.

    5. On large dollar credit modules of $100,000.00 or more, the field did not perform research and contact with the taxpayer to resolve the credit, no indication that telephone contact was made, or attempted, prior to transferring the large dollar credit to XSF.

    6. No required manager’s signature in Box 30 of Form 8758.

      Note:

      Remarks such as "possible barred assessments" are unacceptable.

Transfer of Credit From Excess Collection File (XSF)
  1. Form 8765, IDRS Control File Credit Application, is completed to transfer a credit from the XSF. As soon as a record has been added to the XSF, it is available for research through IDRS using Command Code (CC) XSINQ.

Reasons for Transferring Credit from XSF
  1. Acceptable reasons for requesting a credit to be transferred from the XSF are:

    1. A tax liability has been assessed for the same tax period.

    2. The credit was transferred to XSF in error.

    3. The credit was intended for another payee or agency.

    4. Receipt of Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer.

  2. Refund or transfer of credits from XSF may not be made after the statute of limitations for refund has expired (2 years from date of payment or 3 years from the date the return is filed, whichever is later) unless a valid claim can be established. If a valid claim is established, Form 8765 must be statute cleared by the Statute area, prior to sending to Accounting.

CC XSINQ
  1. CC XSINQ is used to transfer a credit back from Excess Collection. However, on rare occasions, CCP may transfer a credit back from Excess Collection by preparing a Form 8765. As soon as a record has been added to the XSF, it will become available through IDRS using CC XSINQ. Before the credit can be reapplied to TXMODA, several steps must be taken:

    1. Form 3198 or Form 3870 must be received requesting the credits be applied to an account.

    2. CCP tax examiner must manually complete Form 8765.

    3. If the credit was expired from refunding before going to Excess Collection, the ta examiner must send the Form 8765 to the AM Statute Team for clearance.

    4. If the credit has not expired from refunding, the Form 8765 must be e-faxed to Campus Accounting.

    5. If the AM Statute Team clears the credit to be reapplied to an account, the Form 8765 is stamped for clearance and sent back to the tax examiner.

    6. The tax examiner must e-Fax the Form 8765 to Campus Accounting for processing.

      Note:

      Additional research may be required before transferring cases to and from Excess Collection.

Tips and Techniques for Transferring of Credits To and From Excess Collections File (XSF)
  1. Additional research may be required before transferring cases to and from Excess Collection. Contact with other Operations may be necessary.

    Example:

    Accounts Management Statute Teams

    1. When transferring credits to XSF, always verify for credit availability to prevent erroneous refund or offset.

    2. When transferring Claims for credit or refund of prepaid credits review to determine if they were filed within 3 years of the due date or extended due date of the return, or 2 years from the payment date for Subsequent Payments.

    3. When transferring credits from XSF, if the research shows the record is CLOS, do not prepare Form 8765. CLOS means the credit has already been reapplied or is no longer available.

    4. When transferring credits to XSF, if the transcript shows credit applied to XSF but does not show on XSINQ, contact Excess Collections to research their listing. If found on their listing, enter remarks in Box 17 of Form 8765"XSINQ not available."

Erroneous Refunds

  1. An erroneous refund is "the receipt of any money from the IRS to which the recipient is not entitled."

  2. More information about Erroneous Refunds can be found in IRM 21.4.5, Erroneous Refunds.

Transferring Credits Between Related Taxpayers

  1. If the offset is to be made as described in IRM 4.4.3.5, Transferring Payments and Credits Between Related Taxpayers, follow the instructions below in addition to routine processing.

    1. For a Related Taxpayer, immediately input a Hold Code “1” in Item 07 of Form 5344, to prevent a refund.

    2. Input Form 3870, received from Field Exam to post once cycle after the related or overpaid Form 5344.

    3. Input Form 5344 to the Primary tax module receiving the credit once cycle after Form 3870 to ensure that the credit is available at the time of settlement.

      Note:

      The Revenue Agent or TCO must prepare two Form 5344. Two forms are required with each credit transfer. One for the taxpayer requesting the offset and one for the related taxpayer receiving the offset.

      Note:

      Field Exam should complete Form 3870 in lieu of Form 2424 to transfer credits between modules. Form 3870 allows for a manager’s signature, where the Form 2424 does not.

Refunds to Other Taxpayers

  1. These procedures should be followed when a refund is to be issued to someone other than the taxpayer in whose name the tax was paid.

  2. Make sure the name entered on the allowance document is that of the person in whose name the check should be drawn. The refund checks are prepared and distributed by the disbursing center directly from the allowance documents - refer to IRM 21.4.3.5.5.2.1, Issuing Checks in Another Name for additional instructions.

Recovery of Erroneous Refunds

  1. The case file will be identified by Field Exam on Form 3198 by notating in the ”Other Instructions” box of the Special Features” section and provide the following information:

    1. The taxpayer’s name, address, and Taxpayer Identification Number (TIN) from whom the erroneous refund is to be recovered;

    2. The tax period,

    3. The tax return form number, and

    4. The amount of refund to be recovered.

  2. Forward the request for recovery of the erroneous refund to the Campus Accounting Branch.

  3. Include a transcript of the account from which the erroneous refund was issued.

Jeopardy Assessments/Termination Assessments/ Transferor-Transferee Assessments

  1. It is necessary, at times, for CCP employees to receive assessment requests from Field Exam which require special procedures. These assessments are:

    1. Jeopardy Assessments,

    2. Termination Assessments, and

    3. Transferor / Transferee Requests.

Jeopardy Assessments
  1. Jeopardy assessments allow for the collection of taxes in circumstance in which it is determined that collection of tax would be endangered if normal procedures were followed. Jeopardy assessments protect the government’s interest under IRC 6861(a), Jeopardy Assessment of Income, Estate, Gift and Certain Excise Taxes.

  2. A jeopardy assessment must be approved by the Area Director and Area Counsel AND be made within 48 hours of the Area Director’s approval. Refer to IRM 4.15.1.7.5, Secure Approval of the Report.

    Reminder:

    Written approval by Area Counsel is required under the provisions of the IRS Restructuring and Reform Act (RRA) of 1998. Failure to do so will result in the abatement of any assessment made under IRC 6201.

  3. Jeopardy assessments are made on either Master File (MF) or Non-Master File (NMF).

    Note:

    NMF are generally processed in the same manner as MF, except the numbering is different and abstract codes are needed for individual MF and Business Master File (BMF) adjustments. NMF assessments are handled by Kansas City Submission Processing Center (KCSPC) rather than Ogden Campus Accounting. NMF assessments post to the Automated Non-Master File (ANMF) system which is a stand-alone system for maintaining accounts that cannot be processed on MF.

  4. CCP should refer all cases to a Restricted Interest Tax Examiner immediately upon the receipt of a Jeopardy or Termination Assessment request. Requests for quick assessments will be made by telephone or electronic facsimile using the Enterprise e-Fax system (EEFax). E-Fax is the preferred method to request a quick assessment. Form 2644, Recommendation for Jeopardy/Termination Assessment, will be used to request quick assessments, in addition to Form 2859.

    IF the request is made by THEN provide the following information
    Telephone
    1. Affirmative statement that the Area Director approved Form 2644.

    2. Name, address and TIN of the taxpayer,

    3. Type of tax,

    4. Taxable period,

    5. Amount of tax, penalties with the appropriate transaction code(s), interest to be assessed, credit adjustments and/or reference numbers

    6. Amount of payment, if any, the balance due, 23C date (refer to IRM Exhibit 20.2.1-2, Definition of Terms, for definition of 23C date), and

    7. Document locator number (DLN).

    Electronic Facsimile/ E-Fax
    1. Form 2859 for each type of tax return, with a control number, and

    2. Form 3210 for each type of tax return. Include the name control, MFT, TIN, tax period and Control number. In the remarks area, enter the 23C date and “FAX QUICK ASSESSMENT”. Address the form to the appropriate function and include the originator’s complete address, mail stop and eFax number os the receipted Form 3210 may be e-Faxed back.

  5. CCP will transmit the quick assessment to Ogden Campus Accounting (MF) or Kansas City Submission Processing Center (KCSPC) (NMF)

  6. Faxing should be done only once each day, if possible, and prior to 12:00 p.m. CST. If there are numerous entities and returns, the information should be transmitted as early as possible.

    Note:

    If two work days or less remain before the statute of limitations will expire, follow telephonic quick assessment procedures. Refer to IRC 6871, Claims for Income, Estate, Gift and Certain Excise Taxes in Receivership Proceedings.

Types of Jeopardy Assessments
  1. There are two types of Jeopardy assessments:

    1. Against the Taxpayer’s Correct Taxpayer Identification Number (TIN) and

    2. Possessor of Certain Cash

Area Procedures Against the Taxpayer’s Correct TIN
  1. The Area Office must provide notice, by email or telephone, to the Centralized Case Processing (CCP) Field Office Resource Team (FORT) manager or the Field Liaison as soon as it is known that a jeopardy assessment is being made (preferably within 48 hours before assessment).

  2. E-Fax all preliminary paperwork to FORT manager or Field Liaisons.

    1. Form 2644, Recommendation for Jeopardy/Termination Assessment, with the Area Director’s signature;

    2. Area Counsel’s Approval Memorandum;

    3. Completed Form 3198, Special Handling Notice for Examination Case Processing, for each year;

    4. Completed Form 5344, Examination Closing Record, for each year;

    5. Form 4549, Income Tax Examination Changes with all schedules for all years; and

    6. Specific written instructions stating to whom the FORT manager should eFax the completed Form 3552, Prompt Assessment Billing Assembly, once the assessment is made.

      Note:

      Typically the Technical Services Manager and the Collection Officer are designated to receive the Faxed Form 3552.

  3. The original Form 2644 will be sent to the FORT manager via express mail.

FORT Procedures
  1. Upon receipt of the faxed package listed in IRM 4.38.1.8.9.1.2, the following information must be provided to either Kansas City Submission Processing Center (KCSPC) for Cincinnati and Memphis CCP and Ogden Submission Processing Center (OSPC) for Ogden CCP, to advise them that a jeopardy assessment is being e-Faxed:

    1. Taxpayer’s name, address and TIN;

    2. Taxable period;

    3. Type of tax;

    4. Amount of tax, penalty (with appropriate transaction codes), interest to be assessed (computed by the examiner to the likely assessment date) and credit adjustments and/or credit reference numbers;

    5. Amount of payment if any;

    6. Balance due and

    7. Document Locator Number (DLN) and 23C date

      Note:

      If the jeopardy assessment is for a delinquent return or a terminated period, it must be shown separately and called to the attention of the assessment officer.

  2. Either the FORT Manager or employees will prepare Form 2859, Request for Quick or Prompt Assessment, by year, using the information provided by the Area and approved by the Area Director, referenced in IRM 4.38.1.8.9.1.2(2).

    Note:

    Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), will be used for Trust Fund assessments.

  3. The 23C date must be the date Form 2644 was signed by the Area Director.

  4. "JEOPARDY ASSESSMENT" will be notated across the top of Form 3210 and include e-Faxing instructions (as determined in IRM 4.38.1.8.9.1.2(2)) for the confirmation Form 3552.

  5. E-Fax all forms received from the Area plus the Form 2859 to Ogden Campus Accounting at (855)235-8844.

  6. Within one day of the assessment, the following will be e-Faxed to the Campus Accounting Operation, Accounting Control System, Journal and Ledger Unit:

    1. The original and one copy of Form 2644;

    2. Form 3198;

    3. Form 5344 for each year;

    4. Form 4549 and

    5. Copy of narrative and pattern letter (with attached tax computation).

  7. A package of the above documents listed in paragraph (6) should be mailed to the attention of the assessment officer Ogden Internal Revenue Service Campus (OIRSC) previously contacted for verification that the correct assessment has been made.

Possessor of Certain Cash
  1. Jeopardy Assessments made under IRC 6867 require a new taxable entity by created for the person who is in physical possession of the cash.

  2. The procedures for this type of jeopardy assessment are the same as those for an assessment made under the taxpayer’s correct TIN except the assessment is made under a temporary TIN obtained from the campus Entity function. Refer to IRM 3.13.5.24.1.8, Assignment of an IRS Number for Termination/Jeopardy Assessment.

  3. The TIN is established on Master File.

  4. The use of a temporary TIN enables separate tax liability treatment for the possessed cash and avoids any effect on the possessor’s personal individual tax liability which remains separate and apart from the IRC 6867 assessment.

  5. All documents requiring entity information must use "(Possessor’s Name) as Possessor of Certain Cash" in the name line.

Termination Assessments
  1. A termination assessment is made when it is found that a taxpayer would act to prejudice, or to render wholly or partially ineffectual, the collection of income taxes for a current or immediately preceding taxable year, unless collection proceedings are brought without delay.

  2. Each termination assessment must be approved by the Area Director (or delegate) and Area Chief Counsel (or delegate).

  3. Termination Assessment:

    1. Against the Taxpayer’s Correct TIN IRC 6851 and

  4. A termination assessment consists of two parts:

    1. Assessment of the short tax period (the termination period) and

    2. Assessment of the full tax period (the taxpayer’s normal tax year).

Against the Taxpayer’s Correct TIN
  1. A Termination Assessment is one of two types of an assessment.

  2. Termination applies if a return is not due yet (including extensions) and can be a partial year.

  3. Since a return is not yet due, the case is controlled on Non-Master File (NMF), using Form 5354, Examination Request Non-Master File.

  4. An immediate assessment is made on the termination year.

  5. After the assessment is made, the case is held in suspense pending action by the taxpayer.

  6. A Transaction Code (TC) 914, Active Criminal Investigation is placed on the Master File account and should not be removed until a return is filed or a return is due and not filed and Master File controls are needed.

Termination of a Taxpayer’s Year
  1. When the assessment involves the termination of a taxpayer’s year, the liability for the terminated tax period is handled as a jeopardy assessment at the time of termination. Refer to IRM 4.38.1.8.9.1 .

  2. The package sent to the FORT by the Area is the same as described for Jeopardy Assessments in IRM 4.38.1.8.9.1.2, except Form 5344 is not prepared.

  3. The termination assessment is made as a short period NMF assessment.

  4. To prevent possible forfeiture of lien rights, the original short period assessment must not at any time (prior to determination of the tax liability for the full year) be reduced to an amount less than the current tax liability for the full year.

  5. When the case is received by CCP for assessment of the full period, the termination NMF assessment will be transferred to Master File.

How Assessment is Made
  1. The assessment is made according to the type of assessment:

    1. Jeopardy- Assessment is made on MF for the full period

      Note:

      CCP can still process the jeopardy assessment and should then forward the package to the RACS Unit in KCSPC If a tax year is not on MF. RACS will input the assessment on the Automated Manual Assessment (AMA). The signed Form 23C, Assessment Certificate - Summary Record of Assessments, secures the assessment. The assessment will not appear right away but it will be a legal assessment as long as there is a signed Form 23C certificate. The assessment will post once the account is established on MF.

    2. Termination- Assessment is made on NMF as a short period, even though the period may be a full period. The assessment is made as a short period to differentiate between the termination period and the full period under normal filing requirements. NMF assessments are done by KCSPC. CCP will prepare and send Form 2859 and Form 2644 to the RACS Unit in KCSPC. The RACS Unit will generalize the transactions and then route them to the NMF group to post the NMF assessments.

  2. Possessor of Cash — The possessor of cash assessment is made as either a jeopardy or termination assessment, as noted above. A new taxable entity and temporary TIN is created for possessor of cash assessments.

    1. New Taxable Entity — A new taxable entity (dummy file) is created for the individual who is in physical possession of the cash. All documents requiring entity information must use "(Possessor's Name) as Possessor of Certain Cash" as the name line.

    2. Temporary TIN — A temporary TIN must be obtained for all assessments made under IRC 6867, Presumptions Where Owner of Large Amount of Cash is not Identified, regardless of information indicating the possessor's personal TIN. Contact the campus entity function to obtain a temporary TIN. The use of the temporary TIN will enable separate tax liability treatment for the possessed cash and avoid any effect on the possessor's personal individual tax liability, which remains separate from the IRC 6867 assessment.

Assessing Amounts
  1. CCP must forward the following items to Ogden Campus Accounting (jeopardy assessments) and/or KCSPC (termination assessments):

    1. Copy of Form 2644, Recommendation for Jeopardy/Termination Assessment;

    2. Copy of Form 2859, Request for Quick or Prompt Assessment;

    3. Copy of Form 5344, Examination Closing Record, prepared in accordance with IRM 4.10.8.17.1;

    4. Copy of Form 3198, Special Handling Notice for Examination Case Processing, prepared in accordance with IRM 4.10.9;

    5. Copy of Pages 1 and 2 of applicable Form 4549, Report of Income Tax Examination Changes, portion of the tax computation prepared in accordance with IRM 4.10.8.4.1; and

    6. Copy of narrative.

      Note:

      All forms in this section can be faxed to the respective recipients through eFax. Ogden eFax number for Jeopardy Assessments is 855-235-8844. Kansas eFax number for Termination Assessments is 866-805-2235.

  2. After the jeopardy/termination assessment information is transmitted to Ogden Campus Accounting (jeopardy assessments) or KCSPC Campus Accounting (termination assessments), respectively, will process the assessment and provide CCP with the required information showing that an assessment was made.

  3. For MF, Ogden Campus Accounting will process the jeopardy assessment and forward Form 3552, Prompt Assessment Billing Assembly, to CCP. For NMF, KCSPC will generate Form 6335, NMF First Notice, and forward to CCP. NMF assessments will post immediately to Taxpayer Delinquent Account (TDA) and be posted to IDRS with a "N" after the taxpayer’s SSN. Refer to IRM 3.17.244.3.5, Termination Assessments, for further information.

  4. After the assessment is made by Ogden Campus Accounting (Jeopardy Assessments) and/or KCSPC (Termination Assessments), CCP will return one copy of Form 2644 to the examiner.

Confirming the Assessment
  1. After the jeopardy/termination assessment is processed by CCP, Ogden Campus Accounting will provide Form 3552 to CCP for Master File assessments. The form will be reviewed by CCP to verify the name, address, TIN, tax period and assessment information are consistent with Form 2859. KCSPC will provide Form 6335, for Non-Master File assessments.

  2. After processing, Form 3552 (MF) or Form 6335 (NMF) and Form 2859 are faxed to the Area Office through EEFax. Form 3552 (MF) or Form 6335 (NMF) must be associated with the control copy in CCP.

  3. Upon request, the campus will withhold manual and/or computer billing.

  4. Immediately contact Ogden Campus Accounting and/or KCSPC for issuance of a corrected bill if any errors are detected on Form 3552 (MF) or Form 6335 (NMF). If verification of the assessment is not received, the CCP Manager, or designated employee must follow-up with Ogden Campus Accounting and/or KCSPC.

  5. CCP will follow-up in sufficient time to prevent barred assessments.

  6. Follow-up will be done three weeks from the 23C assessment date for non-statute assessments.

    Note:

    All forms in this section can be sent to the respective recipients through eFax.

Transferor / Transferee Requests
  1. A transferor is one who created the tax liability and transferred assets that could potentially satisfy the tax liability to another party or multiple parties. The transferor may be a corporation, an individual or an estate.

  2. A transferee is the person(s) or entity(ies) who received the assets for less than full, fair and adequate consideration and who is additionally liable for the tax due to this transfer. A transferee may be a corporation, an individual, an estate or an executor or administrator of an estate or a fiduciary or a combination of these entities.

  3. If multiple transferees exist, each transferee is controlled separately.

  4. The transferee individual/entity will have the title "Transferee" after the transferee’s name.

General Instructions
  1. IRM 4.11.52.5(3), Administration Procedures, instructs Field Exam to establish a transferee case as a DUMMY record.

    1. ERCS will not allow both a Master File and a Non-Master File (NMF) control for the same person/entity.

    2. AIMS will not allow a Social Security Number (SSN) with a Business Master File (BMF) Master File Transaction (MFT) code.

    3. A DUMMY file must be established for the transferee’s TIN with "-D" (dummy) and "Transferee" after the name to indicate the transferee status.

    4. Using the "-D" eliminates the other dashes in the TINs so both ERCS and AIMS will accept the number with the NMF MFT of the transferor.

      Example:

      Smith, John, Transferee, 123456789-D, MFT 80, or Big Trucks, Transferee, 123456789-D, MFT 80.

Closing Agreed Cases
  1. Technical Services will:

    1. Prepare Form 1296, Assessment Against Transferee or Fiduciary, for the transferee reflecting the transferee’s TIN using the N format:

      Note:

      If the transferee has limited liability, Form 1296 will be annotated with the date(s) the interest should begin and the amount of tax associated with each date.For individual transferees, nnn-nn-nnnnN. For non-individual transferees, nn-nnnnnnnN

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEROR" or "TRANSFEREE" notated across the top. Clearly note on the Form 3198 that both the transferor and transferee files are included.

    4. Close the transferor master file record and the transferee "N" record(s) on ERCS to CCP Status Code 51 with Disposal Code 03, 04, or 09, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    5. Prepare Form 10904, Request for Record Deletion from AIMS, for the -D record to be deleted from AIMS. Forward to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND.

  2. If the transferor case has been previously closed and the transferee case is to be closed:

    1. Prepare Form 1296 for the transferee reflecting the transferee’s TIN using the "N" format as instructed in IRM 4.38.1.8.9.3.2.2(1)(a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEREE" across the top.

    4. Prepare a copy of the transferee administrative file to be associated with the transferor file under the TC 421 DLN of the transferor TIN.

    5. Close the transferee NMF "N" records on ERCS to CCP Status Code 51 with Disposal Code 03, 04 or 09, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    6. Prepare Form 10904 for the "D" record to be deleted from AIMS. Forward the Form 10904 to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND. Include a copy of the administrative file to be associated with the transferor/ transferee file.

    7. The AIMS/ERCS unit will process the Form 10904 and will forward the transferee administrative file to the campus to be associated with the transferor file using the TC 421 DLN found on Master File.

  3. CCP will:

    1. Prepare Form 2859 to process the adjustment per Form 1296.

    2. Forward Form 2859 to CIRSC Accounting Control/Service Operations. The adjustment will be reflected under the "N" TIN.

      Note:

      This assessment may be mailed, telephoned, or e-Faxed to Accounting.

Closing Defaulted from 90-Day
  1. Technical Services will:

    1. Prepare Form 1296 for the transferee reflecting the transferee’s TIN using the "N" and formatted as instructed in IRM 4.38.1.8.6.3.1(1)(1). Also, if the transferee has limited liability, annotate the Form 1296 as stated in IRM 4.38.1.8.6.3.2.2(1)(a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEROR" or "TRANSFEREE" across the top. Clearly note on the Form 3198 that both the transferor and the transferee files are included.

    4. Close the transferor master file record and the transferee NMF "N" record(s) on ERCS to CCP Status Code 51 with Disposal Code 10 or 13, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    5. Prepare Form 10904 for the "D" record to be deleted from AIMS. Forward to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND.

  2. If the transferor case has been previously closed and the transferee case is to be closed:

    1. Prepare Form 1296 for the transferee reflecting the transferee’s TIN using the N format as instructed in IRM 4.38.1.8.6.3.2.2(1)(a).

    2. Prepare and input Form 5354 to provide CCP inventory controls on AIMS and ERCS during the assessment process.

    3. Prepare Form 3198 with "TRANSFEREE" across the top.

    4. Prepare a copy of the transferee administrative file to be associated with the transferor file under the TC 421 DLN of the transferor TIN.

    5. Close the transferee NMF "N" record(s) on ERCS to CCP Status Code 51 with Disposal 10 or 13, as appropriate.

      Note:

      ERCS will update the AIMS record with the new status.

    6. Prepare the Form 10904 for the "D" record to be deleted from AIMS. Forward the Form 10904 to the local AIMS/ERCS staff for processing using Disposal Code 28 or AMNOND. Include the copy of the transferee administrative file to be associated with the transferor file.

    7. The AIMS/ERCS unit will process the Form 10904 and will forward the transferee administrative file to the campus to be associated with the transferor file using the TC 421 DLN found on Master File.

  3. CCP will:

    1. Prepare Form 2859 based on information on Form 1296.

    2. Forward Form 2859 to CIRSC Accounting Control / Service Operations for assessment. The adjustment will be reflected under the "N" TIN.

      Note:

      This assessment may be mailed, telephoned, or e-Faxed to Accounting.

Form 5344, Examination Closing Record
  1. Work the transferor case file as a unit following normal procedures using the appropriate disposal code on Form 5344.

    Note:

    The transferor whipsaw indicator will be "K" .

  2. The transferee Form 5344 is completed as follows:

    1. Item 13: the disposal code must be an examined disposal code. It cannot be Disposal Code 28, non-master file closings.

    2. Item 35: must include the adjustment amount from Form 2859.

    3. Item 401: must reflect the whipsaw indicator "R" .

Limited Liability Involving Multiple Years
  1. The assessment may be made against the transferor, as well as one or more transferees.

  2. The assessment against the transferee may be for the full amount due by the transferor or may be a lesser amount (limited liability).

  3. If liability is limited and more than one year is involved, one assessment will be made for the multiple years.

  4. List on Form 1296 the total amount to be assessed and amounts for each transferee. Refer to the note at IRM 4.38.1.8.6.3.1(1)(1).

IRC 6901(a)(2)
  1. Under IRC 6901(a)(2), assessment may be made of the liability of a transferee for excise and employment taxes incurred under the 1954 Code if the transferee liability arises from the liquidation of a partnership or a corporation or a reorganization within the meaning of IRC 368(a).

  2. In such a case, if the transferee agrees to pay the tax due, the examining officer will prepare a supplemental return for the taxpayer or collecting agency involved. The transferee will evidence his or her agreement by signing the return as transferee under IRC 6901(a)(2).

Processing Instructions for 6901(a)(2)
  1. Do not process the supplemental return prepared by the revenue agent.

  2. Prepare Form 1296 as the assessment document.

  3. Examination or Appeals will complete the following items:

    1. The type of tax;

    2. Transferor name, address, TIN, taxable year or period and Code section;

    3. Transferee name, address, TIN, taxable year or period and Code section; and

    4. The amount of and type transferee tax and penalty.

  4. Specify the type of tax as "Other Tax" .

  5. If an Appeals hearing is requested, transfer the case to the Appeals Office prior to assessment.

Misrouted Cases

  1. The field offices and Technical Services will occasionally send cases to the wrong CCP site.

  2. These procedures will alleviate this situation when they occur.

    Note:

    The majority of cases are closing to CCP electronically. The following procedures apply in instances where Field Exam was required to assemble a paper case file.

What to do with Misrouted Mail
  1. The CCP clerk is required to promptly take all misrouted mail to their lead, manager, or technical unit so the cases can be reviewed for imminent statute assessments.

  2. CCP clerks are required to return misrouted mail back to the sender after the statute has been protected.

  3. If the cases are in Status 51, the CCP site returning the case must contact the AIMS/ERCS analyst where the database is controlled and provide a copy of the Form 3210 being returned with the case.

    1. This allows for an accurate account for cases on the In-Transit Status 51 listing.

    2. This will allow the CCP site that has control of the case to update the ERCS database back to the appropriate status.

  4. If the cases were shipped to the correct CCP site, but the Form 3210 is addressed to the incorrect campus, the sender must be notified to provide CCP with a corrected Form 3210.

Handling of Misrouted Mail
  1. If Field Exam or Technical Services routes a case to the incorrect CCP site, the following procedures must be followed to ensure that the campus who should have received the case is aware of the misroute, depending upon the number of days until the ASED expires:

    1. IRM 4.38.1.8.10.2.1, Cases with Statutes Greater than 60 Days from ASED

    2. IRM 4.38.1.8.10.2.2, Cases with Statutes Less than 60 Days from ASED

  2. If the case is being forwarded to the incorrect CCP site, it will appear on the Status 51 In-Transit Listing longer which will make it appear as if the case is taking more time to come in from Field Exam or Technical Services.

    Note:

    There is nothing on the listing that indicates the case was shipped correctly.

Cases with Statutes Greater than 60 Days from ASED
  1. The CCP site that received the misrouted cases must prepare a Form 3210 to accompany the case back to the originating function.

    1. This is either Field Exam or Technical Services.

  2. A notation should be made on the Form 3210 that the case was shipped to the incorrect CCP site.

  3. The CCP site which is returning the case must contact the AIMS/ERCS analyst where the database is controlled in Status 51 and provide a copy of the Form 3210 being returned with the case.

    1. This helps with two items.
      An accurate account for the case on the In-Transit Status 51 Listing.
      The CCP site which has control of the case can update the ERCS database back to the specific status.

      Note:

      This will either be 10, 12, or 21.

      Note:

      Use Reject Reason Code 410 (Case Misrouted; Mailed to Wrong CCP site).


      The status must be returned to the originator to show the correct audit trail on AIMS.

Cases with Statutes Less than 60 Days from ASED
  1. The CCP site that received the misrouted case must make contact with the originator to notify them that the case was sent to the incorrect CCP site, and the statute is within 60 days of expiration.

  2. The applicable documents must be secured to ensure that a manual assessment can be input or obtain proof from the originator that the statute has been protected.

  3. No matter whether the incorrect CCP site makes a protective assessment, or the field provides proof that the statute was protected, the assessment documents (Form 2859) should be included in the case file.

Special Handling Cases

  1. Some cases require special handling and the following IRM section has procedures that will help when working these cases.

Claims/Amended Returns

  1. A claim is a request from a taxpayer for a refund or credit to the taxpayer’s account, or an abatement of penalties and interest.

  2. The purpose for the filing of a claim by a taxpayer is usually to give additional information that will change the tax account.

  3. CCP tax examiners must know how to process adjustments on claims to accurately update the taxpayer’s account.

Claim Forms
  1. There are different types of claims that can be closed in CCP:

    1. Regular Claims,

    2. Carryback Claims, and

    3. Excise Fuel Claims.

  2. This section will explain the three types of claims:

    1. Claims for Credit,

    2. Claims for Refund, and

    3. Claims for Abatement.

  3. It will also show how to identify claims and the statutes of limitation on claims.

Filing Regular Claims
  1. There are four ways to file a regular claim:

    1. An amended return. Amended returns can be identified in most cases by being followed by an "X" in their form name, such as Form 1040X, Amended U.S. Individual Income Tax Return. There are also "X" returns for corporate and employment returns.

    2. Form 843, Claim for Refund and/or Request for Abatement.

    3. Form 8849, Claim for Refund of Excise Taxes.

    4. Also, a claim could be an informal inquiry letter, in lieu of a specific form.

Carryback Claims
  1. It can be more beneficial for a taxpayer to spread the declaration of a business operating loss over multiple tax years instead of a single tax year. This is referred to as a "carryback."

  2. Carryback claims are filed on Form 1045, Application for Tentative Refund (IMF), or Form 1139, Corporation Application for Tentative Refund (BMF). The Revenue Agent Report (RAR) may state "NOL C/B," which stands for Net Operating Loss, Carryback in Section A.

    1. These cases are assigned to Restricted Interest Tax Examiners.

      Note:

      If Carryback and General adjustments pertain to a case, Form 2285, Concurrent Determinations of Deficiencies, must be in the case file.

Excise Fuel Claims
  1. Fuel claims are not established on AIMS. These are filed on Form 843 and Form 4136, Credit for Federal Tax Paid on Fuels. These claims are processed in the Centralized Specialty Tax Operation located in the Cincinnati Service Center.

Claim Types
  1. There are three types of claims:

    1. Claims for Credit: A claim for credit is for money not paid into the system by the taxpayer.

      Note:

      Child Tax Credit and Earned Income Credit

  2. Claims for Refund:

    1. A claim for a refund is a request for a reduction of tax, penalty, or interest the taxpayer has paid.

  3. Claims for Abatement:

    1. A claim for abatement is a request for reduction of tax, penalty, or interest the taxpayer has not paid.

    2. A claim for abatement is considered a reconsideration of a tax assessment, commonly referred to as a recon.

Identifying Claims
  1. Claims are not specific to any type of class return or work type. They are assigned with other work.

  2. Form 3198 is notated to indicate a case is a claim and the document that posted as a TC 97X on the transcript has been considered.

  3. As with any case, a review of AIMS prior to beginning work on the case is imperative. Common ways to identify a claim are:

    1. Source Code

      Type of Source Code Definition
      30 Claim for a Refund
      31 Claim for Refund - Paid
      32 Claims - Carryback Year - Paid or Unpaid
      35 Administrative Adjustment Request
      73 Taxpayer’s Request

    1. AIMS Freeze Code O, which will prevent case closure before the claim is considered.

    2. TC 97X Claim or duplicate return filed on Master File.

    3. An AA Alpha Statute.

Claims & Statutes of Limitations
  1. In order for a claim to be considered timely, it must be filed by the latest of the following dates:

    1. 3 years from the date the return was due.

    2. 3 years from the date the return was filed.

    3. 2 years from the date the tax was paid.

      Reminder:

      A claim never extends the statute of limitations for assessing an additional deficiency or for obtaining a refund. Attention must be paid to both the Assessment Statute Expiration Date (ASED) and the Refund Statute Expiration Date (RSED) when working claims.

Survey Claims
  1. A Survey Claim is when the IRS accepts a claim for refund without the time and expense of an audit.

  2. These cases are closed with a survey stamp on the front page of the return or claim form.

  3. Survey claims should have an amount present on the AIMS database.

  4. All adjustments that the taxpayer claims must be entered in Item 12 or 15 as applicable.

  5. Examination results must be negative.

  6. On the Form 5344:

    1. Use DC 34 in Item 13.

    2. Items 12, 13, 15 and 36 are required entries.

    3. Item 21 is only needed if the amount in Item 12 is different than the claim amount in the AIMS database. This database amount appears on CC AMDISA on the line labeled CLAIM AMT/DT>.

    4. Items 06, 07, 09, 11, and 39 are optional entries.

Form 5344, Examination Closing Record, Completion for Examined Claims
  1. CCP Tax Examiners will complete Form 5344 as normal. Items that affect claims specifically are addressed below.

Item 09, Priority Code
  1. Input of a priority code will bypass certain conditions on IDRS and prevent the case from rejecting from closing from the AIMS terminal or prevent an unpostable condition.

  2. Enter a "1" if there is a 97X on AIMS.

  3. Enter a "3" if there is an IRS-initiated claim.

    Note:

    Priority Code 3 will allow credit interest to be computer generated from the interest start date to the 23C date less the applicable back off days. Please refer to IRM 20.2.4 for more information.

  4. Leave blank if this is a taxpayer-initiated claim and no TC 97X.

    Reminder:

    Review the claim received date on the document. If the received date is before the TC 420 date on TXMOD, then it is a taxpayer-initiated claim.

Item 12, Transaction Codes
  1. Enter a TC 301 for the claim amount being allowed, which will be stated as a negative number. This is the amount of tax being decreased.

  2. Use TC 161 or TC 271 respectively decreases of "Failure to File" or "Failure to Pay" penalties. Input the amount as a negative number.

  3. Always verify that the amount being decreased matches the amount posted on IDRS exactly.

    1. If the amount on the Form 5344 exceeds the amount of tax or penalty on the module, the transaction will unpost.

Item 13, Disposal Code
  1. There are two disposal codes used for claims:

    1. DC 01 - Claim examined and disallowed in full or

    2. DC 03 - Claim examined and allowed in part or full

Item 15, Reference Codes
  1. Reference codes are only required if adjustments are being made per the revenue agent report (RAR).

Item 20, Claim Reject Date
  1. For Item 20, enter the Claim Reject date. Use the date of the:

    1. Form 2297, Waiver of Statutory Notification of Claim Disallowance,

    2. Letter 905, Final Partial Claim Disallowance or Letter 906, Final Full Claim Disallowance, or

    3. Signed report with disallowed adjustments.

Item 21, Amount Claimed
  1. Enter the amount of the claim or reduction of tax requested by taxpayer if the amount on the database is not correct. If there was a $1 protective claim amount on the AIMS database, then the correct amount of the claim must be entered when closing the case.

  2. Leave blank if AIMS database is correct.

Item 22, Dollars Protected
  1. This is the reduction in tax requested by the taxpayer that was protected from leaving the Treasury. This amount cannot exceed the amount claimed.

  2. This item will be left blank if the amount is allowed in full.

Item 23, RBP Hours
  1. This is the amount of time spent on revenue-based protection, and can be entered in fifteen- minute increments (.0, .3, .5, or .7) for field examinations.

  2. If not present, enter as 1.0 hours.

Item 24, Claim Type
  1. The field will provide the appropriate claim type in Item 24.

  2. Claim types are:

    Claim Type Definition
    A Joint Committee Case
    B Form 843
    C Form 1040
    E Additional Documentation/Informal Claim
    F Reserved
    G Form 1139, Corporation Application for Tentative Refund
    H Form 1045, Application for Tentative Refund
    I Return File
    J Affirmative Issues
    K Form 1120X
    L Employment Tax Claims (941-X, 943-X, 944-X, 940-X, 945-X, etc.
    Z Other Situations

  3. If a claim type is not provided by the field, the first document that should be examined by the tax examiner to determine the action that initiated the claim should be the revenue agent’s Form 9984, Examining Officer’s Activity Record, that was provided with the case file.

    1. This is the history of the examination including what initiated the audit. If the claim type cannot be determined based on this information, refer the case to the Lead or FORT for handling.

Item 41, No Change Issue Codes (MFT 30 only)
  1. Required on all MFT 30 (IMF) DC 01 No-Change closings.

  2. If not present, use all 9’s.

Closing Letters
  1. The field, during the examination, may determine a portion of the claim will be disallowed. If this determination is made,

    1. Form 2297, Waiver of Statutory Notification of Claim Disallowance, and

    2. Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit

    are sent to the taxpayer along with a copy of the RAR showing the adjustments that were allowed on the Claim.

  2. If there is no reply, then the field sends Letter 569 allowing the taxpayer 30 days to request Appeals Consideration.

Most Common Letters
  1. CCP should follow the instructions provided on Form 3198 and send only the letters prepared by the revenue agent to the taxpayer. The most common letters sent with claims are:

    1. Letter 905, Partial Claim Disallowance (sent through certified mail),

    2. Letter 906, Full Claim Disallowance (sent through certified mail), and

    3. Letter 570, Claim Allowed in Full.

      Note:

      This list is not all-inclusive.

  2. Like all other case types, CCP is not responsible for the preparation of closing letters for SB/SE and LB&I cases. Any closing letters that are required will be prepared and issued by Field Exam.

Delinquent Returns and Substitute for Return Processing

  1. A delinquent return is a return filed by the taxpayer(s) or their representative, subsequent to the normal due date of the return including properly executed extensions.

  2. A substitute for return (SFR) is a return prepared and submitted by the Service when it is determined the taxpayer has a filing requirement and has failed to comply.

  3. The purpose of a delinquent and a substitute for return is to assist taxpayers in complying with the Internal Revenue Code requirement for filing tax returns.

  4. Tax Examiners must be familiar with the procedures for processing SFR and delinquent return cases in the different situations that may occur.

Similarities and Differences Between Delinquent and Substitute for Returns
  1. The basic similarities between SFR and delinquent returns are:

    Substitute for Return Delinquent Return
    • Posts a dummy TC 150 in order to establish AIMS.

    • Posts a TC 150 with a DLN consisting of repeating 0, 8, or 9.

    • Does not have the taxpayer signature.

    • Does not start the running of the ASED.

    • Posts the TC 150 in order to establish AIMS.

    • Posts the tax according to the return.

    • Has the taxpayer’s signature.

    • Does start the running of the ASED.

Identifying SFRs and Delinquent Returns on IDRS
  1. SFR and Delinquent Returns can be identified on IDRS in the following ways:

    1. SFR’s will have a Push Code 036 on AIMS.

    2. SFR’s will have a Return Condition Code (RCC) 4 will post in return information and will often read 6020B or SFR next to TC 150 on TXMOD.

    3. IDRS will often show SFR indicator on TXMODA or IMFOL/ BMFOL.

    4. Delinquent returns will show the date the return was filed.

Statute Issues
  1. There are several special statute issues on Delinquent and Substitute for Return cases.

  2. SFRs will show "EE" on AIMS if the ASED has not been properly set.

  3. The filing of a delinquent return at any time during an examination begins the running of the ASED.

Processing of SFR and Delinquent Returns
  1. This IRM subsection will provide information on the following subjects when working with SFR and Delinquent Returns:

    1. Setting the ASED.

    2. Penalty Considerations.

    3. Credits and Potential Barred Refunds.

    4. Closing for Delinquent Returns and SFR Returns.

    5. Secured Delinquent Return and SFR Return Additional Adjustments (Agreed).

Credits and Potential Barred Refunds
  1. Research credits on the account, and verify the Refund Statute Expiration Date (RSED) to prevent potentially barred refunds.

    1. Bring back credits from Excess Collections on Form 8765 as necessary.

    2. Move credits that are barred from refund to Excess Collections using Form 8758.

Closing Procedures for Delinquent Returns
  1. If no changes are warranted to the original return, close case as a no-change case and complete the following entries on the Form 5344:

    1. Item 13, Disposal Code - 01.

    2. Item 37, Delinquent Return - this entry should reflect a T for the first return secured or an R for the subsequent returns secured.

    3. Item 414, Delinquent Return Amount - this entry should reflect the refund or balance due shown on the return.

  2. If changes are warranted, follow normal closing procedures for changed cases but include the following entries on Form 5344:

    1. Item 12, TC 160 - The delinquency penalty must be addressed on late filed returns. Enter the applicable delinquency penalty or a zero if the delinquency penalty will not be asserted.

    2. Item 13, DC - Use the applicable DC of the examination: agreed, unagreed, etc.

    3. Item 37, Delinquent Return - This entry should reflect a "T" for the first return secured, an "R" for the subsequent returns secured.

    4. Item 414, Delinquent Return Amount - This entry should reflect the refund or balance due shown on the return.

  3. Follow normal closing procedures for changed or no-change with adjustments cases. For changed cases, ensure the examination report started with the amounts from the original return. For no-change cases, ensure DC 01 is entered in Item 13; Disposal Code. For all cases, ensure Item 37: Delinquent Return and Item 414; Delinquent Return Amount are present.

Closing Procedures for SFR Returns
  1. AM424 with Push Code 036 will generate a TC 595 for IDRS SC 03. If the input passes the AIMS and Master File checks, TC 424s with PC 036 before COB on Thursday, will generate a TC 150 over the weekend. Close the case using normal procedures for agreed closures including the following entries on the Form 5344:

    1. Item 38-40, Ensure an original return blocking series (00X) is used.

    2. Item 9, Complete this block only for IMF returns. This code instructs MF to compute the FTP penalty from the return due date, eliminating the need to use TC 270 which restricts MF from generating future FTP penalty accruals.

    3. Item 12, TC 160, The delinquency penalty must be addressed on late filed returns. Enter the applicable delinquency penalty or a zero if the delinquency penalty will not be asserted.

    4. Item 13, Use the applicable DC.

    5. Item 34 and Item 414 - DO NOT complete. Not applicable for SFR cases.

Delinquent Return Received After SFR 150 Posted - Accepted As Filed Procedures
  1. f a return is received after an SFR TC 150 has posted, the amounts on the secured return must be incorporated into an examination report and assessed as a TC 300.

  2. The input of a TC 971 AC 282 using the return received date in the Trans Date field must be requested by Field Exam as soon as the return is secured.. This updates MF to show that Examination secured a delinquent return. This also establishes the ASED at MF for IMF cases. The duplicate return freeze on MF is not set and an AIMS weekly update is not generated.

  3. Field Exam will start with zero per return, to reflect tax, credits, etc. per return.

  4. Field Exam or CCP will need to complete the following entries on the Form 5344:

    1. CCP will enter in Item 09 priority code 9 when assessing additional tax.

    2. Field Exam will enter in Item 13 the applicable DC. If agreed (DC 03/04/09) use the return received date as the agreement date.

    3. Field Exam will enter in Item 12 or 15, certain line items taken from the return using the appropriate reference/TCs:

    4. Item 12, TC 160 - The delinquency penalty must be addressed on late filed returns. Enter the applicable delinquency penalty or a zero if the delinquency penalty will not be asserted.

    5. Item 37, Do not make an entry in Item 37. This field is only used for secured delinquent returns if there is NO TC 150 posted.

    6. DO NOT enter anything in Item 414: Delinquent Return Amount - The examination results will be calculated on the examination adjustment.

  5. Form 3198 will have a notation on the "Other Instructions" line of the "Special Features" section "SFR TC 150 Posted - Process delinquent return as final closure."

  6. If multiple returns were secured, Field Exam will instruct CCP to process the balance due years first and cycle in the refund years (if the RSED is not expired) to ensure the refunds are applied to the balance due years.

  7. Verify the transcript attached to the return is for the same TIN, name, and MFT as reflected on the delinquent return. If not, reject the package back to the Field Office Resource Team (FORT).

  8. Verify an SFR TC 150 has posted on the transcript. If no TC 150 is posted on the module, forward the package to the FORT Unit explaining there is no TC 150 posted for the TP.

  9. Determine whether the TP owes a balance due on the tax period being processed. The refund may be used to pay off any balance due on the module being processed, but it CANNOT be used to offset any outstanding balance due on any other tax periods.

  10. Process the Form 5344 using a Hold Code 4 to freeze the expired refund.

  11. If payments, credits, or both were transferred from the TP’s account to the Excess Collections File, complete Form 8765, IDRS Control File Credit Application, and forward it to Campus accounting function to have the credits transferred back.

  12. If it is determined the refund is barred from being refunded to the TP, it is to be sent to the Excess Collections File via Form 8758, Excess Collections File Addition.

  13. Additional requirements can be found in IRM 3.17.220.2.11, Manually Refunding from the XSF.

  14. Verify entries on Form 5344 match the secured delinquent return.

  15. Request input of CC AMCLSE to close the case to SC 90.

Delinquent Return Secured by Examination After TC 150 SFR Posted, With Audit Potential - Process Partial Assessment Procedures
  1. f the return is not accepted as filed, because a TC 150 has already posted at MF, the secured return must be processed as a partial assessment within 7 days of receipt of return unless the return appears to be fraudulent. In such cases, Field Exam will follow guidelines in IRM 4.4.9.4.11.1, Penalties, for the proper handling of fraudulent failure to file (FFTFF) penalty cases.

  2. When a delinquent return is secured after a SFR TC 150 has posted and the secured return has audit potential but zero tax liability, no partial assessment is required.

  3. Field Exam will prepare an RAR starting with zero per return to reflect tax, credits, etc. per return. If tax per return is zero (before withholding credits or refundable credits or both), a partial will not be requested. Field Exam will prepare a final examination report starting with per return figures of zero.

  4. Field Exam will eFax the partial assessment request to CCP and include the following:

    1. First 2 pages of the return - include Schedule SE, if applicable,

    2. Examination Report,

    3. Form 5344

    4. Form 3198SFT TC 150 Posted - Process delinquent return as partial assessment entered in the Special Features section.

  5. Verify an SFR TC 150 is posted on the transcript. If no TC 150 is on the module, send the package to the FORT.

  6. If payments, credits, or both were transferred from the TP’s account to the Excess Collections File and the RSED has not expired, complete Form 8765 and forward it to Campus accounting function to have the credits transferred back.

  7. Request input of CC AMCLSF or manual assessment if required, to assess the partial assessment. Stamp Form 5344 "Request Completed" and eFax copy back to the field group for association with the original return in the case file.

Delinquent Return Secured by Examination After SFR TC 150, With Audit Potential - Final Closing Package (Partial Assessment Processed)
  1. Field Exam will prepare the RAR using the partial assessment amounts as the starting figures. If no partial assessment was processed because the tax was zero, the starting figures will be the amounts shown on the return filed by the TP.

  2. Field Exam will complete Form 5344 paying special attention to the following fields:

    1. Items 12 and 15 as applicable. TC 160 - The delinquency penalty must be addressed on late filed returns. Enter the applicable delinquency penalty or a zero if the delinquency penalty will not be asserted.

    2. Item 13, DC. Use the applicable changed DC.

    3. Item 37, Delinquent Return. Do not make an entry in Item 37: Delinquent Return. This field is only used for secured delinquent returns if there is NO TC 150 posted.

    4. Item 414, Delinquent Return Amount. DO NOT enter anything in Item 414. The examination results will be calculated on the partial assessment made previously and the final assessment.

  3. Request input of CC AMCLSE to assess final closure.

Estate Returns

  1. Estate Tax Returns are returns that must be filed for the estate of every citizen or resident of the U.S. whose gross estate at date of death exceeds the amount defined by law. Non-resident non-citizens must also file an estate tax return if the gross estate includes property situated in the U.S..

  2. Gift Tax Returns are returns that must be filed when a gift is made to someone other than a person’s spouse that exceeds the amount defined by law.

Purpose and Importance of Estate and Gift Tax Returns
  1. The purpose of this IRM is to acquaint the CCP TE on properly closing estate and gift tax return case files.

  2. It is important for the CCP TE to identify what comes in a virtual Estate Return case file so that they can process the closing documents correctly.

General Information
  1. This IRM subsection is to give general information such as the following:

    1. Types of returns.

    2. SSN format.

    3. Statute of limitations.

    4. Case Assembly.

Types of Returns
  1. The two returns discussed here are:

    1. Form 706 (MFT 52), U.S. Estate Tax Return, and

    2. Form 709 (MFT 51), United States Gift (and Generation - Skipping Transfer)Tax Return.

SSN Format
  1. All Estate and Gift tax modules are identified by a "V" at the end of the taxpayer’s SSN.

    Example:

    000-00-2689V

Statute of Limitations
  1. The Assessment Statute Expiration Date (ASED) for Estate and Gift returns is computed as follows:

    1. Form 706 U.S. Estate Tax Return - 3 years from the due date of return or 3 years from the IRS received date, whichever is later. Form 706 returns are due 9 months from the exact date of death for any taxpayer who has passed away after 01/01/1971.

    2. Form 709 United States Gift (and Generation - Skipping Transfer)Tax Return - 3 years from the due date of return or 3 years from the date the return was actually filed, whichever is later. Form 709 returns are due 3 1/2 months after the end of the taxable year (April 15th).

Estate Case Processing Procedures
  1. This section will assist CCP TEs in processing Estate cases.

Forms
  1. Several forms will be present in the virtual case file when processing adjustments to Form 706, United States Estate Tax Return.

  2. These forms are:

    1. Form 706, U.S. Estate Tax Return,

    2. Form 5344, Examination Closing Record,

    3. Form 1273, Report of Estate Tax Examination Changes,

    4. Form 890, Waiver of Restriction on Assessments & Collection of Deficiency & Acceptance of Overassessments _Estate, Gift and Generation - Skipping Transfer Tax, and

      Note:

      This will generally not be present on no-change cases.

    5. Form 3198, Special Handling Notice for Examination Case Processing

Assessing MFT 52 Modules on IDRS
  1. When accessing Form 706 modules on IDRS, there will not be a numeric YYYYMM tax period. Instead, a series of six zeroes (000000) will stand in for the year and month.

Form 5344, Examination Closing Record
  1. Estate Case Processing entries on the Form 5344 that are different from other types of closures are as follows:

    1. Item 15 - An Item Reference (IREF) code is input relating to the type of return in the file:

    Item Reference Code (IREF) Definition
    074 Generation Skipping Tax
    076 Estate Tax
    078 Interest Assessment for State Death Tax Credit Taken But Not Paid

  2. For IREFs 074 and 076, the total tax adjustment may consist of one or all of these types of tax depending on the date of validity and whether adjustment to a specific tax is warranted. The sum of the IREFs used to reflect the change in tax must equal the TC 30X amount entered in Item 12 of the Form 5344.

  3. For IREF 078, Interest Assessment for State Death Tax Credit taken but not paid, the related dollar amount must be greater than zero. A TC 340 must be present.

    Note:

    Adjustments of this type are usually handled by Tax Examiners who have received Restricted Interest training.

Identifying Restricted Interest
  1. It is important that these cases are reviewed for Interest that should be restricted.

Review TXMODA for -I Freeze
  1. Access CC TXMODA and review the freeze section for a -I freeze. A -I freeze means the module has been restricted from interest due to the posting of a TC 340.

  2. Because of Restricted Interest involvement, if the case is a Form 709 or if the case is a Form 706 and the case has not been granted Section 6166 Installment Privileges, it must be forwarded to a Tax Examiner who has received training on Restricted Interest issues.

  3. If the taxpayer has been granted Section 6166 Installment Privileges on a Form 706 Estate case, the case may be handled with only a few small changes to the Form 5344 to enable closing.

Section 6166 Installment Privileges
  1. The taxpayer’s election of Section 6166 Installment Privileges will be notated at the top of Page 2 of the Form 706 enclosed in the case file. If the taxpayer has chosen to use this election, the box will be checked "Yes." The case file will also generally contain a Form 4349, Computation of Estate Tax Due with Return and Annual Installment.

Special Instructions for Form 5344, Examination Closing Record
  1. In Line 6A, use the 23C date for the current day for the Debit Interest "To" Date.

  2. Input a Hold Code of 2 in Line 07 to hold both notices and credits. Next to "Remarks," write "6166 Election."

  3. In Item 12, a TC 340 for .00 must be input to bypass the -I freeze on TXMODA and enable the case to close.

  4. Prepare a Form 2275, Records Request, Charge and Recharge, to refer the case to the Estate and Gift Department at the Cincinnati campus to have the installment agreement input after the case has been successfully closed and the assessment input. Attach the Form 2275 to the case and refer to local procedures.

Gift Case Processing Procedures
  1. This section will assist CCP TEs in processing Gifts cases.

Forms
  1. Several forms will be present in the virtual case file when processing adjustments to Form 709, United States Gift Tax Return.

  2. The forms are:

    1. Form 709, United States Gift Tax Return. It is also common for Form 709 cases to be a Substitute for Return, so they may contain electronic prints instead of an original return signed by the taxpayer, or a delinquent return that is not stamped with a DLN,

    2. Form 5344, Examination Closing Document,

    3. Form 3233, Report of Estate Tax Examination Changes),

    4. Form 890, Waiver of Restriction on Assessments & Collection of Deficiency & Acceptance of Overassessments. - Estate, Gift, and Generation Skipping Transfer Tax. This will generally not be present on no-change cases, and

    5. Form 3198, Special Handling Notification for Examination Case Processing.

Statutes of Limitations
  1. There are several special situations that may be encountered when working MFT 51 cases that are unique to this type of case:

    1. Alpha statute "VV" Gifts Not Adequately Disclosed on Return - 6501(c)(9): If an assessment is being made on the return, update the statute in Line 14 of Form 5344 to six months from the last date of the current month.

    2. Alpha statute "EE" No Return Field - 6501(c)(3): Update to 3 years from the 23C date of the current date unless a delinquent return is enclosed in the case file. If a delinquent return signed by the taxpayer was received and not addressed prior to receipt of the case file, update to 3 years from the stamped received date of the return.

Item Reference Numbers
  1. There are several Item Reference (IREF) Numbers that are used in Item 15 on Form 5344 specifically on MFT 51 Gift cases:

    1. 077 - Gift tax - This amount must match the TC 300 or 301 amount in Item 12 on Form 5344.

    2. 115 - Taxable Gifts Current Period Amount.

    3. 116 - Taxable Gifts Prior Period Amount.

    4. 117 - Total Gifts Current Period Amount.

  2. Adjustments to IREFs 115, 116, and 117 do not affect tax and will appear on Form 3233 on Lines 15, 16, and 17. Adjustments to these items do not appear on every return.

Unified Credit Adjustment
  1. Another adjustment that is specific to MFT 51 cases is the Unified Credit Adjustment, which is reported on Line 422 of Page 2 on Form 5344, and appears as "Applicable Credit Adjustment Amount." The adjustment appears on Line 26 on Form 3233.

  2. A Unified Credit Adjustment is required on any MFT 51 case that is being closed with a Disposal Code 01, and will reject from closure if an adjustment is not present.

    1. If an adjustment is not being made per the Revenue Agent Report, it is necessary to input an adjustment of $1 in Line 422 of the Form 5344 in order to allow the case to close.

Helpful Hints While Closing Estate and Gift Cases
  1. Here are some helpful hints while working Estate and Gift cases in CCP Exam:

    1. Verify the entire case belongs to the same taxpayer.

    2. Regarding Form 3198, follow all instructions received from Specialty Field Exam.

    3. Verify the freeze codes (if any are present).

      Freeze Codes Definition
      -A Freeze Make sure amended return is in the case file. If it is not, refer the case to the lead.
      -I Freeze and 6166 applies Follow procedures in IRM 4.38.1.9.3.3.2.
      -I Freeze ONLY Send case to Cincinnati CCP Exam Team 101.

      Note:

      Do not send any no change or survey cases.

    4. Edit the Form 5344 correctly:

      Item Number Item Name Actions to Take
      P38-40 Blocking Series
      • 00X - Original Return/ SFR/ 6020b

      • 30X - Electronic Prints

      • 40X - Electronic Case

      08 Agreement Date Required
      • This is not required on TC 301 or No Change cases.

      09 Priority Codes
      • 1 - To release a -A Freeze if an amended return is in the case file.

      • 3 - To release a -A Freeze and computer generate a Failure to File (FTF) penalty (TC 27X) on SFR/ 6020b returns.

      12 / 15 Tax & CREF CCP is required to verify amounts and/or enter amounts per RAR in case file.
      • Form 706 - MFT 52 (TC 30X/ Ref Code 076)

      • Form 709 - MFT 51 (TC 30X/ Ref Code 077). You will rarely use 115, 116, and 117.

      • Form 1041 - MFT 05 (TC 30X/ Ref 886 only)

      • Form 706 - GS - MFT 52 (Ref 074)

      13 Disposal Code If this is not entered, use the code shown on Form 3198.
      14 Statute Extended To This is a CCP field. Follow statute procedures.
      20, 21, 22, 23, and 24 Claims & Amended Returns If required, please follow Claims procedures.
      28, 30 and 31 Examiner’s Time, Examination Technique Code, and Examiner’s Grade This is generally completed by the revenue agent. If it is blank, CCP TEs need to complete.
      32 Grade of Case Required Field
      39 Disclosure Code Complete as applicable.
      408, 411, and 412 Related Ret Alpha Code, Payment Code, and Installment Agreement Code Required fields. CCP TE must complete this field to avoid a reject.

Employment Taxes

  1. Audits for Employment Tax returns are sent to Centralized Case Processing (CCP) Exam, Cincinnati for closure.

Purpose and Importance of Employment Taxes
  1. The purpose of Employment Tax Returns is to process adjustments to Social Security taxes, income tax withholding and unemployment tax by employers for their employees.

  2. It is important for the CCP TE to recognize the forms needed to process an employment tax case file and the adjustments required to process either assessments or overassessments correctly.

    1. Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (Employment Tax Adjustments Not Subject to IRC 7436).

Types of Employment Returns
  1. There are five employment tax returns that could be sent to CCP. They are:

    1. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return,

    2. Form 941, Employer’s Quarterly Federal Tax Return,

    3. Form 943, Employer’s Annual Return for Agricultural Employees,

    4. Form 944, Employer’s Annual Federal Tax Return, and

    5. Form 945, Annual Return of Withheld Federal Income Tax.

  2. Employment tax adjustments may also be made to Form 1040, U.S. Individual Income Tax Return, using Form 1040, Schedule H, Household Employment Tax.

Statute of Limitations
  1. Federal employment taxes must be assessed for Federal Insurance Contributions Act (FICA), Federal Unemployment Tax Adjustments (FUTA) and withholding taxes within the 3-year statute of limitations.

  2. The Assessment Statute Expiration Date (ASED) for employment tax returns is computed as follows:

    1. Form 940 - 3 years from the due date of the return or the received date, whichever is later. The return due date is January 31st.

    2. Form 940, Form 941, Form 943, Form 944, and Form 945 - 3 years from April 15th of the following year for which the return was due or the received date of the return, whichever is later. The return due date is the last day of the month following the end of the quarter.

  3. The ASED on employment tax adjustments processed to a Form 1040 return is 3 years from April 15th of the following year for which the return was due, or 3 years after the date the return was actually field, whichever is later.

Disposal Codes
  1. The following disposal codes are used for Employment Tax case files:

    Disposal Code Description
    DC 01 No change with adjustments. This can refer to a change that has been disallowed in full, or a case that has no adjustments to tax or penalties.
    DC 02 No change. This refers to a case where no changes are being made to tax, penalties, or reference items.
    DC 03 Agreed cases closed before issuance of a 30-day letter.
    DC 04 Agreed cases closed after issuance of a 30-day letter.
    DC 07 Appealed unagreed cases.
    DC 08 Other (08 is considered agreed on the AIMS tables)

    Note:

    Disposal Code 08 is used on the Form 5344 generated by RGS on cases that are being closed out of the group as unagreed for the issuance of a stat notice. Technical Services will update the disposal code to the correct code upon final closure.

    Note:

    Effective 03/2009 DC 08 is no longer used when closing SFR cases. Use the applicable disposal code.

    Note:

    Effective 01/2010 an agreement date is not valid for DC 08.

Adjustments to Railroad Retirement Tax Act (RRTA)
  1. CCP will forward copies of Form 4668, Form 886-A, Explanation of Items, and attachments pertinent to Chapter 22 taxes, for all agreed railroad employment tax examination reports to the Railroad Retirement Board (RRB). The address for the RRB is:
    Railroad Retirement Board
    Chief Financial Officer
    844 N. Rush Street
    Chicago, IL 60611

Employer Identification Number (EIN)
  1. If the EIN per the original Schedule H, (Form 1040) is incorrect or there was no Schedule H, (Form 1040) filed as follows:

    1. Use IRS Reference Number (IREF) 993 to add or correct the primary taxpayer’s nine digit EIN.

    2. Use IREF 994 to add or correct the secondary taxpayer’s nine digit EIN.

Form 940 Case Processing Procedures
  1. Centralized Case Processing (CCP) Tax Examiners (TEs) at the Cincinnati Service Center are responsible for processing Form 940 cases sent by Employment Revenue Agents (RA). CCP Tax Examiner’s at the Memphis Service Center are responsible for processing “tag-along” Form 940 cases sent in by a Revenue Agent or TCO.

Forms Required
  1. Several forms will be present in the case file when processing adjustments to Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

  2. These forms are:

    1. Form 4666, Summary of Employment Tax Examination,

    2. Form 4667, Examination Changes - Federal Unemployment Tax,

    3. Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (Employment Tax Adjustments Not Subject to IRC 7436), and

    4. Form 5344, Examination Closing Record.

  3. Form 4666, Form 4667 and Form 2504 should be checked to verify that all corresponding information matches.

  4. Form 2504 may be present in the file, but it does not have to be signed for an assessment to be made on the employment case file. Deficiencies can be assessed even if the taxpayer does not agree.

  5. An agreement date is never entered on Form 5344 for employment tax cases. Normal interest is computed from the return due date, refund date, or TC 826/836 date to the payment date or 23C assessment date, whichever is earlier.

  6. If the case is being closed with no changes (DC 01 or 02), Form 4666, Form 4667, and Form 2504 are not always included and are not required for closure.

  7. Closing letters will be mailed by Specialty Employment Tax Field prior to the case closing to Exam CCP.

Form 5344, Examination Closing Record
  1. Tax increases or decreases are found on Line 8 of Form 4667. These adjustments are entered by the field with Transaction Code (TC) 300/301 in Item 12 of Form 5344.

  2. Penalty increases or decreases are found on Line 9 of Form 4667. These adjustments are entered on Form 5344 in Item 12 section using the appropriate TCs.

  3. Increases and decreases in FUTA tax will have reference codes related to the tax with the state where the adjustment is notated on Form 5344, Item 15.

    1. Adjustments due to an increase or decrease in wages require a reference code in Item 15 of Form 5344. The three-letter reference code will be the letter T for Taxes followed by the two-letter state abbreviations.

      Example:

      TOK for taxes in Oklahoma and TWI for taxes in Wisconsin.

    2. If more than one state is involved, a separate reference is listed for each.

    3. If no increase or decrease is being made, no reference code is needed.

    4. The total of the tax reference code amounts in Item 15 of Form 5344 must equal the TC 300/301 adjustment in Item 12.

  4. Increases and decreases in wages are found on Line 8 of Form 4667. These adjustments are entered with a three-letter reference code in Item 15. The three-letter reference code will be the letter "W" for Wages followed by the two-letter state abbreviation.

Forms 941/943/944/945 FICA Case Processing Procedures
  1. Form 941, Form 943, Form 944, and Form 945 cases are processed by Centralized Case Processing (CCP) Tax Examiners (TEs) at the Cincinnati Service Center.

FICA Adjustments
  1. Several forms will be present in the case file, when processing adjustments to FICA tax.

  2. These forms are:

    1. Form 941, Employer’s Quarterly Federal Tax Return,

    2. Form 943, Employer’s Annual Tax Return for Agricultural Employees,

    3. Form 944, Employer’s Annual Federal Tax Return,

    4. Form 4666, Summary of Employment Tax Examination,

    5. Form 4668, Employment Tax Examination Changes Report,

    6. Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment (Employment Tax Adjustments Not Subject to IRC 7436)), and

    7. Form 5344, Examination Closing Document.

Processing FUTA Forms
  1. Form 4666, Form 4668, and Form 2504 should be checked to verify that all corresponding information matches.

  2. On Form 4668, Columns (b) through (e) of Line 1 through 12 should be added together and the totals compared to Form 4666 Column (f), Summary of Employment Tax Examination.

  3. If Form 2504 is present, the IRC 6205(a) Interest Free Period will need to be considered.

  4. Normal interest is computed from the return due date, refund date, or TC 826/836 date to the payment date or 23C assessment date, whichever is later.

  5. Form 2504 may be present in the file, but it does not have to be signed for an assessment to be made on the employment case file. Deficiencies can be assessed even if the taxpayer does not agree.

  6. Cases closed with no changes (DC 01 or 02) may not include Form 4666, Form 4668, or Form 2504. They are not required for closure in these situations.

  7. Closing letters will be mailed by Specialty Employment Tax Field prior to the case closing to CCP.

Form 5344, Examination Closing Record, FICA Process
  1. Tax increases or decreases will be found on the line entitled "Delinquent tax or increase (decrease) in tax of Form 4668 which is the total of Lines 1 through 5." Adjustments to tax will be entered in Item 12 on Form 5344 as TC 300/301.

  2. Penalty increases or decreases will be found on Lines 7 - 12 of Form 4668. These will be entered using the appropriate TCs in Item 12.

  3. Reference Codes are required in Item 15 to notate account changes. They are listed in the FICA Input Reference Codes chart in IRM 4.38.1.9.6.4.

    Note:

    The sum of Reference Codes 003/111, 007/112, and 008 will equal the TC 30X amount.

FICA Reference Codes
  1. Use Item Reference Numbers (IRNs) to adjust tax, wages, and Credit Reference Numbers (CRNs) to adjust applicable credits on employment tax returns.

  2. The valid reference numbers for 2004 and prior Form 941 accounts and 2005 and subsequent are listed below.

    FICA Input Reference Codes

    Ref Code Adjustment to Found on Form 4668, Line(s) Entry in Item 15 of Form 5344 Entry in Part D of Form 2859
    003 (2004 and prior)
    111 (2005 and current)
    Adjusted total income tax withheld 11 003/111 and amount On Line 1 - 003 and amount
    004 Taxable Social Security wages 1 004 and amount On Line 2 - 004 and amount
    005 Taxable Social Security tips 4 005 and amount On Line 3 - 005 and amount
    007 (2004 and prior)
    112 (2005 and current)
    Total Social Security tax 01 007/112 and amount On Line 6 - 007 and amount
    008 Total backup withholding 11 008 and amount On Line 7 - 008 and amount
    073 Taxable Medicare wages and tips 1 and 4 073 and total amounts from Line 1 and 4 On Line 5 - 073 and total amounts from Line 1 and 4
    079 IRC 3509 rate 2, 3 & 6 079 and zero amount On Line 11 - 079 and zero amount
     

Interest Free Adjustments
  1. Interest free adjustments are spelled out in IRC 6205(c).

  2. If a taxpayer filed a timely Form 941, Form 943, Form 944 or Form 945 and an error is found in the tax liability by the field, the taxpayer is entitled to an "interest free period" if they agree to the adjustment and sign the Form 2504 or Form 2504-T. IRC 6205(a) privileges must be notated on the Form 3198 by the field.

  3. Always verify the dates to make sure the taxpayer has agreed.

  4. Penalties do not get an interest free period.

  5. Form 5344 entries made by the field:

    1. An agreement date is required.

      Note:

      An agreement date is needed for computation of the Interest Free period.

    2. The tax amount will be entered as TC 308 in Item 12. TC 308 requires an interest computation date in Item 11 of Form 5344. (This will enable the computer to compute the interest and eliminate the need to manually compute the interest.)

Schedule H, Household Employment Tax Case Processing Procedures
  1. In 1995, household employers were no longer required to file Form 942, Employer’s Quarterly Federal Tax Return for Household Employees. Any FICA, FUTA taxes and withheld income tax in regard to the taxpayer’s household employees are reported on Form 1040, Schedule H, Household Employment Tax. Employers have the option to report this type of employee’s wages on Form 941 or Form 943, if applicable. Form 1040, Schedule H is filed with the employer’s Form 1040, U.S. Individual Income Tax Return, but the taxes are still considered employment taxes.

  2. Form 1040, Schedule H may be filed by either the primary or secondary taxpayer.

Forms Required
  1. Several forms will be present in the case file when processing adjustments to Form 1040, Schedule H, Household Employment Tax.

  2. These forms are:

    1. Form 2504, which is an agreement to changes form the taxpayer.

    2. Form 4667, which is used to report FUTA adjustments to Schedule H.

    3. Form 4668, which is used to report FICA adjustments to Schedule H.

      Note:

      Form 2504, Form 4667, and Form 4668 should be checked to verify all information matches.

  3. Form 4667 is used to report FUTA adjustments to Schedule H. Increases or decreases to FUTA employment tax will be found on Line 8 of Form 4667. On Form 5344, enter these amounts using TC 300/301 in Item 12.

  4. Form 4668 is used to report FICA adjustment to Schedule H. Quarterly entries in Columns (b) through (e) will be totaled to arrive at the correct adjustment amount for the calendar year. Increases or decreases to FICA employment tax will be found on Line 5 of Form 4668. This amount will be entered in Item 12 of Form 5344 using TC 300/301.

    FICA Reference Codes for Schedule H Cases

    Primary Ref Code Secondary Ref Code Adjustment to Form 4668, Line Entry in Item 15
    003 (2004 and prior)
    111 (2005 and current)
    903 Income tax withheld 11 003/111/903 and amount
    004 904 Taxable Social Security wages 1 004/904 and amount
    007 (2004 and prior)
    112 (2005 and current)
    907 Total Social Security and Medicare tax 10 007/112/907 and amount
    073 973 Taxable Medicare wages and tips 1 073/973 and amount
    993 994 To correct SSN on Schedule H - 993/994 and correction
FUTA Employment Tax and Wage Tax Changes
  1. FUTA employment tax increases/decreases will be entered in Item 15:

    1. The reference codes for a primary taxpayer consists of a T followed by the two-character state code.

      Example:

      TTX for Texas.

    2. Secondary taxpayers consist of a Y followed by the two-character state code.

      Example:

      YTX for Texas.

  2. FUTA wage increases/decreases will be entered in Item 15 as follows:

    1. The primary taxpayer reference code consists of a W followed by the two-character state code.

      Example:

      WTX for Texas.

    2. The secondary taxpayer reference code consists of a Z followed by the two-character state code.

      Example:

      ZTX for Texas.

      Reminder:

      If there is insufficient space in Item 15 on the Form 5344 for all the entries required, input REQ54 with additional reference numbers.

Excise Tax Cases

  1. Excise tax returns are filed by taxpayers for internal taxes levied on the manufacture, sale, or consumption of a commodity within a country, and any various taxes on privileges often assessed in the form of a license or fee.

Purpose and Importance of Excise Tax Returns
  1. The purpose of this IRM is to acquaint the CCP TE on properly closing excise tax return case files.

  2. It is important for the CCP TE to identify what comes in an Excise, case file so that they can process the closing documents correctly.

General Information
  1. This IRM subsection is to give general information such as the following:

    1. Types of returns,

    2. Statute of limitations, and

    3. Case Assembly.

Types of Returns
  1. The type of returns discussed here are:

    1. Form 720, Quarterly Federal Excise Tax Return,

    2. Form 2290, Heavy Highway Vehicle Use Tax Return,

    3. Form 8849, Claim for Refund of Excise Taxes,

    4. Form 4136, Credit for Federal Tax Paid on Fuels,

    5. Form 6627, Environmental Taxes,

    6. Form 730, Monthly Tax Return for Wagers, and

    7. Form 11-C, Occupational Tax and Registration Return for Wagering.

Statute of Limitations
  1. The Assessment Statute Expiration Date (ASED) for Excise returns is computed as follows:

    1. Form 720 - Three years after the due date of the return, or three years after the return was actually filed, whichever is later.

    2. Form 2290 - Three years after the due date of the return, or three years after the return was actually filed, whichever is later.

    3. Form 730 - Three years after the due date of the return, or three years after the return was actually filed, whichever is later.

      Reminder:

      Form 8849, Form 4136, Form 6627, and Form 11-C do not have any statute of limitation.

Excise Case Processing Procedures
  1. This section will assist CCP TEs in processing Excise electronic cases.

  2. Procedures for the following forms and claims will be listed:

    1. Form 720,

    2. Form 730,

    3. Form 2290,

    4. Form 11-C,

    5. PCOR,

    6. Medical Device Tax, and

    7. MFT 40.

Closing Package
  1. Several forms will be present in the case file when processing adjustments to Excise Tax Returns, including Forms 720, 730, 2290, 11-C, and 8849.

  2. These forms are:

    1. Form 5344, Examination Closing Document,

    2. Form 3198, Special Handling Notification for Examination Case Processing, and

    3. Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection (if agreed).

Form 720,Quarterly Federal Excise Tax Return, Helpful Hints
  1. Form 720 is listed under Master File Tax (MFT) 03.

  2. There are four different due dates:

    1. April 30th,

    2. July 31st,

    3. October 31st, and

    4. January 31st.

  3. If a credit reference number (CRN) is present, send the case to Team 101 in Cincinnati CCP Exam.

    1. The credit reference numbers will begin with either a 3 or 4.

Form 5344, Examination Closing Record
  1. Item 28 will equal the amount in Item 404(c).

  2. Item 23 will equal the amount in Item 404(e).

  3. Item 15 which totals the abstracts will equal the amount in Item 12. Item 12 is the TC 300 or 301 amount.

    1. Abstracts will start with either 0 or 1.

    2. Each abstract has its own ASED.

  4. If multiple abstracts are present in Item 404, do a DC 03 or 08 before you input a DC 02.

  5. Item 39 is the entry for the State Disclosure Program.

Form 730, Monthly Tax Return for Wagers, Helpful Hints
  1. Form 730 is listed under Master File Tax (MFT) 64.

  2. This is a form filed monthly.

    1. The due date is the last day of the month following the month when wages were paid.

  3. The Failure to Deposit (FTD) penalty does not apply to Form 730.

  4. When reporting interest, refer to Form 3198 or the Revenue Agent Report (RAR).

    Reminder:

    Do not place anything into Item 15 on Form 5344EXCEPT for the accuracy-related penalty.

Form 2290, Heavy Highway Vehicle Use Tax Return, Helpful Hints
  1. Form 2290 is listed under Master File Tax (MFT) 60.

  2. This is a prepaid return.

  3. The due date is August 31st or the last day of the month following the month truck was purchased / put on the road for use.

    Example:

    September - the due date is October 31st.

  4. The Failure to Deposit (FTD) penalty does not apply to Form 2290.

    Reminder:

    Do not input TC 180 as it will unpost.

  5. On Form 5344, Item 15 should be left blank unless there is an accuracy-related penalty or credit reference number (CRN) 365.

  6. If there is a Claim on Form 2290:

    1. Look at Schedule 6 attached to Form 2290 for the reason the claim was requested.

      Reason for Claim Description of Reason
      Truck was sold, destroyed, or stolen
      • Item 12 should include TC 300 for $0.00.

      • Item 15 will have CRN 365 with the amount as a positive (+).

      Truck was under 5,000 miles (or 7,500 agricultural miles) were driven
      • Item 12 will include the TC 300 for $0.00 and TC 770 for $0.00.

      • Item 15 will have CRN 365 with the amount as a positive (+).

Form 11-C, Occupational Tax and Registration Return for Wagering, Helpful Hints
  1. Form 11-C is listed under Master File Tax (MFT) 63.

  2. This form is filed annually.

  3. The Failure to Deposit (FTD) penalty does not apply to Form 11-C.

  4. The form must be completed by July 1st.

PCOR Helpful Hints
  1. Patient-Centered Outcomes Research (PCOR) uses Abstract 133. It is equal to either the TC 300 or 301.

  2. On Form 5344, follow the information below:

    1. Item 15 - Shows Abstract 133 and credit reference numbers (CRN): 813/814/815/816.

      Note:

      The CRNs 813/814/815/816 will not show in Item 404; only Abstract 133 will show on the Form 5344.

      Credit Reference Numbers (CRN) SHIP-LIVES Reference
      813 70-906

      Note:

      CRN 813 amount = amount input for SHIP-LIVES reference.

      814 70-907
      815 70-908
      816 70-909

    2. Make sure you have all zeroes (0) in your count before the number (#).

      Example:

      70-906 0000000007

    3. If you have no LIVES, put zeroes (0) all the way across.

Medical Device Tax Helpful Hints
  1. The Failure to Deposit (FTD) penalty does not apply to the Medical Device Tax.

  2. On Form 5344, enter the TC 300/301 in Item 12.

    1. This is included in Credit Reference Number 812 and is equal to Abstract 136.

MFT 40 Helpful Hints
  1. MFT 40 is used for Form 8849, Schedule 1, Fuel Claims only.

  2. Tax cannot be assessed on MFT 40 cases.

    Note:

    If this situation occurs, reject the case back to the Revenue Agent and inform them to open the controls on MFT 03.

  3. This is a non-interest MFT. The system will not generate interest, so you will not need a TC 770 for $0.00.

  4. Disclosure is not on these cases.

Credit Reference Numbers
  1. Following is a table of Credit Reference Numbers (CRN) with their corresponding Abstract numbers.

    CRN Abstract Description
    303 105 Dyed Diesel Fuel
    304 109 Taxable tires, bias ply or super single tires
    305 113 Taxable tires, super single tires designed for steering
    306 104 Diesel Water - Fuel Emulsion
    307 60 Renewable Diesel Mixtures
    308 110 Fishing Rods and Fishing Poles
    309 104 Diesel - Water Fuel Emulsion Exports
    310 60 Diesel - Water Fuel Emulsion Blending
    322 22 Telephone
    324 14 Aviation Gasoline
    326 26 Transportation of Persons by Air
    327 27 Use of International Air Travel Facilities
    328 28 Transportation of Property by Air
    329 29 Transportation by Water
    340 40 Gas Guzzler Automobiles

    Note:

    If sold to police, interest is accrued.

    341 41 Sport Fishing Equipment
    342 42 Electric Outboard Motors
    344 44 Bows, Quivers, Broadheads, and Points
    345 20 Ozone-depleting Chemicals
    346 35 Kerosene - not in aviation
    347 35 Kerosene used in buses
    348 71 Nontaxable use of undyed kerosene in trains
    349 19 Domestic Oil Spill or Imported Petroleum Products Oil Spill Tax
    350 60 Diesel used in buses
    351 51 Alcohol sold as but not use as fuel
    353 60 Diesel used in trains
    354 14 Aviation Gasoline
    355 69 Kerosene - Aviation
    360 60 Diesel Fuel
    361 61 LPG (other than CRN 352 or CRN 419)
    362 62 Gasoline
    364 64 Inland Waterways Fuel Use
    365 196 Form 2290
    366 33 Highway Type Tires
    367 197 Form 11-C
    368 198 Form 730
    369 69 Kerosene
    370 102 Arrow Components
    371 71 Dyed Diesel Fuel used in trains
    377 77 Kerosene
    379 79 Other fuels
    380 30 Foreign Insurance
    381 31 Obligations not in Registered Form
    382 36 Coal - Underground mined or Coal Export Claims / Producer filed by November 3, 2008. Abs. No. is not applicable on the Export Claims.
    383 33 Truck, trailer
    384 37 Coal - Underground mined
    385 38 Coal - Surface mined or Coal Export Claims/ Exporter filed by November 3, 2008. Abs. No. is not applicable on the Export Claims.
    386 39 Coal - Surface mined
    387 114 Fishing Tackle Boxes
    388 60 Biodiesel
    389 106 Arrow Shafts
    390 60 Agri-biodiesel
    392 92 Passenger Vehicles (luxury tax)
    393 62 Alcohol - ethanol
    394 62 Alcohol - not containing ethanol
    395 61 Liquefied Petroleum Gas (LPG)
    396 108 Taxable tires other than bias ply or super single tires
    397 97 Vaccines
    398 98 Ozone-depleting Chemicals
    411 62 Exported Gasoline
    412 14 Exported Aviation Gasoline
    413 60 Exported Diesel Fuel
    414 35 Exported Kerosene
    415 105 Exported Dyed Diesel Fuel
    416 107 Exported Dyed Kerosene
    417 35 Kerosene used in commercial aviation
    418 69 Kerosene used in noncommercial aviation
    419 112 Liquefied petroleum gas (LPG)
    420 118 "P" Series Fuels
    421 120 Compressed Natural Gas
    422 121 Liquefied hydrogen
    423 122 Fuel from the Fischer-Tropsch Process
    424 123 Liquid Fuel from biomass
    425 124 Liquefied Natural Gas
    426 112 Liquefied petroleum gas (LPG)
    427 118 "P" Series Fuels
    428 120 Compressed Natural Gas
    429 121 Liquefied Hydrogen
    430 122 Fuel from the Fischer-Tropsch Process
    431 123 Liquid Fuel from biomass
    432 124 Liquefied Natural Gas
    433 111 LUST on fuels used in foreign trade
    434 125 LUST fuels used in train or inland waterways
    435 79 Liquefied gas derived from biomass (effective 10/01/2008)
    436 79 Liquefied gas derived from biomass (effective 10/01/2008)
    437 79 Compressed gas derived from biomass (effective 10/01/2008)
    438 136 Taxable Medical Devices
    439 133 PCORI (Patient-Centered Outcomes Research Institute fee)
    812 136 Adjust Taxable Medical Devices
    318 133 Adjust PCORI Specific Health Insurance Policies (SHIP)
    814 133 Adjust PCORI Applicable Self Insurance Health Plans (ASIHP)
    140 140 Indoor Tanning Services (there is no corresponding CRN

  2. Below is a table of Credit Reference Numbers (CRN) with their corresponding Abstract numbers that have expired that might still be eligible for credit.

    CRN Abs No Description
    323 101 Compressed Natural Gas
    352 61 Non-taxable use of LPG in certain intercity and local buses
    356 58 Use of gasoline for 10% gasohol BI
    357 73 Use of gasoline for 7.7% gasohol BI
    358 58 Gasoline for 10% gasohol
    359 59 10% gasohol
    363 74 Use of gasoline for 5.7% gasohol BI
    373 73 Gasoline for 7.7% gasohol
    374 74 Gasoline for 5.7% gasohol
    375 75 7.7% gasohol
    376 76 5.7% gasohol
    378 78 Dyed diesel fuel used in certain intercity and local buses

BBA.

  1. This section will go into detail for the following case types:

    1. Bipartisan Budget Act (BBA) of 2015

Definitions
  1. The Bipartisan Budget Act (BBA) of 2015 affects all partnerships filed with tax years beginning on or after January 1, 2018.

BBA
  1. Section 1101 of the Bipartisan Budget Act (BBA) of 2015 created a program that repealed the TEFRA partnership procedures.

  2. The examination process is for partnership returns that are subject to the BBA centralized partnership audit regime.

    Note:

    These procedures apply to SB/SE cases sent to Memphis CCP Exam and LB&I cas