4.50.1 Campaign Development Process

Manual Transmittal

May 04, 2018

Purpose

(1) This transmits new IRM 4.50.1, LB&I Compliance Integration, Campaign Development Process.

Background

LB&I Division made several business process changes in February 2016. Campaigns are the new LB&I business process managed by the Assistant Deputy Commissioner Compliance Integration.

Material Changes

(1) This is a new IRM.

Effect on Other Documents

This IRM incorporates the LB&I commissioner memo "Interim Guidance with Respect to Separation of Duties" , dated November 13, 2017. This guidance is now final.

Audience

LB&I employees

Effective Date

(05-04-2018)

De Lon Harris
Assistant Deputy Commissioner Compliance Integration
Large Business and International Division (LB&I)

Program Scope and Objectives

  1. This IRM provides an overview of the Campaign Development Process. The Assistant Deputy Commissioner Compliance Integration (ADCCI) is responsible for administering the campaign development, administrative and governance processes.

  2. A key focus of LB&I’s mission is to identify the highest potential compliance risks among LB&I taxpayers and to assign resources to address these potential risks. Campaigns are a component of this strategy.

  3. ADCCI ’s responsibilities include planning, guiding, developing, directing and implementing a comprehensive and integrated strategic research and compliance program, including campaign project management activities.

  4. ADCCI will monitor the process to ensure that LB&I’s focus is on identifying compliance risks that impact material segments of LB&I taxpayers, rather than risks determined at the individual taxpayer level. This will allow LB&I to assign its limited resources to the greatest potential compliance risks in the LB&I taxpayer population.

  5. Audience: The primary users of this IRM are LB&I examiners and personnel in examination-related functions. Other IRS employees affected by LB&I’s shift toward issue-based identification of highest compliance risk and implementation of campaigns will also use this IRM.

  6. Policy Owner: Assistant Deputy Commissioner Compliance Integration (ADCCI), LB&I

  7. Primary Stakeholders: The primary stakeholders are all LB&I personnel.

  8. The ADCCI organization is comprised of three components:

    1. Program Management Office (PMO)

    2. Data Solutions (DS)

    3. Compliance Planning and Analytics (CP&A)

  9. Campaigns involve a thorough analysis of data to support the identification and evaluation of potential compliance risk within the LB&I filing population. Campaigns consider potential treatment streams, deployment of resources, identification and delivery of training, mentoring, networking, audit tools, metrics, as well as a robust feedback mechanism to ensure all elements of a campaign are effective and continuously improved. The Campaign Development Process incorporates the agile model by requiring input from users of the Campaign Development Process. Agile development is a methodology that anticipates the need for flexibility and applies a level of pragmatism into the delivery of the finished product. The agile model promotes an environment of continuous collection, review and analysis of data and feedback to enhance selection of work.

  10. Work identified under the Campaign Development Process is mandatory and must be completed within the approved treatment streams.

  11. The Campaign SharePoint Portal was opened to all LB&I employees on April 18, 2016 for inputting campaign submission ideas.

  12. The Campaign Development Process objectives include:

    1. Providing LB&I workload focusing on strategic issues while balancing resources

    2. Providing a robust feedback mechanism for capturing input on the effectiveness of data analysis, issue identification filters, treatment streams, training, tools, and other matters so that campaigns can be refined, improved or reconsidered quickly.

  13. Fairness and integrity are built into the foundation of the Campaign Development Process. See IRM 1.2.10.37, Policy Statement 1-236. Throughout the Campaign Development Process there are checks and balances with decisions being documented at many points. For example:

    • Triage and initial scoping of the issue

    • Prioritization of the issue

    • The approvals of return selection filters for the population

    • Compliance Integration Council’s decision to move forward or not with the campaign

    • The use of tailored treatment streams

    • Resource needs

    • The identification and classification of risks

  14. Program Owner: The Program Management Office (PMO) within ADCCI is responsible for the administration, procedures and updates to campaigns.

  15. The following are commonly used terms and acronyms.

    Term Definition
    Campaign A campaign is a plan focused on compliance issues, using the appropriate resources and a combination of treatment streams to achieve a desired outcome.
    Campaign Owner A campaign owner is the practice area responsible for the execution and reporting of campaigns approved by the Compliance Integration Council. Once a campaign submission is approved, it becomes an official campaign.
    Submission Owner The owner is the practice area that has been assigned to review and assess the campaign submission. The submission does not become a campaign until the Council approves it.
    Acronym Definition
    ADCCI Assistant Deputy Commissioner Compliance Integration
    Council Compliance Integration Council
    CDF Campaign Development Form
    CDP Campaign Development Process
    CIP Compliance Initiative Project
    CP&A Compliance Planning & Analytics
    DS Data Solutions
    PA Practice Area
    PBS Program and Business Solutions
    PMO Program Management Office
    PSP Planning and Special Projects
    RICB Risk Identification Control Board
    RICB Part I Approval to Develop and Test Filter
    RICB Part II Approval of the Campaign Filter
    RICB Part III Modifications (Previously Approved Part I or Part II Changes)
    SME Subject Matter Expert

Authority

  1. The authority for the Campaign Development Process comes from the Compliance Integration Council (the "Council" ). The Council serves as the governing body for the identification, selection, assignment, and allocation of resources for all compliance and enforcement activities for LB&I taxpayers. The Council considers campaign submissions and recommends approval or other actions commensurate with analyzing campaign and compliance risk.

  2. At the direction of the Council, the Campaign Development Process (CDP) has replaced the Compliance Initiative Process (CIP) (see IRM 4.17.1) for the identification of potential areas of non-compliance in LB&I.

  3. The Council Charter lists the following LB&I officials as members of the Council:

    • Division Commissioner

    • Deputy Division Commissioner

    • Assistant Deputy Commissioner Compliance Integration – Council Chair

    • Director, Program and Business Solutions

    • Assistant Deputy Commissioner International

    • All Practice Area Directors

    • LB&I Division Counsel

ADCCI Responsibilities within Campaign Development Process

  1. ADCCI plays a critical role in the CDP, aligning work with LB&I’s strategic goals and collaborating across the various areas of LB&I to improve taxpayer compliance.

  2. ADCCI is responsible for several actions within the CDP, including but not limited to:

    • Analyzing the submissions by triaging and scoping

    • Developing return selection filters

    • Supporting the practice areas with metrics, feedback mechanisms, campaign development form (CDF) review and presentation to the Council

    • Managing data sources

    • Delivering workload

    • Assisting the Council

    • Maintaining the CDF SharePoint site

Practice Area (PA) Submission and Campaign Owner Responsibilities

  1. Each submission owner is responsible for the build-out and assessment of the campaign submission, including documentation of these steps on the CDF on the SharePoint portal. PAs will collaborate with ADCCI as outlined above.

  2. Each campaign owner is responsible for the execution of the campaign, including periodic reporting to the Council. Modifications of the campaign may require subsequent Council approval.

Risk Identification Control Board (RICB)

  1. The mission of RICB is to ensure the enforcement selection process is an equitable and fair process to all taxpayers under Policy Statement 1-236, Fairness and Integrity in the Enforcement Selection. RICB will only approve work using criteria based on tax laws and treasury regulations and not on organization names or their policy positions. The goal of RICB is to ensure that the criteria used for workload selection promotes public confidence that tax laws are being applied impartially.

  2. The RICB seeks to develop repeatable risk identification methods for integration into ongoing workload identification processes. These efforts might be administered within Compliance Planning and Analytics (CP&A) or by other units in LB&I, including the PAs. The RICB plays a role throughout the enforcement process, not only in the development of a campaign filter but also in monitoring their effectiveness, proposing changes or retiring the campaign filter.

  3. In carrying out its role, the RICB reviews requests for new filters and rules to develop campaigns. The RICB makes recommendations to the PAs whether and how to proceed with, modify, or terminate filters. Only after the RICB approves a filter can return data information be shared with the PA.

  4. The RICB is chaired by the CP&A director’s senior technical advisor and is comprised of five senior program managers from ADCCI and two PA program managers in accordance with the RICB charter.

  5. The RICB process allows the development, refinement and testing of filters.

Program Objectives and Review

  1. Program Reports: Within ADCCI, internal systems are used to house documents related to CDP. Access to these systems requires Online 5081 approval.

  2. LB&I ensures that adequate and effective controls are in place during the development, approval and execution of campaigns. Practice areas will provide resources, monitor and report results, and take appropriate actions as submissions move through the CDP.

  3. Program Effectiveness: The program goals are analyzed and addressed in stages 1-6 described in IRM 4.50.1.2. Documentation will include summary reports from PMO including related campaign metrics as well as periodic feedback from the campaign owner. The Council will consider the information from the Campaign Summary Report to determine whether the campaign should continue, be modified or be discontinued. PMO will maintain a portfolio of all active and discontinued campaigns. The PMO will document the decisions of the Council.

  4. Annual Review: The review of this IRM 4.50.1 occurs annually to ensure accuracy and promote consistent tax administration. The ADCCI is responsible for this review.

Related Resources

  1. For additional information see:

    • ADCCI home page

    • Campaign Development SharePoint Portal at: https://program.ds.irsnet.gov/sites/lbiComplianceCampaigns/SitePages/Home.aspx

  2. Campaign mailbox: *LB&I Campaigns

Campaign Submission Development Process

  1. The Campaign Development Process consists of six stages which are further described in the following subsections.

    1. Campaign Proposal and Scoping

    2. Campaign Framework and Approach

    3. Campaign Approval

    4. Campaign Execution

    5. Campaign Monitoring and Assessment

    6. Campaign Conclusion

    These stages are depicted in Exhibit 4.50.1-1, LB&I Campaign Flowchart–High-Level Summary.

Stage 1: Campaign Proposal and Scoping

  1. The campaign development SharePoint portal is open to all LB&I employees to submit campaign ideas using Section A of the CDF. CP&A reviews all campaign submissions and performs the following functions

    1. Triages all submissions for accuracy and completeness

    2. Completes preliminary issue scoping of the estimated return populations (e.g., number of returns that would be filtered by type, estimated dollars at risk, etc.)

    3. Identifies and assigns the submission to a submission owner.

    .

Stage 2: Campaign Framework and Approach

  1. The processes included in this stage are not all-inclusive and all are not mandatory. Each campaign submission is unique and may require different processes or documentation. This document should be used as a guide to help determine what is needed for specific campaign submissions.

  2. Submission owner utilizes prioritization scoring matrix and recommends whether the campaign submission should move forward to development.

  3. Submission owner forms a campaign development team and receives the appropriate concurrence to develop the submission.

  4. Submission owner collaborates with CP&A to develop, test, modify or terminate the filters through the RICB process. RICB Part I and II approval is required before a campaign submission is presented to the Council for approval.

  5. The IRS has three main objectives surrounding workload selection:

    1. Selecting returns with the highest positive impact on tax administration

    2. Selecting work in an unbiased manner without retaliating against, or harassing a taxpayer (see IRM 4.1.5.3.1(3) and section 1203(b)(6) of the IRS Restructuring and Reform Act of 1998)

    3. Protecting the confidentiality of the criteria used to select work so taxpayers cannot easily avoid detection

  6. LB&I personnel must ensure fairness and integrity in the enforcement selection process per IRS Policy Statement 1-236.

  7. LB&I personnel must also adhere to guidance regarding separation of duties (see memorandum in Exhibit 4.50.1-2, Guidance with Respect to Separation of Duties) involving campaign workload selection. LB&I personnel are precluded from performing an examination of a taxpayer and advising, consulting, or mentoring during the examination of a taxpayer if they:

    1. Classified that taxpayer’s return, disclosure filing, or response to a soft letter for the purpose of selecting the taxpayer for examination

    2. Reviewed or approved the classification of the return

    3. Worked with unredacted RICB Parts I, II, or III data as part of the filtering process

  8. The submission owner will recommend treatment streams and determine resources, durations and schedules.

  9. The submission owner will identify training and tools, collaborate with ADCCI in establishing compliance goals, metrics and feedback-gathering frameworks.

Stage 3: Campaign Approval

  1. The submission owner presents the campaign submission, with PMO’s assistance if needed, to the Council for approval consideration.

  2. The PMO may review campaign submissions for presentation to the Council and posts the submission-related documents and final deck for presentation to the Council’s SharePoint site (restricted access).

  3. The PMO also provides the Council with summary reports of submission statistics.

  4. The Council reviews all parts of the CDF through the signature section, considers recommendations and votes to approve submissions as campaigns.

  5. Once a submission is approved by the Council, the CDF is completed and the campaign proceeds to Stage 4, Campaign Execution.

State 4: Campaign Execution

  1. The campaign owner determines how to execute the campaign based on the approved CDF. If filtering is involved, the campaign owner contacts CP&A to conduct return identification. CP&A assists with:

    1. Securing project and tracking codes

    2. Workload identification using approved return selection filters

    3. Classification of returns

    4. Assigning returns to the field

  2. LB&I personnel are precluded from performing an examination of a taxpayer and advising, consulting, or mentoring during the examination of a taxpayer if they:

    • Classified that taxpayer’s return, disclosure filing, or response to a soft letter for the purpose of selecting the taxpayer for examination

    • Reviewed or approved the classification of the return

    • Worked with unredacted RICB Parts I, II, or III data as part of the filtering process

  3. If filtering is not involved, the campaign owner continues with the approved treatment stream.

  4. The campaign owner develops any relevant tools, documents, and other campaign information needed to conduct the campaign.

  5. The campaign owner periodically reports out progress made on the campaign to the Council.

  6. If a campaign needs to be modified, the campaign owner submits the recommended changes for Council approval through the PMO. Examples of changes are:

    • Deviations in the number of returns for workload selection

    • Impact on resources

    • Changes in treatment streams

Stages 5 and 6: Campaign Monitoring, Assessment and Conclusion

  1. The Council considers progress and summary reports on all campaigns.

  2. The PMO provides the Council with campaign feedback and metrics to assist in that determination.

  3. The Council determines whether a campaign should be continued, modified, or terminated. The PMO records the Council’s determinations.

  4. CP&A provides post-campaign monitoring and periodic updates to the Council.

Additional Work Sources

  1. In addition to the high-risk returns identified by campaigns, additional work sources may be used to supplement inventory and balance coverage of the LB&I population.

  2. ADCCI may identify issues of significant impact to the LB&I population that warrant screening for all taxpayers within this population. These issues can be identified from all areas and individuals within LB&I, and/or networking interactions with specialists in technical areas. As issues are identified, further research and analysis are undertaken to determine whether the scope of the issue is significant to warrant campaign consideration.

LB&I Campaign Flowchart – High-Level Summary

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Guidance with Respect to Separation of Duties

November 13, 2017
MEMORANDUM FOR ALL LARGE BUSINESS AND INTERNATIONAL EMPLOYEES
FROM: DOUGLAS W. O’DONNELL /s/ Douglas W. O’Donnell
Commissioner, Large Business and International Division
SUBJECT: Interim Guidance with Respect to Separation of Duties

This document provides an overview of interim guidance on activities Large Business & International (LB&I) employees may perform to ensure adequate safeguards are in place for the proper separation of duties; particularly as they relate to workload selection and classification activities from other enforcement activities, including direct examinations. Observing the guidance ensures impartial workload selection, maintains appropriate confidentiality of the workload selection criteria, and allows LB&I to effectively leverage its labor and intellectual capital to deliver efficiently and strategically on its mission to increase voluntary tax compliance. A more detailed description of campaign activities and our workload selection guidance is contained in the attached Appendix (see Exhibit 4.50.1-3), Guidance for LB&I Personnel with Respect to Participation in Campaign Related Activities.

The IRS has some main objectives surrounding workload selection:

  • Selecting returns with the highest positive impact on tax administration

  • Selecting work in an unbiased manner without retaliating against, or harassing, a taxpayer (see IRM 4.1.5.1.1 and Section 1203(b)(6) of the IRS Restructuring and Reform Act of 1998)

  • Protecting the confidentiality of the criteria used to select work so taxpayer cannot easily avoid detection

  • Ensuring fairness and integrity in the enforcement selection process (see IRS Policy Statement 1-236)

Separation of duties concerns exist when personnel participate in classification and workload selection activities, and then also participate in the examination of the same taxpayer selected for examination [1]. Also, it is imperative that LB&I protect workload selection criteria from improper disclosure and ensure that proper controls are in place to keep the criteria confidential.

Therefore, LB&I personnel are precluded from performing an examination of a taxpayer and advising, consulting, or mentoring during the examination of a taxpayer if they:

  • Classified that taxpayer’s return, disclosure filing, or response to a soft letter for the purpose of selecting the taxpayer for examination [2]

  • Reviewed or approved the classification of the return, [3]

  • Worked with un-redacted RICB Part I, II, or III data as part of the filtering process. [4]

LB&I will not consider the activities listed below as classification or workload selection activities. Therefore, LB&I personnel can perform these duties and be involved in performing an examination of the taxpayer and/or advising, consulting, or mentoring during the examination of the taxpayer:

  • Campaign submissions – submitting, triaging, scoping, evaluating, and developing campaign submissions [5]

  • Filtering – the development of filter formulas via RICB Part 1, II, and III (developing, testing and modifying) and seeing redacted RICB Part I, II, and III filter results [6]

  • Pre-classification activities – preparing classification materials including check sheets and guidelines [7]

  • Return risk assessment – reviewing a return that has been selected for examination for any additional risk for purposes of determining whether to examine or survey the return, [8] and

  • Disclosure filing reviews – initial screening, sorting , grouping and analyzing for the sole purpose of narrowing the population into workable groups. These actions are different from classifying the disclosures to select returns for examination [9]

This guidance is effective immediately. Employees should contact their manager if prior or current activities performed in the context of campaign development does or did not comply with the rules outlined above.

If you have any questions or concerns about this guidance, please submit them via the LB&I Feedback/Input tool on the Getting It Right Together website.

[1] See Exhibit 4.50.1-3, Campaign Personnel and Permitted Activities.

[2] See Exhibit 4.50.1-3, Disclosure Review and Classifiers.

[3] See Exhibit 4.50.1-3, Managers.

[4] See Exhibit 4.50.1-3, Initial Prioritization, Preliminary Scoping, Filter Development and Data Analytics.

[5] See Exhibit 4.50.1-3, Campaign Subject Matter Experts.

[6] Id.

[7] Id.

[8] See Exhibit 4.50.1-3, Examiners.

[9] See Exhibit 4.50.1-3, Disclosure Review.

Appendix: Guidance for LB&I Personnel with Respect to Participation is Campaign-Related Activities [1]

This document provides interim guidance to LB&I personnel on those activities they may perform on a single campaign while maintaining adequate safeguards for the proper separation of workload selection and classification activities and other enforcement activities, especially direct examination. Observing these guidelines serves to ensure impartial workload selection, maintain appropriate confidentiality of the workload selection criteria, and allows LB&I to most effectively leverage its labor and intellectual capital to deliver efficiently and strategically on its mission to increase voluntary tax compliance within LB&I’s taxpayer population. This guidance reflects a weighing of related but occasionally contrasting risks. It is anticipated that this guidance will be formally adopted in the Internal Revenue Manual.

Background

The development and execution of campaigns requires involvement of various groups of personnel. In general, personnel participating in workload selection must be precluded from involvement in examinations or other taxpayer specific treatment streams to ensure an unbiased workload selection process. [2] This document first lists and describes the activities involved in the development and execution of campaigns. These descriptions generally do not identify any specific group within LB&I responsible for an activity because the personnel responsible for a particular activity may vary depending upon the nature of the particular campaign, and may change over time as the campaign development process matures. This document then discusses the limitations, if any, on any person or group of persons performing a certain campaign activity from participating in other campaign activities, outlining the activities they may participate in, and those they must avoid to maintain an adequate separation of duties.

This document reflects the considered business judgment of LB&I (as expressed and approved by the Compliance Integration Council) and balances the need to maintain separation between workload selection activities and taxpayer-specific treatment streams with the goal of best deploying our subject matter experts in the campaign process. This will ensure we are appropriately addressing taxpayers with the greatest compliance risk.

This guidance and direction is effective as of the date of issuance. Employees should contact their manager if prior or current activities performed in the context of campaign development does or did not comply with the rules outlined herein and in the related memorandum.

Description of Campaign Activities

Submission of Campaign Ideas

A proposed campaign begins when an idea is submitted for consideration. Any LB&I employee may input campaign ideas/submissions into the Campaign Portal. These ideas may involve tax issues with impact within or outside their LB&I Practice Area (PA).

Initial Prioritization and Preliminary Scoping

Once a campaign idea is submitted, preliminary review of the submission occurs and may involve reaching out to the submitter for additional information which is attached to Section A of the Campaign Development Form (CDF).

This step includes reviewing submissions for accuracy and completeness, including correct Internal Revenue Code (IRC) section and/or Uniform Issue List (UIL) code, and to ensure the submission would not lead to IRC 6103 violations or Records of Tax Enforcement Results (ROTERS).

As part of prioritization, past historical filters and Compliance Initiative Projects (CIPs) are reviewed.

The submission is preliminarily evaluated to determine whether the potential compliance risk can be measured. If the submission is substantive and not procedural, a high level redacted scoping formula and tax return data are prepared and attached to Section B of the CDF. The scoping assessment will include an estimated LB&I return population along with IBMIS reports for the identified UIL.

Explanation of conclusions, notes, and recommendations will be updated in Section B of the CDF. The PA responsible for the development of the campaign submission (the Campaign Submission Owner) is identified, and the submission is forwarded to them.

Campaign Submission Owner Development

Upon receiving a submission that has undergone initial prioritization and preliminary scoping, the receiving PA performs its own preliminary evaluation of the submission and a decision is made whether to proceed with further vetting and potential development of the submission, transfer it to a more appropriate PA, or recommend to the Council that the submission be declined. [3] The submitter may be contacted to obtain additional information or to discuss the submission.

Analysis of the submission includes PA initial prioritization and completion of Part 1 of Section C of the CDF. The impact of the issue and the organizational risks will be considered and recommended treatment streams (for example, soft letters, examination, development of new forms) will be developed. This step also includes consideration of tools, training, and support needed to implement the campaign. Goals and metrics for measuring success of the campaign are also developed. As discussed in more detail below, the recommendation is discussed with appropriate steering committees throughout the process before the final recommendation is taken to the Compliance Integration Council (the "Council" ) for approval.

Part 1 Filtering (development)

If a campaign submission anticipates the use of specific tax return information to achieve its objectives, simultaneously with the Campaign Submission Owner development, filters are developed to identify returns with compliance risk associated with the issue identified in the campaign submission. (Typically, the filter development is a collaboration between subject matter experts from the Campaign Submission Owner and data specialists who have access to necessary data and special expertise in writing filters.) The filter formula and inputs are developed and Part I of the Risk Identification Control Board (RICB) form for the filter is prepared. The purpose of the initial filter is to identify the population for the potential non-compliance issue from tax return and other data. The population is based on a tax year where complete data is available and not necessarily the current tax year. This step may include consideration of possible interaction of various tax return line items and forms to incorporate areas the field typically considers in risking for the issue. The RICB Part I Form must be approved by a PA Director or his or her designee (in some areas the Part I Form review includes participation of the applicable Steering Committee) before submitting to the RICB.

The RICB is currently chaired by the Senior Technical Advisor to the Director of Compliance, Planning and Analytics (CP&A). The current voting members of the RICB include the Chair and Senior Managers from Campaign Development and Administration (CD&A), Research, Planning and Workload Delivery and Data and Systems Management along with two rotating Senior Managers from the PAs. The RICB is involved in efforts that create repeatable risk identification methods for integration into ongoing workload identification processes. They ensure that all filters for Campaigns are in accordance with the Internal Revenue Code, Internal Revenue Manual, and any other published guidance. They consider fairness to the taxpaying public with a goal of pursuing those taxpayers who may fail to voluntarily comply or otherwise meet their tax obligations. The RICB ensures an equitable process that identifies returns for examination based on the likelihood of reporting errors across all areas of potential noncompliance. The RICB reviews filter proposals, and approves filter development, refining, and testing.

Once RICB approval is received, the data specialists run the filter and review filter results for accuracy. If the data is accurate, the redacted filter results (TP Name and TIN are masked) are provided to individuals listed on the RICB form (typically from the Campaign Submission Owner) and adjustments to the initial filter formulas and inclusion of additional filters are considered. The goal is to refine the initial filter. (For example, if the population is large, or some criteria are still included that may alleviate the risk, revisions may include a higher materiality threshold, or an additional line item.)

Part I Filtering (testing)

Once the filter appears to be fully developed, it is tested. The test population is based on a tax year where complete data is available and therefore is not necessarily the current tax year. This includes reviewing a statistical sample of tax returns (includes taxpayer data) to ensure that the filter is appropriately identifying returns with the identified compliance risk. Feedback from the testing (without taxpayer information) and recommendations (if any) are provided and reviewed. Filter testers may recommend modification to the filter and if necessary additional RICB approvals will be secured. Next steps are determined (typically Part II Filtering).

Part II Filtering (workload selection)

Once the Part I filter has been tested and all parties agree that the filter works, Part II of the RICB Form is prepared to reflect the final filter, which includes a preliminary number of returns based on the test population. This preliminary number is used to estimate the number of returns recommended to the Council for examination (or alternative treatment stream, such as a soft letter). Part II of the RICB form is then approved by the PA Director or designee, and forwarded to the RICB for approval. RICB Part II approval is required before the campaign submission is presented to the Council. Once the campaign is approved, the Part II Filter is run against the current population. Where appropriate, statistical sampling is utilized to select the number of returns approved by the Council (which may be different from the number originally recommended) for the approved treatment stream. Part II Filter results are not shared with the Campaign Submission Owner because these results are the actual workload selection. The selected returns are then often classified (see step below).

Individuals may assist CD&A in preparing Part II of the RICB Form, but this is largely administrative assistance and they do not have access to the un-redacted results from running the Part II filter.

Disclosure Reviews

Some campaigns may involve review of disclosures that are mandated by formal IRS guidance (such as a listing notice, or an identified transaction of interest). Also, some disclosures may be received through an exchange of information with a foreign country pursuant to a tax treaty or tax information exchange agreement. In both situations, a policy decision has been made, typically by the Treasury Department, that certain information should be received by the IRS to assist compliance efforts on applicable tax provisions. These materials frequently contain identifying information, including names and EINS of promotors and participants.

For example, if the campaign involves a transaction of interest or listed transaction notice, the participant and material advisor disclosures are often reviewed. This review is an initial screening, sorting, and grouping process typically performed by examiners and/or subject matter experts. Reviews of the disclosures at this stage are generally intended to sort the population into more manageable groups, but not generally for the purpose of selecting them for examination. Most frequently, the goal is to narrow the population to those of most interest, determine risk, and select participants (and their returns) or materials advisors to forward for classification. Sometimes however, the disclosure review is designed to directly identify returns for examination without the need for further classification or other selection.

Other disclosures, such as OECD BEPS Action 5 disclosures of rulings, or documents produced in response to a John Doe summons, may also be reviewed and generally are treated similarly to disclosures from formal IRS guidance (such as listing notices).

Preparing Classification Materials

When a campaign contemplates classification of returns prior to their assignment to teams for examination, a classification check sheet, or explanation of issue considerations, may be developed to assist classifiers in identifying the campaign issue. This typically includes a generic analysis of the campaign risk and mitigating factors to consider in classification. It also may include a comprehensive list of relevant tools, external sources of information, documents, guidance on identification of potential non-compliance and where to look for it on the tax return, and other case information to be included in the case built files (CBF) to assist the classifiers in determining the compliance risk, and examples of high, medium, or low risk situations. Training and/or training materials to assist the classifiers may also be developed and provided.

Performing Classification (workload selection)

Returns (or entities) selected through filtering and/or statistical sampling, along with CBF information, are loaded into LB&I software for classification (as defined in IRM 4.1.5.1.5.1).

The classifiers review the returns (or entity information) and/or disclosures and CBF information to determine compliance risk. Either an issue specific classification sheet or LB&I software pro-forma classification sheet is prepared to summarize and capture the issues considered on each return that is classified. Returns identified in accordance with classification criteria will be selected for examination (or campaign identified treatment stream such as soft letter) and the classification sheet will be included in the CBF ultimately shared with the field. If necessary, another sample may be pulled for classification until the number of returns approved by the Council is reached.

After classification takes place, the classifier’s manager or another designated person reviews the classifier’s work and signs off on it.

Returns/entities selected through classification will be delivered to LB&I Workload Identification System (LWIS) for assignment to the field, or to appropriate personnel for soft letter or alternative treatment stream actions.

Risking Returns in the Field

A return may not go through a formal classification process as described above. Instead, it may just be selected for examination and sent directly to the field group or examiner for additional risk analysis and review to determine whether to examine or survey the return. The examiner may request SME assistance in assessing the risk and determining whether to initiate an exam or survey the return.

Training, Workshops, Remote Training, and Practice Units

Training and support materials are identified or prepared as needed to educate personnel charged with executing the campaign. This may include published practice units, practice units under development, recorded CPE sessions, or newly developed technical training. Materials will be developed as needed and any necessary training will be conducted either through live or remote (virtual) training.

Network or Campaign Calls (Advising)

Periodic conference calls or SABA sessions are held throughout campaign development and execution. Calls are used to monitor campaign progress, provide opportunities for feedback and a forum to resolve issues that come up in the campaign development or execution. Call leads will be involved in resolving issues, providing assistance, and identifying additional technical resources that may assist teams executing a treatment stream for a particular taxpayer.

Network or Campaign Calls (Participation Only)

Periodic conference calls or SABA sessions are held throughout campaign development and execution. Calls are used to monitor campaign progress, provide opportunities for feedback and a forum to resolve issues that come up in the campaign development or execution.

Participants that have limitations on their involvement because of separation of duty issues can share experiences and ask questions on these calls. They will not be involved in resolving specific issues or providing case specific advice on the examinations where they have separation of duty issues.

Assigned Mentoring or Assistance of Subject Matter Experts
(Applies only to certain select campaigns)

Some campaigns, especially those involving complex technical issues, may include the assignment of a formal mentor or other advisor to assist in sharing knowledge and issue development. Typically, senior personnel (for example, revenue agents from the field or other subject matter experts, with experience developing the campaign issue) will act as advisors to those LB&I employees charged with executing the treatment streams of a campaign. Mentoring and advising will be both formal, through hands on case discussions (live or virtual), as well as informal small group discussions. This individualized advising on particular cases constitutes direct examination involvement (mentor will be assigned to the case in IMS), since the mentor would be involved with a specific taxpayer on an ongoing basis, and should be distinguished from informal mentoring, answering ad-hoc questions, and non-case specific advice provided on practice network or campaign calls. The line between formal advising and the provision of informal advice on technical issues can be difficult to discern and can vary from case to case. If there are questions, those should be elevated.

Execution of Treatment Streams

Soft Letter or Other Taxpayer Outreach (Workload Selection)

In campaigns where a soft letter or taxpayer outreach (not opening an examination) is the initial treatment stream, a designated person will prepare and mail soft letters to the entities or taxpayers identified by the classifier or Part II filtering. Some of this outreach is educational only, and no response is requested and no further action will be taken. If the soft letter requires a response, any correspondence received will be reviewed and appropriate actions will be taken (including closing without further action or forwarded for examination). If the soft letter requires a response, but none is received, next steps will be determined and pursued (including possibly forwarding for examination).

Other Non-Taxpayer Specific Treatment Streams

Some campaigns may involve activities that are not taxpayer specific treatment streams. This could be the case where the treatment stream is development of forms, industry outreach, new legislation, Industry Issue Resolution, and other generic guidance. In these cases, it is possible that some of the prior campaign development steps would not be needed, such as filtering and classification.

Direct Examination

In the case where the treatment stream is direct examination, it will be performed by appropriate LB&I personnel. Specific teams will be identified who will be responsible for that campaign examination. The returns selected for examination either through classification, disclosure review, soft letter response, or field risk assessment will be forwarded to the identified team manager(s) for examination. Managers will review and assign work. Examiners will provide interim and post-examination feedback on the campaign training, issue identification and any other specific feedback solicited.

Campaign Monitoring

The campaign will be monitored throughout execution to follow the campaign’s progress. Feedback will be solicited and campaign metrics will be employed to monitor whether the campaign is delivering as expected or if modifications or discontinuation are necessary. Summary reports will be provided to stakeholders throughout LB&I including the appropriate steering committees and the Council.

Campaign Modification

If a modification to the campaign is necessary, recommended modifications may be discussed with the appropriate steering committee(s). The Council must approve significant modifications. Depending upon the modification, filtering as well as other steps in campaign development may need to be revisited (and risks must be evaluated for steps taken in the revised development).

Campaign Discontinued

The Campaign Submission Owner will recommend discontinuing a campaign when monitoring, based upon previously agreed upon metrics, shows that campaign goals have been met (e.g. compliance risk has been significantly reduced). The campaign may also be discontinued if it is determined that the campaign is not a good use of LB&I resources. The campaign will be discontinued only upon approval by the Council.

Campaign Oversight

The Campaign Submission Owner PA Director or another executive from the PA (the executive lead) is responsible for overall campaign oversight. Throughout the campaign process, managers, members of the Office of Chief Counsel, and LB&I executives provide oversight of the various campaign development activities. Frontline managers are involved in each of the campaign activities discussed in this memorandum. Other managers may have responsibilities in the general development and management of the campaign. Counsel will provide legal advice throughout the campaign process but would not be part of the selection process nor would they typically be part of the team executing the treatment stream. An executive lead is the executive sponsor of each campaign and has overall oversight responsibility over that campaign. Moreover, the executive lead is responsible for approving significant steps of the campaign, including filtering formulas, modifications and discontinuing campaigns. In many cases the PA steering committee will assist the executive lead in these functions. The filters must also be approved by the RICB. The Council performs the ultimate oversight role, approving all campaigns, campaign modifications and discontinuing the campaign.

Campaign Personnel and Permitted Activities

As indicated in the introduction to this document, this section lists the groups of employees and the activities (see activity descriptions above) that they may participate in as part of the campaign process. To the extent personnel are considered involved in workload selection activities they may not be involved in taxpayer specific treatment streams. In this regard, personnel involved in either running Part II filtering (obtaining and reviewing the un-redacted results; not initiating the request) or performing classification are treated as involved in workload selection. As previously indicated, decisions regarding permitted activities reflect weighing of risks and judgments based upon current understanding of the activities involved in the campaign process. If personnel have questions regarding whether their involvement in an activity could be considered workload selection, they should discuss it with their manager, who will elevate the question to the extent necessary.

Initial Prioritization, Preliminary Scoping, Filter Development, and Data Analytics (Currently CP&A)

CP&A personnel are responsible for initial prioritization, preliminary scoping, Part I filter development and testing and Part II final workload selection filtering. They are also responsible for gathering metrics and assisting during campaign monitoring. Because these personnel perform Part II filtering, which determines treatment stream (workload selection) population, the personnel involved in this filtering may not also participate in execution of actual campaign treatment stream (including providing case specific advice and mentoring) if execution of the treatment stream involves examination or is otherwise taxpayer specific. Personnel involved in Part II filtering may participate (although currently they generally do not) in non-taxpayer specific activities such as development of classification materials, generic training, participating in campaign calls, campaign monitoring, campaign modification, and discontinuing campaigns.

Campaign Subject Matter Experts (SMEs)

If a campaign is accepted for further vetting and development following initial prioritization and scoping, a team of personnel with expertise in the issue being considered in the campaign (SMEs) will develop and support the campaign. SMEs and their frontline managers can participate in Campaign Submission Owner development, Part I filtering (development) and review of redacted filter testing results, preparing classification materials, helping risk returns once assigned to the field, training, advising and listening to campaign calls, direct execution of campaign where treatment stream is examination (or other taxpayer specific treatment stream), or mentoring personnel executing taxpayer specific treatment stream, campaign monitoring, modification and discontinuing campaigns. SMEs may assist CP&A in preparing Part II of the RICB Form, but they do not have access to the un-redacted results of Part II filtering.

If SMEs classify returns for examination or review classifications, they will not be permitted to participate in examination or execution of taxpayer specific treatment stream (with respect to returns they classified). In addition, they cannot participate in advising or mentoring with respect to returns they classified. They can participate in network calls and discuss issues arising in campaigns but cannot consult on specific taxpayers if they classified the return. They can participate in examination and mentoring involving returns they did not classify. See discussion below regarding classifiers.

Example:
A revenue agent submits a campaign suggestion to the portal. CP&A does initial prioritization and scoping. As a part of this process, CP&A requests the involvement of a PN SME to assist in developing a filter that will identify returns having the issue identified in the campaign submission. The SME works with CP&A to develop a formula based on items anticipated to be on tax returns. Part I of the RICB form requesting approval for the filter is prepared. The purpose of the initial filter is to generally scope the population from tax return and other data. This step may include consideration of possible interaction of various tax return line items and forms to incorporate areas the field typically considers in risking for the issue. None of these activities are workload selection that will cause separation of duty concerns.

SMEs may also be involved in analyzing the redacted results of the Part I filter output. They can provide input to further refine the filter to narrow results and provide more focus. However, SMEs may NOT be involved in reviewing un-redacted output of filters.

SMEs can assist CP&A in preparing the Part II RICB request, but cannot see the Part II filter results (where taxpayer identifying information is involved).

If SMEs review un-redacted filter results, or participate in classification (see below) of particular taxpayers, they cannot participate in examining or mentoring examining agents in connection with those taxpayers. They can participate in generic network calls, and discuss and consult on issues arising in the campaign, to the extent not taxpayer specific. They may also mentor and advise with respect to other taxpayers.

Disclosure Review

Those involved in disclosure reviews for purposes of scoping and developing a campaign submission, or developing classification materials for the classifiers to use in determining which disclosures and related tax returns to select for examination will not be considered by LB&I to be involved in workload selection. Accordingly, they will be permitted to participate and advise in network calls, and may discuss and consult on issues arising in the campaign with respect to specific taxpayers.

Those that review disclosures to select taxpayers for examination are involved in workload selection and will be prohibited from assisting in the examination of the taxpayers they selected. This may occur for instance when the review of the disclosures leads directly to the assignment of an examination. They may participate on network calls, sharing experiences and asking questions, but cannot advise on the specific examinations.

Classifiers (and those reviewing and signing off on classifier’s work)

PA personnel will perform classification of returns (or disclosures and the returns impacted by them) for taxpayer specific treatment stream (Classifiers). Because classifying is intrinsically performing workload selection, classifiers and those reviewing classifications will not be permitted to participate in examination or execution of taxpayer specific treatment stream (with respect to returns they classified). In addition, they cannot participate in advising or mentoring with respect to returns they classified. Classifiers and their reviewers can participate in network calls and discuss issues arising in campaigns but cannot consult on specific taxpayers if they classified the return. They can participate in examination and mentoring involving returns they did not classify. For example, an examiner from CBA DFO-W that classifies campaign returns to be worked by CBA DFO-E, could examine returns that were classified by CBA DFO-E with respect to that campaign. Classifiers cannot participate in initial prioritization and scoping, Campaign Submission Owner development, Part I and Part II filtering, advising in campaign calls (with respect to returns they classified), monitoring, modification and discontinuing the campaign, given their involvement in taxpayer specific activities.

Examiners

Once classifiers have selected taxpayers for examination (or other taxpayer specific treatment stream), or the case is sent directly to the field for risk analysis after being selected for examination, subject matter and/or geographic PA personnel (Examiners) will execute the campaign. Examiners will, where appropriate for the campaign, risk returns, conduct exams, be involved in campaign calls as advisors and listeners and act as formal campaign mentors. They can also participate in Campaign Submission Owner development and Part I filtering, monitoring, modification and discontinuing campaigns. Examiners cannot participate in Part II filtering. They cannot classify returns they will examine.

Managers

Frontline managers typically will have direct involvement in many of the steps previously described. Senior Managers, for example territory or program managers, may also have direct involvement in certain campaign activities. Managers with such direct involvement will be subject to the same limitations as the personnel they manage. For example, the manager reviewing return classification will be subject to the same limitations as the classifier performing that function. Managers who do not have direct involvement in a taxpayer specific function (Part II filtering or classification), but who rather perform a general oversight function, will not be limited in their participation in other campaign activities.

Counsel

Counsel in general act as advisors to LB&I and are not the decision makers with respect to campaigns, including campaign execution, monitoring, modification and discontinuing campaigns. Counsel may consult on all campaign activities in accordance with their internal guidance.

Executives and Steering Committees

Various PAs maintain steering committees, which may include the PA Director, DFOs, Counsel, and other appropriate PA personnel. Depending on PA guidelines, these steering committees may assist the PA Director in prioritizing campaigns, reviewing RICB forms, and conducting a final review of campaign proposals before they are elevated to the International Steering Committee (ISC) and/or Domestic Steering Committee (DSC) and the Council following approval by the PA Director.

The ISC is hosted by the Assistant Deputy Commissioner International and is open to all LB&I executives including those from the International Subject Matter PAs and the Geographic PAs (GPA). Leadership from ADCCI, Criminal Investigations, Chief Counsel and Division Counsel (LB&I and SB/SE) also participate in these monthly meetings. The ISC provides advice on international campaigns and international aspects of domestic campaigns with respect to campaign development and prioritization in preparation for the Compliance Integration Council’s review process.

The DSC is hosted by the Assistant Deputy Commissioner, Compliance Integration and is open to LB&I PA Directors, the LB&I Commissioner and Deputy Commissioner, the ADCI and the Director, Planning & Business Solutions. Leadership from Criminal Investigations, SB/SE and LB&I Division Counsel also participate in monthly meetings. The DSC provides advice on domestic campaign development and prioritization in preparation for the Compliance Integration Council’s review process.

Council membership consists of Senior Executives in LB&I and LB&I Division Counsel. The Council establishes the compliance strategy for LB&I and serves as the governing body over the identification, selection, assignment, and allocation of resources for compliance and enforcement activities for LB&I.

The Council considers and approves campaigns and takes other actions commensurate with campaign and compliance risk. In this role, they review PA Campaign recommendations, which include treatment streams, training, tools, timelines, and metrics, modifications and discontinuing campaigns.

The Council provides Executive-level oversight of the Campaign process to ensure appropriate workload selection and assignment decisions regarding deployment of resources.

LB&I PA Directors and other executives participating in steering committees, ISC, DSC and the Council provide oversight over the entire campaign process. Their roles in reviewing and approving campaigns, including review of filters, considering appropriate treatment streams, monitoring, modification and discontinuing campaigns does not require any direct involvement in workload selection or execution of treatment streams. Accordingly, their activities should not pose any separation of duty risk.

Footnotes

[1] While this document focuses on separation of duty concerns with respect to campaign related issues and activities, similar concerns may also apply to non-campaign issues.

[2] The IRS has several main objectives surrounding workload selection: (i) selecting work with the highest positive impact on tax administration, (ii) selecting work in an unbiased manner (see IRM 4.1.5.1.1 requiring a separation between workload selection, classification, and examination and Section 1203(b)(6) of the IRS Restructuring and Reform Act of 1998 requiring the termination of employees violating the Internal Revenue Code for the purpose of retaliating against, or harassing, a taxpayer, taxpayer representative, or other employee of the Internal Revenue Service, (iii) protecting the confidentiality of the precise criteria used to select work in order to not provide a road map of how much an aggressive taxpayer could get away with before being identified for compliance review by the IRS, and (iv) ensuring the fairness and integrity in the enforcement selection process (see IRS Policy Statement 1-236). These processes operate under a comprehensive set of checks and balances and safeguards to identify the highest potential noncompliance, using scoring mechanisms, data driven algorithms, third party information, whistleblowers and information provided by the taxpayer. No one individual should control the enforcement selection decision-making processes, and LB&I limits involvement to only those employees whose duties require involvement.

[3] At any time during the development process a decision may be made to transfer to another Campaign Submission Owner or recommend to the Council that the submission be declined or discontinued.