4.46.7  Post Examination Activities

Manual Transmittal

July 22, 2011


(1) This transmits revised IRM 4.46.7, LB&I Guide for Quality Examinations, Post Examination Activities.

Material Changes

(1) Replaced references to "Large and Mid-Size Business" and "LMSB" with "Large Business and International" and "LB&I" , respectively.

(2) Removed all references to Planning, Quality, Analysis, and Support (PQAS).

(3) Added references to LB&I's Planning, Analysis, Inventory and Research (PAIR) and Pre-Filing and Technical Guidance (PFTG) organizations where appropriate.

(4) Editorial corrections made throughout.

(5) Hyperlinks updated throughout.

Effect on Other Documents

IRM 4.46.7 dated December 29, 2009 is superseded.


LB&I Team Managers, Specialist Managers, Specialists, and Revenue Agents

Effective Date


Cheryl P. Claybough
Director, Pre-Filing and Technical Guidance (PFTG)
Large Business and International Division  (03-01-2006)

  1. Closing a case – This section discusses the various aspects of completing an LB&I case, writing the report, and working with Appeals on unagreed issues.

  2. Assessment of team members’ performance - This section discusses the performance appraisal process for LB&I team members. It also discusses the team manager’s and team coordinator’s roles in the appraisal process.

  3. Post examination critique - This section discusses the purpose of the post examination critique process and procedures used to conduct the critiques with the examination team and the taxpayer.  (03-01-2006)
One-Case Concept

  1. General - The one-case concept is a process under which all components of a case remain together throughout the examination under the control of the team manager. This results in better overall case management. Team managers deal with one level of management with taxpayers on audit sites. Corporate tax departments influence and control IRS dealings with each of their subsidiaries and divisions. The IRS should employ the same one-case concept with the LB&I team manager having the overall control of the case.

  2. Scope and effect - The entire business complex should be viewed as a whole in order to fully comprehend the scope and effect of each segment upon the other and the effect of the whole operation on the separate and collective tax liabilities of the LB&I primary case.  (07-22-2011)
Closing a Case

  1. Keeping case components together - The team manager and team coordinator should preserve the one-case concept whenever possible although there may be times when partial closings are necessary.

  2. Team members – Team members complete their assignments at various stages of the examination cycle. Several tasks must be performed including the preparation of their portion of the Revenue Agent’s Report before they are finished.

  3. Files & workpapers – The team manager must review files and workpapers at the end of the examination. Pre-Filing and Technical Guidance (PFTG) can provide guidance through the issuance of quarterly LQMS reports that address the auditing standards. Older files must be sent to the Federal Records Center.

  4. Closing actions – All cases related to the key case must close through the primary examination group. An exception applies for Employment Tax and Excise Tax cases which generally close out of their respective groups. The team manager enters all closing data in the Issue Management System (IMS).

  5. Appeals – The taxpayer must submit a protest if there are unagreed issues. After the protest is received, the case is transferred to Appeals. RRA 98 changed the rules of interaction between LB&I and Appeals. The ex-parte rules must be observed during all conferences that follow.  (03-01-2006)
Completing the Examination

  1. Actions required - Team members do not all complete their work on a case at the same time. Team members, upon the completion of their examination assignments, should:

    1. Discuss any pending proposed issues with the team manager to obtain concurrence,

    2. Discuss any pending proposed issues directly with the tax manager, depending upon the communications agreement (Part I of Examination Plan) and instructions to team members (Part II of Examination Plan), and

    3. Prepare their portion of the examination report.  (12-29-2009)
Partial Closings

  1. Exception - The return of a related entity may be closed out in advance of the primary case. This is generally done at the request of the taxpayer for good and valid reasons or when agreement forms have been received and must be processed.

  2. Documentation - Care should be exercised to provide reasonable assurance that the partial closing is in the best interest of the Service. The examination report should indicate that the entity is part of a LB&I case and should contain an explanation for the separate closing.

  3. Time - Time spent must be closed out using Form 5344, Examination Closing Record in Issue Management System (IMS). The team manager should keep copies of all closing documents in order to capture the results subsequent to closing.  (03-01-2006)
Files and Workpapers

  1. Workpapers – Team members are encouraged to develop their workpapers to support the proposed issues in lieu of detailed explanations in the transmittal letter.

  2. Workpapers to Appeals - Workpaper files (including computer disks) are forwarded to Appeals for their use in resolving the unagreed issues. The team manager should arrange for CIC workpapers to be returned with a copy of the Appeals report after completion of any Appeals action. This will give the team manager immediate access to files needed for subsequent examinations and to allow for completion of the final status report without interrupting case closing action.

  3. Disposition of workpapers – CIC workpapers must be retired to the Federal Records Center no earlier than 4 years after the date of closing (AIMS Status 90). IRM 1.15.23-1 Records Control Schedule for Tax Administration – Examination (11-01-2002) provides additional guidance.

    1. CIC workpaper files that are retired to the Federal Records Center should be designated for destruction 15 years from the date of closing.

    2. CIC planning files may be retained for a period of 75 years. For a listing of records included in a CIC planning file see Exhibit 4.46.3-4.

    3. Copies of original workpapers related to carryover/recurring issues may be retained as needed to promote effective tax administration.

    4. IC examination workpapers will be forwarded with the closed case file. Team managers with IC examinations may retain copies of appropriate reports, schedules, workpapers and other administrative data that may be needed for other future examinations.

  4. Procedures - It is important that appropriate procedures be established to permit the retrieval of LB&I case files from the Federal Records Center. For example, it may be necessary to obtain previously closed files in the event that a LB&I case is post reviewed by Treasury Inspector General for Tax Administration (TIGTA), the Governmental Accounting Office (GAO), or by a reviewing function of LB&I. Taxpayers may file claims with respect to various Federal tax issues previously closed.

  5. Contact point to retrieve records - The team manager assigned to the CIC taxpayer should be the contact point for requests for CIC examination files. The receiving team manager should be provided with a copy of the SF 135, Records Transmittal and Receipt (see Exhibit 4.46.7-1), the box index, and other historical files from the transferring team manager if the examination responsibility is transferred.

  6. Retrieval of Records - Retrieval of files from the Federal Records Center may be needed. The team manager should make arrangements to receive the shipment of LB&I examination files and then arrange for the files to be reviewed by the appropriate party. All files may be retrieved by completing a Form 2275, Records Request, Charge and Recharge. This form serves as a transmittal to the Federal Records Center but also is a charge out and recharge record for audit trail purposes. Form 2275 should provide the FRC with as much information as possible, i.e., name and phone number of point of contact in case the FRC has questions, accession number, location number (if known) and the number of the box. Team managers should consult with the local Records Manager if problems arise in retrieving files, and not contact the FRC by telephone.

  7. Retrieval to other offices - Files sometimes have to be reviewed at another location. The team manager may subsequently ship the information but should control the documents by utilizing Document Transmittal Form 3210. It should be emphasized that Form 3210 should always accompany taxpayer sensitive records shipped to other offices (for example, Appeals, Counsel, LB&I Quality Measurement Staff, etc.).

  8. Record Retirement - The Internal Revenue Manual provides detailed procedures for the retirement of IRS records, including packing records, making cartons, shipping records, and instructions for the completion of various forms. IRM 1.15 should be consulted when necessary, but ordinarily LB&I personnel should use the designated FRC or Records Manager as the primary source of information.

  9. Cases Removed from CIC - A CIC taxpayer may be removed from the CIC program. Historical CIC workpapers should be maintained by the team manager or designee for the industry in which the taxpayer files tax returns as provided in IRM 1.15.  (03-01-2006)
Review of Case

  1. Responsibility - The team manager is responsible for reviewing the primary case and all effectively controlled entities that are included in the examination. Support managers are not required to perform a review of examination reports of support examinations. However, managers of specialty groups, i.e., Employment Tax, Excise Tax, Engineering, Insurance, Financial Products, TEGE, CAS, and International will be responsible for the technical/mathematical accuracy and issue development/documentation of any separate specialty reports issued.

  2. Refund cases - Joint Committee cases should be handled by procedures outlined in the Joint Committee Procedures (See IRM 4.36).  (07-22-2011)
Assistance from PFTG - LQMS

  1. Assistance from the PFTG staff may take the form of LB&I Quality Measurement System (LQMS) on-site reviews. Reviewers will make randomly selected 50% and 100% completion reviews on-site according to a statistically valid sample that is determined on an annual basis. Recommendations are made in reports to the Industry Director, DFO, and territory manager for the improvement of procedures and development of issues.

  2. LQMS – LQMS is a non-evaluative process that includes review of completed IC, and in-process or completed CIC examinations. IC reviews are conducted upon receipt of sampled closed case files at various IRS offices. CIC reviews are conducted at the examination site of selected cases with 25% or more of planned staff days used (re: IMS). Case review results, which determine LB&I’s Balanced Measurement score, are summarized and reported quarterly with recommendations made in reports to the Industry Director, Director Field Operations and territory manager for improvement of procedures and issue development.

  3. Procedures - The integrity, independence, and objectivity of the reviewer must be preserved. Reviewers must not vary from regular procedures by orally resolving issues. Differences should be documented. Reviewer's memoranda and team manager/team member replies should be prepared and made a part of the case file.

  4. LB&I Auditing Standards - The team manager is responsible for reviewing the case for compliance with the LB&I Quality Measurement System (LQMS) Auditing Standards. The Team Manager Checksheet is mandatory for both CIC and IC cases. Form 13327 (Administrative Procedures Input Document) will be completed contemporaneously during the course of the examination. The form is signed by the Team Manager and Examiner. More information is available from the LQMS website at http://lmsb.irs.gov/hq/pqa/2/default.asp .

  5. Examination Policies and Procedures section manages LB&I programs and processes that occur during compliance assurance activities.

    • This includes Joint Committee Review. See: Joint Committee Home Page.

    • Post-filing Workstream – Two groups of analysts provide support to LB&I team members on a wide range of procedural issues. See: Post-Filing Workstream Home Page.  (03-01-2006)
Forwarding for Appeals Actions

  1. Preparation of 30-Day Letters - The team manager has responsibility for the preparation and delivery of the 30-Day letter to the taxpayer. 30-Day Letters will be expeditiously prepared and mailed according to existing procedures. The case will be included in the 30-Day Letter suspense files at the group level and updated to status 13 on ERCS after the mailing of the 30-Day Letter to the taxpayer.

  2. Protest - The following actions will be completed when a protest is received from the taxpayer:

    1. The adequacy of the protest and its compatibility with the examiner's report must be considered. All discrepancies and factual differences should be reconciled and resolved before the case is transmitted to Appeals. Any written response prepared by the team manager or the examination team will be sent to the taxpayer. Such information could help in settling the case.

    2. The team manager or team coordinator will review and respond in writing to new information or issues raised in the protest. The response is not intended to restate positions taken in the RAR or Transmittal Letter, but to address new information and/or new issues raised in the protest. The protest may include new information not previously brought to light. It will be appropriately considered to ensure complete development prior to Appeals consideration. Area Counsel is available to assist in analyzing and responding to new information or issues raised in the protest.

    3. Responses, where applicable, will be secured from specialists, including international examiners, engineers, economists, appraisers, etc., who helped to determine the position on protested issues or who provided background data, assumptions, etc., used to formulate those positions. A copy of the written response will be provided to the taxpayer and included in the administrative file with the protest.

    4. Additional documents and records may be secured. New issues will be raised when appropriate. Similarly, if it is determined that an issue has no merit it should be conceded and the tax recomputed.

    5. The team manager should be aware that the lack of an adequate review and response to the protest is a reason for returning jurisdiction of the case by Appeals.

    6. The response will be sent to the taxpayer prior to forwarding the case to Technical Services. Information of a confidential nature should not be incorporated in the response but should be included in the Transmittal Letter or discussed with Appeals during the pre-Appeals conference (following ex parte rules).

  3. Additional response time - The taxpayer may request an extension of time in which to file a protest. The team manager may approve the request based on the facts and circumstances in each case. A statutory notice of deficiency may need to be issued. The LB&I examination team or examiner should contact Centralized Case Processing for guidance.

  4. Primary case - The team manager should forward the entire group of related entities in the case simultaneously to Appeals.

  5. Team manager assistance - The Appeals office serving the taxpayer is responsible for consolidating all cases in the group. The team manager assists in the following ways:

    1. Provide background information (if needed),

    2. Provide that part of the examination plan which contains a capsule history of the taxpayer,

    3. Provide information on how workpapers are organized, and

    4. Prepare a concise synopsis of the overall case (if requested).  (03-01-2006)
Closing Actions

  1. Tax Returns - All returns associated with the LB&I examination should be closed in coordination with the primary examination team. This includes both those examined and those surveyed. When the taxpayer's copy of a return is inspected but not examined, appropriate comments should be made in the examination plan and planning file and in the transmittal letter to the examination report.

  2. Employment tax returns – These returns are generally controlled by the employment tax specialist and closed by the employment tax team member assigned to the case.

  3. Excise tax returns – These returns are generally controlled by the excise tax specialist and closed by the excise tax team member assigned to the case, except for excise tax on Form 5330 controlled by Employee Plans.

  4. Tax exempt, pension returns – These returns are not controlled by the LB&I team. Closing is completed by the TE/GE team assigned to the case.

  5. Other returns - Other types of returns may be controlled by other specialists that are closed separately from the income tax files.  (12-29-2009)
Closing Agreements - Process

  1. A Closing Agreement, Form 906, must be signed and filed in triplicate. All copies must have the original signatures.

  2. Upon approval of the Closing Agreement, the original copies are processed in the following manner:

    1. One original copy should be sent to the taxpayer. This action should be recorded (e.g. keep a copy of the transmittal letter in the files, note this in your activity record, etc.).

    2. One original copy should be attached to the last examined return in the file covering a year to which the agreement pertains (back with the top of the form affixed such that one can see the printed "Form 906" notation). Write in red on the top margin on all of the other returns "SUBJECT TO FORM 906 CLOSING AGREEMENT ATTACHED TO 20XX RETURN" .

    3. One original copy should be sent to the DFO having jurisdiction over the taxpayer. The DFO should maintain a folder for Closing Agreements.  (03-01-2006)
Conference with Appeals

  1. Meetings with Appeals – LB&I team managers and agents may meet with Appeals before the Appeals process begins and after it is concluded in some circumstances.

  2. RRA 98 – Changes brought about by RRA 98 Sec. 1001 give the taxpayer the opportunity to be a party to all taxpayer related communications between LB&I and Appeals (See Rev. Proc. 2000-43).  (03-01-2006)
Procedures for LB&I Cases

  1. Actions required by RRA 98 - As a result of RRA 98 Sec. 1001(a)(4), ex parte communications between Appeals Officers and other IRS employees are prohibited to the extent that such communications appear to compromise the independence of the Appeals Officer. The following pertains to the ex parte rules:

    1. Ex parte communications are communications that take place in the absence of the taxpayer or the taxpayer’s representative. This prohibition is not limited to oral communications but applies to any form of communication, oral or written (manually or computer generated).

    2. The team manager will notify the taxpayer/representative and give the taxpayer/representative the opportunity to attend any pre-conference meeting with Appeals. This is to ensure an independent Appeals function within the IRS.

    3. The taxpayer may waive the ex parte restrictions.

  2. Purpose of the pre-conference - The pre-conference is to discuss the issues, protest and examination team's written response to the protest. A frank discussion of the issues and particular facts and circumstances surrounding the case development will add to the Appeals Officer’s knowledge of the case. The need for any additional development, resources, specialists or expert witnesses will be discussed at this meeting.

  3. Communications - It is expected that the meeting will serve to establish lines of communication between Appeals and the examination team that will be maintained throughout consideration of the case.

  4. Procedures - Examination team participants should share their views on the disputed issues, including their assessment of litigating hazards and the strategies involved in setting up adjustments on particular issues. However, the conference should not be used as a vehicle for securing a commitment from Appeals to defend any particular issue, committing to particular settlement positions, or otherwise negotiating the settlement posture of Appeals on the case.  (03-01-2006)
Requesting a Pre-Conference

  1. Criteria - Subject to the ex parte communication provisions of RRA 98, unless an exception is agreed to between LB&I and Appeals, a pre-conference will take place on all LB&I cases designated by Appeals as Appeals team case leader cases. Generally, these are cases with deficiencies of $10 million or more and have more than 20 significant issues.

  2. Exceptions - Conferences may be requested on other LB&I cases by the team manager. The Appeals team case leader will be responsible for arranging the conferences on Appeals team leader cases. The meeting for other cases will be arranged by the team leader/Appeals officer following a written request to the team manager for the conference or the receipt of a written request.

  3. No pre-conference - The team manager and Appeals may agree that a pre-conference would not be useful in a given case in which a conference is required, the file should be documented with a memorandum specifying that no pre-conference is desired by either LB&I or Appeals and signed by appropriate officials from each function.

  4. Other cases - These procedures do not prohibit requesting conferences on other types of cases e.g., cases with industry-wide impact, specialized industries, coordinated issues or cases with significant issues.  (03-01-2006)
Participation in Pre-Conference

  1. LB&I - LB&I participants will usually consist of the team manager or the team coordinator, other LB&I team members, and specialist managers, as applicable.

  2. Appeals - The Appeals team will usually consist of the Appeals team case leader or team leader and Appeals officer assigned to the case. Participation by management will be determined by industry guidelines.

  3. Counsel - Area Counsel will be invited to participate in pre-conferences on all docketed cases. In non docketed cases either the team manager or Appeals may request the participation of Area Counsel.  (07-22-2011)
Other Communications with Appeals

  1. New information – It is important that LB&I and Appeals maintain an open dialogue. The ex parte rules under Rev. Proc. 2000-43 must be followed. New and significant information which was not made available during the examination, may be presented to Appeals in an effort to secure a return of the case (see Policy Statements P-8-2 and P-8-3 in IRM 1.2.17). This information should be referred to the examination team for timely review and comment. Every effort should be made to handle these requests expeditiously and on a priority basis.

  2. Taxpayer contact - The examination team may have to make additional contacts with the taxpayer to perform a complete review of the additional information. The taxpayer will be notified when Appeals sends the information to the examination team for consideration. Remember that all communications, oral and written, must be shared with the taxpayer. The examination team's evaluation of the information will also be shared with the taxpayer.  (03-01-2006)
Applications to Docketed Cases

  1. The petition - The examination team is not expected to review and comment on the taxpayer's petition before receipt of the case by Appeals. However, Appeals will provide them with a copy of the petition for review and comment in docketed cases to which these procedures apply.

  2. LB&I – The examination team will provide a review of the petition to the extent it has knowledge of the facts and issues in dispute.

  3. Planning the timetables - A key part of the pre-conference meeting will be planning the timetables and resources needed to respond to new information that may be presented by the taxpayer. Recognition will be given to time frames established by the rules of the Tax Court in establishing priorities for the examination of new information and response to taxpayer positions.  (03-01-2006)
Post Settlement Conference

  1. Conference goal - The purpose of the post-closing conference is to discuss the settlement reached and its subsequent impact on the taxpayer. The conference is intended to supply the examination team with information that may be helpful in the examination of the subsequent cycles of the taxpayer and to assist in identifying those issues that may be susceptible to resolution by application of settlement authority.

  2. General rule - A post-closing conference will be held on all CIC cases after final disposition by Appeals unless an exception is agreed to between LB&I and Appeals. Area Counsel will be invited to attend this conference on all docketed cases. Area Counsel may attend these meetings in non docketed cases at the request of either the examination team or Appeals.

  3. Purpose - This conference is not intended to be a critique of the settlement nor is it intended to replace LB&I's dissent procedures. It is solely intended to communicate the resolution of the case to the examination team.  (03-01-2006)
Direct Examination Time for Conference Procedures

  1. Activity code – The team coordinator and team members should use Activity Code 598, Pre/Post Appeals Conferences to charge time for these meetings.  (12-29-2009)
Dissent Procedures for Disagreements with Appeals Determinations

  1. These procedures are intended to provide LB&I examination personnel a process for voicing their concerns about an Appeals settled case. These procedures are not intended to replace any informal procedures currently in use at the local level. These formal procedures are to be used when the informal process fails to resolve significant concerns about the Appeals disposition of an issue(s).

  2. Disagreement with an Appeals disposition will be expressed in a written dissent memorandum to the appropriate Appeals Area Director, and will clearly state the nature of the dissent and the supporting rationale, including:

    1. Citation of the specific facts which should have been considered, or given more weight, if LB&I believes Appeals did not properly consider the facts.

    2. Citation of the applicable law (i.e. Code Sections, Regulations, Revenue Rulings, Court Cases, etc.) if LB&I believes there was an error either in the interpretation or application of the law by Appeals.

  3. Dissents will be forwarded to the appropriate Appeals Area Director, through the LB&I Territory Manager within 90 days (extensions may be mutually agreed upon) of the receipt of an Appeals Case Memorandum (ACM). The Appeals Area Director will forward the dissent to the appropriate Appeals Team Manager (ATM).

  4. Upon receipt of a dissent, the ATM will prepare a written response to the dissent, addressing each of the concerns expressed therein. This written response should be completed and transmitted through the Appeals Area Director to the LB&I Territory Manager within 90 days of receipt of the dissent by Appeals. A status report with an updated ECD will be provided to LB&I when the 90 day response time is not practical under the circumstances.

  5. Once the response is received from Appeals, LB&I may, within 15 days, request a post Appeals conference by contacting the Area Director.

  6. The above procedures should, in most instances, resolve the concerns of both LB&I and Appeals regarding the disposition of a given case. Where a resolution can not be reached, the dissent may be elevated to the appropriate LB&I Director of Field Operations and Appeals Director of Field Operations.

  7. These procedures do not preclude any of the activities already in place involving the Advisory Boards or the exchange of information between Compliance analysts and Appeals analysts.  (03-01-2006)
Assessment of Team Members Performance

  1. Performance assessments - At the conclusion of each LB&I case involving team members on detail from other groups or business operating divisions, the team manager will consider whether written comments regarding the team members work should be submitted to the employee’s manager.  (03-01-2006)
Performance Assessment

  1. Not a substitute for annual appraisal - The manager of an employee detailed to a LB&I examination needs feedback for use in preparing the annual appraisal of that team member. The team manager's assessment is not intended to be a substitute for the overall performance assessment but rather is one of the factors that will be considered in the total evaluation subsequently prepared by the employee’s manager.

  2. Contribution to the examination - Written comments should reflect not only how well the team member performed, but what he or she contributed to the team effort in planning and executing the examination.

  3. Feedback from team coordinators – Team managers may ask for feedback from team coordinators about the work performed by team members (including specialists) assigned to their case.  (03-01-2006)
Criteria for Assessment

  1. 25 staff days - A written assessment is required for any team member from another group who spends more than 25 staff days on an LB&I case. The team manager's assessment should pertain to the team member's contribution to the team effort and final product.

  2. Specifics - An assessment should relate to specifics and should be informative regarding such matters as:

    1. Name of case,

    2. Type and complexity of assignment,

    3. Time spent by team member and period covered,

    4. Manner in which assignment instructions were adhered to,

    5. Method and frequency of communications maintained between team member, team coordinator and team manager

    6. Initiative and imagination displayed in planning the work, in developing audit procedures, and in carrying out the assignment, and

    7. The team member's overall contribution to the team effort and ability to work in a team environment.  (03-01-2006)
Performance Observation

  1. Information available - The team manager, with feedback from senior team coordinators, is expected to assess the work performed by each team member. To assess the performance of team members from other groups, specialists, and support agents, team managers and senior team coordinators consider the following items:

    1. Communication skills

    2. Technical skills

    3. Organizational ability

    4. Professionalism and interpersonal relations  (03-01-2006)
Communication Skills

  1. What to look for - Examples of communication skills that may be used for evaluation purposes are as follows:

    1. Quality and completeness of information document requests (IDRs)

    2. Quality of the examination report, i.e., preparation of Forms 5701/Notices of Proposed Adjustments (NOPAs)

    3. Discussions of issues with taxpayer

    4. Discussion of issues with team coordinator and other team members  (03-01-2006)
Technical Skills

  1. Factors to consider - Technical skills may be evaluated considering:

    1. Consequence of issues developed

    2. Development of factual support for issues

    3. Quality of procedures employed

    4. Research applied to findings.  (12-29-2009)
Organizational Ability

  1. Factors to consider - Organizational abilities are demonstrated by:

    1. Orderly approach to the examination

    2. Presentation of findings

    3. Organization of workpapers

    4. Ability to concentrate on material items.

    5. Utilizing Risk Analysis for a risk based/issue focused approach.  (03-01-2006)
Professionalism and Interpersonal Relations

  1. Factors to consider - Professionalism and interpersonal relations are demonstrated by:

    1. Harmonious relationships with other team members, team manager, and the taxpayer

    2. Manner in which the team member kept the manager and team coordinator informed about activities

    3. Demonstrated reliability

    4. Ability to work well in a team environment  (03-01-2006)
Other Factors to Consider

  1. Format - The narrative form should be used in the assessment of a detailed team member's performance during an LB&I case assignment.

  2. Timing of Assessments – Normally, written assessments will be performed at the end of an examination. There may be times when a detailed employee’s manager will request feedback before the detail is completed. This could occur if the employee applies for a new job or the annual appraisal is due. Other aspects to keep in mind are:

    1. There should be a continual exchange of viewpoints between the team manager and team members directed toward the identification of strengths and weaknesses in both the case management and work accomplishment areas. This will enable team managers to take corrective action on a current basis and will provide them with background material for the narrative comments.

    2. Some team members complete their assignments long before the conclusion of the examination. The team manager should provide the employee’s manager with evaluative comments when the assignment is completed. This will give the employee’s manager more current information about the employee’s performance for use in preparing appraisals.

  3. Recognition for Outstanding Work - The team manager should recognize outstanding work and recommend awards when appropriate. Consideration should be given to the contribution of all team members in recommending awards, including individual and group awards. Remember that:

    1. Performance awards are primarily the responsibility of the manager of an agent detailed to an examination team.

    2. The primary team manager should not hesitate to recommend that an award be considered and should contribute the basic information needed to initiate the appropriate award.  (03-01-2006)
Post Examination Management Critique

  1. Two meetings -The team manager holds two meetings to accomplish the post-examination critique; one with the examination team and one with the taxpayer. The critique should be held during the final stages of the examination or within thirty days after the case is closed from the field. Critiques should be held even though there is an overlapping of examinations or the examination is in the last cycle before decontrol. This process would not apply to IC cases although it could be used at the discretion of the team manager to gain insight into IC customers’ service needs and issues.

  2. Participants - Those involved in planning and executing CIC examinations are the best sources of reliable information to be used to evaluate the effectiveness of the examination.  (03-01-2006)
Post Examination Critique Objectives

  1. Subsequent examination - The single most important objective of the critique is to establish the groundwork for improving the quality of subsequent examinations. This can be accomplished by:

    1. Determining the effectiveness of the present examination

    2. Developing recommendations for improving the subsequent examination

    3. Obtaining data that will be useful to the subsequent examination team

    4. Bringing the taxpayer's attention to problems encountered and discuss possible solutions

    5. Giving the taxpayer an opportunity to present problems caused by the examination

    6. Evaluating the effectiveness of computer programs  (03-01-2006)
Critique with the Examination Team

  1. Set out in examination plan - The critique should be provided for in the Examination Plan in Section 2, Instructions to Team Members. It should identify persons who will participate in the critique and the specific areas each will cover.

  2. Documentation - Each team member should be instructed to maintain a folder containing summaries of topics and related background material to be used in preparation for the post examination critique. This folder should be kept up-to-date throughout the course of the examination, since recollections diminish as time passes. It should contain any subject matter which might be helpful in improving the efficiency and effectiveness of the subsequent examination such as:

    1. Recommendation that certain probes, accounts or issue development be eliminated or expanded,

    2. Suggestion that different examination procedures or methods be adapted (Note: Form 4764B, block C, should be used for this purpose),

    3. Identification of special computer programs that should be employed and any additional records that will be needed,

    4. Recommendations regarding time requirements,

    5. Identification of potential issues based on information obtained during the current examination, and

    6. Suggested adjustments to the scope or depth of the examination.

  3. Specific instructions - Team managers may want to incorporate specific instructions to ensure particular coverage. Furthermore, they should review the originally planned critique to ensure adequate coverage of modifications made to the plan and other important incidences that arose during the examination, such as previous differences or disputes involving team members and the taxpayer.

  4. Combining with opening conference - Because the critique's emphasis is on improving subsequent examinations, combining it with the next cycle's opening conference may be a useful technique. The similarities in the objectives of the two meetings make the critique an important source of information for the next cycle's team members. Where applicable, consideration can be given to combining the two meetings or portions of them whether or not the same team manager is assigned to the subsequent examination.  (12-29-2009)
Scope of Critique

  1. Agenda - The team manager and team members should keep in mind that the primary objective for conducting the critique, is to establish the groundwork for the next examination. The recent examination must be thoroughly evaluated with emphasis on how subsequent examinations can be improved. Some of the more important topics to be discussed during the critique are listed below:

    1. Were results commensurate with the time spent?

    2. Were examination procedures efficient and effective? This appraisal should be in sufficient detail to provide the team manager of the subsequent examination a basis for adopting new examination techniques and planning new specialized computer programs.

    3. Did the examination plan effectively monitor and control the examination, provide adequate guidelines to team members, facilitate a more orderly examination, and adequately serve as a vehicle for coordination?

    4. How were taxpayer/team member relationships? This discussion should be approached from the standpoint of identifying corrective actions the next team manager can take in solving or avoiding problem areas.

    5. Were responses to information document requests timely? Problems in this area are a major concern of team managers. Servicing the information needs on a timely basis is necessary to effectively utilize personnel resources and to complete the examination within the planned time frame. Here again, the next team manager will welcome suggestions on how improvement can be achieved.

    6. How effective was the assistance or support participation? If there was no assistance or support, should the next examination provide for participation? This discussion should involve: 1) analysis of time vs. results; 2) the need for improved communication, cooperation or commitment; and 3) expected or resulting benefits of support group participation.

    7. What estimate of time is suggested for the next examination? This subject is best left until the end since some of the discussions and resulting recommendations will involve expenditures of more or less time than spent on the completed examination. The team manager will need this estimate for advance planning and program planning purposes.

    8. Were all agreed and unagreed issues adequately documented? Determine whether workpapers were adequately prepared during issue development, and if the issues in the RAR were adequately explained avoiding additional time and potential loss of tax revenues.

    9. Was there timely issue resolution during the audit? Did team members identify, develop and obtain the assistance of expertise needed for timely resolution?

  2. Potential offset issues - Potential offset issues that exist which should be considered by examiners in the event claims are subsequently filed by the taxpayer should be documented in this critique.  (03-01-2006)
Participants in Critique

  1. Participants - The participants should be those directly involved in the examination with a significant role. Service personnel who might attend are:

    1. Team manager

    2. Team coordinator

    3. Team members, including those from support teams (possibly via conference call)

    4. Specialist and specialist managers

    5. Territory manager

    6. Other participants, including the team manager or team members for the subsequent examination cycle if they differ from the current team

    7. Area Counsel

    8. Examiners from other divisions  (03-01-2006)
Critique with Taxpayers

  1. Participants - The post examination critique with the taxpayer should be held separately. Participants should include the team manager, territory manager and appropriate taxpayer officials. It may include the team coordinator, specialty managers, and higher level Service management in some cases. The team manager for the subsequent examination may also be invited.

  2. Agenda - A list of items to discuss during the critique with the taxpayer is contained in Exhibit 4.46.7-2. Items to be discussed in the critique should be given to the taxpayer at the opening conference. The taxpayer should be encouraged to maintain critique notes during the course of the examination.

  3. Customer Satisfaction Survey - The taxpayer should be advised that the CIC case will be part of a pre-examination survey following the pre-planning meeting and a post closing survey conducted by an outside contractor for LB&I. All responses are confidential and intended to assist LB&I in improving customer satisfaction. See Exhibit 4.46.7-3 for details on the Customer Satisfaction Survey.  (03-01-2006)
Documentation of Post Examination Critique

  1. Minutes - A written report is required on each case and should be prepared by the team manager at the conclusion of the post examination critique. The report should, at a minimum, include:

    1. The subjects discussed

    2. The conclusions reached

    3. Recommendations and instructions to the next team

    4. Identification of agreed recurring issues (these must be discussed with the taxpayer)

    5. Taxpayers recommendations and comments

    6. Identification of the participants  (03-01-2006)
Carryover Adjustment Schedule

  1. Preparation of Form 6095 - Carryover and Recurring Adjustment Schedule, Form 6095 or other suitable schedule which fits the particular needs of the case should be prepared at the conclusion of the examination. A copy of the schedule should be placed in the planning file for follow-up by the succeeding team.

  2. Taxpayer’s copy - A copy of Form 6095 should be given to the taxpayer along with the schedule of required adjustments and corresponding workpapers. By providing a copy to the taxpayer, the taxpayer could:

    1. Compute carryover adjustments for subsequent years. Those adjustments might involve depreciation computations on items capitalized in prior years or certain accruals.

  3. Subsequent team - The completed schedule would be reviewed along with the Revenue Agent Report. This will provide subsequent team members with the confidence that all carryover/rollover adjustments have been identified.  (03-01-2006)
Recurring Issues

  1. Discussion of recurring issues - Agreed recurring issues should be discussed with the taxpayer during the post examination critique. Refer to IRM

  2. Inadequate records - The taxpayer should be advised in writing relative to the areas where the accounting procedures or practices are inadequate or need to be changed. The letter should be from the Industry Director and should be directed to the principal corporate officer responsible for taxes.

  3. Follow-up - Examination of returns filed subsequent to the receipt of the letter that indicate the taxpayer failed to correct the procedures or practices, appropriate penalties should be pursued.  (03-01-2006)
Disposal of Critique

  1. File Retention - The team manager should retain the report in the planning files for use by the subsequent team manager unless an Industry Director has issued other specific guidance on the disposition of critiques.

Exhibit 4.46.7-1 
Records Transmittal and Receipt Form

This link shows an example of a blank Records Transmittal and Receipt Form, SF 135.


This link is to the instructions for the SF 135, located on the back of the form.


Exhibit 4.46.7-2 
Agenda for Post Examination Critique

Agenda Topics
1 Information Document Request (IDR) Form 4564:
a. Prioritization
b. Clarity
c. Timeliness -- issuance and responses
d. Appropriate scope
2 Notice of Proposed Adjustment -- Form 5701:
a. Clarity
b. Discussion and resolution of issues
c. Timeliness -- issuance and responses
d. Agreement on facts
e. Accelerated issue resolution
3 Progress Meetings:
a. Frequency
b. Content - address problems and concerns
4 Specialists:
a. Scheduling
b. Discussion of issues
c. Technical Advisor
5 Assistance or Support examinations:
a. Timeliness
b. Scope and depth
c. Taxpayer support
6 Data processing:
a. Effectiveness of techniques
b. Access/resources
7 Accommodations:
a. Space and equipment
b. On-Site visitations
8 One-stop Service
9 Examination Team:
a. Rotation of personnel
b. Team expansion/contraction
c. Diversion of personnel
10 Scheduling/responsibility:
a. Peak period coordination
b. Rollover computations
c. Interviews of corporate officials
d. Cycle size-projected

Exhibit 4.46.7-3 
Customer Satisfaction Survey

Customer Satisfaction Survey Information with a comparison of procedures for CIC and IC cases.

In an effort to improve on the balanced measures, LB&I identified the need to survey our external customers on an ongoing basis. The Customer Satisfaction survey is the primary vehicle we use to measure Customer Satisfaction and Dissatisfaction. This initiative is part of the Service-wide effort to establish a system of balanced measures as mandated by RRA 98. It is also a result of Executive Order 12862, which requires all government agencies to survey their customers and incorporate the results in their process improvement efforts.

  IC Survey CIC Survey
Which customers are contacted for the survey? Random Sample of closed cases; usually around 1,200 in a fiscal year. Census of all CIC cases preplanned and closed in fiscal year.
When Cases closed Oct - Mar, survey conducted in May-June.
Cases closed Apr - Sept, survey conducted in Nov - Dec.
Cases preplanned or closed in Oct - Mar, survey is conducted in May-June.
Cases preplanned or closed in Apr - Sept, survey conducted in Nov - Dec.
How is survey administered? Via telephone by trained interviewers. Via telephone by trained interviewers.
Results Reported Bi-annual report distributed to Industry and Field Specialist HQ offices. Summary information is posted on LB&I - PAIR web page. Annual reports distributed to Industry and Field Specialist HQ Offices. Summary information is posted on LB&I - PAIR web page.

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