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4.71.14  EP Mandatory Review

Manual Transmittal

July 12, 2016

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) Minor editorial changes were made throughout the document.

(2) This IRM has been updated to incorporate additional internal procedures within EP Mandatory Review.

Effect on Other Documents

This supersedes IRM 4.71.14 dated September 24, 2015.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(07-12-2016)


Robert S. Choi
Director, Employee Plans
Tax Exempt and Government Entities

4.71.14.1  (07-12-2016)
Overview of EP Mandatory Review

  1. The principle objective of the EP Mandatory Review function is to evaluate EP examination cases, in order to ensure IRS compliance with the Internal Revenue Code and related regulations.

  2. In pursuit of this objective, reviewers will perform case reviews to determine whether cases were worked in accordance with the law, the Internal Revenue Manual (IRM) and other established procedures.

  3. The review process will serve to ensure that the taxpayer and all other affected parties are afforded courteous, impartial and professional service.

  4. To this end, Mandatory Review must continually strive for:

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

    2. The protection of the government's interest.

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

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

    5. The timely dissemination of examination process guidance and relevant information, which can be utilized by management and other personnel to best achieve the mission of the IRS and TE/GE.

4.71.14.2  (07-12-2016)
Staffing

  1. Reviewers will be experienced and highly competent personnel who:

    1. Possess a comprehensive knowledge of generally accepted accounting and auditing principles, as well as, superior skills in the understanding and application of the tax law, regulations, rulings, court decisions, and other interpretative material

    2. Are knowledgeable in IRS policies and procedures

    3. Are capable of performing a quality review of EP examination case files

    4. Have a fair and impartial attitude

    5. Merit the highest respect and cooperation of EP personnel

    6. Have demonstrated an ability to assume responsibility and take positive action when warranted

    7. Communicate ideas and opinions clearly, tactfully and objectively

    8. Apply good judgment

    9. Exercise individual initiative

  2. Agents are generally assigned to Mandatory Review for 3 years.

  3. Agents may be detailed to Mandatory Review, on an interim basis, due to an increase in review staff workload.

4.71.14.3  (07-12-2016)
Mandatory Review Duties

  1. Mandatory Review is responsible for:

    1. Reviewing unagreed EP examination cases.

    2. Providing technical and procedural assistance to agents and group managers working EP examinations still at the group level that have a high potential of becoming cases subject to mandatory review.

    3. Preparing Form 5456, Reviewer’s Memorandum, which will be issued to the field group manager when a reviewed case requires further documentation, correction or development. See IRM 4.71.14.6, 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. Coordination of writing and updating the Employee Plans Examination Procedures (IRM 4.71) and the Employee Plans Examination Guidelines (IRM 4.72) portions of the Internal Revenue Manual.

    5. Writing and reviewing various types of instructional materials and other guidance that impacts EP examiners.

4.71.14.4  (07-12-2016)
Cases Subject to Review

  1. Certain examination cases involving complex matters are subject to mandatory review. These types of cases are:

    1. Proposed revocation cases (unless resolved through a Delegation Order 8-3 (DO 8-3) closing agreement)

    2. Proposed non-qualification cases (unless resolved through a DO 8-3 closing agreement)

    3. Unagreed Form 1040, U.S. Individual Income Tax Return, or Form 1120, U.S. Corporation Income Tax Return, discrepancy adjustments

    4. Unagreed Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, exams

    5. Unagreed Form 990-T, Exempt Organization Business Income Tax Return, exams

    6. Unagreed claims

    7. Informant claims for reward cases

    8. Requests for the review of a case by a group manager

      Note:

      Contact the Manager, EP Mandatory Review.

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

4.71.14.4.1  (07-12-2016)
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). With regard to qualification issues, the case cannot be resolved through Employee Plans Compliance Resolution System (EPCRS) or a DO 8-3 closing agreement. Examples include but are not limited to:

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

    2. Form 1040/1120 discrepancy adjustments, Form 5330 examinations or Form 990-T examinations for which the taxpayer was notified that additional tax was due and provided a response stating disagreement with the issue.

    3. Form 1040/1120 discrepancy adjustments, Form 5330 examinations or Form 990-T examinations for which the taxpayer was notified that additional tax was due, but then failed to file amended returns, delinquent returns, or sign agreements (e.g., Form 4549-E, Income Tax Discrepancy Adjustments, or Form 870-EP, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment ) 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 failed to file to 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, Acceptance of Proposed Disallowance of Claim for Refund or Credit and Form 2297, Waiver of Statutory Notification of Claim Disallowance, within the specified time. See IRM 4.71.8, EP Claims, for procedures on claims.

  2. Proposed Revocation–A Proposed Revocation occurs when a qualification issue is raised by the agent during the examination of a plan that had previously received a favorable determination letter (in the name of the plan), and the issue is not 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.

  3. Final Revocation–A Proposed Revocation becomes a Final Revocation 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, 90-Day Letter - Final Revocation,

    2. Is upheld by Tax Court, or

    3. Is resolved through a DO 8-3 closing agreement. See IRM 4.71.3.3.2, DO 8-3 Closing Agreements.

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

  5. 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.

  6. 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 Records 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.

4.71.14.5  (07-12-2016)
Technical Case Review

  1. Cases received in Mandatory Review will be assigned to a reviewer by the Manager, EP Mandatory Review (or designee) and worked as soon as administratively feasible.

  2. Priority will be given to short statute cases and other cases given special expedited consideration.

  3. When a case first comes into Review, the case will pass through a "triage" process.

  4. A designated reviewer (the "Triage Reviewer" ) will perform the following actions:

    1. Verify the statute of limitations expiration date and make arrangements to extend the statute of limitations if the statute is short.

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

    3. Make sure the information in RCCMS and AIMS agree.

    4. May provide specific instructions or observations for the reviewer to whom the case is assigned.

    5. If the case is a short statute case or special project case, the case will be assigned immediately to a reviewer to work.

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

  5. Once the case is assigned to a reviewer, the reviewer will make every effort to begin review of the case within 15 days of receipt of the case.

  6. When reviewing a case file, the reviewer will determine and ensure:

    1. Statutes of limitations have been properly protected and updated

    2. The agent/group manager properly considered and observed examination cycles

    3. The group manager's involvement in the case is adequate and properly documented

    4. The time span to complete the case was reasonable considering facts and circumstances involved

    5. The examined returns have been properly established on RCCMS and AIMS

    6. Examination issues have been adequately developed

    7. The workpapers fully document exam procedures, identify and document issues, are concise, well organized, and indexed

    8. The Revenue Agent Report (RAR) is adequate. See paragraph (7) below

    9. That forms, letters and templates used are the most current version and are completed correctly

    10. That the agent has made a reasonable effort to reach an agreement if the case is unagreed

    11. The positions of the plan sponsor and the IRS are presented in a manner leaving no doubt that there is a difference of opinion

    12. Letters prepared for mailing to the taxpayer are correct

    13. The examination was expanded to include all relevant years and related returns under EP jurisdiction

    14. All necessary referrals were timely and properly made

    15. Service policies and procedures were followed

    16. All required forms and letters are contained in the paper case file and saved in the RCCMS Office Documents folder using the RCCMS Naming Convention

  7. When reviewing the Revenue Agent Report (RAR) the reviewer must verify that:

    1. Unagreed issues are properly developed, clearly explained, and adequately supported by law, regulations, published rulings, court cases, as applicable.

    2. Both the government and the taxpayer positions are clearly stated with proper references and citations.

    3. Supporting documentation is included in the case file.

    4. Tax and penalties are correctly computed and the amounts are listed in the RAR and on related forms such as Form 5438, Report of Examination - Excise Taxes on Employee Plans, and Form 870-EP, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment, (if applicable).

4.71.14.5.1  (07-12-2016)
Processing Unagreed Cases

  1. With the exceptions listed in paragraph (2) of this section, a 30-Day Letter package will be prepared if the case file is a:

    1. Form 5500 exam where the agent has proposed plan revocation or non-qualification

    2. Form 1040/1120 discrepancy adjustment that results from proposed plan revocation or non-qualification

      Note:

      Field agents do not issue 30-Day Letter packages when a discrepancy adjustment is a consequence of plan revocation or non-qualification.

    3. Form 5330 exam that is unagreed (meets the criteria of IRM 4.71.14.4.1, Definitions)

    4. Form 990-T exam that is unagreed (meets the criteria of IRM 4.71.14.4.1, Definitions)

    5. Unagreed claim

      Note:

      See IRM 4.71.14.5.1.3, 30-Day Letter Procedures.

  2. The reviewer will skip the 30-Day Letter and go straight to the preparation of a 90-Day Letter in the following situations:

    1. If technical advice was requested on an issue affecting the qualified status of the plan and the ruling is adverse to the plan sponsor, it will preclude any further appeal within IRS as to those issues. If this is the case, the reviewer will not prepare a 30-Day Letter (Proposed Revocation or Proposed Non-qualification Letter), but will instead go directly to the preparation of a 90-Day Letter (Final Revocation or Final Non-qualification Letter) to the plan sponsor.

      Note:

      If technical advice was requested on an excise tax or unrelated business income tax issue and the ruling is adverse to the taxpayer, it will not affect the appeal rights of the taxpayer. If this is the case, the reviewer should prepare the 30-Day Letter package.

    2. If an unagreed case has less than 210 days remaining on the statute of limitations and the taxpayer refuses to extend the statute of limitations, the reviewer will skip the 30-Day Letter and go directly to the preparation of a 90-Day Letter package.

      Note:

      There may be circumstances where Counsel advises that a 30-Day Letter be sent even when the statute is within the 210 days. These situations will be handled on a case by case basis.

    3. If there is a related examination in an Exam Functional Unit (e.g., SB/SE) with income tax adjustments that result from plan disqualification, and EP Mandatory Review is aware that the SB/SE case is either docketed or SB/SE is in the process of issuing a 90-Day Letter on the related case, the reviewer will go directly to the preparation of a 90-Day Letter package.

      Note:

      To help with this determination, the reviewer should secure AMDISA prints for the plan sponsor and the Highly Compensated Employees (HCEs) in the plan. Additionally, a careful review of the case chronology record may disclose if a related exam is open. It may also be helpful to contact the examining agent.

    Note:

    If any of these three situations arise, the reviewer will discuss the situation with the Manager, EP Mandatory Review.

    Note:

    30-Day Letter procedures are discussed in IRM 4.71.14.5.1.3, 30-Day Letter Procedures, and 90-Day Letter procedures are discussed in IRM 4.71.14.5.1.5, 90-Day Letter Procedures.

  3. The reviewer will review all Forms 2848 and 8821 (if applicable) to make sure they are properly completed and that all applicable years are included in accordance with IRM 4.71.1.9, Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821). Also ensure Form 2848 or Form 8821 have been submitted to the appropriate Service Center per paragraph (12) of IRM 4.71.1.9, Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821).

  4. If a 30-Day Letter is being prepared and the reviewer agrees with the agent’s conclusion and no major corrections are necessary:

    1. The reviewer will make necessary corrections to the RAR or other portions of the 30-Day Letter package.

    2. The reviewer will email the 30-Day Letter package to the Manager, EP Mandatory Review (or designee) for review prior to issuance of the 30-Day Letter.

    3. The Manager, EP Mandatory Review (or designee) will review the 30-Day Letter package, discuss issues with the reviewer as needed, suggest or make any necessary revisions to the 30-Day Letter package, and email the approved 30-Day Letter package to the reviewer.

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

    5. Immediately after the 30-Day Letter is mailed to the taxpayer, the reviewer will complete the Mandatory Review (MR) Update Sheet, (See IRM 4.71.14 Exhibit 2 at IRM 4.71- Employee Plans Examination Exhibits), email the form to the Group Management Assistant (with a copy to group manager or designee), and update the case to status 22 (30-Day) through RCCMS.

      Note:

      When the case is updated to status 22 in RCCMS, make sure the AIMS box is checked so that AIMS gets updated when the "update" request is made. The reviewer should obtain a new AMDISA print reflecting the update.

  5. If the case being reviewed is a 1040/1120 discrepancy adjustment for which the 30-Day Letter was previously issued by the field agent, and in response to the 30-Day Letter, the taxpayer requested an Appeals hearing, the reviewer will prepare the case to go to Appeals if there are no issues with the proposed tax assessment. See IRM 4.71.14.5.1.4, Cases to Appeals, for procedures for preparing cases for Appeals.

  6. If the case being reviewed is a 1040/1120 discrepancy adjustment for which the 30-Day Letter was previously issued by the field agent, and the taxpayer did not respond or request an Appeals hearing, the reviewer will prepare the 90-Day Letter package if there are no issues with the proposed tax assessment. See IRM 4.71.14.5.1.5, 90-Day Letter Procedures.

  7. As appropriate, the reviewer will prepare an Advisory Memorandum on Form 5456, Reviewer’s Memorandum to the agent. The purpose of the Advisory Memo is to notify the agent of any procedures that the agent failed to follow or of significant changes made by the reviewer. The case will not be returned when an Advisory Memo is issued. See IRM 4.71.14 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of an Advisory Form 5456.

  8. If the reviewer does not agree with the agent’s conclusion, determines that items in the report require significant correction, or that the case needs further development, the reviewer will discuss returning the case with the Manager, EP Mandatory Review. With approval, the reviewer will:

    1. Prepare Form 5456, Reviewer’s Memorandum, as an Inquiry Memo stating his or her position on the issues and listing actions that need to be taken.

    2. Email Form 5456 to the Manager, EP Mandatory Review (or designee) for approval.

    3. Prepare MR Update Sheet indicating "Update to status 13" and filling in the requested information for that item.

    4. Update RCCMS for transfer, save Form 5456 in the RCCMS Office Documents folder using the RCCMS Naming Convention, place a hard copy in the case file in accordance with IRM 4.71.12.4, Assembly Guidelines for All Unagreed Examinations.

    5. Mail the case to the Group Management Assistant to be returned to the field agent through the agent’s manager.

    6. As a courtesy, the reviewer will contact the originating group manager and/or agent before returning the case to the group.

  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) must be made prior to issuing the 30-Day Letter. See IRM 4.71.14.5.1.2, Referrals to DOL.

    Note:

    If the case has less than 210 days remaining on the statute of limitations and the taxpayer will not extend the statute, and the 30-Day Letter is not being issued then the referral should be made prior to the issuance of the 90-Day Letter if there is sufficient time on the statute of limitations. Approval of the Manager, EP Mandatory Review is required to go straight to 90-Day.

4.71.14.5.1.1  (07-12-2016)
Picking Up Additional Years

  1. If the reviewer determines that the pursuit of a qualification issue, excise tax issue, or UBI tax issue is warranted in an additional year, the reviewer will first discuss the need to add an additional year(s) with the Manager, EP Mandatory Review.

  2. If the Manager, EP Mandatory Review agrees that an additional year(s) should be picked up, the reviewer will do the following:

    1. If the case is a Form 5330, or Form 990-T, the reviewer will follow the procedures in IRM 4.71.14.5.1.1.1, Substitute for Return Procedures for Forms 5330 or 990-T.

    2. If the case is a Form 5500, the reviewer will contact the manager of the group that conducted the exam to discuss the issue and to discuss coordination with EP Classification to get the additional year(s) established on RCCMS and AIMS.

      Note:

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

    3. If an additional year is picked up, the taxpayer must be informed of the exam in writing.

      Note:

      This should be done through an individually designed letter that merely states which years are under exam.

    4. If the decision is made to pick up an additional year(s) after the 30-Day Letter has been issued, advice from Counsel should be solicited to determine if the 30-Day Letter needs to be corrected or reissued.

4.71.14.5.1.1.1  (07-12-2016)
Substitute for Return Procedures for Forms 5330 or 990-T

  1. IRM 4.71.5.9.2, Substitute for Return Package, provides that when a Form 5330 excise tax issue is unagreed, the agent is instructed 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.

    Note:

    SFR procedures for Forms 990-T are found in IRM 4.71.10.5.3, Substitute for Return Package, and are similar to Form 5330 procedures.

  2. With approval of the Manager, EP Mandatory Review to add an additional year(s), the reviewer will:

    1. Determine if the return has already been filed by the taxpayer by securing applicable IDRS research (BMFOLI, BMFOLT, BMFOLR) for the applicable taxpayer identification number. If a return has already been filed, further research should be conducted to determine if the previous filing addressed current issue. If a Form 5330 or Form 990-T has been filed for that year, it should be secured and controlled for examination.

      Note:

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

    2. Prepare a SFR package and mail it to the Ogden Service Campus at the address in paragraph (9) below if the agent has not already done so.

      Note:

      The SFR must be sent to the Service Campus because the return must be fully established before the case can be closed to Appeals or before the Statutory Notice of Deficiency (SNOD) can be issued. A return does not become fully established until the Service Center processes the return.

  3. The SFR package consists of:

    1. Form 3210, Document Transmittal,

    2. Form 13133, Expedite Processing Cycle,

    3. Form 3198-A, TE/GE Special Handling Notice, and

    4. Form 5330 or Form 990-T.

  4. Form 5330 should be prepared as follows:

    1. The words "Substitute for Return Prepared by TEGE: Employee Plans" are to be entered on the top margin on the face of the Form 5330 (or Form 990-T for UBI).

    2. Only the top portion of the substitute Form 5330 sections are to be completed including the tax year's beginning and ending dates, and items A through G (and H, if applicable).

      Note:

      Likewise for Form 990-T, only the entity information should be completed.

    3. Form 5330/990-T dollar amount spaces should be left blank.

  5. Form 3198-A should be completed for each Form 5330 or Form 990-T and stapled on top of each return:

    1. Complete the applicable lines in the "Required Entries" section of the form.

    2. Select the SFR (Substitute for Return) entry in the "Special Features" section of the form.

    3. Include the following notation in the Special Instructions section of Form 3198-A: "Substitute for Return; Please process immediately."

  6. Form 13133 should be completed for each SFR and stapled on top of Form 3198-A .

    1. Include your name, phone number and mail code.

    2. Hand write these words: "Substitute for Return" .

  7. Form 3210 should be prepared in triplicate. Two copies (an acknowledgement copy and a recipient copy) should be included in the package mailed to Ogden, and one copy should be maintained in Mandatory Review.

  8. Make a copy of the SFR package for the case file before mailing.

  9. The SFR package will be mailed to:

    • IRS
      1973 N. Rulon White Blvd.
      Mail Stop 6052
      Ogden, UT 84404

  10. Once the reviewer determines the SFR has fully posted with a TC of 150 on a BMFOLT, which takes approximately 6 weeks after the SFR package is sent to Ogden, the reviewer will contact the group manager or agent who initially worked the exam to have them establish the new year on RCCMS and AIMS and then close the year to Mandatory Review.

    Note:

    This action is done by the originating group on RCCMS and AIMS only. There is no need for the originating group to set up a paper file; this will be done by the reviewer.

  11. The reviewer should notify the Group Management Assistant that the return is being transferred from the group to Mandatory Review.

  12. Once the return is transferred by the Group Management Assistant to the reviewer, the statute of limitations (SOL), status code, etc. should be verified for accuracy on RCCMS and AIMS.

  13. Excise or UBI tax will be assessed from Form 5599, TE/GE Examined Closing Record, when the case is closed to EP Examinations, Support Processing.

    Note:

    Form 5599 becomes the assessment document since there was no delinquent return forwarded to the Service Center containing dollar amounts.

    1. The reviewer will make sure tax and penalty amounts are listed on item 12 of Form 5599.

    2. The reviewer will write instructions regarding the assessment of tax (and penalties) in the remarks section of Form 5599.

  14. If IRC 6651(a) penalties are to be assessed on a SFR, the IRS must certify the SFR Form 5330 per IRC 6020(b). Form 13496, IRC Section 6020(b) Certification, is used to provide the certification.

    1. Form 13496 must be completed with a live signature and be dated on or after the date the 30-Day Letter is signed and dated and before the 90-Day Letter is signed and dated.

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

    3. Whenever the reviewer revises a report of proposed adjustments that increases the total tax liability of the taxpayer, a recertification is required on another Form 13496 signed and dated on (or after) the date of the revised report.

    4. When the report of proposed adjustments involves more than one tax year, a separate Form 13496 must be prepared for each year.

      Note:

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

4.71.14.5.1.2  (07-12-2016)
Referrals to DOL

  1. Per the IRS/DOL Coordination Agreement, for plans under DOL jurisdiction involving IRC 4971 or IRC 4975 excise tax, a referral to EBSA should be made by Mandatory Review at least 30 days prior to the issuance of the 30-Day Letter.

    1. The reviewer should make a referral to EBSA even if the exam agent has already made one.

    2. The reviewer should make the referral upon determining that the tax is due on a case under DOL jurisdiction.

    3. After making the referral, await a response from EBSA for up to 30 days before issuing the 30-Day Letter.

    4. If EBSA responds indicating they are initiating participation, then it may be necessary to return the case to the field group for further development.

    Note:

    DOL does not have jurisdiction over plans that only provide benefits to owners and their spouses. However, if it is determined that a plan covering only one participant (or participant and spouse) should cover additional people, a referral should be made.

  2. The referral will consist of a completed Form 6212-B, Examination Referral Checksheet B, with a statement in the Remarks section that the case is in Mandatory Review pending issuance of the 30-Day Letter.

    Note:

    The "DOL Participation Requested" block must be checked on Form 6212-B.

  3. The referral will be sent directly to the EP Classification Unit in El Monte, CA.

    1. The referral can be sent to EP Classification's group mailbox: tege.ep.classification@irs.gov.

    2. The referral can be mailed to:

      IRS - EP Classification
      9350 Flair Drive
      4th Floor
      El Monte, CA 91731-2885

  4. The making of this referral to EBSA satisfies the requirements of IRC 4971(d) and IRC 4975(h) (i.e., no additional referral is required before the issuance of a Statutory Notice Of Deficiency).

4.71.14.5.1.3  (07-12-2016)
30-Day Letter Procedures

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

  2. If a 30-Day Letter is being issued and the reviewer agrees with the agent’s conclusion and no major corrections are necessary:

    1. The reviewer will make any necessary corrections to the RAR or other portions of the 30-Day Letter package.

    2. The reviewer will email the 30-Day Letter package to the Manager, EP Mandatory Review (or designee) for review prior to issuance of the 30-Day Letter.

    3. AMDISA and INOLES prints will be included with the 30-Day Letter package that is emailed to the Manager, EP Mandatory Review (or designee).

    4. The Manager, EP Mandatory Review (or designee) will review the 30-Day Letter package, discuss issues with the reviewer as needed, suggest or make any necessary revisions to the 30-Day Letter package, and email the revised 30-Day Letter package to the reviewer.

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

    6. Immediately after the 30-Day Letter is mailed to the taxpayer, the reviewer will update the case to status 22 (30-Day) through RCCMS (with the AIMS box checked), complete the MR Update Sheet and email the form to the Group Management Assistant (with a copy to group manager or designee). The reviewer will also inform the Group Management Assistant of the date the case was sent to the Manager, EP Mandatory Review (or designee) and the date approval was received. See IRM 4.71.14 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the MR Update Sheet.

      Note:

      The group code of the group that conducted the exam will continue to be reflected on AIMS and RCCMS (the group code will not be updated to 7694).

  3. The 30-Day Letter package for a Form 5330 exam consists of:

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

    2. Pub 1, Your Rights as a Taxpayer

    3. Pub 594, The IRS Collection Process

    4. Pub 1020, Appeals Procedures Employee Plans Examinations

    5. 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.)

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

    7. RAR

    8. Return Envelope

  4. The 30-Day Letter package for a Form 990-T exam consists of:

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

    2. Pub 1

    3. Pub 594

    4. Pub 1020

    5. Form 870-EP

    6. RAR

    7. Return Envelope

  5. The 30-Day Letter package for a proposed revocation/non-qualification consists of:

    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

  6. The 30-Day Letter package for a Form 1040 or Form 1120 discrepancy adjustment consists of:

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

    2. Pub 1

    3. Pub 5, Your Appeal Rights and How To Prepare a Protest If You Don't Agree

    4. Pub 504, Divorced or Separated Individuals, (if Form 1040 and taxpayer is married)

    5. Pub 594

    6. Form 4549-E

    7. RAR

    8. Return Envelope

    9. Interest Calculations

    10. Penalty Calculations (if applicable)

    Note:

    The 30-Day Letter for Forms 1040/1120 are mailed out by Mandatory Review when connected to a proposed revocation/non-qualification. If the taxpayer jointly filed a Form 1040, a separate letter is required to be mailed to each spouse.

  7. The 30-Day Letter package for claims consists of:

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

    2. Pub 1

    3. Pub 594

    4. Pub 1020

    5. Form 2297, Waiver of Statutory Notification of Claim Disallowance, (See IRM 4.71.14 Exhibit 24 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 2297)

    6. Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, (See IRM 4.71.14 Exhibit 25 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 3363)

    7. RAR

    8. Return Envelope

  8. If the taxpayer timely files a protest to Appeals (including claims cases), the procedures in IRM 4.71.14.5.1.4, Cases to Appeals, will be followed.

  9. With regard to a claim, if the taxpayer signs and returns Form 2297 and Form 3363 :

    1. The case will be closed disposal code 01 on AIMS and disposal code 210 on RCCMS.

    2. The case will be closed using closing Letter 2087 if the claim involves a Form 5330.

    3. The case will be closed using closing 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. If the taxpayer concedes the issue, the reviewer will discuss resolution of the case with the Manager, EP Mandatory Review and coordinate processing of the case with the agent who worked the case and their manager, as applicable.

    1. A determination of whether the case will be closed in Review or be returned to the group will be made on a case to case basis.

    2. The manager and/or agent of the originating group will be contacted whenever the taxpayer proposes to resolve the issue(s) through a closing agreement.

    3. If the decision is made for the case to stay in Review for resolution through a closing agreement, the reviewer will follow the procedures in IRM 4.71.3.3, Closing Agreements.

    4. If the case is resolved by the reviewer through a DO 8-3 closing agreement, approval must be secured on the DO 8-3 Transmittal Checksheet from the originating group manager, the originating Area Manager and the Area CAP Coordinator before the closing agreement is sent to the Director, EP Examinations for signature.

  11. If the case is resolved through a closing agreement in Mandatory Review, the reviewer will:

    1. Prepare a new Form 5772-A, EP Workpaper Summary, reflecting a disposal code of 15 (Closing Agreement).

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

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

    4. Issue the appropriate closing letter.

    5. Close the case to EP Examinations, Support Processing (EP Closing Unit).

  12. If additional information is provided by the taxpayer that changes the government’s position, the reviewer will discuss resolution of the case with the Manager, EP Mandatory Review and processing of the case will be coordinated with the agent who worked the case and their manager, as applicable.

  13. With regard to all cases other than claims, if the taxpayer does not respond or chooses not to appeal, then the case will proceed for 90-Day processing in accordance with IRM 4.71.14.5.1.5, 90-Day Letter Procedures.

  14. With regard to claims, if the taxpayer does not timely file a protest to Appeals and does not return signed Form 2297 and Form 3363:

    1. Letter 906-A will be issued by the reviewer who is working the case. See IRM 4.71.14 Exhibit 26 at IRM 4.71 - Employee Plans Examination Exhibits for Letter 906-A.

    2. The case will be closed disposal code 01 on AIMS and disposal code 210 on RCCMS.

      Note:

      The case will be closed to the Group Management Assistant who will close the case to EP Examinations, Support Processing (EP Closing Unit). 90-Day procedures do not apply to claims.

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

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

  17. If a taxpayer agrees and signs Forms 4089 and 4549-E for Form 1040/1120 discrepancy adjustments, close the case per IRM 4.71.4.5 1, Agreed Tax Change.

  18. If a qualification issue is resolved through a closing agreement, close the case per IRM 4.71.3.3, Closing Agreements.

  19. If payment is received, the reviewer will process checks in accordance with Government Accountability Office (GAO) recommendations:

    1. Make sure the check is made payable to the United States Treasury. If the payee line is blank or the check is made payable to "IRS" , overstamp the check with the "United States Treasury" stamp.

    2. The check information (date of check, check number, amount, payer, IRS recipient name and date received) must be entered into the logbook maintained by the Group Management Assistant.

    3. Prepare Form 9814, Request for Mail/Shipping Service, (where applicable)Form 3244-A, Payment Posting Voucher - Examination, and Form 3210, Document Transmittal and address an envelope to the Service Campus where the payment will be mailed.

      Note:

      The sender’s name and address reflected on Form 3210 will be the Group Management Assistant’s name and address.

      Note:

      Forms 3210 prepared for Forms 5330 will be addressed as specified in paragraph (10) through (12) of IRM 4.71.5.6.2, Processing Delinquent Forms 5330 Received from the Taxpayer.

      Note:

      Forms 3210 prepared for Forms 990-T will be addressed as specified in paragraph (8) through (10) of IRM 4.71.10.4.3, Processing Forms 990-T Received from the Taxpayer.

      Note:

      Forms 3210 prepared for Forms 1040 or 1120 will be addressed as specified in paragraph (6) and (7) of IRM 4.71.4.5.1, Agreed Tax Change.

      Note:

      Forms 3210 prepared for closing agreements will be addressed to:
      IRS, c/o Terri Lackey
      Deposit Unit, Stop 31
      201 W. Rivercenter Blvd.
      Covington, KY 41011

    4. The reviewers in Nashville will print Form 9814, Request for Mail/Shipping Service, Form 3210 and Form 3244-A and give the forms, the addressed envelope and the check to the Group Management Assistant or the Manager, EP Mandatory Review.

    5. Reviewers outside of Nashville will scan the check and email the scanned check, Form 3210 and Form 3244-A to the Group Management Assistant and the Manager, EP Mandatory Review.

    6. The Manager, EP Mandatory Review will review the Form 3210, compare it to the Form 3244-A and the check, sign the Form 3210 and provide a signed copy to the reviewer and the Group Management Assistant.

      Note:

      The person who prepares the Form 3244-A cannot be the same person who signs the Form 3210.

    7. For Nashville reviewers, the Group Management Assistant will make a copy for the reviewer, and mail the check, Form 3210 and Form 3244-A to the appropriate Campus in the envelope provided.

    8. Reviewers outside of Nashville will mail the check, Form 3210 and Form 3244-A to the appropriate Campus when approval is received from the Manager, EP Mandatory Review.

    9. The check, Form 3210, Form 3244-A and any delinquent returns received from the taxpayer should be sent express mail (next day) to the appropriate Service Campus by the end of the next business day after receipt.

    10. If the check cannot be mailed to the Service Campus the same day it is received, secure it overnight in a locked file.

    11. If the acknowledgement copy of Form 3210 is not received back from the Ogden Service Campus within 10 days after mailing, the Group Management Assistant will contact the Service Campus to follow-up receipt of the check.

4.71.14.5.1.4  (07-12-2016)
Cases to Appeals

  1. If the plan sponsor, taxpayer or Power of Attorney (POA) files a valid timely protest to appeal the issues reflected in the 30-Day Letter, the reviewer will evaluate all new facts or arguments presented.

  2. If the protest does not alter the original conclusion, the reviewer will:

    1. Review the protest letter received from the taxpayer or POA to insure that it is a valid protest and notify the Manager, EP Mandatory Review (or designee) that a protest was received.

      Note:

      See Pub 1020 for Form 5500 and Form 5330 protests and Pub 5 for Form 1040/1120 protests for all the items needed for a valid protest.

    2. Verify that there is sufficient time on the statute of limitations for the case to be sent to Appeals. All cases moving to Appeals require a minimum of 12 months remaining on the statute of limitations.

    3. Update the RAR to address the protest and send a copy to the taxpayer. This correspondence will become a part of the Administrative Record for Forms 5500.

    4. Complete the Appeals transmittal sheet (Form 12209 ) to send the case to the Appeals at:


      Internal Revenue Service
      Boston Appeals Office
      10 Causeway
      Room 493
      Boston, MA 02222-1047

      Note:

      See IRM 4.71.14 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits) for an example of Form 12209.

    5. Complete the Appeals routing slip (Form 1725) for the case to go 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.

    6. Complete Form 13496, IRC Section 6020(b) Certification, if the return is a Form 5330 or Form 990-T Substitute for Return (SFR) and IRC 6651 penalties are being 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.

    7. Complete Form 3198-A, TE/GE Special Handling Notice, selecting the box, "Forward to Appeals" .

    8. Complete the MR Update Sheet marking "Transfer case to Appeals" under the section titled, "Actions to move a case for shipment to another work unit" . Email the MR Update Sheet to the Group Management Assistant with a copy to the group manager or designee.

    9. Verify that the Administrative Record is properly prepared (in the case of a proposed revocation or non-qualification). See IRM 4.71.3, Unagreed Form 5500 Examination Procedures and EP Exam Closing Agreements.

    10. Save all of the prepared 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.

    11. Assemble the case file in accordance with IRM 4.71.12, Case File Assembly Guidelines.

  3. Make sure the paper closing documents and RCCMS closing record are properly completed:

    1. The disposal code in item 13 should be 07 (601 in RCCMS), Appealed—Protest to Appeals.

    2. The appeals code in item 16 and in RCCMS should be updated to 121, Nondocketed.

    3. The reviewer should sign and date the closing document.

  4. IRC 6621(c) imposes additional interest on amounts due if tax is being assessed on a corporation in the amount of $100,000 in any given tax year.

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

    2. It applies only to "C" corporations, not to individuals or trusts or "S" corporations.

    3. The additional 2% interest applies only when a 30-Day or 90-Day Letter has been issued and only if the amount due is not paid within 30 days of the issuance of the 30-Day Letter or 90-Day Letter (whichever is issued first).

    4. To assure that 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 of Form 5599. The reviewer must also enter the amount of tax and penalties due for the year in item 04 of Form 5599.

    5. Items 03 and 04 of Form 5599 must be completed for all such years for cases going to Appeals if tax of $100,000 or more is being assessed against a C corporation in a given tax year.

  5. Before closing case, make sure the following items are prepared electronically and placed in RCCMS:

    1. Dated 30-Day Letter to the taxpayer with all attachments

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

    3. RAR revised to address Taxpayer’s Protest including rebuttal to Taxpayer’s Position with individually-designed letter used to send the RAR with rebuttal to the Taxpayer (and Representative, if applicable)

    4. Completed Form 12209, Transmittal of Cases to Appeals

    5. Completed Form 1725, Routing Slip

    6. Completed Form 5650, EP Examined Closing Record, or Form 5599, TE/GE Examined Closing Record, (as applicable)

    7. Copy of the return

  6. Transfer the case on RCCMS to the Manager, EP Mandatory Review.

  7. Before going to Appeals the case will be reviewed by the Manager, EP Mandatory Review or their designee. Unless otherwise instructed, forward the properly assembled case file to:


    IRS
    c/o Manager, EP Mandatory Review
    801 Broadway
    MDP 13
    Nashville, TN 37203

  8. Once it is determined that the case is adequate for Appeals review, the case closure will be approved by the Manager, EP Mandatory Review.

  9. The Manager, EP Mandatory Review or designee will send an email to Lead Tax Examining Technician in Examinations Special Support and Processing (ESSP or the EP Closing Unit) and to the Manager, ESSP, attaching all of the items listed in subparagraph (5) above and a Form 3210, listing all of the items included.

  10. The Group Management Assistant will close the case on RCCMS to ESSP.

  11. When ESSP accepts the case and puts it in status 51, the Group Management Assistant will box up the paper case files with the Administrative Record (if applicable) and mail them with Form 3210 listing all returns to Appeals.

    Note:

    The Appeals address is:
    Internal Revenue Service
    Attn: Boston Appeals Office
    10 Causeway, Room 493
    Boston, MA 02222-1047

  12. When the acknowledged Form 3210 is returned from Appeals, the Group Management Assistant will send a copy to the Manager, ESSP.

  13. If information is received in Mandatory Review while the case file is in appellate review, the Appeals Office will be notified of such information immediately.

4.71.14.5.1.4.1  (07-12-2016)
Cases Returned From Appeals

  1. Periodically, cases may be returned to Mandatory Review from Appeals for further development.

  2. Until Appeals begins using RCCMS, cases returned from Appeals will be on AIMS, but there will be no corresponding RCCMS record that will accompany the case when it is received back from Appeals. RCCMS case files may be pulled from the Case Library and assigned to the reviewer who will work the case.

  3. As is the normal procedure for cases coming to Mandatory Review, the case will pass through the "triage" process.

  4. The "Triage Reviewer" will perform the following actions:

    1. Research Mandatory Review records to determine who the original reviewer was.

    2. Notify the Group Management Assistant (or other designee) that the RCCMS records need to be pulled out of the RCCMS case library.

    3. Assign the case immediately to a reviewer. If the original reviewer is still in Review, the case will be assigned to him or her to work. If the original reviewer is no longer in review, the case will be immediately assigned to another reviewer.

    4. The Triage Reviewer may provide specific instructions or observations for the reviewer to whom the case is assigned.

  5. When the reviewer receives the case, it will be given high priority to work.

  6. After reviewing the case file and the memo from Appeals, the reviewer will determine whether or not the case needs to be returned to the original agent for further development.

    1. If the reviewer can easily remedy the Appeals Officer's concerns, the reviewer will address the issue and process the case in the appropriate manner.

    2. The reviewer will receive permission from the Manager, Mandatory Review before initiating any communication with Appeals. The Manager, Mandatory Review 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.

    3. If the case needs to be returned to the original agent, the reviewer will prepare Form 5456 and follow the procedures in IRM 4.71.14.5.1, Processing Unagreed Cases.

4.71.14.5.1.5  (07-12-2016)
90-Day Letter Procedures

  1. If no response is received to the 30-Day Letter, the reviewer will prepare a 90-Day Letter package (Final Revocation Letter, Final Non-Qualification Letter, or Statutory Notice of Deficiency).

    Note:

    The reviewer should 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. The most current version of the following 90-Day Letters should be used:

    Use Letter
    Forms 5330 or 990-T 531-B
    Final Revocation 1757
    Final Non-Qualification 1757-A
    Forms 1040/1120 - discrepancy adjustments 531-A
  3. Area Counsel approval:

    1. Must be secured before issuance of the 90-Day Letter for Forms 5500, 990-T and 5330.

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

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

      Note:

      Specific Counsel attorneys may be assigned to special project cases such as ATAT cases (abusive transaction projects such as 412(i) or Management S Corp. ESOP exams) or Promoter project cases. In those instances, case project procedures should be reviewed to determine designated Counsel attorneys.

  4. Before sending a case to Counsel for 90-Day Review, the reviewer will:

    1. Prepare a draft of the applicable 90-Day Letter as follows:

      Note:

      All parts of the 90-Day Letter to the taxpayer (and POA, if applicable) should be completed but left undated.

    2. Prepare a Summary Revenue Agent Report (Summary RAR);

      Note:

      The Summary RAR is generally a one to four page summary of the Issues, Facts & Analysis, and Conclusion. In some instances (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, the reviewer must make sure that all years listed on the 90-Day Letter are listed on Form 2848 or Form 8821. If they are not, a revised Form 2848 (or Form 8821) should be solicited; otherwise, the 90-Day Letter cannot be mailed out to the representative.

    4. Ensure that the Administrative Record is correctly prepared in accordance with 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 do not have an Administrative Record. With these types of cases, copies of all correspondence and relevant documents will be included in the correspondence section of the case file.

      Note:

      Additionally, an "agreed" Form 5500 that comes to Review as a companion case to an "unagreed" Form 5330, 990-T or 1040/1120, does not need an Administrative Record.

    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 Manager, EP Mandatory Review (or designee).

    6. The Manager, EP Mandatory Review (or designee) and the reviewer will discuss any necessary actions that should be taken or necessary revisions to the 90-Day package that need to be made prior to sending the case to Counsel.

    7. Any disagreements will be resolved by the Manager, EP Mandatory Review.

    8. Sub paragraphs e), f), and g) above do not apply if the 30-Day Letter package was submitted to the Manager, EP Mandatory Review (or designee) for review and approval and there have been no changes since then.

  5. Once approval, if required, is received from the Manager, EP Mandatory Review (or designee), or if no approval is required, the reviewer will:

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

    2. Email the 90-Day Letter(s), full RAR, Summary RAR, Administrative Record Index (if applicable), and Form 870-EP (if applicable) to the Counsel attorney conducting the 90-Day review.

  6. 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.

  7. After the case is returned from Counsel, the reviewer will follow any recommendations from Counsel or work out with Counsel and/or the Manager, EP Mandatory Review why recommendations cannot or will not be followed. Then the reviewer will get the case ready to transfer to the "90-Day Reviewer" , and document that the changes were either made, or if not, why.

    Note:

    The "90-Day Reviewer" is the reviewer designated as such by the Manager, EP Mandatory Review to review and mail out the 90-Day Letter package and to be responsible for the case through the 90-Day period until the case is closed from Mandatory Review.

  8. Occasionally, there may be a valid reason not to follow a Counsel recommendation.

    1. In these instances, written approval of the Manager, EP Mandatory Review must be obtained.

    2. When the case is sent to the 90-Day Reviewer, a full explanation along with documentation of the Manager's approval must be provided.

  9. The reviewer will email the 90-Day Letter package to the 90-Day Reviewer and copy the Manager, EP Mandatory Review, making sure the correct letter is properly prepared and addressed to the correct person at the correct address. The 90-Day Letter package includes:

    1. The applicable 90-Day Letter properly completed and addressed to the taxpayer and POA (if applicable);

      Note:

      The "Person to Contact" on the letter is the 90-Day Reviewer. Their ID number and telephone number should also be listed.

    2. Summary RAR

    3. Final full RAR

    4. Area Counsel Approval Memo

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

    6. Administrative Record Index (Form 5500)

    7. INOLES print

  10. If the case is a Final Revocation, the 90-Day Letter package will include:

    1. Letter 1757 (See IRM 4.71.14 Exhibit 14 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Summary RAR (Explanation of Revocation)

    3. Pub 1

    4. Pub 1020

  11. If the case is a Final Non-Qualification, the 90-Day Letter package will include:

    1. Letter 1757-A (See IRM 4.71.14 Exhibit 16 at IRM 4.71 - Employee Plans Examination Exhibits)

    2. Summary RAR (Explanation of Non-Qualification)

    3. Pub 1

    4. Pub 1020

  12. See IRM 4.71.14.5.1.5.1, Statutory Notice of Deficiency, for additional guidance related to the issuance of 90-Day Letters for Forms 5330, 990-T, or 1040/1120.

  13. Complete Form 13496, IRC Section 6020(b) Certification, if the return is a Form 5330 or Form 990-T Substitute for Return (SFR) and IRC 6651 penalties are being 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.

  14. Once the 90-Day Letter package is approved by Counsel and actions in paragraphs (7) through (13) above have been taken, the reviewer will prepare the case to be sent in overnight mail to the 90-Day Reviewer. See IRM 4.71.14.5.1.5.2, 90-Day Reviewer, for procedures to be followed by the 90-Day Reviewer.

    Note:

    There is no need to send copies of publications with the paper case file. The 90-Day Reviewer will maintain an inventory of current publications.

  15. The paper case file must be completely assembled in accordance with IRM 4.71.12, Case File Assembly, when sent. All documents must be uploaded to RCCMS Office Documents folder using the RCCMS Naming Convention before transferring the case.

  16. The reviewer will complete:

    1. The MR Update Sheet (providing notification that the case is being transferred to the 90-Day Reviewer) and email the form to the Group Management Assistant and the 90-Day Reviewer (with a copy to group manager or designee).

    2. Form 12209, Transmittal of Cases to Appeals, and place a paper copy on top on the outside of the paper case file. A copy will also be saved in RCCMS. See IRM 4.71.14 Exhibit 10 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 12209.

      Note:

      The Appeals address is:
      Internal Revenue Service
      Boston Appeals Office
      10 Causeway, Room 493
      Boston, MA 02222-1047

    3. Form 1725 addressed to ESSP for a 90-Day case being routed to Counsel through the Appeals Office in Boston, MA (Office Code 221). A paper copy will be placed on top of the paper case file and a copy will be saved in RCCMS.

      Note:

      See IRM 4.71.14 Exhibit 21 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 1725 for a 90-Day case.

    4. Form 5650 or Form 5599 (as applicable)

  17. Before transferring the case to the 90-Day Reviewer, the reviewer will ensure that a copy of the return, all forms, workpapers, correspondence, and research, including items listed in subparagraphs (10), (11), (16) b) and c) of this section, are saved in the RCCMS Office Documents folder using the RCCMS Naming Convention.

  18. The reviewer will transfer the RCCMS files to the Group Management Assistant and mail the case files through UPS (or hand deliver if in the same office) to the 90-Day Reviewer. The reviewer will provide the UPS tracking number to the Group Management Assistant and the 90-Day Reviewer.

  19. Once the 90-Day Letter is issued by the 90-Day Reviewer, the case will be placed in a suspense drawer for the earlier of 90 days or the time the taxpayer petitions tax court or the taxpayer files the appropriate waiver.

    Note:

    The case should actually be suspended for 7 to 10 days past the 90-Day expiration date to allow for time lags in mailing and inputting information.

  20. Mandatory Review receives a daily docket listing from the Director, Legal Processing Division, Procedure and Administration Office of Chief Counsel, which should be carefully checked to determine if the U.S. Tax Court has been petitioned. The 90-Day Reviewer may also conduct research at www.ustaxcourt.gov, selecting "Docket Inquiry" , to determine if the taxpayer has petitioned the Tax Court.

  21. If the recipient of the Final Revocation Letter or Statutory Notice of Deficiency files a petition with the U.S. Tax Court, the 90-Day Reviewer will:

    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, Unagreed - Petition to Tax Court, on AIMS and 603 on RCCMS.

  22. Once it is determined that the case is ready to go to Counsel, the case closure will be approved by the Manager, EP Mandatory Review.

  23. The Manager, EP Mandatory Review or designee will send an email to Lead Tax Examining Technician in Examinations Special Support and Processing (ESSP or the EP Closing Unit) and to the Manager, ESSP, attaching the following:

    1. Copy of all returns Mandatory Review is sending to Counsel

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

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

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

    5. Form 3210, listing all of the items included

  24. The RCCMS case will be forwarded to the Group Management Assistant to close to ESSP.

  25. The Group Management Assistant will close the case on AIMS and RCCMS to ESSP.

  26. When ESSP accepts the case and puts it in status 51, the Group Management Assistant will prepare Form 3210 listing all cases and mail the closed paper return files to Boston Appeals Processing for assignment to the Area Counsel office that will be litigating the case.

    Note:

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

  27. When the acknowledged Form 3210 is returned from Appeals or Counsel, the Group Management Assistant will send a copy to the Manager, ESSP.

  28. If information is received in Mandatory Review while the case file is in appellate review, the Appeals Office or Counsel will be notified of such information immediately.

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

    1. The case is prepared for closing as a defaulted case.

    2. The disposal code is 10 on AIMS and 604 on RCCMS.

    3. The case file will be forwarded to the Group Management Assistant to route the case to EP Examinations, Support Processing for final disposition and tax assessment.

  30. If taxes are being assessed, the 90-Day Reviewer will make sure the Form 5599 is properly prepared so that when appropriate, an additional 2% interest per IRC 6621(c) will be 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 a 30-Day or 90-Day Letter has been issued and only if the amount due is not paid within 30 days of the issuance of the 30-Day Letter or 90-Day Letter (whichever is issued first).

    4. To assure that 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 of Form 5599. The reviewer must also enter the amount of tax and penalties due for the year in item 04 of Form 5599.

    5. Items 03 and 04 of Form 5599 must be completed for all such years for cases where a 90-Day Letter has been issued if tax of $100,000 or more is being assessed against a C corporation in a given tax year and the taxpayer did not timely pay in accordance with paragraph c) of this paragraph.

4.71.14.5.1.5.1  (07-12-2016)
Statutory Notice of Deficiency

  1. For practical purposes, 90-Day Letters issued for Forms 5330, 990-T and 1040/1120 discrepancy adjustments are Statutory Notices of Deficiency (SNOD).

  2. The same general 90-Day procedures discussed in IRM 4.71.14.5.1.5, 90-Day Letter Procedures, should be followed with regard to SNOD.

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

  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 SNOD 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 consists of the following:

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

    2. Form 870-EP

    3. Summary RAR

    4. Notice 1214, Helpful Contacts for your "Notice of Deficiency"

    5. Pub 1

    6. Pub 594

    7. Return envelope

  8. A SNOD for Forms 1040 and 1120 consists of the following:

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

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

    3. Form 4549-E

    4. Summary RAR

    5. Notice 1214

    6. Pub 1

    7. Pub 594

    8. Return envelope

      Reminder:

      There is no need to send copies of publications with the paper case file. The 90-Day Reviewer will maintain an inventory of current publications.

  9. The SNOD must be sent by certified mail to the taxpayer's last known address. If the taxpayer’s current address is not known, an INOLES print must be secured to determine the last known address.

  10. Where the SNOD relates to a jointly filed Form 1040, a duplicate copy of the SNOD must be sent by certified mail to each spouse at his or her last known address, even if they reside at the same residence.

4.71.14.5.1.5.2  (07-12-2016)
90-Day Reviewer

  1. The 90-Day Reviewer is a reviewer who is designated by the Manager, EP Mandatory Review to issue 90-Day Letters and to monitor cases while in 90-Day suspense.

  2. When the 90-Day Reviewer receives the RCCMS files, paper case file and the 90-Day Letter package, he or she will:

    1. Review the 90-Day Letter package immediately if the statute of limitations will expire within 45 days.

    2. Review the 90-Day package within ten workdays of receipt if more than 45 days remain on the statute of limitations.

  3. The 90-Day Reviewer will make corrections to the 90-Day Letter Package, if necessary.

  4. If the taxpayer has a representative, the 90-Day Reviewer must make sure that all years listed on the 90-Day Letter are listed on Form 2848 or Form 8821. If they are not, a revised Form 2848 (or Form 8821) should be solicited; otherwise, the 90-Day package cannot be mailed out to the representative.

  5. If it is determined that any substantive changes need to be made, the 90-Day Reviewer will contact the reviewer who worked the case.

    Note:

    The Manager, EP Mandatory Review will resolve any differences.

  6. The 90-Day Reviewer will prepare final hard copies of the 90-Day Letter package(s) addressed to the taxpayer and POA (if applicable) for the Area Manager, EP Examinations Programs and Review, to sign and mail out.

    1. Each 90-Day Letter (complete with all attachments) should be placed in a separate file folder.

    2. A mailing envelope should be prepared for each 90-Day Letter, completely addressed and prepared with completed certified mail forms (PS 3800 and PS 3811) placed on the envelope. The completed envelope should be placed within the associated file folder.

    3. Form 1725 should be attached to the outside of the first folder containing a letter addressed to the taxpayer. See IRM 4.71.14 Exhibit 21 at IRM 4.71 - Employee Plans Examination Exhibits for an example of a completed Form 1725 when obtaining a signature on a 90-Day Letter.

    4. The Counsel approval memo (or email) should be included on the inside left of the first file folder with the letter addressed to the taxpayer.

    5. Each file folder should contain 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" .

    6. The completed originator's PS Form 3800 (certified mail) must stay on the prepared envelope until it is date-stamped by the post office. When the tear away portion with post office stamp is returned to the 90-Day Reviewer it will be stapled to the bottom left of the first page of the file copy of the 90-Day Letter.

    7. Any representatives receiving copies of the letter will be placed in a separate folder with nothing on the front (except post it note saying "rep" ). The inside of the folder would contain Letter 937-A and the same items as the folder containing the letter to the taxpayer.

  7. Once completed, the 90-Day Letter folders discussed in paragraph (6) will be transmitted to the Manager, EP Mandatory Review.

  8. After reviewing the 90-Day Letters, the Manager, EP Mandatory Review, will forward the folders to the Area Manager, EP Examinations Programs and Review, to sign, date and mail out.

  9. Signed and dated file copies of the 90-Day Letters will be returned to the 90-Day Reviewer to be placed in the Administrative Record (Form 5500) or case file (Forms 5330, 990-T or 1040/1120).

  10. The 90-Day Reviewer will process the case in accordance with paragraphs (19) through (25), (27) and (28) of IRM 4.71.14.5.1.590-Day Letter Procedures.

4.71.14.5.1.5.3  (07-12-2016)
Statute Considerations

  1. Generally, the issuance of the 90-Day Letter suspends (in effect extends) the statute of limitations 150 days (90 days to petition tax court plus an additional 60 days to process the case) for taxpayers in the United States and 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 Form 870-EP or Form 4089 was signed to the deadline to petition tax court.

    2. Example: Assume a SNOD is issued on June 1, 2015 on a Form 5330 return with a statute expiration date of July 31, 2015. The taxpayer has 90 days (until August 30, 2015) to petition tax court. The statute of limitations would be "extended" to December 28, 2015 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, 2015 (with 70 days remaining in the 90 day period), the statute of limitations would be "shortened" by 70 days to October 19, 2015.


  3. The 90-Day Reviewer will update the statute of limitations on AIMS and RCCMS when the 90-Day Letter is mailed.

  4. If Form 870-EP or Form 4089 waiver is received prior to the expiration of the 90-Day period, the statute of limitations will need to be updated on AIMS and RCCMS to reflect a shorter statute date.

4.71.14.5.1.5.4  (07-12-2016)
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 are 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 consent of the taxpayer.

  5. Whether or not a notice is rescinded is discretionary on the part of the Secretary.

  6. The Manager, EP Mandatory Review must be consulted by the reviewer when the potential need arises to rescind a SNOD that has been issued on a case in Review.

4.71.14.5.1.5.4.1  (07-12-2016)
Criteria for Rescinding

  1. The determination 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 SNOD was issued without considering a properly filed Form 872, Consent to Extend the Statute of Limitations.

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

  2. A rescission will not 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, Special Consent to Extend the Time to Assess Tax, 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.

4.71.14.5.1.5.4.2  (07-12-2016)
Statute of Limitations Considerations Before Rescinding Notice

  1. Since the rescission agreement returns the case back to its original state before the SNOD was issued, careful consideration must be given to the statute before such agreement is entered into.

  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 must be determined for purposes of issuing another SNOD , if necessary, and making assessments.

  3. If there are at least ninety days remaining on the statute, a rescission may be entered into. If less than ninety 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 prior to the issuance of the SNOD , the rescission will not be granted unless the taxpayer signs another Form 872–A prior to rescission.

4.71.14.5.1.5.4.3  (07-12-2016)
Agreement to Rescind Notice of Deficiency

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

  2. The originator of the SNOD is responsible for the control, preparation, and execution of 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, the rescission agreement must be signed by both spouses or authorized representative(s) for the parties.

  6. Form 8626 will be prepared in duplicate.

    1. Once executed, one copy of the form will be attached to the front of the SNOD.

    2. The second copy is sent to the taxpayer.

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

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

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

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

4.71.14.5.1.6  (07-12-2016)
Completion of Form 5599 and RCCMS Tabs

  1. When you 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. Form 5599 is required to 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 (i.e., 123-45-6789V) related to a Form 5330.
    P21 - 22— MFT Form 1040 = 30; 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.
    P52-54— 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 a delinquent Form 5330 is secured and forwarded 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 Insert current statute of limitations date if the statute has been extended. If the statute has not been extended, leave this item blank.

    Note:

    Do not use alpha codes in the blocks for item 14. If the statute has been updated to an alpha code (e.g., 12/EE/2014), write the alpha code statute to the right of the blocks; enter the actual numerical statute in the blocks (e.g., 12/31/2014).

    15— Credit and Tax Computation Adjustments This item will be left blank if the dollar amount in item 12 is $0. If line 12 contains a dollar amount (i.e., additional tax is being assessed on a previously filed return), then a reference number (manual abstract code) should be listed 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 Time must be entered in whole hours and in tenths of hours.
    30— Technique Code Applicable codes:
    2 – Office/Correspondence exam (OCEP) - full scope
    4 – Field exam - full scope
    6 – OCEP - limited scope/focused audit
    7 – Field exam - limited scope/focused audit
    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 5330 or 990-T is picked up. If there is only one delinquent return, enter a "T" . If there is 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 Substitute for Return (SFR)
    40— Special Project Code Use 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 working the case.
    I— Reviewer The reviewer should fill in their name and the date they completed the form.

    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 will leave line 701 blank; however, reviewers should complete this item.
  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.

4.71.14.5.1.7  (07-12-2016)
Completion of Form 5650 and RCCMS Tabs

  1. When you 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. Form 5650 is required to be completed 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 (e.g., 12/PP/2014), write the alpha code statute to the right of the blocks; enter the actual numerical statute in the blocks (e.g., 12/31/2014).

    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 – Office/Correspondence exam (OCEP) - full scope
    4 – Field exam - full scope
    6 – OCEP - limited scope/focused audit
    7 – Field exam - limited scope/focused audit
    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 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 working 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. Do not enter an amount on this line if the case is being 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 only and $1 in the other years). If the sanction amount is $0, $1 must be entered in item 613. When the closing agreement amount is entered in item 613, the entry should be right justified.
    I— Reviewer The reviewer should fill in their name and the date they complete the form.
    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.

4.71.14.5.2  (07-12-2016)
Agreed Cases Reviewed Per Management Request

  1. From time to time management will provide special requests for certain open agreed cases to be reviewed. After reviewing these cases the reviewer will:

    1. Provide requested feedback to management. This feedback can be in the form of Form 5456, Reviewer’s Memorandum, or any other form of communication as determined by the Manager, EP Mandatory Review.

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

  2. An agreed issue will not be reopened nor should a new issue be of concern to the reviewer unless the basis for such proposal is significant in nature, or the potential effect upon the tax liability is material.

  3. Cases will be returned to the group only with concurrence of the Manager, EP Mandatory Review.

4.71.14.6  (07-12-2016)
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 four ways:

    1. An Advisory Memorandum is used to apprise the group manager and the agent of errors of omission or commission that have been accepted or corrected by the reviewer with no change in qualification or tax liability. When an Advisory Memorandum is issued, the case file is not returned.

    2. An Inquiry Memorandum is prepared when significant issues are present in the exam that warrant the return of the case to the group for further case development by the agent.

    3. A Correction Memorandum often emanates from an Inquiry Memorandum where the agent’s revised recommendations result in an incorrect tax liability, or other significant determination that is incorrect.

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

  3. Form 5456 will be addressed to the manager of the agent who worked the case.

  4. Each issue raised by the reviewer will be clearly explained.

  5. If additional space is needed, Form 886–A can be utilized.

  6. Form 5456 will be emailed to the Manager, EP Mandatory Review (or designee) for approval.

  7. If the Form 5456 is an Inquiry or Correction Memorandum, after approval:

    1. The reviewer will prepare the case to be closed and complete the MR Update Sheet and email the form to the Group Management Assistant (with a copy to group manager or designee).

    2. The case file will be forwarded to the Manager, EP Mandatory Review.

    3. The original and a copy of Form 5456 will be returned with the case file to the agent’s group manager and the case will be updated to status 13.

      Note:

      The case will remain in status 13 until the case is closed from the group.

    4. A copy of Form 5456 will be retained by Mandatory Review.

  8. If the Form 5456 is an Advisory or Commendatory Memorandum, after approval the original Form 5456 (without the case file) will be sent to the agent’s group manager when the case is transferred to Appeals (disposal code 07), the 90-Day letter is issued (status code 24), or the case is closed (disposal code 10).

  9. A copy of the approved Form 5456 will be retained in Mandatory Review by the Group Management Assistant.

  10. The group manager will be contacted by telephone before returning a case that has less than 180 days remaining on the statute. Such cases will be forwarded to the group by express mail (next day).

  11. When a case is returned to the group with Form 5456 (Inquiry of Correction Memo), the group manager will initially consider the Reviewer’s Memorandum as follows:

    1. If the group manager concurs with some or all of the contents of the memorandum, item 3 of the Form 5457, Response to Reviewer's Memorandum - EP/EO, will be completed and both copies of Form 5457 will be forwarded with the case file to the agent.

    2. If the group manager disagrees with the Memorandum, he/she should prepare a written response on Form 5457 citing reasons for disagreement on Form 5457. The "No" block should be selected in item 3.

    3. The group manager should contact the Manager, Mandatory Review by phone to discuss the issue. If the issue cannot be resolved by phone, the case file should be returned to the Manager, Mandatory Review.

    4. The Manager, Mandatory Review shall review the response from the group manager. If he is in agreement with the group manager, the case will be returned to the reviewer to complete. If the Manager, Mandatory Review cannot reach agreement with the group manager, the issue will be elevated to the Manager, EP Programs and Review, who will resolve any dispute.

  12. Upon receipt of the case file with Form 5456 (Inquiry or Correction Memo), the agent will:

    1. Reactivate the case on Form 6490 (EP Technical Time Report).

    2. Complete items 1–6 on Form 5457, utilizing Form 886–A if additional space is required.

    3. In completing item 5 of Form 5457, responses should correspond to the order of the reviewer’s comments on Form 5456.

    4. If an item cited does not result in an adjustment, the additional information or an explanation will be provided on Form 5457.

  13. The group manager will reflect his/her concurrence with the responses to the items listed on the Form 5456 by completing item 7 on Form 5457.

  14. After the group manager's approval, the case file, Form 5457 and two copies of Form 5456 (and Form 886-A) will be resubmitted to Mandatory Review.

  15. The case will be assigned to the reviewer who prepared Form 5456 if the reviewer is still in Mandatory Review.

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

  17. After the final review and acceptance of the case by Mandatory Review, maintain Forms 5456, 5457 and Form 886-A as follows:

    1. Keep originals for the paper case file on the inside left.

    2. If available, electronic versions of Forms 5456 and 5457 will be saved in the RCCMS Office Documents folder using the RCCMS Naming Convention

  18. If after 60 days, no response has been received from the group to a Form 5456 Inquiry or Correction Memo, the reviewer will solicit a response from the group manager with a Form 5456 Feedback Memo.

    1. The Feedback Memo will be addressed to the group manager from the Manager, EP Mandatory Review.

    2. The reviewer's mailing address will be listed in the memo as the address where the group manager will mail his response to the Feedback Memo.

    3. The reviewer will forward a copy of the Feedback Memo to the Group Management Assistant when the Feedback Memo is mailed to the group manager.

    4. When the reviewer receives a response to the Feedback Memo from the group manager, he/she will forward a copy of the response to the Group Management Assistant.

    5. If no response to the Feedback Memo is received from the group manager within 10 days, the reviewer will contact the Manager, EP Mandatory Review who will solicit a response from the group manager.

    6. The reviewer will continue to solicit feedback from the group manager every 30 days thereafter until the case is returned to Mandatory Review or otherwise resolved.

4.71.14.7  (07-12-2016)
Special Notification Procedures

  1. The reviewer should ensure that all required referrals have been made 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 there is no evidence that a referral was made, the reviewer will make the referral.

  2. If issues involved in the case warrant a referral to an Examination Functional Unit (such as SB/SE), and the agent did not previously make a referral, the referral will be made by the reviewer on Form 5666, TE/GE Referral Information Report .

  3. If issues involved in the case directly impact a live examination of a related Form 1040, Form 1041 or Form 1120 in SB/SE or other Examination Functional Unit, the exam agent working the related cases will be contacted and updated with the status of the case.

  4. If issues in the case have an impact on a related case being litigated by Area Counsel, the attorney will be contacted and apprised of the status of the case.

  5. If third party contact is made, the third party notice requirements per IRC 7602(c) will be followed. For all third party contacts, Letter 3164-F and Form 12175, Third Party Contact Report Form, must be prepared and processed in accordance with IRM 4.71.1.10, Third Party Contacts, and the subsections thereunder.

    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.

4.71.14.8  (07-12-2016)
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. Tax amounts, from a Form 5330 or Form 990-T that is picked up in relation to a Form 5500 or a NRU exam, should be reflected on the checksheet that is completed for the Form 5500 or a NRU exam.

    2. A separate CECA checksheet should not be completed for a Form 5330 or Form 990-T exam.

    3. Results from a Form 5330 or Form 990-T exam that has no related Form 5500 exam will not be reported on any CECA checksheet.

    4. Income tax amounts from a Form 1040/1120 discrepancy adjustment that is picked up in relation to a Form 5500 or an NRU exam should be reflected on the checksheet that is completed for the Form 5500 or an NRU exam.

    5. A separate CECA checksheet should not be completed for a Form 1040/1120 discrepancy adjustment.

    6. Results from a Form 1040/1120 discrepancy adjustment that has no related Form 5500 exam will not be reported 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 group manager is instructed not to mail an "electronic copy" of the checksheet to the CECA mailbox. Instead, EP Mandatory Review will email the CECA checksheet to the CECA mailbox for all unagreed cases after the case has been reviewed.

  4. The following procedures apply to Mandatory Review regarding CECA checksheets:

    1. After completing his/her review of the case (and prior to case closure), the reviewer shall make changes to the CECA checksheet, if applicable.

    2. The current version of the CECA Checksheet can be downloaded from the EP Examination website using this link: Checksheet for EP Compliance Activities (CECA)

    3. The Case Chronology Record within RCCMS shall be annotated by the reviewer that he or she reviewed the CECA checksheet and comments will be made about any revisions to the checksheet.

    4. The reviewer shall securely e-mail an "electronic copy" of the checksheet to the CECA mailbox (*TE/GE-EP-CECA) only if the issues on the case are resolved and the case becomes "agreed" (e.g., the case is not going to Appeals, into 90-Day status or returned to the group in accordance with paragraph (5) of this section).

      Note:

      The checksheet will be emailed when the agreed case is closed from Mandatory Review.

    5. If the case is transferred to the 90-Day Reviewer, the 90-Day Reviewer shall securely e-mail an "electronic copy" of the checksheet to the CECA mailbox (*TE/GE-EP-CECA) when the case is closed from Mandatory Review .

    6. If the case is being closed to Appeals, the Manager, EP Mandatory Review (or designee) shall securely e-mail an "electronic copy" of the checksheet to the CECA mailbox (*TE/GE-EP-CECA) when the case is closed from Mandatory Review.

    7. After the CECA checksheet is forwarded to the CECA mailbox, the Case Chronology Record shall be annotated accordingly by the individual who submitted the checksheet (e.g., reviewer, 90-Day Reviewer, or Manager, Mandatory Review or designee).

    8. A copy of the CECA checksheet will be saved in the RCCMS Office Documents folder.

  5. On occasion, a case may be transferred, back and forth, between the group and Mandatory Review. Under such circumstances, the entity in possession of the case file immediately prior to updating the status code to "51" bears the responsibility for the forwarding of the CECA checksheet to the CECA mailbox.

4.71.14.9  (07-12-2016)
Monthly Reports

  1. At the end of each time reporting (ETS) period, assigned case inventory will be validated by each reviewer and a status report submitted to the Manager, EP Mandatory Review.

    1. The total number of cases on hand must be carefully appraised and appropriate measures taken to avert potential backlogs.

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

  2. Status of special assignments will be reported by each reviewer (if applicable) and submitted as part of the monthly report to the Manager, EP Mandatory Review.

  3. Speaking engagements and group presentations conducted during the month will also be included on the monthly report provided to the Manager, EP Mandatory Review.

  4. Closing agreements secured for cases closed during the ETS period will also be included on the monthly report provided to the Manager, EP Mandatory Review.


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