IRC section 7602 - Examination of books and witnesses, which falls under Chapter 78 - Discovery of Liability and Enforcement of Title.

IRC section 6201- Assessment authority, which falls under Chapter 63 - Assessment.

Unagreed cases should have at least one year left on the statute when the case is submitted to EP Mandatory Review.

Agreed cases (including no-change cases) should have at least 180 days remaining on the statute when the case is submitted to the closing functions.

You made the decision before the expiration of the statute of limitations.

A memo of explanation detailing the reasons for not extending the statutory period has been signed by the manager has been saved in the RCCMS electronic case file. See IRM 4.71.9 - Exhibit 2, Update to Statute of Limitation to Alpha “PP” for an example of the memo to use when updating a statute to alpha code "PP" .

A copy of the signed memo was sent to the Area Manager to document your decision not to extend the statutory period.

Between 60 and 270 days before the statute expiration, the examiner updated both AIMS and RCCMS to show this decision using alpha code "PP" - Non-taxable EP Return.

An AIMS transcript is in the RCCMS electronic case file to verify the date of the update action to "PP" the statute.

Update the statute of limitations to alpha code "PP" immediately.

Ensure that a memo of explanation (signed by the group manager) detailing the reasons for opening an examination of a prior year's return is saved in the RCCMS Office Documents folder using the RCCMS Naming Convention. See IRM 4.71.9 - Exhibit 2, Update to Statute of Limitation to Alpha "PP" for an example of the memo.

Include a copy of the AIMS print in the electronic case file to confirm the date of the statute update action to alpha code "PP."

If a statute will expire within 120 to 179 days, call the Manager, EP Mandatory Review, or the manager of the TE/GE Closing Group (as applicable depending on) before transferring the case to them. Follow up the phone conversation with an email listing the cases with a short statute and stating that the case is being transferred to Mandatory Review or closed to TE/GE Closing Group (as applicable).

If a statute will expire within 61-119 days, in addition to notifying the receiving manager, also notify your Area Manager that you’re transferring/closing the case with a short statute.

If a statute will expire with 60 days or less, in addition to notifying the receiving group manager and the Area Manager, also notify the Director, EP Examinations. Indicate whether or not there will be a tax assessment. Area Managers and group managers must ensure that assessments are within the statutory period by monitoring the case until final AIMS closure.

Prepare a memo providing an explanation of the reason(s) the case is being closed with less than 180 days remaining on the statute. Place the memo on top of the case file. Forward a copy of this memo to the Area Manager.

Forward the electronic case files to the TE/GE Closing Group.

Follow-up with the receiving manager to make sure they received the case.

Discuss the case with your Area Manager and get their concurrence. When your Area Manager agrees, he/she should contact the prospective "receiving" Area Manager and ask them to agree to the transfer.

Electronically transfer the case through RCCMS to the receiving examination group.

Follow-up to make sure the group received the case.

Examiners are no longer required to prepare a paper Form 895-EP for all returns whether, or not, controlled on AIMS as part of the procedural statute control requirements.

Examiners will utilize the RCCMS statute verification process as detailed in RCCMS Change Document for Release 3.5.1, started July 2020. This new process also replaces the workflow between the examiner and the group manager.

When the statute date is less than or equal to 270 days, the examiner must check the Statute Validation check box in RCCMS, and go through the RCCMS approval process from the manager as described in the RCCMS Change Document for Release 3.5.1.

Obtain managerial approval before you open an examination of a return with fewer than 12 months remaining on the statute.

Document the approval and justification, or disapproval on Form 5464 (CCR).

Consider factors such as the amount of potential tax liability and the impact on plan participants before opening a year with a short statute.

If you/your manager decide to examine a return with 270 days or less remaining of the statute of limitations, submit a request for AIMS/RCCMS establishment and written approval from the manager at the same time.

Inform the taxpayer of his or her rights every time you ask them to extend the statute of limitations.

Notify the taxpayer by mailing Letter 907-A, Request to Extend the Statute Letter, and Pub 1035, (latest revision) with Form 872, Form 872-H, or Form SS-10.

This protects the interest of the government if the six-year statute is later determined to be inapplicable. So, secure a consent to extend the statute before the three-year statute expires.

If you/your manager determine that the six-year statute can be pursued, be aware that the burden of proof shifts to the government to support that six-year statute.

Obtain Area Counsel's written advice on the six-year statute and document the case file.

A Form 1041 is secured and TE/GE forwards the case for closure.

We refer the 1041 to the appropriate Examination Functional Unit (for example, SB/SE) with Form 5666. See IRM 4.71.6.6, EP Group Procedures – Making Referrals to Examination Functional Units.

You should attempt to secure a statute extension on Form 872-H to extend a short statute on a lead/primary return, as this is the most conservative approach. Or with your group manager’s approval, update the statute of limitations on the corresponding Form 5500 return to alpha code “PP”. Using alpha code PP for a lead/primary 5500 return should be reserved for situations when the attempt to secure a statute extension was not successful and the return otherwise meets the criteria for using alpha code"PP" . See IRM 4.71.9.9 (14), Use of Alpha Codes.

When the statute is updated to alpha code "PP" (for example, 12/PP/2018), prepare a memo of explanation justifying the use of alpha code "PP" , obtain your manager’s signature on the memo.

Forward a copy of the memo to your Area Manager.

Save the approved memo in the RCCMS Office Documents folder using the RCCMS Naming Convention.

Update the statute of limitations to alpha code "PP" immediately upon assignment.

When you expand the scope of a project code 6451 examination to include an IRC 401(a) issue and the statute of limitations is still open for that year, the general statute of limitation procedures contained in this IRM apply and you must protect the statute of limitations for Form 5500/1041.

When you expand the scope of a project code 6451 examination to include an IRC 401(a) issue and the statute of limitations is closed for that year, the statute of limitations on RCCMS and AIMS should continue to reflect alpha code "PP" for that year. If Form 5500 examinations are opened in later years for which the statute is still open, the general statute of limitations procedures contained in this IRM apply and you must protect the statute of limitations for Form 5500/1041.

Include a memorandum of explanation (signed by the group manager) detailing the reason for the examination and the update of the statute to alpha code "PP" in the case file. See IRM 4.71.9 - Exhibit 2 for an example of the memo.

Form 5500 series returns

Form 5330 (See IRM 4.71.5, Form 5330 Examinations)

Form 990-T for unrelated business income related to plan assets of an examined Form 5500 (See IRM 4.71.10, Form 990-T Examinations)

Form 1040/1120 discrepancy adjustments (See IRM 4.71.4, Discrepancy Adjustments)

Form 1040, Form 1120, or Form 990-T: there’s been a substantial omission of gross income on the return in excess of 25% of the amount of gross income stated on the return. See IRC 6501(e)(1).

Form 5330: there has been an omission of more than 25% of the excise tax due, unless disclosure of the item giving rise to the tax was made in a manner that adequately apprises the Secretary of the existence and nature of the item. See IRC 6501(e)(3) and 26 CFR 301.6501(e)-1(c).

Preparer/taxpayer signature stamps or carbon signatures aren’t permitted when signing consent forms.

Make sure that the individual who signs Forms 872 or 872-H on behalf of the taxpayer is properly authorized to sign.

If Forms 872 or 872-H are signed by an individual other than the taxpayer, inspect Form 2848 carefully to make sure the individual who signed is authorized to sign the consent for that particular return and year.

However, if the alterations on the consent are acceptable to the IRS, the taxpayer has initialed each alteration, and there is not sufficient time to perfect the consent, the IRS representative signing the consent may initial alterations and sign the consent.

Advice of Area Counsel must be sought before accepting an altered consent.

For additional guidance on restricted consents, see IRM 25.6.22.8, Restricted Consents.

Send corrected consents to the taxpayer.

Solicit Form 56 if Form 872-H is received from the taxpayer without Form 56.

Be cautious and document the authority for the acting assignment in case the person’s authority to sign the consent is later questioned.

Attach the document giving authority to act to the IRS’s copy of the consent.

On the RCCMS NRU case, enter the statute date of the related Form 941, Form 1120, Form 1120-S, Form 1065, or Form 1040, (as applicable) affected by the NRU examination.

The statute date will help you and your manager monitor the case for a timely referral or pursuit of a Form 1040/1120 discrepancy adjustment, or pursuit and assessment of applicable penalties, when necessary.

Initially, Classification uses the normal statute date of the related Form 941 for IRC 403(b) and IRC 457(b) examinations for RCCMS statute control purposes.

EP won’t control the Form 941 return for IRC 403(b) and IRC 457(b) examinations on AIMS since EP does not have jurisdiction to examine Forms 941.

Even though we don’t control the Form 941 statute date on AIMS for the applicable tax years, protect the Government’s interests for any potential tax adjustments to that return before the statute expires.

Steps to protect the Government's interest would include making a timely referral on Form 5666 with Exempt Organizations (EO) to ensure the Form 941 statute is protected for any proposed adjustments.

When you make a timely referral to EO (or whichever business unit has jurisdiction over the taxpayer), the responsibility to protect the statute no longer rests with you. When you make a timely referral, update the statute of limitations to alpha code "EE" in RCCMS and NMF AIMS (for example, 04/EE/2018).

You may update the statute date for the IRC 403(b) and IRC 457(b) examination to alpha code "EE" when you and your manager determine that there are no tax consequences to the related Form 941 or the Form 941 tax is insignificant.

You may update the statute date for the IRC 403(b) and IRC 457(b) examination to alpha code "EE" when you pick up a prior year and the related Form 941 statute has already barred.

The statute of limitations for Form 941 is extended by Form SS-10. See IRM 4.71.9 - Exhibit 18.

Form SS-10 may be secured by EP Examinations or by EO or FSL/ET.

When secured, and the group has a scanner, scan the Form SS-10 and save it in RCCMS Office Documents folder using the RCCMS Naming Convention, regardless of whether EO or FSL/ET secures it. If not scanned, place a copy of the SS-10 in the paper case file.

Initiator – Enter the examiner’s name and phone number.

Date – Enter the current date.

Taxpayer Name – Enter the name of the Taxpayer.

EIN OR SSN – Enter the TIN of the Taxpayer.

TRC – Highlight "560" and enter the new statute date as MM/DD/YY.

MFT Code – Enter 01 for Form 941.

Taxable Period – Enter the taxable period being extended as YYYYMM.

Send through secure email or EEFax the completed Form 3177 and Form SS-10 to the manager of the TE/GE Closing Group in Brooklyn. The EEFax number is 855-821-0089.

The EEFax Cover Sheet should contain the following note: "Please update the statute on Form 941. The return is not controlled on AIMS" .

Initially, EP Classification uses the normal statute date of the related Form 1040 for SEP, SARSEP, SIMPLE IRA, and 457(f) examinations for control purposes on RCCMS.

If you establish the related Form 1040 discrepancy adjustment on AIMS and RCCMS, you may update the statute date for the SEP, SARSEP, SIMPLE IRA, or IRC 457(f) examination to alpha code "EE" .

You may update the statute date for the SEP, SARSEP, or SIMPLE IRA examination to alpha code "EE" in RCCMS and NMF AIMS when you and your manager determine that the SEP/SARSEP complies with IRC 408(k) or the SIMPLE IRA complies with IRC 408(p).

Unless your group manager approves, don’t start a NRU examination for a given year if the statute date for the related tax return will expire within 12 months.

A "listed transaction" is a type of "reportable transaction" .

A "listed transaction" is defined as a reportable transaction which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of IRC 6011.

The date on which the Secretary is furnished the information so required, or

The date that a material advisor meets the requirements of IRC 6112 with respect to a request by the Secretary under IRC 6112(b) relating to such transaction with respect to such taxpayer.

Include Counsel’s written approval in the penalty case file.

Get the Counsel attorney’s contact information from the EP Abusive Tax Avoidance Transaction (ATAT) Coordinator.

Solicit a statute extension if the statute will expire within 210 days on an agreed case and one year on an unagreed case.

A case is considered agreed if Form 870-EP is signed by the taxpayer.

List the complete name of the person or entity on the "Name(s)" line of Form 872.

List the employer identification number (EIN) or social security number (SSN) on the "TIN" line of the Form 872.

List the current address of the person or entity on the "Address" line of Form 872.

If you’re extending both the income tax statute and IRC 6707A penalty statute, list "Income and IRC 6707A Penalty" on the "Kind of tax" line of Form 872.

If you’re extending the IRC 6707A penalty statute only, list "IRC 6707A Penalty" on the "Kind of tax" line of Form 872.

Enter the tax period for which the statute is being extended on the applicable line of Form 872.

Enter a date on the "Expiration date" line of Form 872 that is far enough in the future to allow ample time for the penalty case to process.

Include in the consent an additional paragraph (6) that reads as follows: "Without otherwise limiting the applicability of this agreement, this agreement also extends to the expiration date identified in paragraph (1) above, the period of limitations for assessing any penalty pursuant to IRC section 6707A, Penalty For Failure to Include Reportable Transaction Information with the Return, with respect to the taxpayers, kind of tax and tax periods identified above."

To extend the statute for a partnership (Form 1065), the Form 872 should be signed by the General Partner and not the Tax Matters Partner. Since there isn’t a line on the Form 872 for a General Partner to sign, strike through the words "Corporate Name" and insert "Partnership Name" and strike through "Corporate Officer" and insert "General Partner" .

Type the name of the authorized individual's name (e.g., group manager's name) who will sign the consent on the "IRS Official's Name" line.

Per IRS Delegation Order 25-2, group managers and reviewers (grade GS-11 or higher) are authorized to sign consents (Form 872).

Make sure the consent is dated on the "Date signed" line next to the signatures.

See IRM 4.71.9 - Exhibit 16, for an example of a completed Form 872 for a IRC 6707A penalty case.

If the return is charged out to an SB/SE group, that group must update the statute.

If the return is not charged out to any group (the examination is not established on AIMS by either EP, SB/SE or LB&I), follow the instructions in IRM 4.71.9.8 (14) to update the statute on Master File using Form 3177.

If Form 872 is secured only for the IRC 6707A penalty, update only Non-Master File AIMS for the penalty case and RCCMS.

Initiator – Enter the examiner’s name and phone number.

Date – Enter the current date.

Taxpayer Name – Enter the name of the Taxpayer.

EIN OR SSN – Enter the TIN of the Taxpayer.

TRC – Highlight "560" and enter the new statute date as MM/DD/YY.

MFT Code – Enter 02 for Form 1120, 06 for Form 1065, or 30 for Form 1040.

Taxable Period – Enter the taxable period being extended as YYYY/MM.

EEFax the completed Form 3177, Form 872 and AMDIS print to the manager of the TE/GE Closing Group in Brooklyn. The EEFax number is 855-821-0089.

The EEFax Cover Sheet should contain the following note: "Please update the statute on this return. The return is not controlled on AIMS."

See IRM 4.71.9 - Exhibit 17 for an example of a completed Form 3177.

Alpha code "AA" designates that the taxpayer timely filed a claim for refund/credit and you’ve decided that there are no other issues on the return which will warrant an additional assessment and the claimed refund has not been paid to the taxpayer.

The statute is held open for refund or credit up to the amount of the claim subject to the limitation on the amount provided by the look back rules of IRC 6511(b) (for example, for a refund claim filed within the 3-year period, the amount is limited to the tax paid during the 3 years immediately preceding the filing of the claim, plus the period of any extension of time for filing the return).

Alpha code "AA" should not be used if there are issues which could result in additional assessment of tax or penalties.

If the statute for assessment is open when you receive a claim, enter the actual statute expiration date, rather than "AA" , on the statute control records.

Update the statute controls "AA" only after you’re sure there’s no likelihood of a tax or penalty assessment and you’ve determined that the refund amount has not already been paid to the taxpayer.

Even though the assessment statute has expired, other adjustments can be made to taxable income to partially or fully offset the otherwise allowable claim for refund. If the claimed refund has been paid to the taxpayer, then no offsets can be made after expiration of the assessment statute of limitations.

Alpha code "AA" may be used for formal claims, informal claims, and for taxpayer requests for abatement of unpaid tax (AIMS source code 73 - Taxpayer Request, also known as Audit Reconsiderations).

Alpha code "AB" designates that the statutory limitation pertaining to the period of time for assessment of tax for the taxable period is no longer pertinent because any applicable tax has been addressed in or waived by a closing agreement that has been properly executed by both the taxpayer and a delegated IRS official.

The month (MM) and year (YYYY) entries accompanying the AB alpha code are the month and year the statute expired, absent the properly executed closing agreement waiving the assessment statute of limitations.

Alpha code "CC" may also be used with a tax return under joint investigation which has a statutory period for assessment that expired before the return was established on AIMS.

If Criminal Investigation withdraws from the joint investigation prior to the expiration of the statute, the statute controls should be updated to reflect the normal statute expiration date, or other applicable alpha code if some other exception to the normal three-year assessment statute applies.

It would not be appropriate to use alpha code "EE" for a Form 5330 that is due for a prohibited transaction if a Form 5500 series return was filed for the period in which the prohibited transaction occurred or was deemed to occur.

It would not be appropriate to use alpha code "EE" for a Form 990-T if UBI was adequately disclosed on the related Form 5500 series return.

It would not be appropriate to use alpha code "EE" for a Form 1040 or Form 1120 discrepancy adjustment prepared by EP.

It would be appropriate to use alpha code "EE" for a SFR Form 5329 or Form 5330 for excise tax other than IRC 4975 excise tax.

It would be appropriate to use alpha code "EE" for a SFR Form 5500 series return.

It would be appropriate to use alpha code "EE" for a SFR Form 990-T when UBI is not adequately disclosed on the related Form 5500 series return.

It would be appropriate to use alpha code "EE" for an IRC 403(b) or IRC 457(b) examination when you make a timely referral to EO or FSL/ET (whichever business unit has jurisdiction over the taxpayer), for a related Form 941. See IRM 4.71.9.7 (3), Monitoring the Statute Date on a Non-Return Unit (NRU) Case.

It would be appropriate to use alpha code "EE" for an IRC 403(b) or IRC 457(b) examination when you and your manager determine that there are no tax consequences to the related Form 941 or that any amount of tax on the Form 941 is determined to be insignificant by your group manager. See IRM 4.71.9.7 (3), Monitoring the Statute Date on a Non-Return Unit (NRU) Case.

It would be appropriate to use alpha code "EE" for an IRC 403(b) or IRC 457(b) examination when you pick up a prior year and the related Form 941 statute has already barred.

The month and year appearing with alpha code "EE" represent the date that is six years from the date the SFR posted.

It is important to understand that the use of an alpha code such as "EE" does not change the fact that assessments on taxable return accounts must be made by the six year month and year statute date reflected.

Update the case to alpha code "EE" through RCCMS by selecting alpha code "EE" on the "alpha day" line in the first RCCMS "General" tab. Do this after the SFR Form 990-T, Form 5330, or Form 5500 is processed, the return is posted and the examination is established on AIMS.

If you receive a a late filed return from a taxpayer, replace the alpha code "EE" statute designation with the true statute expiration date based on the date the return was received by the IRS.

Get AIMS transcripts throughout the examination, at least once every six months, to check for posting of a filed return (such as transaction code 976 or 977).

Do not use alpha code II for Forms 1040 related to Form 5329 examinations (for example, the statute date of Forms 1040 related to Forms 5329 under examination should no longer be updated to alpha code "II" ).

Alpha code "II" can be used when IRS determined there are no income tax issues of material tax consequence on the Form 1040 return, which require examination or the assessment statute has already expired for the income taxes.

Since the extended tax assessment statute resulting from the non-filing of Other Taxes only applies to the tax liability relating to the Other Tax and does not apply to the income tax ASED, decide carefully that no income tax issues are present on the return before you update the statute to alpha code "II" .

If there are income tax issues of tax consequence based on inspection of the Form 1040 and the period for assessment of the income taxes has not expired, don’t update the statute to alpha code "II" . Take action to protect the income tax assessment statute of limitations.

If fraud is proven, there is no limit on the period for assessment.

The taxpayer cannot undo the fraudulent return by filing a non-fraudulent amended return. See Badaracco v. Commissioner, 464 U.S. 386 (1984).

If the original return is fraudulent, an increase in the tax liability can be assessed at any time.

As a general rule, the IRS relies on IRC 6501(c)(1) to keep the statute open only in situations where the normal three-year statute has otherwise expired.

The group manager must determine with certainty that Form 1041 won’t be due for the period under examination, or if a timely referral is made to the Examination Functional Unit (such as SBSE), that EP is no longer responsible for protecting the statute of limitations on Form 1041.

The group manager ensures that a memorandum of explanation (signed by the manager and detailing the reasons for not extending the statutory period) posted to RCCMS and a copy of the memo is sent to the Area Manager.

Unless the exception stated in the next paragraph, only the examining group may update the statute to alpha code "PP" when there are between 60 and 270 days remaining on the statute of limitations.

When you/your manager decide to pick up an examination of Form 5500 for a prior year for which the statute of limitations has expired or has less than 271 days remaining, immediately update the statute of limitations to alpha code "PP."

If we later determine that alpha code "PP" was inappropriate, you may need to complete Form 3999 per IRM 4.71.9.12, Barred Statute Reporting - Form 3999, Statute Expiration Report.

Include a copy of the AIMS print in the case file (or RCCMS) to verify the date the statute was updated to alpha code "PP."

If neither the taxpayer nor the "material advisor" disclose the required information, the period of time for assessment of any tax with respect to the "listed transaction" is unlimited.

Other exceptions to the normal statutory period for assessment of tax may also apply to the tax return in question and IRC 6501(c)(10) does not shorten any other applicable period for assessment, such as the general three-year period prescribed by IRC 6501(a).

IRC 6707A(c)(2) defines a "listed transaction" as a transaction that is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction.

IRC 6501(c)(10) should generally be relied upon to extend the period for assessment only in those instances when the normal three year statute for the year has expired.

The statute may be updated to alpha code "WW" when you’ve determined that IRC 6501(c)(10) applies and the normal three-year assessment statute applicable to the entire return may be allowed to expire if: (1) a consent to extend the assessment statute for the entire return can not be obtained after timely and proper solicitation, (2) the case file is documented with adequate justification for letting the assessment statute applicable to the entire return expire in reliance on IRC 6501(c)(10), (3) written Area Counsel approval is obtained in advance of the normal three-year assessment statute expiration date, and (4) written Area Manager approval is obtained in advance of the normal three-year assessment statute expiration date.

In order to determine if the one-year period under IRC 6501(c)(10) has started to run, consult Rev. Proc. 2005-26, or subsequently published guidance, to determine if the taxpayer or "material advisor" has complied with the requirements contained in the applicable published guidance.

The statute is one year after the earlier of the date the taxpayer discloses the transaction, as discussed in the above-referenced revenue procedure, or the date that a "material advisor" meets the requirements of IRC 6112 with respect to a request by the Secretary under IRC 6112 relating to the transaction.

The statute date determined under IRC 6501(c)(10) can be extended by consent agreement (Form 872) but the examiner needs to bear in mind that consent agreements to extend the IRC 6501(c)(10) statute date only apply to the period for assessing the liability related to the "listed transaction" .

A copy of the AIMS print will be included in the case file (or RCCMS) to verify the date of the statute was updated to alpha code "WW" .

Alpha code "XX" should not be used to reflect an alpha code statute on AIMS.

Return preparer penalty controls for penalties under IRC 6694(a) and IRC 6695 are to reflect a date three years after either the due date of the return (without regard to an extension of time to file) or the date the return or claim for refund with respect to which the penalty is assessed was filed, whichever is later.

Alpha code "XX" can be used to designate that a return preparer penalty under IRC 6713 for preparer’s unauthorized disclosure or use of taxpayer information may be assessed at any time.

Alpha code "XX" can also be used to designate that the penalties under IRC 6700 and IRC 6701 for promoting abusive tax shelters and aiding and abetting understatement of the tax liability, respectively, may be assessed at any time.

The statute control clerk or other designated employee will annotate the statute expiration date of all incoming returns on a case-tracking sheet.

The manager or a designated individual will verify the statute of limitations date and initial the tracking sheet as appropriate.

All cases received with less than 180 days on agreed cases or 365 days on unagreed cases should be assigned as soon as possible.

The statute control file will be checked at least monthly and, where required, the reviewers will secure consents extending the statute and update AIMS and RCCMS on assigned cases.