4.71.14 EP Mandatory Review

Manual Transmittal

December 20, 2018

Purpose

(1) This transmits revised IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review.

Background

IRM 4.71.14 contains procedures for reviewing and processing Employee Plans (EP) exam cases for reviewers in EP Mandatory Review.

Material Changes

(1) Enhanced IRM 4.71.14.1, Program, Scope and Objectives, and the subsections thereunder, by adding more information on the internal controls regulating EP Examinations.

(2) Added new section IRM 4.71.14.1.6, Contact Information for Business Units, to reduce the need for multiple edits to this IRM when contact information changes. The new section will also facilitate finding contact information.

(3) Revised IRM 4.71.14.7.1.6, Completion of Form 5599 and RCCMS Tabs and IRM 4.71.14.7.1.7, Completion of Form 5650 and RCCMS Tabs, to incorporate the October 5, 2018, memorandum from the Acting Director, Employee Plans entitled, Single Type of Examination. This memo eliminates the Office Correspondence Examination Program (OCEP) effective October 4, 2018. Instead, there will be a single type of examination that allows the agent and the group manager to determine, on a case by case basis, whether a visit to the taxpayer’s place of business is appropriate or if the examination should be worked through correspondence.

(4) Significant procedural changes were made throughout the document.

(5) Information contained in the IRM was rearranged for better continuity.

(6) Added new section IRM 4.71.14.3, Safeguarding Personally Identifiable Information, to comply with the December 20, 2016, Internal Guidance Memorandum (IGM) from the Director, Identity and Records Protection Privacy, Governmental Liaison and Disclosure, entitled Social Security Number Elimination and Reduction (SSN ER). This section augments compliance with the May 22, 2007, Memorandum (M-07-16) issued by the Office of Management and Budget (OMB) entitled Safeguarding Against and Responding to the Breach of Personally Identifiable Information to the Heads of Executive Departments and Agencies.

(7) Made editorial changes, including changes for Plain Language (the Plain Writing Act of 2010), throughout the document.

Effect on Other Documents

This supersedes IRM 4.71.14 dated September 27, 2017.

Audience

TE/GE Employee Plans

Effective Date

(12-20-2018)

Catherine L. Jones
Acting Director, Employee Plans
Tax Exempt and Government Entities

Program Scope and Objectives

  1. Purpose: IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review, provides essential information for Mandatory Review’s (MR) reviewers, group manager and support staff on procedures for processing a variety of cases submitted to MR from EP Exam field groups, providing constructive feedback on cases reviewed and providing assistance to field agents and their managers as warranted.

  2. Audience: EP Examinations employees.

  3. Program Owner: Director, EP Examinations sets the program for the EP examination program.

  4. Program Authority: EP Examinations’ authority to conduct examinations, resolve issues and determine tax liability is derived from Title 26, Internal Revenue Code, Subtitle F – Procedure and Administration, which includes but is not limited to:

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

      Note:

      IRC 7602 provides agents with the authority to:
      * Audit any books, papers, records or other data necessary to complete an audit.
      * Take testimony under oath to secure additional information needed.
      * Issue summons for information necessary to complete an audit.
      * Ask about any offense connected to the administering or enforcing of the Internal Revenue laws.

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

      Note:

      EP Examinations’ authority to resolve issues is derived from its authority to make determinations of tax liability under IRC 6201.

  5. This IRM section is authored by EP Mandatory Review. For questions, information or suggestions, contact the manager of EP Mandatory Review

Background

  1. EP Examinations determines if a retirement plan is qualified under IRC 401 and the underlying regulations, and therefore, exempt from tax under IRC 501.

  2. EP’s examination program’s primary objective is regulatory, emphasizing continued qualification of employee benefit plans (Policy Statement 4-119 and IRM 1.2.13, Servicewide Policies and Authorities, Policy Statements for the Examining Process.) EP selects and examines returns to:

    1. Promote the highest degree of voluntary compliance with the tax laws on plan qualification.

    2. Determine qualified plans’ extent of compliance and the causes of noncompliance with the tax laws.

    3. Determine whether such plans meet the applicable qualification requirements in operation.

  3. Under Policy Statement 4-117, EP agents and managers are:

    1. Given broad authority to consider and weigh conflicting information, data, and opinions.

    2. To use professional judgement according to auditing standards to make findings of fact and apply the IRS’s position on issues of law to determine the correct tax liability.

    3. To exercise this authority to obtain the greatest number of tax determination agreements without sacrificing the quality or integrity of those determinations and to dispose of tax differences at the lowest level. See IRM 1.2.13, Servicewide Policies and Authorities, Policy Statements for the Examining Process.

  4. All examinations are done according to Policy Statement 1-236, Fairness and Integrity in Enforcement Selection. See IRM 1.2.10.37, Policy Statement 1-236.

Program Controls

  1. EP Examinations established two review groups to make sure agents conduct examinations per technical, procedural and administrative requirements:

    1. Mandatory Review, see IRM 4.71.14, Employee Plans Examination of Returns, EP Mandatory Review.

    2. Special Review, see IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures.

  2. All examinations are done according to the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).

    Note:

    Find additional information at: Taxpayer Bill of Rights

  3. The IRS is fully committed to protecting the privacy rights of taxpayers and employees.

    1. Privacy laws are included in the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices.

    2. For more information about these laws, visit the IRS Electronic Freedom of Information Act Reading Room.

    3. For questions about privacy, send an email to *Privacy.

    4. For question about disclosure, send an email to *Disclosure.

Acronyms, Abbreviations, Forms and Pubs

  1. This manual uses the acronyms, abbreviations and references the forms as listed in the following two tables:

    Acronyms and Abbreviations

    Acronym/Abbreviations Definition
    CECA Checksheet for EP Compliance Activities
    DOL Department of Labor
    DO Delegation Order
    EBSA Employee Benefits Security Administration
    EP Employee Plans
    EPCRS Employee Plans Compliance Resolution System
    ETS Employee Time System
    HCE Highly Compensated Employee
    IDL Individually Designed Letter
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    IRS Internal Revenue Service
    MFT Master File Tax (Account)
    NBTI Non-Bank Trustee Investigation
    NRU Non-Return Unit
    PBGC Pension Benefit Guaranty Corporation
    POA Power of Attorney
    RAR Revenue Agent Report
    RCCMS Reporting Compliance Case Management System
    SB/SE Small Business/Self-Employed
    SFR Substitute for Return
    SNOD Statutory Notice of Deficiency
    TAM Technical Advise Memorandum
    TEQMS Tax Exempt Quality Measurement System
    UBI Unreported Business Income

     

    Forms, Notices and Pubs

    Form Name
    Form 870-EP Waiver of Restrictions on Assessment & Collection of Deficiency in Tax & Acceptance of Overassessment
    Form 872 Consent to Extend the Time to Assess Tax
    Form 872-A Special Consent to Extend the Time to Assess Tax
    Form 872-H Consent to Extend the Time to Assess Tax on a Trust
    Form 886-A Explanation of Items
    Form 990-T Exempt Organization Business Income Tax Return
    Form 1040 U.S. Individual Income Tax Return
    Form 1041 U.S. Income Tax Return for Estates and Trusts
    Form 1120 U.S. Corporation Income Tax Return
    Form 1725 Routing Slip
    Form 2297 Waiver of Statutory Notification of Claim Disallowance
    Form 2848 Power of Attorney and Declaration of Representative
    Form 3198-A TE/GE Special Handling Notice
    Form 3210 Document Transmittal
    Form 3244-A Payment Posting Voucher - Examination
    Form 3363 Acceptance of Proposed Disallowance of Claim for Refund or Credit
    Form 4089 Notice of Deficiency - Waiver
    Form 4549-E Income Tax Discrepancy Adjustments
    Form 4564 Information Document Request (IDR)
    Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts
    Form 5330 Return of Excise Taxes Related to Employee Benefit Plans
    Form 5438 Report of Examination - Excise Taxes on Employee Plans
    Form 5456 Reviewer’s Memorandum - EP/EO
    Form 5457 Response to Reviewer's Memorandum - EP/EO
    Form 5500 Annual Return/Report of Employee Benefit Plan
    Form 5599 TE/GE Examined Closing Record
    Form 5650 EP Examined Closing Record
    Form 5666 TE/GE Referral Information Report
    Form 5772-A EP Workpaper Summary
    Form 6212-B (DOL) Examination Referral Checksheet B
    Form 8626 Agreement to Rescind Notice of Deficiency
    Form 8821 Tax Information Authorization
    Form 9814 Request for Mail/Shipping Service
    Form 12175 Third Party Contact Report Form
    Form 13133 Expedite Processing Cycle
    Form 13496 IRC Section 6020(b) Certification
    Notice 1214 Helpful Contacts for Your "Notice of Deficiency"
    Pub 1 Your Rights as a Taxpayer
    Pub 5 Your Appeal Rights and How To Prepare a Protest If You Don't Agree
    Pub 504 Divorced or Separated Individuals
    Pub 594 The IRS Collection Process
    Pub 1020 Appeal Procedures EP Examinations

     

Contact Information for Business Units

  1. Phone, fax and email information:

    Group Email Contact Contact Phone Number/ Address
    FAC/EP DOL Coordinator (Form 6212-B Referrals to DOL)

    Note:

    Type "DOL Referral" in the subject line.

    Deborah.Thompson@irs.gov FAC/EP DOL Coordinator (Form 6212-B Referrals to DOL):
    IRS
    Deborah Thompson
    3251 N Evergreen Dr NE
    Grand Rapids, MI 49525-9581
    Classification (all referrals except Form 6212-B)

    Note:

    Type "EP Referral " in the subject line of email

    Note:

    Classification & Case Assignment (C&CA) is a sub-function of Compliance Planning & Classification (CP&C). This IRM refers to C&CA as Classification.

    *TEGE-CPC-Classification(tege-cpc-classification@irs.gov)
    IRS –Classification & Case Assignment
    1100 Commerce St., Mail Code 4910DAL
    Dallas, TX 75242
    Classification (case establishment on RCCMS and AMIS) Classification - Case Assignment (tege.ep.classification@irs.gov)  
    AIMS coordinator
    Office fax: 718-834-6521
    Efax: 855-821-0089
    Email: Charles.Mazzarisi@irs.gov
     
    TE/GE Closing Group 7697 in Baltimore ( for Great Lakes, Gulf Coast and Pacific Coast Areas closing agreed Forms 5500 on RCCMS and AIMS) 443-853-5586
    IRS
    TE/GE Closing Group 7697
    31 Hopkins Plaza
    Room 1550
    Baltimore, MD 21201
    TE/GE Closing Group 7697 in Brooklyn (for Northeast and Mid-Atlantic Area (including Mandatory Review) groups closing agreed Forms 5500 on RCCMS and AIMS) 718-834-5076
    IRS
    TE/GE Closing Group 7697
    2 Metrotech Center
    100 Myrtle Avenue, 6th Floor
    Brooklyn, NY 11201
    EP Mandatory Review  
    IRS - EP Mandatory Review
    c/o Samantha Nolan
    2970 Market Street
    2-H20-133
    Philadelphia, PA 19104
    Mandatory Review Manager  
    Internal Revenue Service
    50 West State Street; 12th floor
    ATTN: EP:7694 GB
    Trenton, NJ 08608
    Mandatory Review 90-day reviewer  
    Internal Revenue Service
    Atten: Charlotte Bartelt
    EP MR – Group 7694 MDP 13
    801 Broadway
    Nashville, TN 37203
    Appeals Rhonda Pennington
    617-788-0628
    ronda.a.dwan@irs.gov

    Internal Revenue Service
    Attn: Boston Appeals Office
    10 Causeway, Room 493
    Boston, MA 02222-1047
    EPCU  
    Internal Revenue Service
    EPCU TEGE - EP
    ATTN: EPCU Group Manager
    1973 Rulon White Blvd.
    MS 1113
    Ogden, UT 84201-0251

Overview of EP Mandatory Review

  1. EP Mandatory Review’s (MR) main objectives are to:

    • Evaluate EP examination cases

    • Ensure IRS compliance with the IRC and related regulations

  2. To reach this objective, reviewers evaluate cases closed to MR to determine if agents worked them according to: current law and procedures, the IRM, and other established guidance.

  3. The review process serves to ensure that the taxpayer and other affected parties are given courteous, impartial and professional service.

  4. Mandatory Review strives for:

    1. Uniform and impartial treatment of all taxpayers, plan participants and sponsors.

    2. Protection of the government's interest.

    3. High quality standards when providing service to internal and external customers including, but not limited to, the general public, the pension community and other IRS employees.

    4. Constant awareness of unfavorable patterns or trends, identification of problem areas and unique issues.

    5. Timely distribution of examination guidance and information that agents, management and other employees can use to achieve the IRS and TE/GE mission.

Staffing

  1. Reviewers are experienced and competent employees who:

    1. Possess a comprehensive knowledge of generally accepted accounting and auditing principles

    2. Have superior skills in understanding and applying the tax law, regulations, rulings, court decisions, and other interpretative material

    3. Are knowledgeable in IRS policies and procedures

    4. Can perform a quality review of EP examination case files

    5. Have a fair and impartial attitude

    6. Merit the highest respect and cooperation of EP employees

    7. Have demonstrated they can assume responsibility and take action when warranted

    8. Communicate ideas and opinions clearly, tactfully and objectively

    9. Apply good judgment

    10. Exercise individual initiative

  2. Usually, agents are assigned to MR on a 3 year rotational detail - MR’s inventory and special projects may dictate shorter or longer periods.

Safeguarding Personally Identifiable Information (PII)

  1. When possible, mask the first five digits of a taxpayer’s SSN on letters, forms, notices, workpapers and emails.

    Example:

    XXX-XX-9999

Mandatory Review Duties

  1. Mandatory Review:

    1. Reviews "unagreed" EP examination cases.

    2. Provides technical and procedural help to EP "field " (front line examination groups) agents and managers working cases with potential for being sent to MR.

    3. Prepares Form 5456, which is issued to the field group manager when a reviewed case requires further documentation, correction or development. See IRM 4.71.14.8, Form 5456, Reviewer’s Memorandum, for additional information on Reviewer's Memorandum. See IRM 4.71.14 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 5456.

    4. Coordinates writing and updating the Employee Plans Examination Procedures (IRM 4.71) and parts of Employee Plans Examination Guidelines (IRM 4.72) of the IRM.

    5. Writes and reviews other types of instructional materials and guidance that impacts EP employees.

Cases Subject to Review

  1. The following EP examination cases are subject to MR:

    1. All proposed plan disqualification (revocation or non-qualification) cases (unless resolved through a Delegation Order 8-3 (DO 8-3) closing agreement). MR issues the 30-Day and 90-Day Letter packages for both types of plan disqualifications.

    2. Unagreed discrepancy adjustments (Form 1040 or Form 1120) related to an unagreed plan qualification. MR issues the 30-Day and 90-Day Letter packages.

      Note:

      The field group issues the 30-Day Letter if the discrepancy adjustment is not related to an unagreed plan disqualification.

    3. Unagreed exam closures without protest to Appeals requiring issuance of a Statutory Notice of Deficiency (SNOD)

      Note:

      Effective October 1, 2017, exam groups (not MR) mail the 30-Day Letters for Form 5329, Form 5330,Form 990-T or 1040 or 1120 discrepancy adjustments. If the taxpayer files a protest to Appeals, the exam group sends the case directly to Appeals.

      Note:

      MR sends the 90-Day Letters for Forms 5329, Forms 5330, Forms 990-T and discrepancy adjustments.

    4. Unagreed claim disallowances (full or partial)

    5. Management requests (requires senior manager’s approval)

  2. Management may identify other cases as being subject to mandatory review, as problems or other special needs arise.

Definitions

  1. Unagreed Case– An unagreed case is an examination, discrepancy adjustment or claim in which the IRS and the taxpayer are unable to resolve the issue(s). For qualification issues, the case can’t or wasn’t resolved through EPCRS or a DO 8-3 closing agreement.

  2. Unagreed examples include, but aren’t limited to:

    1. A Form 5500 series examination with a qualification issue raised by the agent (whether or not disputed by the taxpayer) that isn’t resolved through a closing agreement.

    2. Form 1040/1120 discrepancy adjustments, Form 5330 or Form 990-T examinations for which IRS notified the taxpayer that additional tax was due and the taxpayer responded in writing stating disagreement with the proposed tax assessment.

    3. Form 1040/1120 discrepancy adjustments, Form 5330 examinations or Form 990-T examinations for which IRS notified the taxpayer that additional tax was due, but the taxpayer didn’t file amended returns, delinquent returns, or sign an assessment agreement (for example, Form 4549-E or Form 870-EP) within specified time frames.

    4. Form 5330 examinations involving excise tax under IRC 4971 where the funding deficiency is not corrected.

    5. Form 5330 examinations involving excise tax under IRC 4975 where the prohibited transaction has not been corrected.

    6. Form 5330 examinations for other types of excise tax, for example IRC 4972 and IRC 4980, for which the taxpayer didn’t file/report excise tax that is due.

    7. A claim disallowed in full or in part involving the failure of the taxpayer to sign and return Form 3363 and Form 2297 within the specified time. See IRM 4.71.8, EP Claims, for procedures on claims.

  3. Proposed Revocation– A Proposed Revocation occurs when an agent raises a qualification issue during the examination of a plan that had previously received a favorable determination letter (in the name of the plan), and the issue isn’t resolved through a closing agreement. As a result, the agent proposes to revoke the favorable determination letter and treat the plan and trust as not qualified.

  4. Final Revocation– A Proposed Revocation becomes a Final Revocation if the qualification issue raised by the agent falls into one of these categories:

    1. Not challenged by the taxpayer during the 92 day time frame specified in Letter 1757, 90-Day Letter - Final Revocation

    2. Upheld by Tax Court

    3. Resolved through a DO 8-3 closing agreement. See IRM 4.71.3.4.2, DO 8-3 Closing Agreements

  5. Proposed Non-qualification– A Proposed Non-qualification occurs when an agent raises a qualification issue during the examination of a plan that had not previously received a favorable determination letter (in the name of the plan), and the issue isn’t resolved through a closing agreement. As a result, the agent proposes to treat the plan and trust as not qualified.

  6. Final Non-qualification– A Proposed Non-qualification becomes a Final Non-qualification if the qualification issue raised by the agent:

    1. Is not challenged by the taxpayer during the 92 day time frame specified in Letter 1757-A, 90-Day Letter - Final Non-qualification,

    2. Is upheld by Tax Court, or

    3. Is resolved through a DO 8-3 closing agreement.

  7. Administrative Record– All documents submitted to the IRS by the taxpayer (or authorized representative), and all written correspondence between the IRS and taxpayer (or authorized representative). In cases subject to declaratory judgment under IRC 7476, the Administrative Record is the basis for any future Court proceeding. See 26 CFR 601.201(o)(8).

    1. For EP cases, an Administrative Record is required only for proposed revocation or proposed non-qualification of a plan and trust as a result of a Form 5500 exam.

    2. An Administrative Record is not required for unagreed examinations of Forms 5330 or 990-T, or for Form 1040/1120 discrepancy adjustments.

    3. See IRM 4.71.3.4.4, Administrative Record, for details on how to properly prepare the Administrative Record.

  8. 90-Day Reviewer- The reviewer designated by the MR manager to issue the 90-Day Letter packages for certain reviewers (for example, those on short details or without a mailroom or otherwise identified by the MR manager). Once a case is transferred to the 90-Day Reviewer, the 90-Day Reviewer is the case owner and fully responsible for all aspects (including the statute of limitations) for its processing and closing from MR.

Triage Review

  1. Cases received in MR are assigned to a reviewer by the Manager, EP Mandatory Review (MR manager) after the triage process.

    Note:

    MR gives priority to short statute cases and other cases (NBTIs, cases specifically exempt by the MR manager, such as those MR already worked extensively on with the field getting the case ready for MR). With few exceptions, all cases MR receives go through the triage process.

  2. A designated reviewer (the "Triage Reviewer" ):

    1. Reconciles the AIMS and RCCMS statute of limitation date and corrects all discrepancies.

      Example:

      The TC 150 posting date was used instead of the Form 5500 filing date.

    2. Updates statute to alpha code when appropriate.

      Example:

      The TC 150 posting day for a SFR was used instead of “EE”.

    3. Visually inspects the statute extension and any documents directly related to the extension (Form 56, applicable plan documents, Form 2848). If an error is found, the triage reviewer immediately contacts the MR manager to discuss the appropriate action.

      Example:

      The triage reviewer will obtain a new statute extension.

    4. Conducts a quick case overview to determine if the case is ready for review or must be sent back to the group for further development.

    5. Makes sure the information in RCCMS and AIMS agree.

    6. For discrepancy adjustment cases, ensures the RGS file and a zero variance report are in the file.

    7. For Claims, ensures the agent enclosed a full set of workpapers and mailed the Claim Disallowance Notification package (Letter 569-A with Form 2297 and Form 3363) to the appropriate parties.

    8. May provide notes such as specific instructions or observations for the reviewer who is assigned the case.

      Note:

      Notes will be in RCCMS using the naming convention 2.5 Triage Notes.

    9. If the case is a short statute case or special project case, immediately notifies the MR manager, who determines if the case warrants immediate assignment to a reviewer.

    10. Depending on workload levels, the case may be temporarily placed in an unassigned drawer.

Technical Case Review

  1. The EP manager assigns the case to a reviewer after the triage process.

  2. Reviewers:

    1. Within 15 days from receipt of the case, make every effort to start to review the case.

    2. Track time applied to each case type (F-5500, F-1040, F-5330) separately using the RCCMS naming convention of 2.4 F5464 CCR MR. An optional consolidated CCR is available for this purpose, see Exhibit XX below.

    3. Verify the statutes of limitations were properly determined, extended and updated as needed.

    4. Confirm examination cycle times were considered and observed.

      Reminder:

      Any deviations from cycle time must be documented in the agent’s CCR and justified by the case file.

    5. Determine if time charges for case activities were reasonable considering the case’s facts and circumstances and that the group manager's involvement is documented in the file and is commensurate with the case complexities and the agent’s grade and experience.

      Example:

      The manager’s Involvement must be documented in CCR and may be supported/supplemented by memos, emails and case reviews.

    6. Verify all returns (related, prior, subsequent ) under EP jurisdiction were established on RCCMS and AIMS and all mandatory referrals ((internally, externally or to other business units) were prepared correctly and made timely.

    7. Evaluate the examination issues identified, the steps used to develop the issues and the supporting workpapers: i) Verify that the proper issues were identified and developed; i) Verify that the agent didn't spent excess time developing immaterial or non-issues; iii) Confirm that workpapers are concise, well organized, are indexed to supporting documentation/other workpapers and where necessary document the taxpayer’s position.

    8. Determine if the RAR was prepared on the most current version of Form 886-A (5-2017) with the proper heading (correct taxpayer, EIN and years).

    9. Determine if the RAR is complete and fully presents the issues, facts, tax law, taxpayer’s position, government’s position and conclusions in a logical and cohesive manner.

      Example:

      The RAR is written so that plan sponsor’s and the IRS’s positions are presented in a manner leaving no doubt that there is a difference of opinion.

    10. Verify that the agent made a reasonable effort to reach an agreement if the case is unagreed. Verify the agent fully documented the details of any closing agreement offers and negotiations.

    11. Review the forms, letters and templates the agent prepared to confirm the most current versions were used and correctly completed.

      Note:

      Carefully review the documents the agent sent to the taxpayer.

    12. Verify all required forms, letters and workpapers are contained in the paper case file and saved in the RCCMS Office Documents folder using the RCCMS Naming Convention.

    13. Determine if the Administrative Record and Index are complete.

      Note:

      The Reviewer must update the Administrative Record and Index for all correspondence sent to the taxpayer/POA while the case is in Mandatory Review (MR).

    14. Be responsible for the statute of limitations and comply with IRM 4.71.9, Employee Plans Examination of Returns, Statute Control Procedures: Prepare Forms 895, solicit extensions as needed and update AMIS and RCCMS accordingly. Use Alpha Codes when applicable.

      Reminder:

      If the statute of limitation is updated to PP, the reviewer must prepared the memo to the Area Manager described in IRM 4.71.9.9, Use of Alpha Codes.

    15. Use Form 4564 (IDR) for request for additional information and comply with IRM 4.71.1.7.3, Concluding the Initial Audit Appointment and Additional Requests for Information, and IRM 4.71.1.7.4, Enforcement Process: Delinquency Notice, Pre-Summons Letter and Summons.

      Reminder:

      Requests for additional information must relate to issues identified by the field as unagreed.

      Caution:

      When the reviewer identifies an area of possible non-compliance or underdevelopement of an issue that the field agent didn’t note as unagreed, the reviewer will discuss it with the MR manager before requesting any additional information.

Processing Unagreed Cases

  1. With the exceptions listed in IRM 4.71.14.7.1 (2), a 30-Day Letter package is prepared for:

    1. Form 5500 exams, where the agent has proposed plan revocation or non-qualification (unless resolved through a Delegation Order 8-3 (DO 8-3) closing agreement. MR mails these packages.

    2. Unagreed claims. MR mails these packages. See IRM 4.71.14.7.1.3, 30-Day Letter Procedures.

    3. Form 1040 and Form 1120 discrepancy adjustments that result from plan revocation or non-qualification. MR mails these packages simultaneously with the 30-Day Letter package for the plan.

      Note:

      Field agents issue 30-Day Letter packages for all other discrepancy adjustments.

    4. Unagreed Form 990-T when there is a related plan revocation or non-qualification. MR mails these packages simultaneously with the 30-Day Letter package for the plan.

    5. Effective October 1, 2017, 30-Day Letters for unagreed Form 5330 will be mailed out by the exam groups (instead of MR). If the taxpayer files a protest to Appeals, the case will be sent straight to Appeals by the exam group. See IRM 4.71.14.5.1, Definitions, for the definition of what constitutes an unagreed Form 5330 exam.

    6. Effective October 1, 2017, 30-Day Letters for unagreed Form 990-T will be mailed by the exam groups (instead of MR). If the taxpayer responds to the 30-Day letter with a protest to Appeals, the case will be sent to Appeals by the exam group. See IRM 4.71.14.5.1, Definitions, for the definition of what constitutes an unagreed Form 990-T exam.

    7. Effective October 1, 2017, 30-Day Letters for unagreed Form 5329 are mailed by the exam groups (instead of MR). If the taxpayer responds to the 30-Day letter with a protest to Appeals, the exam group sends the case to Appeals.

  2. The review will bypass issuing a 30-Day Letter and instead prepare a 90-Day Letter after discussing with MR manager, when:

    1. Technical advice was requested on an issue affecting the qualified status of the plan and the ruling is adverse to the plan sponsor. The adverse Technical Advise Memorandum (TAM) precludes any further appeal within IRS for those issues.

      Note:

      If the adverse TAM relates to excise tax or unrelated business income, the taxpayer’s appeal rights are unaffected. The agent issues the 30-Day Letter package.

    2. Less than 210 days remain on the statute of limitations and the taxpayer refuses to extend the statute of limitations.

      Note:

      In some circumstances, Counsel may advise the reviewer to send a 30-Day Letter even when the statute is within the 210 days. These situations are handled on a case by case basis.

    3. There is a related examination in an Exam Functional Unit (such as SB/SE) that has income tax adjustments which were caused by plan disqualification, and MR knows that the related case is either docketed or in the 90-Day Letter process.

      Note:

      Reviewer: Secure AMDISA prints for the plan sponsor and for the plan’s Highly Compensated Employees (HCEs). Review the CCR; it may disclose if a related exam is open and may be helpful to contact the examining agent.

    Note:

    See IRM 4.71.14.7.1.3, 30-Day Letter Procedures, and 90-Day Letter procedures in IRM 4.71.14.7.1.5.

  3. The reviewer evaluates all Forms 2848 and Forms 8821 (if applicable) submitted during the examination and ensures they comply with IRM 4.71.1.9, Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821).

    Caution:

    Verify entity information (plan, trust, employer, owner), tax type (income, excise), form number (1040, 1041, 1120, 5330, 5500, 5329), tax periods (all years under exam must be included), and the taxpayer’s execution of the form (as trustee, authorized corporate officer, individual) are correct. If any one is incorrect, the form may be invalid.

    Note:

    Ensure Form 2848 or Form 8821 is submitted to the appropriate Service Center per IRM 4.71.1.9(12), Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821)

    for processing.

  4. When it’s MR’s responsibility to issue the 30-Day Letter package and the reviewer agrees with the agent’s conclusion(s) and no major corrections are needed:

    1. The reviewer makes any needed corrections to the RAR or other parts of the 30-Day Letter package.

    2. The reviewer emails the 30-Day Letter package to the MR manager (or designee) for review and approval.

      Note:

      Managerial approval must be obtained before the 30-Day Letter package is issued.

    3. The MR manager (or designee) reviews the 30-Day Letter package and discusses any issues noted with the reviewer (the MR manager may suggest or revise the 30-Day Letter package). The MR manager will provide an approval email containing the final version of the approved 30-Day Letter package to the reviewer.

    4. The reviewer will use certified mail to send the approved 30-Day Letter package to the taxpayer (and POA, if applicable).

    5. The reviewer updates the case to status 22 (30-Day) in RCCMS immediately after mailing the 30-Day Letter, making sure the AIMS box is checked so that AIMS gets updated when the update request is made. Obtain a new AMDISA print reflecting the update.

  5. For Form 1040 or Form 1120 discrepancy adjustments or Form 5330 or Form 990-T, where the 30-Day Letter was previously issued by the field agent, and the taxpayer didn’t respond or request an Appeals hearing, the reviewer will either:

    1. Prepare the 90-Day Letter package (if there are no issues with the proposed tax assessment). See IRM 4.71.14.7.1.5, 90-Day Letter Procedures.

    2. Discuss concerns with the agent’s 30-Day Package with MR’s manager.

  6. As appropriate, the reviewer prepares a Reviewer’s Memorandum on Form 5456. There are two types of Reviewer’s Memorandums:

    1. Advisory - used to notify the agent of any procedures that the agent failed to follow or of any required or suggested changes made by the reviewer. The case is not returned by the reviewer. See IRM 4.71.14 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of an Advisory Form 5456.

    2. Correction - used to notify the agent of material errors that require them to correct or perform significant case work to develop the issue(s). The case is returned by the reviewer because MR can’t process it until the agent finishes correcting/developing case issues.

  7. The reviewer must discuss returning the case with the MR manager when the reviewer doesn’t agree with the agent’s conclusion(s) or determines that the report requires significant correction, or that the case needs further development. Only with managerial approval, will the reviewer:

    1. Prepare Form 5456 (Correction Memo) stating his or her position on the issues and providing the field agent with the necessary actions to take.

    2. Email Form 5456 to the MR manager (or designee) for approval.

    3. Save Form 5456 in the RCCMS Office Documents folder using the RCCMS Naming Convention, and place a hard copy in the case file according to IRM 4.71.12.4, Assembly Guidelines for All Unagreed Examinations.

    4. Update RCCMS for transfer.

    5. Mail the paper case file to the address provided by the MR manager (to the field group manager, field agent, MR manager).

  8. The MR manager will:

    1. Accept the case transfer on RCCMS

    2. Contact the originating field group manager (and agent, at the MR manager’s discretion) to advise the field that the case is being returned.

    3. Confirm the shipping address with the field group manager.

    4. Update the case to status 13 in RCCMS.

  9. If the case involves unagreed IRC 4971 or IRC 4975 excise tax, a referral to the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) will be made before the 30-Day Letter is issued if the agent hasn’t done so previously. See IRM 4.71.14.7.1.2, Referrals to DOL.

Picking Up Additional Years
  1. Generally, the reviewer should NOT add (establish) an additional year(s) to the field agent’s unagreed return package.

  2. When the reviewer believes that the pursuit of a qualification issue, excise tax issue, or UBI tax issue beyond the years currently under exam is warranted, the reviewer will discuss adding an additional year(s) with the EP manager.

  3. If the EP manager agrees that an additional year(s) should be picked up, the reviewer will:

    1. For a Form 5330 or Form 990-T case, follow the procedures in IRM 4.71.14.7.1.1.1, Substitute for Return Procedures for Forms 5330 or 990-T.

    2. For a Form 5500 case, the reviewer will contact the field group manager to discuss the issue and coordination with Classification to get the additional year(s) established on RCCMS and AIMS.

      Note:

      If Form 5500 is due but not filed, follow the procedures in IRM 4.71.1.21, Amended, Substitute and Secured Forms 5500.

    3. If an additional year is picked up, inform the taxpayer in writing of the additional year(s) being placed under exam using an individually designed letter that states which years are under exam.

    4. If an additional year(s) is picked up after the 30-Day Letter has been issued, ask Counsel if the 30-Day Letter needs to be re-issued.

Substitute for Return Procedures for Forms 5330, 5329 or 990-T
  1. IRM 4.71.5.9.2, Substitute for Return Package procedures instruct agents to prepare a substitute for return (SFR) package, establish the SFR on RCCMS and AIMS, and mail the SFR package to the Ogden Service Center when a Form 5330 excise tax issue is unagreed. See SFR procedures for Form 5329 in IRM 4.71.27.9.2, Form 3177 - Substitute for Return Procedures, and Form 990-T SFR procedures in IRM 4.71.10.5.2, Substitute for Return Package.

  2. Generally, an additional year(s) should NOT be added to the unagreed return package established by the field and sent to Mandatory Review.

  3. If the reviewer believes an additional year(s) should be established, or Counsel directs the establishment of an additional year(s), the EP manager’s written approval must be obtained. Once approved, the reviewer will:

    1. Determine if the taxpayer has already filed the return by securing applicable IDRS research (BMFOLI, BMFOLT, BMFOLR) for the applicable taxpayer identification number. If filed, determine if the filed return correctly addresses the current issue. If the filed Form 5330, Form 5329, or Form 990-T doesn’t correctly address the issue, establish examination controls.

      Note:

      Remember if an SSN is being used in BMFOL, a "V" must follow the SSN.

    2. Prepare a SFR package according to the appropriate IRM section cited in IRM 4.71.14.7.1.1.1 (1).

      Note:

      Send the SFR to the Service Campus because the return must be fully established before the case can be closed to Appeals or a SNOD is issued. A return only becomes fully established when the Service Center processes the return.

  4. When the SFR has a TC 150 on BMFOLT (for Form 5330 or Form 990-T) or IMFOLT (for Form 5329) the return is fully posted (this takes approximately 6 weeks after sending the SFR package to the Service Center), the reviewer will contact Classification to get the return established on RCCMS and AIMS. See IRM 4.71.5.9.2, Substitute for Return Package, when establishing Forms 5330; IRM 4.71.10.5.2, Substitute for Return Package, when establishing Forms 990-T, and IRM 4.71.27.9.2, Form 3177 - Substitute for Return Procedures, when establishing Forms 5329 and set up the paper file.

  5. When MR receives the return, the statute of limitations (SOL), status code, etc. on RCCMS and AIMS must be checked for accuracy.

  6. The TE/GE Closing Group assesses excise tax and UBIT from Form 5599. Form 5599 becomes the assessment document since no delinquent return with dollar amounts was processed by the Service Center. Therefore, the reviewer must:

    1. Make sure tax and penalty amounts are listed correctly on Form 5599.

    2. Write instructions on assessing tax (and penalties) in the remarks section of Form 5599.

  7. If the IRC 6651(a)(2) (failure to pay) is asserted on a SFR, the IRS must certify the SFR Form 5330, Form 990-T, or Form 5329 per IRC 6020(b). Form 13496 is used to provide the certification.

    1. The SFR package includes Form 13496, the SFR (the Form 5330, Form 990-T or Form 5329 sent to the Service Campus), the RAR (Form 886-A) and Form 5438 (for excise tax issue).

      Note:

      For a Form 990-T SFR, total income (Form 990-T, line 13), total deductions (Form 990-T, line 29), unrelated business taxable income (Form 990-T, line 34) and total tax (Form 990-T, line 44), must be clearly listed in the RAR.

    2. Form 13496 must contain a live signature with the date signed. The date the form is executed must be on or after the date on the issued 30-Day Letter and before the date on the issued 90-Day Letter.

    3. The completed Form 13496 must identify the taxpayer by name and contain the taxpayer identification number, and purport the Form 13496 to be a valid IRC 6020(b) return.

    4. List the number of SFR pages noted in IRM 4.71.14.7.1.1.1 (7). (a) above on the Form 13496.

    5. Whenever the reviewer revise a report of proposed adjustments that increases the total tax liability of the taxpayer, a newly executed Form 13496 is required.

    6. If the report of proposed adjustments involves more than one tax year, prepare a separate Form 13496 for each year and attach it to each SFR package.

      Note:

      See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496.

Special Notification Procedures
  1. The reviewer will ensure that the agent made all required referrals to other governmental agencies such as the Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL), and Pension Benefit Guaranty Corporation (PBGC). If not, the reviewer will make the referral.

  2. Review the case issues and follow referral procedures for the following:

    If case issues Then
    Warrant a referral to an Examination Functional Unit (such as SB/SE), and the agent didn’t refer Refer on Form 5666.
    Impact a related Form 1040, Form 1041 or Form 1120 in SB/SE or other Examination Functional Unit exam Contact the exam agent working the related case and update the case status
    Impact a related case being litigated by Area Counsel Contact the attorney and update them on the case status
    Require third party contacts Follow third party notice requirements per IRC 7602(c). Prepare Letter 3164-F and Form 12175, Third Party Contact Report Form and process per IRM 4.71.1.10, Third Party Contacts.

    Note:

    A referral made to DOL for the purpose of satisfying IRC 4971(d) or IRC 4975(h) is no longer treated as a third party contact.

Referrals to DOL
  1. Per the IRS-DOL Coordination Agreement, plans under DOL’s jurisdiction involving IRC 4971 or IRC 4975 excise tax, require IRS to make a referral to EBSA at least 30 days before we issue the 30-Day Letter. In most instances, the EP exam field group makes the referral. If they didn’t, the reviewer must.

    Note:

    DOL doesn’t have jurisdiction over plans that only provide benefits to owners and their spouses. However, if determined that a plan covering only one participant (or participant and spouse) should cover additional people, a referral is warranted.

    1. The MR manager’s written approval is needed when a required referral is not made.

      Example:

      The MR manager determined the referral won’t be made because the statute of limitations is imminent and the 90-Day Letter must be issued immediately.

    2. If EBSA responds that they are initiating participation, the case may need to be returned to the field group for further development.

  2. A DOL referral consists of a completed Form 6212-B with a statement in the Remarks section that the case is in MR pending issuance of the 30-Day Letter. Check the DOL Participation Requested block on Form 6212-B.

  3. Send the referral to the FAC/EP DOL Coordinator at the address noted in IRM 4.71.14.1.4, Contact Information for Business Units.

  4. Making this referral to EBSA satisfies the requirements of IRC 4971(d) and IRC 4975(h), so no additional referral is required before the SNOD is issued.

30-Day Letter Procedures
  1. The 30-Day Letter gives the taxpayer 30 days to request a hearing with Appeals.

  2. When MR issues the 30-Day Letter and the reviewer agrees with the agent’s conclusion(s), and no major corrections are needed, the reviewer will:

    1. Make corrections to the RAR, or other portions of the 30-Day Letter package, if needed.

    2. Email the 30-Day Letter package, along with current AMDISA and INOLES prints, to the MR manager (or designee) for review and approval.

      Note:

      The MR manager (or designee) will review the 30-Day Letter package and if needed, discuss any issues with the reviewer. The MR manager may make suggestions or revise the 30-Day Letter package. The MR manager will email an approved final 30-Day Letter package to the reviewer.

    3. After obtaining managerial approval, send the approved 30-Day Letter package to the taxpayer (and POA if applicable) by certified mail.

    4. Update the case to status 22 (30-Day) through RCCMS (with the AIMS box checked) immediately after mailing the 30-Day Letter to the taxpayer.

      Note:

      The field group code continues to be reflected on AIMS and RCCMS and not 7694.

    5. Get an AMDISA reflecting case in status 22.

  3. Use the most current version of the 30-Day Letter. See the table below for which letter to use for specific case types, the letter’s most recent revision date (as of the IRM’s publication date), and the acceptable RCCMS naming convention to use:

    Use Letter Revision date RCCMS naming convention Acceptable variations
    Forms 1040/1120 - discrepancy adjustments 3605-A June 2015 3Q10.TAX DISC ADJ LTR 3605-A
    • 3Q10.L3605A a YYYYMMDD

    • 3Q10.aYYYY MM DD L3605A

    Forms 5330 2005 May 2004 3T1.UNAGR LTR 2005 30 Day Form 5330
    • 3T1.aYYYY MM DD L2005

    • 3T1.L2005 a YYYYMMDD

    Form 990-T 2005-A February 2009 3T1.UNAGR LTR 2005-A 30 Day Form 990-T
    • 3T1.aYYYY MM DD L2005-A

    • 3T1.L2005A a YYYYMMDD

    Proposed Revocation 1756 May 2015 4.XXX Letter 1756 Proposed Revocation 4.XXX L1756 YYYY MM DD Prop Rev
    Proposed Non-Qualification 1758 May 2015 4.XXX Letter 1758 Proposed Nonqualification
    • 4.aYYYY MM DD L1758

    • 4.XXX L1758 YYYYMMDD Prop Nonqual

    Claims 3602-A May 2004 3U1.CORR LTR 3602-A 30 Day Claim 3U1.CORR L3602A YYYY MM DD Claim

    Note:

    Additional items in the 30-Day Letter package will follow the naming convention established by the letter.

    Example:

    Form 4549-E would be named 3Q10.b TAX DISC ADJ LTR 3605-A 30 Form 4549-E,

  4. The 30-Day Letter package for a Form 5330 exam includes:

    1. Letter 2005 (See IRM 4.71.14 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. RAR (Form 886-A)

    3. Pub 1

    4. Pub 594

    5. Pub 1020

    6. Form 870-EP (See IRM 4.71.14 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 870-EP.)

    7. Form 5438 (See IRM 4.71.14 Exhibit 5 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 5438.)

    8. Return Envelope

  5. The 30-Day Letter package for a Form 990-T exam includes:

    1. Letter 2005-A (See IRM 4.71.14 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. RAR (Form 886-A)

    3. Pub 1

    4. Pub 594

    5. Pub 1020

    6. Form 870-EP

    7. Return Envelope

  6. The 30-Day Letter package for a proposed revocation/non-qualification includes:

    1. Letter 1756 (for proposed revocation) or Letter 1758 (for proposed non-qualification). See IRM 4.71.14 Exhibits 7 and 8 at IRM 4.71 - Employee Plans Examination Exhibits.

    2. Pub 1

    3. Pub 594

    4. Pub 1020

    5. RAR (Form 886-A)

    6. Return Envelope

  7. The 30-Day Letter package for a Form 1040 or Form 1120 discrepancy adjustment includes:

    1. Letter 3605-A (See IRM 4.71.14 Exhibit 9 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Form 4549-E

    3. Pub 1

    4. Pub 5

    5. Pub 504 (if Form 1040 and taxpayer is married)

    6. Pub 594

    7. RAR (Form 886-A)

    8. Interest Calculations

    9. Penalty Calculations (if applicable)

    10. Return Envelope

    Note:

    MR mails the 30-Day Letter for Forms 1040/1120 when they’re related to a proposed revocation/non-qualification. If the taxpayer jointly filed a Form 1040, a separate letter must be mailed to each spouse.

  8. The 30-Day Letter package for claims includes:

    1. Letter 3602-A (See IRM 4.71.14 Exhibit 19 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. RAR (Form 886-A)

    3. Pub 1

    4. Pub 5

    5. Pub 594

    6. Form 2297 (See IRM 4.71.14 Exhibit 24 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 2297)

    7. Form 3363 (See IRM 4.71.14 Exhibit 25 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 3363)

    8. Form 870-EP

    9. Return Envelope

  9. For claims: if the taxpayer signs and returns Form 2297 and Form 3363, close the case with:

    1. Disposal code 01 on AIMS and disposal code 210 on RCCMS.

    2. Letter 2087 if the claim involves a Form 5330.

    3. Letter 2511 if the claim involves a Form 990-T.

      Note:

      There is no closing letter for claims on Forms 1040 or 1120 if the taxpayer signs and returns Form 2297 and Form 3363.

  10. Use the correct salutations in the 30-Day Letters:

    1. Letter 3605-A, Letter 2005 or Letter 3602-A for an individual(s), use the name(s) shown on Form 1040.

    2. Letter 3605-A, Letter 2005 or Letter 3602-A series letter for an organization (any entity that is not an individual), use the organization’s legal name shown on federal tax returns.

    3. Letter 1756 or Letter 1758, use the plan sponsor’s name (Dear ABC, Inc.). Do not use the plan name or an individual’s name.

      Note:

      The address line of the letter can include an individual name.

      Example:


      ABC, Inc.
      c/o John Doe
      12 Main Street
      City, State Zip

  11. If the taxpayer timely files a protest to Appeals (including claims cases), follow the procedures in IRM 4.71.14.7.1.4, Cases to Appeals.

  12. If the taxpayer concedes the issue or wants to enter into a closing agreement resolution, discuss the taxpayer’s proposal with the MR manager. Then coordinate case processing with the field agent and their manager to:

    1. Determine whether the case will remain in MR or be returned to the group for closure or closing agreement resolution.

    2. If MR resolves the case through a DO 8-3 closing agreement, approval must be secured on the DO 8-3 Transmittal Checksheet from the originating group manager, originating Area Manager, and the Area CAP Coordinator before sending the closing agreement to the Director, EP Examinations for signature.

  13. If MR resolves the case through a closing agreement, follow the procedures in IRM 4.71.3.4, Closing Agreements, and remember to:

    1. Prepare a new Form 5772-A, Form 5650, etc. to reflect disposal code 15 (Closing Agreement).

    2. Update and prepare workpapers in the appropriate places to reflect the issue(s) resolution.

    3. Reclassify the Administrative Record (if the case is a previously unagreed Form 5500) to a correspondence file.

    4. Issue the appropriate closing letter.

    5. Close the case to the TE/GE Closing Group.

  14. If the taxpayer provides additional information that changes the government’s position, discuss case resolution with the MR manager. If the MR manager agrees that the case can be resolved, the MR manager will coordinate case processing with the reviewer, field agent and agent’s manager.

  15. For all cases other than claims, if the taxpayer doesn’t respond or chooses not to appeal, then the case will proceed for 90-Day processing according to IRM 4.71.14.7.1.5, 90-Day Letter Procedures.

  16. For claims, if the taxpayer doesn’t timely file a protest to Appeals or provide a signed Form 2297 and Form 3363 the reviewer will:

    1. Issue Letter 906-A. See IRM 4.71.14 Exhibit 26 at IRM 4.71 - Employee Plans Examination Exhibits for Letter 906-A.

    2. Use disposal code 01 on AIMS and disposal code 210 in RCCMS to close the case to the MR manager.

    3. Mail the paper case file directly to TE/GE Closing Group.

      Note:

      Use the Philadelphia address in the "From" box of the Form 3210. The reviewer is the "Releasing official" .

      Note:

      90-Day procedures do not apply to claims.

  17. If a taxpayer agrees and signs Form 870-EP for a:

    1. Form 5330 examination or files Forms 5330, close the case per IRM 4.71.5.6.4, Closing Agreed Form 5330 Exams, and process any returns or checks received per IRM 4.71.5.6.2, Processing Delinquent Forms 5330 Received from the Taxpayer.

    2. Form 990-T examination or files Forms 990-T, close the case per IRM 4.71.10.4.4, Closing Agreed Forms 990-T, and process any returns or checks received per IRM 4.71.10.4.3, Processing Forms 990-T Received from the Taxpayer.

  18. If a taxpayer agrees and signs Form 4549-E for Form 1040/1120 discrepancy adjustments, close the case per IRM 4.71.4.5 1, Agreed Tax Change.

  19. If a qualification issue is resolved through a closing agreement, close the case per IRM 4.71.3.4, Closing Agreements.

Cases to Appeals
  1. When the taxpayer responds to the 30-Day letter with a protest to Appeals, the reviewer must determine if the protest is valid and scan the protest into RCCMS.

    Note:

    The requirements of a valid protest are in Pub 1020, (for Form 990-T, Form 5330 and Form 5500 protests) and in Pub 5 (for Claims, Form 1040 or Form 1120 protests).

  2. To determine if the protest is valid:

    1. Evaluate the protest.

    2. If no new information is presented, update the RAR to reflect the protest to Appeals request.

    3. If the protest has new facts or arguments and the information doesn’t change the IRS’s position, update the RAR to reflect the new information and the IRS’s rebuttal to the new information.

    4. Prepare an individually-designed letter (IDL) to send the revised RAR. Explain in the IDL that the revised RAR incorporates the protest and provide the case’s current status (being processed to Appeals).

    5. Mail the IDL and revised RAR to the taxpayer (plan sponsor, POA, as applicable).

      Reminder:

      Add the revised RAR and IDL to the correspondence section of the paper and RCCMS files (and to the Administrative Record for Form 5500 cases).

      Note:

      Save all forms and letters in the RCCMS Office Documents folder using the RCCMS Naming Convention, see IRM 4.71.1 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits

    6. Notify the MR manager (or designee) that you received a protest and of its status (valid, invalid, date you expect to respond to taxpayer, etc.).

  3. Ensure the statute of limitations will have at least 12 months when Appeals receives the case from MR. If not, obtain a statute extension.

  4. Verify that the Administrative Record is properly prepared for a proposed revocation or non-qualification. See IRM 4.71.3, Unagreed Form 5500 Examination Procedures and EP Exam Closing Agreements.

  5. If the return is a SFR Form 5330 or Form 990-T and the IRC 6651(a)(2) failure to pay penalty is proposed, complete Form 13496. Attach Form 13496 to the back of the SFR. See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496. See IRM 4.71.14.7.1.1.1 for instructions on completing Form 13496.

    Note:

    Form 13496 is not required if only the IRC section 6651(a)(1) failure to file penalty is proposed.

  6. To transfer the case to Appeals:

    1. Complete Form 3198-A selecting the box, "Forward to Appeals" .

    2. Complete the Appeals routing slip (Form 1725), routing the case to the Appeals Office in Boston, MA (Office Code 121). See IRM 4.71.14 Exhibit 11 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 1725 for a case going to Appeals.

    3. Complete the closing document (it must be signed and dated) and the RCCMS closing record:

      Reminder:

      Use disposal code (item 13) 07 (601 in RCCMS), "Appealed—Protest to Appeals" .

      Reminder:

      Use appeals code 121 (on the paper closing documents and in RCCMS), "Nondocketed" .

    4. Prepare an email for the MR manager (or designee) to send to the AIMS Coordinator and TE/GE Closing Group manager. Explain in the email that the case is ready to be closed to Appeals and contains all of the items listed in IRM 4.71.14.7.1.4 (8) and a completed Form 3210 listing the items in the email. Address the Form 3210 to the TE/GE Closing Group in Brooklyn (Attn: Charles Mazzarisi) with the sender being the MR manager. See IRM 4.71.14.1.4, Contact Information for Business Unit.

  7. If IRS assesses tax on a corporation of $100,000 in any given tax year, IRC 6621(c) imposes additional interest on amounts due.

    1. For EP exam purposes, section 6621(c) applies to Forms 5330 and to Form 1120 discrepancy adjustments.

    2. IRC 6621(c) applies only to "C" corporations.

      Note:

      IRC 6621(c) doesn’t apply to individuals, trusts or "S" corporations.

    3. The additional 2% interest only applies when IRS issued a 30-Day or 90-Day Letter and only when the taxpayer hasn’t paid the amount due within 30 days of the 30-Day or 90-Day Letter date (whichever is issued first).

    4. To make sure the additional 2% interest is assessed, enter the date the 30-Day or 90-Day Letter was issued (whichever is issued first) in item 03 of Form 5599. Enter the amount of tax and penalties due for the year in item 04 of Form 5599.

    5. Complete Form 5599 items 03 and 04 of Form 5599 for each year if tax of $100,000 or more is proposed against a C corporation in any single tax year.

  8. Make sure the following items are in the electronic RCCMS folder because the case can’t close without them:

    1. Dated 30-Day Letter(s) (taxpayer and POA, if applicable) with attachments

    2. Taxpayer’s valid protest letter with attachments (scanned)

    3. Revised RAR including the taxpayer’s protest and the IRS’s rebuttal.

    4. The individually-designed letter used to provide the revised RAR to the taxpayer (and POA, if applicable)

    5. Completed Form 12209

    6. Completed Form 1725

    7. Completed Form 5650 or Form 5599, (as applicable)

    8. Copy of the return(s)

  9. Transfer the case on RCCMS to the MR manager. The MR manager reviews the file to determine if the case is ready for Appeals.

  10. Hold the properly assembled paper case file until the MR manager sends an email stating the case is in status 51 and instructs you to mail the paper case file to Appeals.

  11. When the TE/GE Closing Group accepts the case and the case’s status is updated to 51, mail the paper case file, the Administrative Record (if applicable), and completed Form 3210 to Appeals. See IRM 4.71.14.1.4, Contact Information for Business Units for Appeal’s address.

  12. If MR receives additional information while the case file is in Appeals, notify Appeals (with your manager’s permission) and immediately send them the information. The MR manager will determine whether the proposed communication is necessary and whether it is an ex parte communication covered by RRA 98 limitations. See IRM 8.1.10, Ex Parte Communications for the rules on ex parte communications.

    Note:

    Notify the taxpayer that you provided the additional information to Appeals.

Cases Returned From Appeals
  1. Periodically, Appeals may return cases to MR for further development.

    Note:

    Until Appeals begins to use RCCMS, they’ll only return the physical case file.

  2. The MR manager will:

    1. Research MR records to determine the original reviewer. If he/she is still in MR, return case to that reviewer. If not, assign to another reviewer.

    2. Pull the RCCMS records from the RCCMS case library.

    3. Assign the case to the reviewer.

    4. Give reviewer specific instructions or observations, as needed.

  3. The reviewer will give the case high priority work status.

  4. After reviewing the case file and Appeal’s memo, the reviewer will determine if the case should be returned to the original field agent for further development.

    1. If the Appeals Officer's concerns can easily be remedied, do so and send the case back to Appeals.

    2. Get the MR manager’s permission to communicate with Appeals. The MR manager determines whether the proposed communication is necessary and whether it is an ex parte communication covered by RRA 98 limitations. See IRM 8.1.10, Ex Parte Communications for the rules on ex parte communications.

    3. Prepare Form 5456 (Reviewer’s Memorandum) and follow the procedures in IRM 4.71.14.7.1, Processing Unagreed Cases if you’re returning case to field.

90-Day Letter Procedures
  1. If the taxpayer fails to response to the 30-Day Letter, prepare a 90-Day Letter package (Final Revocation Letter, Final Non-Qualification Letter, or SNOD).

    Note:

    Allow an additional seven days beyond the 30-Day period (to account for mail delays) before preparing the 90-Day Letter, unless a statute is pending.

  2. For 30-Day Letters issued by the field, determine whether the 30-Day Letter package is correct. If any 30-Day Letter package item (the Letter, RAR, Form 870-EP, Form 4549-E, Form 5438) contains an error(s), discuss with the MR manager. The MR manager determines whether the 30-Day Letter must be re-issued.

  3. If the 30-Day Letter package must be re-issued, the MR manager will determine whether:

    1. The reviewer will make the corrections and re-issue the 30-Day Letter, or

    2. MR will return the case to the field to make the correction(s) and re-issue the 30-Day Letter.

    Note:

    If the case is returned to the field, prepare a Reviewer’s Memorandum (Form 5456) to explain the items requiring correction and the need for the letter to be reissued.

  4. Use the most current version of the 90-Day Letter. See the table below for which letter to use for specific case types, the letter’s most recent revision date (as of the IRM’s publication date), and the acceptable RCCMS naming convention to use:

    Use Letter Revision date RCCMS naming convention Acceptable variations
    Forms 1040/1120 - discrepancy adjustments 531-A 8-2016 3T1.UNAGR LTR 531-A 90 Day Discrepancy Adjustment  
    Forms 5330 or 990-T 531-B 5-2004 3T1.UNAGR LTR 531-B 90 Day Form 5330  
    Final Revocation 1757 5-2015 4.XXX LETTER 1757 Final Revocation  
    Final Non-Qualification 1757-A 5-2015 4.XXX LETTER 1757-A Final Nonqualification  

    Note:

    Follow the letter’s naming convention for additional items in the 90-Day Letter package.

    Example:

    Form 4549-E would be named 3T1.b UNAGR LTR 531-A 90 DISC ADJ Form 4549-E.

  5. The 90-Day Letter package for a Form 1040 or Form 1120 discrepancy adjustment includes:

    1. Letter 531-A (See IRM 4.71.14 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Form 4549-E

    3. RAR (Form 886-A)

    4. Form 4089

    5. Notice 1214

    Note:

    If the taxpayer jointly filed a Form 1040, a separate letter must be mailed to each spouse.

  6. The 90-Day Letter package for a Form 5330 or Form 990-T exam includes:

    1. Letter 531-B (See IRM 4.71.14 Exhibit 15 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Pub 1

    3. Pub 594

    4. Form 870-EP (See IRM 4.71.14 Exhibit 4 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 870-EP.)

    5. Notice 1214

    6. RAR (Form 886-A)

    7. Return Envelope

  7. The 90-Day Letter package for a Final Revocation/Non-qualification consists of:

    1. Letter 1757 (for Final Revocation) or Letter 1757-A (for Final Non-qualification) (See IRM 4.71.14 Exhibits 14 and 16 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Pub 1

    3. Pub 1020

    4. Explanation of Final Revocation/Non-Qualfication (Summary RAR)

  8. See IRM 4.71.14.7.1.5.2, Statutory Notice of Deficiency, for additional guidance related to the issuance of 90-Day Letters for Forms 5330, 990-T, or 1040/1120.

  9. Use the correct salutations in the 90-Day Letters:

    1. L-531-A for an individual(s), use the name(s) on Form 1040.

    2. L-531-B for a Form 5330, use the individual’s name per a) above.

    3. L-531-B for an organization (any entity that is not an individual), use the organization’s legal name as shown on federal tax returns.

    4. L-1757 series letter, use the plan sponsor’s name (Dear ABC, Inc.). Do not use the plan name or an individual’s name.

      Note:

      The address line of the letter can include an individual name.

      Example:


      ABC, Inc.
      c/o John Doe
      12 Main Street
      City, State Zip

  10. Area Counsel approval:

    1. Must be obtained before the 90-Day Letter for Forms 5500, 990-T and 5330 is issued.

    2. Is optional for Forms 1040/1120 discrepancy adjustments.

    3. Is solicited from the Area Counsel office that has jurisdiction over the area where the taxpayer resides.

      Exception:

      Specific Counsel attorneys may be assigned to special project cases such as ATAT cases or Promoter project cases. In those instances, review case project procedures to determine designated Counsel attorneys.

  11. Before sending a case to Counsel for a 90-Day Review:

    1. Prepare a draft of the applicable 90-Day Letter. Complete all parts except the date. Date the letter when you later mail it. Send the case to the 90-Day Reviewer, following the procedures in IRM 4.71.14.5.2.5.1, Transfer to 90-Day Reviewer.

    2. Prepare a Summary RAR. The Summary RAR is generally a one to four page summary of the Issues, Facts, Law, Analysis, and Conclusion. In some cases (like ATAT projects), Counsel may want to prepare the Summary RAR. See IRM 4.71.14 Exhibit 20 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a Summary RAR

    3. If the taxpayer has a representative(s), make sure that all years listed on the 90-Day Letter are listed on a Form 2848 or Form 8821. If they are not, secure a revised Form 2848 (or Form 8821); otherwise, you can’t send the 90-Day Letter to the representative(s).

      Note:

      A taxpayer may use different representatives for different years.

    4. Ensure that the Administrative Record is correctly prepared per IRM 4.71.3.4.4, Administrative Record, for Form 5500 cases involving revocation or non-qualification. See IRM 4.71.14 Exhibit 12 at IRM 4.71 - Employee Plans Examination Exhibits for an Administrative Record Index template.

      Note:

      Unagreed Forms 5330, 990-T or 1040/1120 and agreed companion (ride along) Forms 5500 don’t have an Administrative Record. For these cases, include copies of all correspondence and relevant documents in the correspondence section of the case file.

      Note:

      Discuss closing any agreed companion (ride along) returns with the MR manager.

      Example:

      An "agreed" Form 5500 is transferred to MR as a companion (ride along) case to an unagreed Form 5330, 990-T or 1040/1120 examination.

    5. Email the 90-Day Letter(s), full RAR, Summary RAR, Administrative Record Index (if applicable), Form 4089 (if applicable), and Form 870-EP (if applicable) to the MR manager (or designee).

    6. If the MR manager (or designee) has concerns with the case or the 90-Day Letter package, they’ll discuss them with the reviewer and determine appropriate actions and/or revisions to the 90-Day package.

      Note:

      The MR manager resolves any disagreements.

      Note:

      You can’t send the case to Counsel until all the recommended actions/revisions have been addressed.

    7. Subparagraphs e) and f) above do not apply if the 30-Day Letter package was previously submitted to the MR manager (or designee) for review and approval and no changes were made since that time.

  12. When you receive MR manager approval (required when the MR manager didn’t previously approve the 30-Day Letter), the reviewer will:

    1. Prepare a transmittal memo for Counsel requesting a formal 90-Day Letter review.

    2. Send the entire paper case file (with the Administrative Record for Forms 5500) to Counsel.

      Note:

      Place the transmittal memo on top of the case file.

    3. Email the transmittal memo, 90-Day Letter, full RAR, Summary RAR, Administrative Record Index (if applicable), and Form 870-EP, Form 4089, Form 4549, (as applicable) to the Counsel attorney conducting the 90-Day review.

    4. Use the RCCMS naming convention of "2.2 Request for Counsel Review" followed by a descriptive extension (such as SNOD for 1040, SNOD for 5330, Final Disqualification, Final Revocation, etc.) for the request package (transmittal memo and 90-Day Letter package)

      Note:

      You may use an email as the transmittal memo.

  13. Generally, Counsel has 45 days to review and return the case file to the reviewer.

    Note:

    While the case is in Counsel, the reviewer is responsible for protecting the statute of limitations.

  14. When Counsel returns the case, their recommendations will be noted in a Counsel Recommendation Memo.

    Note:

    Use the RCCMS naming convention of "2.1 Counsel Recommendation Memo" followed by a descriptive extension (such as SNOD for 1040. SNOD for 5330, Final Disqualification or Final Revocation.)

  15. The reviewer will:

    1. Generally, follow the recommendations in the Counsel Recommendation Memo and document the CCR accordingly.

    2. Deviate from Counsel’s recommendation(s) only after providing the MR manager with justification for deviation and any alternate actions proposed.

      Note:

      The reviewer should try to get concurrence from the attorney who wrote the memo on any deviation agreement before discussing with the manager. This can be done via e-mail. Sometimes items can be clarified and Counsel agrees with the change.

    3. Obtain written approval from the MR manager for any deviation(s) and the agreed upon alternate action(s).

    4. Follow the procedures in IRM 4.71.14.6.1.5, 90-Day Letter Procedures, or transfer the case to the 90-Day Reviewer under the procedures in IRM 4.71.14.7.1.5.1, Transfer to 90-Day Reviewer.

  16. Generally, reviewers issue 90-Day Letter packages on the cases they review. The MR manager determines the exceptions to the general rule.

    Note:

    Reviewers not issuing 90-Day letters will transfer their case under IRM 4.71.14.7.1.5.1, Transfer to 90-Day Reviewer. After the transfer, the 90-Day Reviewer issues the 90-Day Letter package and becomes the case owner (is fully responsible for the case and its closure from MR).

  17. After getting Area Counsel approval, the reviewer or 90-Day Reviewer emails the Mid-Atlantic EP Area Manager (with a "cc" to the MR manager) the entire 90-Day Letter package. Include the Counsel Recommendation Memo, if applicable.

    1. Note the email’s purpose in its subject line.

      Example:

      Approval request for issuance of discrepancy adjustment SNOD.

    2. At the top of the email, list the entity name, the years covered, the form number and the statute date.

      Example:


      RE: Jane Doe 90-Day Letter for discrepancy adjustment.
      Form: 1040
      Years: 12-31-2015
      SOL: 04-15-2019

    3. In the body of the email: ask the Mid-Atlantic Area Manager to electronically sign the letter and the EP manager to approve the letter’s issuance by signing the attached Form 1725 (the buck slip included in the email).

      Note:

      The RCCMS naming convention for the buck slip is 3T1. ("e" or the next letter in the sequence) UNAGR 90 F-1725.

    4. Address the buck slip to the Area Manager. Identify the taxpayer (name, plan number), issue(s), form number, years covered and the corresponding statute date(s). State whether you followed Counsel’s recommendation and, if applicable, whether you’ll send the POA a copy of the letter.

      Reminder:

      Send separate emails for each 90-Day Letter package (complete with all attachments) to the Mid-Atlantic Area Manager (with a cc to the MR manager) for all packages requiring approval.

  18. When the MR manager returns the approved Form 1725 (buck slip) and the Mid-Atlantic Area Manager returns the electronically signed letter:

    1. Prepare the mailing envelopes and PS Forms 3800 (certified mail). The PS Form 3800 must stay on the prepared envelope until it’s date-stamped by the post office. Then staple PS Form 3800 to the first page of the file copy of the 90-Day Letter in the administrative record (Form 5500) or in the case file (Forms 1040, 1120, 5329, 5330, 990-T). When you receive the signed green card with the post office stamp (tear away portion), staple it to the bottom left of the first page of the file copy of the 90-Day Letter. If there is a representative copy, staple it to the representative’s copy of the letter.

      Note:

      Include in the lead case file folder a complete file copy of the 90-Day package. On the bottom of the copy of the 90-Day Letter notate, "Copy of letter sent to taxpayer" . Include the Counsel approval memo (or email) on the inside left of the lead file

      .

    2. If the taxpayer has a representative, send a certified copy of the full 90-Day Letter package (under cover letter Letter 937-A) and follow the same procedures in a) above regarding certified mail.

  19. Place signed and dated file copies of the 90-Day Letters in the Administrative Record (Form 5500) or case file (Form 5330, Form 990-T, Form 1040 or Form 1120).

  20. Update the case to status 24 (90-Day) through RCCMS immediately after mailing the 90-Day Letter to the taxpayer.

    Note:

    When the case is updated to status 24 in RCCMS, make sure the AIMS box is checked so that AIMS gets updated when the "update" request is made. Print a new AMDISA that shows the update. Place it in the lead paper file and post the electronic print in RCCMS.

  21. Check and complete the "Stat Notice Issue Date" box on Form 3198-A.

  22. A 90-Day Letter package includes:

    1. The applicable 90-Day Letter (531-A, 531-B, 1757, 1757-A). The reviewer determines the correctness of the letter number, series, salutation and address.

      Note:

      The "Person to Contact" will be either the reviewer or the 90-Day Reviewer with their ID and telephone numbers noted.

    2. Summary RAR

    3. Final RAR (the one sent with the 30-Day Letter)

    4. Counsel Recommendation Memo with reviewer’s comments and/or response to Counsel and/or the MR manager, if applicable.

    5. Form 870-EP (Forms 5330 and 990-T)

    6. Administrative Record Index (Form 5500)

    7. INOLES print (if address differs from the address reflected on the 90-Day letter, an explanation is warranted)

      Example:

      INOLES is wrong, taxpayer confirmed correct address with reviewer.

  23. Complete Form 13496 if the return is a Form 5330 or Form 990-T Substitute for Return (SFR) and the IRC 6651(a)(2) penalty (failure to pay) is asserted. Attach Form 13496 to the back of the SFR. See IRM 4.71.14 Exhibit 22 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 13496. See IRM 4.71.14.7.1.1.1 for instructions on completing Form 13496.

  24. If the taxpayer has a valid representative, prepare a separate 90-Day Letter package for the POA. Verify that all years listed on the 90-Day Letter are listed on Form 2848 or Form 8821. If not, secure a revised Form 2848 (or Form 8821). Otherwise, you can’t mail the 90-Day package to the representative.

    Note:

    A taxpayer may use different representatives for different years.

  25. Update the case to status 24 (90-Day) through RCCMS immediately after mailing the 90-Day Letter. When updating the case to status 24 in RCCMS, ensure the AIMS box is checked so AIMS updates when the "update" request is made. Print a "new" AMDISA for each year and place each in its respective folder.

  26. After issuing the 90-Day Letter, place the case in suspense (a 90-Day drawer) for 90 days or, if earlier, the time the taxpayer petitions tax court or files the appropriate waiver.

    Note:

    Suspend the case for 7 to 10 days past the 90-Day period to allow for time lags in mailing and inputting information.

  27. MR receives a daily docket listing from the Director, Legal Processing Division, Procedure and Administration Office of Chief Counsel. Check it daily to determine if the U.S. Tax Court has been petitioned. You can also find this information at www.ustaxcourt.gov, by selecting "Docket Inquiry," and searching by name to determine if the taxpayer has petitioned the Tax Court.

    Note:

    A "P" at the end of the docket number indicates a retirement plan case.

  28. If the recipient of the Final Revocation Letter or SNOD files a petition with the U.S. Tax Court:

    1. Contact the Area Counsel attorney responsible for the case to let them know the case is being closed to Counsel through the Appeals function.

    2. Ask the Counsel attorney if they want the Administrative Record mailed directly to them (if there is an Administrative Record).

    3. Prepare the case for closing.

      Note:

      The Appeals Office Code is 221 for cases going to Tax Court, and the disposal code is 11 on AIMS and 603 in RCCMS - Unagreed - Petition to Tax Court.

  29. When you determine the case is ready to go to Counsel, send the case closure to the MR manager for approval.

  30. The MR manager or designee will send an email to the AIMS Coordinator and TE/GE Closing Group manager attaching the following:

    1. Copy of all returns MR is sending to Counsel

    2. All closing documents (for example, Forms 5650 or 5599) for those returns

    3. The 90-Day Letter and attachments (Final Revocation, Final Non-qualification, SNOD)

    4. Explanation of Revocation, Explanation of Non-qualification or RAR (related to SNOD)

    5. Form 3210, listing all of the items included

  31. Forward the RCCMS case to the MR manager to close the case on AIMS and RCCMS to the TE/GE Closing Group.

  32. Once the TE/GE Closing Group accepts the case and puts it in status 51, the MR manager prepares Form 3210 listing all cases and mails the closed paper files to Boston Appeals Processing for assignment to the Area Counsel office litigating the case.

    Note:

    The Administrative Record and paper documentation (other than the return files) maybe mailed directly to the Counsel Attorney or the local Appeals Office supporting that Area Counsel.

  33. When Appeals or Counsel returns the acknowledged Form 3210, the MR manager will send a copy of the form to the TE/GE Closing Group manager.

  34. If MR receives information while the case file is in appellate review, notify the Appeals Office or Counsel immediately.

  35. If a Tax Court petition is not timely filed:

    1. Prepare the case for closing as a defaulted case.

    2. Use AIMS disposal code 10 and RCCMS code 604.

    3. Forward the case file to the MR manager to route to the TE/GE Closing Group for final disposition and tax assessment.

  36. If taxes are being assessed, the reviewer will make sure the Form 5599 is properly prepared and when appropriate, the additional 2% interest per IRC 6621(c) is assessed.

    1. For EP exam purposes, IRC 6621(c) applies to Forms 5330 and to Form 1120 discrepancy adjustments where the amount of tax to be assessed is $100,000 or more.

    2. The additional interest applies only to "C" corporations, not to individuals or trusts or "S" corporations.

    3. The additional 2% interest applies only when IRS issued a 30-Day or 90-Day Letter and the taxpayer didn’t pay the amount due within 30 days of the date on the 30-Day Letter or 90-Day Letter (whichever is issued first).

    4. To make sure the additional 2% interest is assessed, the reviewer must enter the date the 30-Day Letter or 90-Day Letter was issued (whichever is issued first) in item 03 and the amount of tax and penalties due for the year in item 04 of Form 5599.

    5. Complete Form 5599 items 03 and 04 for all years in which IRS issued a 90-Day Letter if tax of $100,000 or more is being assessed against a C corporation in a given tax year and the taxpayer didn’t timely pay per paragraph c) above.

Transfer to 90-Day Reviewer
  1. The "90-Day Reviewer" is the reviewer the MR manager designates to issue the 90-Day Letter package.

  2. This section applies to a case that is transferred to the 90-Day Reviewer.

  3. When a case is transferred to a 90-Day Reviewer, that reviewer becomes fully responsible for the case and will keep the case until the case is closed.

  4. Before transferring the case to the 90-Day Reviewer:

    1. Use the 90-Day Reviewer’s information for the: address on the letter, the "Person to Contact," the ID, and telephone number.

    2. Print the entire 90-Day Letter package (except for the pubs and/or notices) and place it top of the paper file.

      Note:

      The 90-Day Reviewer is responsible for including the current version of all pubs and/or notices with the 90-Day Letter when it is mailed to the taxpayer.

    3. Make sure a complete copy of the 30-Day Letter package is in the case file.

    4. Complete Form 5650 or Form 5599 as applicable. Leave the disposal code blank.

  5. Ensure a copy of the return(s), all forms, all workpapers, all correspondence, and all research are saved in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  6. Assemble the paper case file per IRM 4.71.12, Case File Assembly.

  7. When the 90-Day Reviewer receives the complete case file (RCCMS files, paper case files and the 90-Day Letter package), he or she will review the 90-Day Letter package:

    1. Immediately, if the statute of limitations will expire within 45 days.

    2. Within 10 workdays of receipt, if the statute of limitations will expire in more than 45 days.

  8. The 90-Day Reviewer will:

    1. Make any necessary minor corrections to the 90-Day Letter Package.

    2. Contact the original reviewer to discuss any significant corrections identified to see if all facts are understood and to determine if a solution can be reached. If there is a difference in opinion between the 90-Day Reviewer and the original reviewer on the type or extent of the change(s), the MR manager will resolve any differences and determine if the case will be returned to the original reviewer.

    3. If the taxpayer has a representative, make sure that all years listed on the 90-Day Letter are listed on Form 2848 or Form 8821.

      Note:

      If not, secure a revised Form 2848 (or Form 8821) from the taxpayer or POA. If all years aren’t listed and you don’t receive a revised form, don’t send a 90-Day Letter package to the POA.

Statutory Notice of Deficiency (SNOD)
  1. A SNOD is the 90-Day Letter issued for Forms 5330, 990-T and 1040/1120 discrepancy adjustments.

    Note:

    90-Day Letters issued for final revocations and final non-qualifications are not per se SNODs; no direct tax deficiency results when the letter is issued.

  2. Follow the same general 90-Day procedures in IRM 4.71.14.7.1.5, 90-Day Letter Procedures, for a SNOD.

  3. A SNOD is the Commissioner’s, as a delegate of the Secretary legal determination of the taxpayer’s tax liability.

  4. Director, EP Examinations and Area Managers are authorized to sign the SNOD, on behalf of the Commissioner.

  5. A taxpayer must file a Tax Court petition within 90 days (150 days if the taxpayer is outside the United States) after the SNOD has been mailed.

    Note:

    All references in this Manual to the 90-Day Letter shall be read to include the 150-Day Letter when applicable.

  6. All SNODs must specify the date the IRS has determined to be the last day for filing a petition with the Tax Court.

  7. A SNOD for Form 5330 or Form 990-T includes:

    1. Letter 531-B (See IRM 4.71.14 Exhibit 15 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Pub 1

    3. Pub 594

    4. Form 870-EP

    5. Notice 1214

    6. Revenue Agent Report (Form 886-A)

    7. Return envelope

  8. A SNOD for Forms 1040 and 1120 includes:

    1. Letter 531-A (See IRM 4.71.14 Exhibit 13 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Form 4549-E

    3. Revenue Agent Report (Form 886-A)

    4. Form 4089 (See IRM 4.71.14 Exhibit 27 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 4089)

    5. Notice 1214

    6. Pub 1

    7. Pub 594

    8. Return envelope

      Reminder:

      If MR is transferring the case to the 90-Day Reviewer to issue a SNOD, there is no need to send copies of publications and notices with the paper case file. The 90-Day Reviewer will add those documents to the SNOD package.

  9. Send the SNOD by certified mail to the taxpayer's last known address. If the taxpayer’s current address is not known, get an INOLES print to determine the last known address.

  10. If the SNOD is for a jointly filed Form 1040, you must send a duplicate copy of the SNOD by certified mail to each spouse at his or her last known address, even if they reside at the same residence.

Issuance of 90-Day Letter Packages
  1. When the Mid-Atlantic Area Manager electronically signs the letter and the MR manager returns the approved Form 1725 (buck slip)

    1. Prepare the mailing envelopes and PS Forms 3800 (certified mail). The PS Form 3800 must stay on the prepared envelope until it is date-stamped by the post office. Then staple PS Form 3800 to the first page of the file copy of the 90-Day Letter in the administrative record (Form 5500) or in the case file (Forms 1040, 1120, 5329, 5330, 990-T). When the reviewer/90-Day Reviewer receives the signed green card with the post office stamp (tear away portion), staple it to the bottom left of the first page of the file copy of the 90-Day Letter. If there is a representative copy, staple it to the representative’s copy of the letter.

      Note:

      Include in each file folder a complete file copy of the 90-Day package. On the bottom of the copy of the 90-Day Letter notate, "Copy of letter sent to taxpayer." Include the Counsel approval memo (or email) on the inside left of the first file folder with the letter addressed to the taxpayer

    2. If a representative received a copy of the letter, place it in a separate folder with nothing on the outside of the folder (except a post-it note saying "rep" ). Include in the folder, Letter 937-A and the same attachments as the folder containing the letter to the taxpayer.

  2. Place signed and dated file copies of the 90-Day Letters in the Administrative Record (Form 5500) or case file (Forms 5330, 990-T or 1040/1120).

  3. Process the case per paragraphs (19) through (25), (27) and (28) of IRM 4.71.14.7.1.5,90-Day Letter Procedures.

  4. Update the case to status 24 (90-Day) through RCCMS immediately after mailing the 90-Day Letter to the taxpayer.

    Note:

    When the case is updated to status 24 in RCCMS, make sure the AIMS box is checked so that AIMS gets updated when the "update" request is made. Print a new AMDISA showing the update. Place it in the lead paper file and post the electronic print in RCCMS.

  5. Check and complete the "Stat Notice Issue Date" box on Form 3198-A.

Statute Considerations
  1. Generally, the issuance of the 90-Day Letter suspends (extends) the statute of limitations:

    1. 150 days (90 days to petition tax court plus, an additional 60 days to process the case) for taxpayers in the United States.

    2. 210 days (150 days to petition tax court plus, an additional 60 days to process the case) for taxpayers outside the United States.

  2. However, by signing Form 870-EP or Form 4089 the taxpayer waives his/her right to petition tax court.

    1. As a result, the additional time by which the statute of limitations was "extended" (by the issuance of the 90-Day Letter) is shortened by the amount of time remaining from the date the taxpayer signed Form 870-EP or Form 4089 to the deadline to petition tax court.

      Example:

      Assume a SNOD is issued on June 1, 2018 on a Form 5330 return with a statute expiration date of July 31, 2018. The taxpayer has 90 days (until August 30, 2018) to petition tax court. The statute of limitations would be "extended" to December 28, 2018, by the issuance of the 90-Day Letter (150 days are added to the original statute date). However, if the taxpayer signs Form 870-EP on June 21, 2018 (with 70 days remaining in the 90 day period), the statute of limitations would be shortened by 70 days to October 19, 2018.

     

  3. Update the statute of limitations on AIMS and RCCMS after mailing the 90-Day Letter and when the taxpayer signs Form 870-EP or Form 4089.

Rescinding Statutory Notices Of Deficiency
  1. This section does not apply to Final Revocation and Final Non-qualification letters. They are not "Notices of Deficiency" and therefore, not subject to this section of the IRM.

  2. The Secretary may, with the consent of the taxpayer, rescind any SNOD mailed to the taxpayer.

  3. The taxpayer or the IRS may initiate rescission of a SNOD.

  4. A SNOD may only be rescinded with the taxpayer’s consent.

  5. Whether or not a notice is rescinded is at the Secretary’s discretion.

  6. Consult the MR manager when you might need to rescind a previously issued SNOD on a case still in MR.

  7. MR must consult Area Counsel before rescinding a SNOD.

Criteria for Rescinding
  1. The decision to rescind a SNOD is made on a case-by-case basis. A rescission may be agreed to if:

    1. A SNOD has been issued for an incorrect amount. The taxpayer must be advised that, once rescinded, another SNOD may be issued for a different amount.

    2. The SNOD was issued to the wrong taxpayer.

    3. The SNOD was issued for the wrong tax period.

    4. The taxpayer submits information establishing the actual tax due is less than the amount shown in the SNOD.

    5. Other extenuating circumstances warrant rescission.

  2. A rescission won’t be entered into if:

    1. On the date of the rescission, 90 days or less remains before the expiration date of the period of limitations on assessment,

    2. The 90-Day period under IRC 6213(a) has expired without the taxpayer filing a petition with the Tax Court,

    3. The taxpayer has filed a petition with the Tax Court, or

    4. The taxpayer and the IRS, prior to the issuance of the notice of deficiency, have executed a Form 872–A covering any of the tax years in the notice of deficiency. A notice of deficiency may be rescinded in this situation, however, if prior to rescinding the notice of deficiency the taxpayer and the IRS execute a new Form 872–A covering the same tax years as the earlier Form 872–A.

Statute of Limitations Considerations Before Rescinding Notice
  1. Since the rescission agreement returns the case back to its original statute before the SNOD was issued, carefully consider the statute before you enter into a SNOD rescission.

  2. The rescinded SNOD suspends the running of the statute of limitations only for the period during which the SNOD is outstanding. A new statute date will need to be determined if another SNOD is issued to make assessments.

  3. If there are at least 90 days remaining on the statute, a rescission may be entered into. If less than 90 days remains on the statute, the SNOD will be rescinded only if the taxpayer executes a Form 872 or Form 872–A to extend the statute.

  4. If there was a Form 872–A on the case before the SNOD was issued, the rescission won’t be granted unless the taxpayer signs another Form 872–A before the rescission.

Agreement to Rescind Notice of Deficiency
  1. Use Form 8626 to secure an agreement between the taxpayer and the government to rescind a SNOD.

  2. The originator of the SNOD prepares, controls and executes the form.

  3. Regarding the rescission agreement:

    1. It must apply to the same tax periods as the SNOD.

    2. More than one year can be entered on the rescission agreement form.

    3. The agreement must contain all taxable years covered in the SNOD. All tax years covered will be entered below the first paragraph under "Tax Year Ended."

  4. The rescission agreement must reflect the same deficiency and penalties as the SNOD.

  5. If the SNOD was issued to both a husband and wife, both spouses or authorized representative(s) for the parties must sign the rescission agreement.

  6. Prepare Form 8626 in duplicate. Once executed:

    1. Attach one copy of the form to the front of the SNOD.

    2. Send the second copy to the taxpayer.

  7. The rescission agreement is effective on the date the Commissioner or delegate countersigns the Form 8626.

  8. Use Letter 2264 (DO) to request the taxpayer’s concurrence to rescind by signing Form 8626.

  9. Use Letter 2262 (DO) to send a copy of the executed rescission agreement to the taxpayer.

  10. Use Letter 2263 (DO) to advise the taxpayer that the rescission is not being granted and the SNOD will remain in effect.

Completion of Form 5599 and RCCMS Tabs
  1. To validate a case for closure in RCCMS, complete any field that appears in red. These fields correspond to the required items on Form 5599 as detailed below.

  2. A Form 5599 must be completed when closing Forms 5330, Forms 990-T, Forms 1040/1120 discrepancy adjustments and MFT 99 Non-Return Unit (NRU) examinations.

  3. Complete Form 5599 as follows:

    ITEM EXPLANATION
    P7-18—TIN Insert the EIN or SSN for the Taxpayer. Use a file source of "V" with an SSN (for example, 123-45-6789V) related to a Form 5330.
    P21 - 22— MFT Form 1040 = 30; Form 5329 = 29; Form 1120 = 02; Form 5330 = 76; NRU = 99; Form 990-T = 34.
    P24 -29 — Tax Period Insert the tax year being adjusted.
    P31-34—Name Control Insert the first four letters of the last name for individuals or the first four letters of the name for other entities as found on an AMDISA print.
    P53-55— Plan/Report Number For Forms 5330, enter the number of the related plan.
    C—Name Insert taxpayer's name (last name first for Form 1040).
    08—Agreement Date Insert the date the signed Form 4549-E is received (if applicable).
    12—Tax Liability Adjustment Enter a transaction code of 300 and $0 if no additional tax is being assessed above what is reflected on the return secured by the examiner or the reviewer. If additional tax is being assessed above what was reported on a filed return, enter a transaction code of 300 and the additional amount of tax being assessed.
    12—Penalties Insert Code "320" for civil fraud penalty and amount of penalty. If Form 870-EP is signed by the taxpayer and the agent is assessing IRC 6651 penalties, enter transaction code 160 and the amount of penalties that are being assessed.

    Note:

    If IRS secures a delinquent Form 5330 and forwards it to Ogden, the Campus will assess penalties on the return unless the agent provides instructions to the contrary.

    Note:

    IRC 6662 penalties should be reflected on item 15.

    13—Disposal Code 01 = "Regulatory/Revenue Protection" : Use to close an agreed claim or a claim that is not protested to Appeals.
      02 = "No Change"
      03 = "Agreed Tax Change"
      06 = "Delinquent Return Secured"
      07 = "Unagreed - Protest to Appeals"
      10 = "Unagreed - Without Protest"
      11 = "Unagreed - Petition to Tax Court"
    14— Statute Extended to If the statute was extended, insert the current (extended) statute of limitations date,. If the statute has not been extended, leave this item blank.

    Note:

    Don’t use alpha codes in the blocks for item 14. If the statute has been updated to an alpha code (for example, 12/EE/2021), write the alpha code statute to the right of the blocks; enter the actual numerical statute in the blocks (for example, 12/31/2021).

    15— Credit and Tax Computation Adjustments Leave this item blank, if the dollar amount in item 12 is $0. If line 12 contains a dollar amount (for example, additional tax is being assessed on a previously filed return), then list a reference number (manual abstract code) here with the additional amount of tax being assessed (additional tax being assessed is listed in both items 12 and 15). Examples of reference numbers are:
    IRC 4971(a) = 163
    IRC 4971(b) = 225
    IRC 4972 = 161
    IRC 4973(a) = 164
    IRB 4975(a) = 159
    IRC 4975(b) = 224
    IRC 4979 = 205
    IRC 4979A = 203
    IRC 4980 = 204
    IRC 6662 = 680
    IRC 6707A = 648
    UBIT = 886
    16— Appeals Office Code An entry is required when the taxpayer files a protest to Appeals or petitions tax court. The applicable codes are as follows:
    121 = Protest to Appeals (non-docketed case)
    221 = Petition Tax Court (docketed case)
    18— Unagreed Amount If the case is going to Appeals, enter the amount of tax and all penalties (except IRC 6651(a)(2)) for the year.
    28— Examiner’s Time Enter time in whole hours and in tenths of hours.
    30— Technique Code Applicable codes:
    2 – Correspondence exam - full scope
    4 – Field exam - full scope
    6– Correspondence exam - limited scope/focused audit
    7 – Field exam - limited scope/focused audit

    Note:

    OCEPs were eliminated effective October 5, 2018

    31— Agent’s Grade Enter applicable grade level.
    32— Case Grade Enter the grade of the case in the blocks from left to right as two digits:
    Grade 9 = 09
    Grade 11 = 11
    Grade 12 = 12
    Grade 13 = 13
    33— Examiner’s Name Enter the last name, leave a space and then enter the first initial.
    37— Delinquent Return Code Enter the delinquent return code if a delinquent Form 5329, 5330 or 990-T is picked up. If there is only one delinquent return, enter a "T" . If there’s more than one delinquent return, enter a "T" in the latest year and an "R" in all prior years. No entry if the return is a SFR.
    40— Special Project Code Use the same project code as used for Form 5500.
    41a— No Change Issue Codes Enter "99999999" for Form 1040 with Disposal Code "02" . Otherwise, no entry is required.
    42— ARDI Code An entry is required only if the disposal code is "03" . Leave blank if case is being closed "No Change" or is "Unagreed" .
      Applicable Codes Are:
    1— Fully Paid
    2— Not Paid
    3— Partially Paid
    4— Installment Agreement with payment
    5— Installment Agreement without payment
    50— Employee Group Code Enter the group number of the agent who worked the case.
    I— Reviewer Enter your name and the date the form was completed.
     

    Note:

    Check the box at the bottom of page one to indicate that there is an entry on page two, if applicable.

    701— Principal Issue Code For Form 1040/1120 discrepancy adjustments, use Code "27" in most cases. See Document 6476. On "Unagreed" cases field agents should have left line 701 blank; however, reviewers should complete this item.
    414- Delinquent Return Amount Leave blank.
    415 - Amended Return Amount Leave blank.
  4. See IRM 4.71.14 Exhibit 17 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 5599 for a case going to Appeals.

Completion of Form 5650 and RCCMS Tabs
  1. To validate a case for closure in RCCMS, complete any field that appears in red. These fields correspond to the required items on Form 5650 as detailed below.

  2. Complete Form 5650 when closing Forms 5500 and MFT 74 NRU examinations.

  3. Complete Form 5650 as follows:

    ITEM EXPLANATION
    P7-18—TIN Insert the EIN for the taxpayer.
    P21 - 22— MFT Enter 74.
    P24 -29 — Tax Period Insert the tax year being examined.
    P31 - 34—Name Control Insert the first four letters of the last name for individuals or the first four letters of the name for other entities as found on an AMDISA print.
    P59 - 61 — Plan Number Enter the plan number.
    C—Name Insert taxpayer's name (last name first for Form 1040).
    13—Disposal Code 02 = "No Change"
      07 = "Unagreed - Protest to Appeals"
      10 = "Unagreed - Without Protest"
      11 = "Unagreed - Petition to Tax Court"
      15 = "Closing Agreement"
    14— Statute Extended to Enter the current statute expiration date (without alpha codes) whether or not the statute has been extended with Form 872

    Note:

    Do not use alpha codes in the blocks for item 14. If the statute has been updated to an alpha code (for example, 12/PP/2018), write the alpha code statute to the right of the blocks; enter the actual numerical statute in the blocks (for example, 12/31/2018).

    16— Appeals Office Code An entry is required when the taxpayer files a protest to Appeals or petitions tax court. The applicable codes are as follows:
    121 = Protest to Appeals (non-docketed case)
    221 = Petition Tax Court (docketed case)
    28— Examiner’s Time Time must be entered in whole hours and in tenths of hours.
    30— Technique Code Applicable codes:
    2 – Correspondence Exam - full scope
    4 – Field exam - full scope
    6 – Correspondence Exam - limited scope/focused exam
    7 – Field exam - limited scope/focused exam
    31— Agent’s Grade Enter applicable grade level.
    32— Case Grade Enter the grade of the case in the blocks from left to right as two digits:
    Grade 9 = 09
    Grade 11 = 11
    Grade 12 = 12
    Grade 13 = 13
    33— Examiner’s Name Enter the last name, leave a space and then enter the first initial.
    40— Special Project Code Enter the same project code assigned to the lead case.
    42—ARDI Code If the disposal code is 15, enter the appropriate Accounts Receivable Dollar Inventory (ARDI) code.
    50— Employee Group Code Enter the group number of the agent who worked the case.
    602— EP Taxes Enter excise tax picked up during the exam that is not reflected on Form 5599 of a related Form 5330 exam.
    603— Penalty Enter any penalties picked up during the exam that are not reflected on Form 5599 for the related Form 5330 exam.
    604— EP Penalties & Interest Enter totals from line 603.
    605— Adjustments to SBSE An entry is required when disposal code 13 is used. Enter the amount of proposed adjustments referred to an Examination Functional Unit (e.g., SB/SE) for the specific plan and year to which the Form 5650 relates. Don’t enter an amount on this line if the case is closed disposal code 15.
    606— Total Deductions Claimed Enter deductions claimed for contributions to the plan. Must be at least $1.
    607— Total Assets Enter total trust assets as of the end of the plan year. Must be at least $1.
    608— Number of Participants Affected Enter the number of participants that were directly affected by the exam (e.g., a change in account balance or vesting percentage). Must enter 0 if none are directly affected (cannot be left blank).
    609— Type of Plan Enter "1" if a defined benefit plan or "2" if a defined contribution plan.
    610— EP Issue Code Enter the applicable Issue Code(s) that relate to the Disposal Code. See Document 6476 for a list of Issue Codes.
    612— EP NAICS Code Enter the applicable NAICS Code (See Document 6476).
    613— EP Closing Agreement Insert the sanction amount of any closing agreement entered into (if a closing agreement involves more than one year, enter the amount in the earliest year and $1 in the other years). If the sanction amount is $0, enter $1 in item 613. When the closing agreement amount is entered in item 613, the entry should be right justified.
    I— Reviewer Enter your name and the date the form was completed
    M— Form Number Enter "Form 5500"
  4. See IRM 4.71.14 Exhibit 18 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 5650 for a case going to Appeals.

Agreed Cases Reviewed Per Management Request

  1. Sometimes, management will request MR to review certain open agreed cases. After reviewing these cases the reviewer will:

    1. Provide requested feedback to management. This feedback can be in the form of Form 5456 or any other form of communication the EP manager determines.

    2. Close the case to EP Examinations, Support Processing, or return the case to the group, as applicable.

  2. The reviewer will not reopen an agreed issue, or open or elevate a new issue unless the basis for such proposal is significant in nature, or the potential effect upon the tax liability is material.

  3. Cases are returned to the field group only with the group manager’s agreement.

Form 5456, Reviewer’s Memorandum

  1. Form 5456, Reviewer’s Memorandum, is used by Mandatory Review to communicate necessary information related to reviewed cases with the agent who worked the case and their group manager.

  2. Form 5456 can be used in three ways:

    1. An Advisory Memorandum - used to let the group manager and agent know of issues found during MR’s review and how they were resolved. Cases are not returned when an Advisory Memorandum is issued.

    2. A Correction Memorandum - prepared when significant issues are present in the exam that warrant the case’s return to the group for further development by the agent.

    3. A Commendatory Memorandum - issued when an agent does an exemplary job on an exam with difficult issues.

  3. Address Form 5456 to the agent’s manager that worked the case.

  4. Clearly explain each issue you are raising.

  5. Use Form 886-A if additional space is needed.

  6. Form 5456 is emailed to the EP manager (or designee) for approval.

  7. The MR manager will contact the exam group manager to discuss the reviewer’s memo. If the case is being returned, the reasons will be explained.

    Note:

    The field group manager must be called before a case with less than 180 days remaining on the statute is returned. These cases are sent to the group by express mail (next day).

  8. If the Form 5456 is a Correction Memorandum, the reviewer will:

    1. Print an approved copy of Form 5456 and place it on the left hand side of the lead case file.

    2. Update the CCR stating that the case is being returned with an explanation of the reason.

    3. Upload the approved version of Form 5456 and any additional files prepared by the reviewer into the RCCMS Office Documents folder using the RCCMS Naming Convention.

    4. Update the case in RCCMS to status 13.

      Note:

      The case remains in status 13 until closed from the group.

    5. Transfer the RCCMS files to the MR manager (or designee) who closes the case back to the exam group.

    6. After receiving the MR manager’s permission, prepare Form 3210 and mail the case to the group.

  9. If the Form 5456 is an Advisory or Commendatory Memorandum, after approval, MR sends the original Form 5456 (without the case file) to the agent’s group manager before: the case is either transferred to Appeals (disposal code 07), the 90-Day letter is issued (status code 24), or the case is closed (disposal code 10).

  10. The MR manager keeps a copy of the approved Form 5456.

  11. When the case is returned to the field group on Form 5456 (Correction Memo), the field group manager could:

    1. Agree with some, or all of the contents of the Memo, complete Form 5457 item 3 and send both copies of Form 5457 with the case file to the agent.

    2. Disagree with the contents of the Memo, select No in item 3 of Form 5457 and prepare a written response on Form 5457 citing the reasons for disagreement.

    3. If the group manager disagrees with or has questions about the Memo, he/she will call the MR manager to discuss. If the issue(s) can’t be resolved, a conference call will be arranged between the Area Manager(s), the group manager, the MR Manager, the reviewer and agent.

  12. When the agent receives a case returned on a Form 5456 (Correction Memo), the case is added to the agent’s WebETS (EP Technical Time Report) so the additional time spent to complete the work specified in the Reviewer’s Memo is correctly recorded.

  13. The field has 60 days to respond to the Correction Memo and return the case to MR, if needed.

  14. When the case is ready to be returned to MR, the agent will:

    1. Close the case under normal procedures as specified in the IRM.

    2. Complete Form 5457 items 1– 6 using Form 886–A if additional space is needed.

    3. Complete Form 5457 (item 5) in the same order as the reviewer’s comments on Form 5456.

    4. Fully document an item raised in the Correction Memo that doesn’t result in an adjustment (for example, a more expansive explanation was warranted or additional information was obtained).

    5. Transfer the case with Form 5456 and the completed Form 5457 to the group manager.

  15. The group manager will:

    1. Document concurrence with the responses to the items listed on the Form 5456 by completing item 7 on Form 5457.

    2. If the case is still unagreed, close the case on RCCMS to MR and mail the paper file with the completed Form 5457 and Form 5456 (including Form 886-A) to MR.

  16. When MR receives the returned case, the MR manager will assign the case to the reviewer who prepared Form 5456, if he or she is still in MR.

  17. The reviewer will consider the responses on Form 5456, by completing items 8–10 on Form 5457 and, if necessary, prepare another Form 5456.

  18. After MR accepts the case and the reviewer is satisfied with the agent’s Form 5457 responses, the reviewer will, keep Forms 5456, 5457 and Form 886-A as follows:

    1. Attach the originals to the inside left of the paper file.

    2. Save the electronic versions of Forms 5456 and 5457 in the RCCMS Office Documents folder using the RCCMS Naming Convention

  19. If the returned case hasn’t been sent back to MR within 60 days, the MR manager will contact the field group manager to discuss the case status. The MR manager will continue to contact the field group manager every 30 days thereafter, until the case is returned to MR or otherwise resolved.

Checksheet for Employee Plans Compliance Activities (CECA Checksheets)

  1. The CECA checksheet is required for EP examinations when a Form 5500 series or a NRU exam results in a "change" closure (all disposal codes except 02).

    1. Show tax amounts, from a Form 5330 or Form 990-T that is picked up during a Form 5500 or a NRU exam on the checksheet completed for the Form 5500 or a NRU exam.

    2. Don’t complete a separate CECA checksheet for a Form 5330 or Form 990-T exam.

    3. Don’t report results from a Form 5330 or Form 990-T exam that has no related Form 5500 exam on any CECA checksheet.

    4. Report income tax amounts from a Form 1040/1120 discrepancy adjustment picked up during a Form 5500 or an NRU exam on the Form 5500 or NRU exam checksheet.

    5. Don’t complete a separate CECA checksheet should for a Form 1040/1120 discrepancy adjustment.

    6. Don’t report results from a Form 1040/1120 discrepancy adjustment that has no related Form 5500 exam on any CECA checksheet.

  2. The EP agent is required to complete the CECA checksheet and save it in the RCCMS Office Documents folder using the RCCMS Naming Convention provided in Exhibit 2 of IRM 4.71.1 IRM 4.71 - Employee Plans Examination Exhibits.

  3. If the case is "unagreed" , the field group manager is instructed not to mail an “electronic copy” of the checksheet to the CECA mailbox because it’s MR’s responsibility to email the final CECA checksheet for all unagreed cases.

  4. Reviewers and MR manager follow the procedures below for CECA checksheets:

    1. After completing the final case review (before closing it), update the CECA checksheet, if applicable.

    2. Download the current version of the CECA Checksheet from the EP Examination website at: Checksheet for EP Compliance Activities (CECA)

    3. Note in the CCR that you reviewed the CECA checksheet and describe any changes made, if applicable.

    4. Secure email an "electronic copy" to the CECA mailbox (*TE/GE-EP-CECA) only if the issues on the case are resolved and the case becomes "agreed" (for example, the case is not going to Appeals, into 90-Day status or returned to the group per IRM 4.71.14.9 (5)).

      Note:

      MR emails the checksheet when the agreed case is closed from MR.

    5. For cases transferred to the 90-Day Reviewer, the 90-Day Reviewer secure emails the "electronic copy" of the checksheet to the CECA mailbox (*TE/GE-EP-CECA).

    6. For cases closed to Appeals, the MR manager (or designee) secure emails an “electronic copy” of the checksheet to the CECA mailbox (*TE/GE-EP-CECA).

    7. After the CECA checksheet is forwarded to the CECA mailbox, the individual who submitted the checksheet (such as, reviewer, 90-Day Reviewer, or MR manager or designee) notes its forwarding in the CCR.

    8. Save a copy of the CECA checksheet in the RCCMS Office Documents folder.

  5. Sometimes, a case may be transferred, back and forth, between the group and MR. In these circumstances, the group who possesses the case file immediately before updating the status code to "51" must forward the CECA checksheet to the CECA mailbox.

Monthly Reports

  1. At the end of each WebETS reporting period, each reviewer validates their assigned case inventory and submits a status report to the MR manager.

    1. The number of cases on hand are carefully appraised so appropriate measures are taken to avert potential backlogs.

    2. The status of short statute and other high priority cases will be determined so appropriate measures are taken.

  2. Each reviewer reports the following information to the EP manager to include in their monthly report:

    1. Status of special assignments (if applicable)

    2. Speaking engagements and group presentations they conducted

    3. Closing agreements secured for cases closed during the WebETS period