- 4.52.1 Global High Wealth Industry Processes and Procedures
- 126.96.36.199 Overview
- 188.8.131.52 Population Identification
- 184.108.40.206 Perform Detailed Risk Assessment and Case Building
- 220.127.116.11 Additional Work Sources
- 18.104.22.168 Workload Services Remote Examination Support
- 22.214.171.124.1 Requesting Subsequent Year and Additional Related Entity Returns
- 126.96.36.199.2 Information Document Requests (IDR) Responses
- 188.8.131.52 The Tax Equity Fiscal Responsibility Act of 1982 (TEFRA)
- 184.108.40.206 GHW Shared Drive
- 220.127.116.11 Field Case Closings
- 18.104.22.168 Record Retention
- 22.214.171.124 Enterprise Case Exam Plan Overview
- Exhibit 4.52.1-1 Enterprise Case Exam Plan
Part 4. Examining Process
Chapter 52. Global High Wealth Industry
Section 1. Global High Wealth Industry Processes and Procedures
August 12, 2013
(1) This transmits new IRM 4.52.1, Global High Wealth Industry, Global High Wealth Industry Processes and Procedures.
(1) This is a new IRM section outlining the Global High Wealth (GHW) industry and processes unique to the industry.
Director, Global High Wealth Industry
Large Business and International Division
This section provides an introduction to the Global High Wealth (GHW) industry and processes used by GHW. GHW was formed to take a holistic approach in addressing the high wealth taxpayer population; to look at the complete financial picture of high wealth individuals and the enterprises they control. A GHW Enterprise Case consists of a key case, generally an individual income tax return, and related income tax returns where the individual has a controlling interest and significant compliance risk is deemed to exist. Controlling interest can include significant ownership of and/or significant influence over an entity or multiple entities within the enterprise. The enterprise case may include interests in partnerships, trusts, subchapter S corporations, C corporations, private foundations, gifts, and the like. GHW consists of two functions, Workload Services (WLS) and the field examination groups.
The Global High Wealth Industry is responsible for individuals with assets or earnings of tens of millions of dollars. In accordance with IRM 126.96.36.199.2, LB&I Planning, Analysis, Inventory and Research (PAIR) has primary responsibility for overall coordination of the Annual Exam Plan and workload identification.
PAIR provides GHW with an initial listing of the high wealth taxpayer population. GHW WLS then utilizes mathematical computations to determine the examination potential of high wealth individual taxpayers. These computations were developed from available Compliance Data Warehouse (CDW) data and are used to preliminarily assess the level of compliance risk on filed returns. The returns with the highest risk indicators, determined in consultation with PAIR, are further risk assessed by WLS and potentially selected for GHW examination.
Workload services conducts a detailed risk assessment process consisting of researching taxpayer forms and related data, identifying particular issues, observing trends, and consulting with industry specialists. Risk assessment includes preparation and review of a YK-1 analysis for each taxpayer to gain an understanding of the taxpayer enterprise (Form 1040 and all related entities). During the risk assessment, large, unusual, or questionable items (LUQs) are noted by WLS for consideration by field agents for all entities in the enterprise that are determined to pose a risk of noncompliance. Related entities considered to be high risk are identified for inclusion in the case building package.
Upon conducting a complete risk assessment, WLS risk assessors determine whether the case will be included in inventory available for assignment. WLS personnel build enterprise case files for delivery to the field with all related returns to be examined and other tax-relevant materials.
Once an enterprise case is assigned, a virtual case team folder is established on a secure shared drive for additional case-building, exam workpapers, and examination-related materials. GHW enterprise cases may consist of one or more of the following forms.
Form 1040 Individual Tax Return Form 1065 Return of Partnership Income Form 1120 Corporation Income Tax Return Form 1120S Small Business Corporation Income Tax Return Form 1041 Fiduciary Income Tax Return (for Estates and Trusts) Form 990 Return of Organization Exempt from Income Tax Form 990PF Return of Private Foundation Form 990T Exempt Organization Business Income Tax Return Form 706 Estate Tax Return Form 709 Gift Tax Return
WLS uses a Microsoft Access database to monitor GHW inventory available for assignment. WLS establishes AIMS controls on all selected returns using the following codes –
Name Code Description Source Code (SC) 20 Key case Initial Year 40 Key Cases Subsequent or prior year 50 Related Entity Primary Business Code (PBC) 307 Identifies the primary level of responsibility for the account Secondary Business Code (SBC) 87700 Identifies the secondary level of responsibility for the account Employee Group Code (EGC) 1025 GHW — No return secured 1026 GHW — return secured Project Code 1048 GHW Industry Tracking Code 6205 Cases selected to be sent to the field
In addition to the high-risk individuals identified by PAIR, additional work sources are utilized to supplement inventory and balance coverage of the GHW population.
Referrals: GHW receives referrals from the field and other business units by way of a referral form located on GHW Web page. Once it is determined that a referral may be appropriate for GHW, the enterprise is subjected to the risk assessment process described above on the GHW shared drive (see IRM 188.8.131.52 below). Referrals that are not accepted by GHW are forwarded to the appropriate Planning and Special Programs (PSP) office or back to the exam group that made the referral, as appropriate.
Whistleblower Claims: GHW receives whistleblower claims from the Whistleblower Office and works these claims in accordance with established Service-wide policy. See IRM 25.2.2, Whistleblower Awards for specific procedures on how to address Whistleblower Claims.
Issue driven: WLS may identify issues of significant impact to the GHW population that warrant screening for all taxpayers within this population. These issues can be identified from the WLS team, GHW field examinations, and/or networking interactions with specialists in technical areas such as international compliance. As issues are identified, further research and analysis are undertaken to determine whether the scope of the issue is significant in the GHW population, at which time a Compliance Initiative Project (CIP) will be considered.
GHW field agents are often located in different Posts of Duty across the country. This creates a need for WLS to provide various support services so the field can work GHW cases efficiently and effectively. This section provides guidance on the various examination support services provided by WLS.
All requests for prior year, subsequent year, and related returns will be sent to WLS to be filled.
All requests will be submitted by the field team manager via E-mail to the risk assessor assigned to the respective territory. The team manager will provide WLS with the following information:
Related Entity Name
Taxpayer Identification Number (TIN)
Master File Transaction (MFT) code
All requests for returns will be updated to the team’s Employee Group Code (EGC) on AIMS once the return has been received and placed in the appropriate team folder.
All information and documents received in response to Information Document Requests (IDR’s) issued by the examiner will be sent to the WLS unit to be Bates numbered and scanned (if needed).
All documents must be in PDF format in order to be Bates numbered.
WLS will convert all documents to PDF, with the exception of Excel spreadsheets, and make the PDF files text searchable.
WLS will save the original documents of any files that are converted and will purge them in accordance with established record retention policy. WLS will Bates number and scan (if needed) the entire IDR response. The IDR response will then be placed in the taxpayer “IDR Response Utah” electronic folder within five business days from the date WLS receives the IDR response. Note: If the IDR response is too voluminous to Bates number and scan within five business days, WLS will notify the revenue agent.
WLS will create a case organizer for each Keycase and related entity. The case organizer will contain the following:
Name of the IDR response
Hyperlink for each response
Who prepared the IDR response
All IDR responses received should be processed in the following manner:
IDR Responses Delivered via Mail – Paper Copy
• If the IDR response is delivered via mail, the IDR response should be mailed directly to the following address:
Internal Revenue Service
Attn: Global High Wealth WLS (Applicable Risk Analyst/Territory)
324 25th Street Room 6025
Ogden, UT 8440
If the IDR response is received by mail, the revenue agent will send the original IDR response including the original envelope to WLS within two days. The revenue agent will provide WLS with the following information:
The date the IDR response was received
Who prepared the IDR response (taxpayer, POA, etc.)
The IDR name
The taxpayer name and TIN
Password information, if applicable
WLS will notify the revenue agent via E-mail when the Bates numbering and scanning have been completed. WLS will store and maintain original IDR responses in accordance with established record retention policy.
IDR Responses – E-mailed Document
If the IDR response is delivered via E-mail to the revenue agent, the revenue agent will forward the original E-mail to the IDR response E-mail box at *LB&I Global High Wealth WLS. The revenue agent will provide WLS with the following information:
The date the IDR response was received
Who prepared the IDR response (taxpayer, POA, etc.)
The IDR name
The taxpayer name and TIN
Password information, if applicable
WLS will notify the revenue agent by E-mail when the Bates numbering has been completed.
All IDR responses are Bates numbered and scanned in received date order. If an Excel spreadsheet is included in an IDR response, WLS will not scan or convert the document to a PDF. WLS will create a coversheet documenting that a spreadsheet was received and describe its contents. This coversheet will be converted into a PDF file, Bates numbered, and included in the IDR response file.
Additional documents other than IDR responses (e.g. Summons, Powers of Attorney) requiring Bates numbering and/or scanning should be coordinated with the appropriate WLS risk analyst using similar procedures outlined for the IDR responses, notating to WLS the location of where the documents should be placed on the shared drive.
Many GHW cases include partnership and other flow-through entities subject to the Tax Equity Fiscal Responsibility Act (TEFRA). GHW established a liaison position in WLS to support GHW field examination groups in navigating TEFRA and meeting their responsibilities regarding TEFRA.
The TEFRA liaison is tasked with identifying and bridging gaps between GHW and its internal customers, including campus and Technical Services units. Through the implementation of a liaison position, GHW is able to ensure that TEFRA and other complex casework is addressed in an effective and consistent manner.
IRM 4.31 provides the processes and requirements for working a TEFRA examination.
IRM 4.31.1, Pass-Through Entity Handbook, provides a general overview, TEFRA terminology, and details the core responsibilities of various positions held within the field and the campus.
IRM 4.31.2, Pass-Through Entity Handbook, TEFRA Examinations-Field Office Procedures, explains the field TEFRA procedures necessary for working a TEFRA key case entity and the related investors. The procedures include how to identify a TEFRA entity, its TMP, and the TEFRA statute, as well as the notices required to be sent to TEFRA partnerships and investors. The duties of the field Coordinator are also outlined.
In addition to these critical TEFRA procedures, one TEFRA requirement that is unique to GHW is: If there are less than 425 days (but at least 12 months) remaining on the TEFRA key case statute of limitations, approval from the GHW Territory Manager is required to start an examination of the key case .
The GHW shared drive gives GHW examiners, managers, exam technicians, and other staff the ability to share information and documentation among team members. The shared drive also permits sharing of case information with other functions such as field specialists, technical specialists, and counsel.
The shared drive includes a main Global folder.
Within the main “Global” folder, there are separate team folders for each GHW team to maintain their unassigned and started cases. Within each team folder there are subfolders for each taxpayer and other team resources.
Also within the Global folder, there is a folder named “Common” which includes job aids, documents, and information relevant to all GHW teams. The job aids include instruction on how to establish the enterprise cases, naming convention and folder creation, which must be followed on all enterprises cases that are set up on the shared drive.
When access is needed to the shared drive, follow the procedures below:
When access is needed to the shared drive for GHW team members, the GHW team manager will request access through WLS.
When access is needed for others such as field specialists, technical specialists, or counsel, the team coordinator will request access through WLS.
Although employees who have been granted access will be able to access the entire team folder, there is an understanding that access is only being authorized to the case folder and its contents for the assigned taxpayer. Established unauthorized access (UNAX) restrictions apply.
The closing procedures for GHW enterprise cases have not been finalized. There is a field desk guide located in the GHW Toolkit containing draft procedures.
The purpose of this section is to provide guidelines for the development of the Enterprise Case Exam Plan for GHW cases. The Enterprise Case Exam Plan document is for official use only (OUO) and should not be sent to the taxpayer. The Enterprise Case Exam Plan is a compilation of a holistic approach to an examination of a taxpayer and the entities comprising his/her financial enterprise. These may represent various tax return filings, tax jurisdictions and filing periods, which have common ownership and/or control. The taxpayer and the various business entities are holistically risk assessed and an Enterprise Case Exam Plan is developed to consolidate the actions to be taken.
This approach presents unique challenges in that the enterprise can have separate returns, separate statute dates, separate filing dates, separate representation and proportional ownership interest. A return exam plan is developed for each separate return that is placed under exam as a component of the enterprise exam.
Hence, the Enterprise Case Exam Plan is an internal document, which consolidates all these separate return exam plans into one exam plan from an issue driven and resource perspective. It is constructed as a Microsoft Excel document that provides a roll up of each examined return within the enterprise and includes summaries of issues, time, and agents assigned for each return being examined. This document is for OUO purposes and is not to be disclosed or shared outside the IRS. These guidelines are provided to promote quality and consistency in the preparation of the Enterprise Case Exam Plan. The Enterprise Case Exam Plan is required for every GHW enterprise case.
The Enterprise Case Exam Plan should be completed during the risk analysis stage of the examination, and should be prepared using the standardized spreadsheet format. The Enterprise Case Exam Plan must contain the following sections shown in Exhibit 4.52.1-1.
The first return will be the Key Case of the enterprise (general rule is this will be the primary 1040).
Following the Key Case, all other related returns in status 12 should be listed. (Do not include returns that are inspected but not examined).
Section will include hyperlink to the individual/entity exam plan and risk analysis issued to the taxpayer.
GHW will follow current LB&I procedures in IRM 184.108.40.206 for the preparation and inclusion of the following forms:
Taxpayer copy of risk analysis
IMS SAIN number for the issue
Description of the issue related to the corresponding SAIN number.
Team Coordinator Comments/Notes:
Section should be used for comments of the Team Coordinator (TC) related to each issue listed.
Revenue agent assigned to each issue.
Potential (A= Highest)
The TC ratings of risk for the issue
Required issues to be worked and Tier one issues.
Other issues to be worked that can be dropped at the 50% review by TC or Manager.
Issues to be worked only if A & B issues are completed by the 50% review.
Est. Staff Days
Estimated staff days assigned by issue by agent. Total estimated staff days per the enterprise case exam plan must reconcile to total staff days reported in IMS. Estimated staff days will include both technical and administrative issues.
A summary reconciliation work paper will be used to reconcile exam plan time and IMS time.
Discuss with Specialist
Name of the specialist assigned or consulted regarding the issue. If no specialist was assigned use N/A.
Counsel/Technical Specialist Involvement
List any Counsel involvement and any technical specialist involvement during the exam.
National Office Involvement
List any discussion with National Office and who was involved.
List the potential adjustment amount for each issue.
50% Yes or No
At the time of the 50% review, use this column to state if examination of the issue will continue.
50% Review Comments
Give a brief explanation of why examination of the issue will continue or will not be continued and provide the estimated amount of the potential adjustment if examination of the issue will be continued.
Enterprise Timeline Tab
First Day Time Charged to Enterprise Case(s)
Opening Conference with Taxpayer (30-60 days small enterprise exam, 60-90 large enterprise exam)
Enterprise Exam Plan Submitted to TTM for Approval (NLT 120 Days)
Mid-Cycle Risk Analysis
Last Day to Issue IDR
Last Day for TP to respond to IDR’s
Last day to Issue Form 5701, Notice of Proposed Adjustment
Submit Case to Joint Committee
Issue Resolution (Fast Track, Early Referral to Appeals)
Issue RAR/ 30-Day Letter (60 Day for TEFRA Partnership)
Taxpayer Protest Due Team (if unagreed)
Case Closed to Team Manager
Case Closed to Status 80/90 (ECD)
Enterprise Examinations Approvals
Enterprise Case Exam Plan Document.
Cases assigned to a senior team coordinator (STC) require team manager and territory manager approval (initial plan and 50% review).
Cases assigned to a non-STC, require team manager approval (initial plan and 50% review).
Form 4764 (Examination Plan) must be prepared for each individual entity under exam and the team manager must approve all examination plans.
Risk Analysis must be conducted on all enterprise cases and the team manager must approve all risk analyses.