4.71.24 Whistleblower Claims

Manual Transmittal

December 06, 2018

Purpose

(1) This transmits revised IRM 4.71.24, Employee Plans Examination of Returns, Whistleblower Claims..

Background

This revised IRM 4.71.24 provides guidance and information to assist EP agents in processing Whistleblower Claims.

Material Changes

(1) Enhanced IRM 4.71.24.1, Program, Scope and Objectives, and the subsections thereunder, by adding more information on the internal controls regulating EP Examinations.

(2) This IRM was revised throughout to comply with the November 15, 2017, Internal Guidance Memorandum (IGM) TE/GE -04-1117-0024 from the Director, Compliance Planning & Classification (CP&C) entitled, Whistleblower (WB) Claims.

(3) Added new section IRM 4.71.24.1.4, Contact Information for Business Units and Sub-functions, to reduce the need for multiple edits to this IRM when contact information changes. The new section will also facilitate finding contact information.

(4) The titles for those coordinating Whistleblower cases in TE/GE (TE/GE Whistleblower Coordinator and EP WB SME) were updated throughout the IRM.

(5) Eliminated all portions of the IRM relating to the responsibilities of the TE/GE Whistleblower Coordinator and the EP WB SME since these positions are now in Compliance Planning & Classification (CP&C) and will be covered in other IRMs.

Effect on Other Documents

This supersedes IRM 4.71.24 dated September 20, 2017.

Audience

Tax Exempt and Government Entities
Employee Plans

Effective Date

(12-06-2018)

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

Program, Scope and Objectives

  1. Purpose: IRM 4.71.24, Employee Plans Examination of Returns, Whistleblower Procedures, provides guidance for Employee Plans (EP) agents in processing Whistleblower Claims.

  2. Audience: This IRM provides procedures for agents, managers, and support staff in EP Examinations.

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

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

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

      Note:

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

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

      Note:

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

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

Background

  1. IRM 4.71.24 provides guidance and information to assist agents in working Whistleblower claims related to EP examinations.

  2. EP Examination is the division designated to determine if a retirement plan is qualified under IRC 401 and the underlying regulations, and therefore, exempt from tax under IRC 501.

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

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

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

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

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

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

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

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

  5. All examinations will be done in accordance with Policy Statement 1-236, Fairness and Integrity in Enforcement Selection. See IRM 1.2.10.37, Policy Statement 1-236.

Program Controls

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

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

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

  2. Tax Exempt Quality Measurement System (TEQMS) is the quality control system TE/GE uses to oversee the entire examination program. For more information on TEQMS, see IRM 4.70.7, Special Review (SR) and Tax Exempt Quality Measurement System (TEQMS) Procedures.

  3. All examinations will be done in accordance with the Taxpayer Bill of Rights as listed in IRC 7803(a)(3).

    Note:

    Find additional information at: Taxpayer Bill of Rights

  4. The IRS is fully committed to protecting the privacy rights of taxpayers and employees. Privacy laws are included in the IRC, the Privacy Act of 1974, the Freedom of Information Act, and IRS policies and practices. For more information about these laws, visit the IRS Electronic Freedom of Information Act Reading Room. For questions concerning privacy, send an email to *Privacy. For question concerning disclosure, send an email to *Disclosure.

Acronyms and Forms

  1. This manual uses the following acronyms and references the following forms.

    Acronyms

    Acronyms Definition
    AIMS Audit Information Management System
    CCR Case Chronology Record
    CP&C Compliance Planning & Classification
    EP Employee Plans
    EP WB SME Employee Plans Whistleblower Subject Matter Expert
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    IRS Internal Revenue Service
    MAP Multiemployer
    SFR Substitute For Return
    SME Subject Matter Expert
    TE/GE Tax Exempt & Government Entities Division
    TEQMS Tax Exempt Quality Measurement System
    WB Whistleblower

     

    Forms and Schedules

    Form Name
    Form 211 Application for Award for Original Information
    Form 1040 U.S. Individual Income Tax Return
    Form 3198-A TE/GE Special Handling Notice
    Form 3949 Information Report Referral
    Form 11369 Confidential Evaluation Report on Claim for Award

     

Contact Information for Business Units and Sub-functions

  1. Phone, efax and email (note in the subject line EP Referral) information:

    1. Classification: *TEGE-CPC-Classification (tege-cpc-classification@irs.gov)

      Note:

      The Employee Plans Whistleblower Subject Matter Expert (EP WB SME) works in Classification.

  2. Postal mailing addresses:

    1. Classification:
      IRS – Classification & Case Assignment
      1100 Commerce St., Mail Code 4910DAL
      Dallas, TX 75242


    2. IRS - Compliance Planning & Classification (CP&C)
      c/o TE/GE Whistleblower Coordinator
      1100 Commerce St., Mail Code 4910 DAL
      Dallas, TX 75242

Overview of EP Exam Whistleblower Procedures

  1. On December 20, 2006, Congress made provision for the establishment of a Whistleblower Office within the IRS.

  2. The Whistleblower Office has responsibility for the administration of the informant award program under IRC 7623.

  3. IRC 7623 authorizes the payment of awards from the proceeds of amounts the Government collects by reason of the information provided by the informant making the claim.

  4. Whistleblower claims are submitted by an informant on Form 211, Application for Award for Original Information. See IRM 4.71.24 Exhibit 1 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 211.

  5. There are two types of Whistleblower Form 211 claim cases:

    1. Discretionary award IRC section 7623(a) cases ("Category A" cases), and

    2. Mandatory award IRC section 7623(b) cases ("Category B" cases).

  6. Payment of Category A awards is made at the discretion of the IRS.

  7. To be eligible for a Category B award, the amount in dispute (including tax, penalties, interest, additions to tax, and additional amounts) must exceed $2,000,000. If the taxpayer is an individual, the individual's gross income must exceed $200,000 for any taxable year at issue.

  8. This IRM section outlines the procedures for Employee Plans (EP) personnel who work Category A and Category B Whistleblower claims.

  9. IRM 25.2.2 provides general guidance for the handling of Category A and Category B Whistleblower claims. This section customizes those procedures for EP Exam.

  10. The TE/GE Whistleblower Coordinator (the WB Coordinator) works in CP&C and is responsible for all Whistleblower claims in TE/GE.

  11. The WB Coordinator transfers all Whistleblower claims involving retirement plans to Classification. If it is determined that the claim has audit potential, the EP WB SME will assign it to an EP Exam group to be worked.

Category A Whistleblower Claim Procedures

  1. When Form 211 is received by the Whistleblower Office (WB Office), the claim is added to the WB tracking system.

  2. If the WB Office determines that the case does not meet the $2,000,000 criteria to be a Category B case, the WB Office will route the case to the Informant Claims Unit (WB ICE Unit) in the Ogden Service Center for processing.

  3. If the case involves an issue under the jurisdiction of Employee Plans, the WB ICE Unit will prepare a Category A WB case file (Form 211 and any supporting information) and and assign the claim in e-Trak to TE/GE in OD Classification status.

  4. The WB Coordinator assigns claims involving retirement plans the Classification group in CP&C. If the claim has audit potential, it will be transferred to the EP WB SME for taint review and debriefing, and assigned to an EP Exam group to be worked.

Category A Whistleblower Claim Procedures for EP Agents

  1. When a Whistleblower claim is assigned, the EP Exam group will receive two files from the EP WB SME:

    1. The examination case file

    2. The Category A WB case file

  2. When you receive the Category A WB case file, carefully read the Category A Instructions in the WB case file. The Category A Instructions:

    1. Provide basic procedures and guidance for the examination.

    2. Explain the types of documents that must be in the WB case file. See IRM 4.71.24 Exhibit 2 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Category A Instructions.

  3. Follow these Category A WB case file special protection procedures:

    1. Keep the WB file in a locked cabinet.

    2. Include TD F 15-05.11 (SBU Cover Sheet) on the outside of the file.

    3. Keep all WB material, documents, interview notes, etc. separate from the examination case file.

    4. Don't mention the WB in the examination case file: Don't include any WB information in the CCR, exam workpapers, any audit file documents or RCCMS.

  4. Don't let the taxpayer know that there is a WB involved.

  5. If you think you should interview the WB, contact the EP WB SME for assistance.

    Note:

    TE/GE Counsel will also need to be involved if the WB is interviewed; this will be coordinated by the EP WB SME.

  6. When you finish the examination, complete Form 11369. See IRM 4.71.24 Exhibit 3 at IRM 4.71 - Employee Plans Examination Exhibits for an example of Form 11369.

    1. Complete Form 11369 for each taxpayer (except for jointly filed Forms 1040).

      Note:

      You only need to complete one Form 11369 for a jointly filed Form 1040. Combine both spouses on a single Form 11369.

    2. Clearly explain how the material provided by the WB affected the examination.

    3. Obtain your group manager's approval on Form 11369.

      Note:

      The WB Office heavily relies on this form when deciding the amount to award the WB. The WB Office is responsible to determine whether an award is warranted and the amount of the award. You won't be involved with this decision; however, your case write-up of the WB's information and its importance and value is critical for the award determination.

  7. Include this documentation, as appropriate and relevant in the WB case file:

    • Original WB Form 211 and attachments

    • Form 11369 for each taxpayer

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040. Both spouses are combined on a single Form 11369.

    • Copies of all examined returns, including substitute for returns (SFRs) you prepared and/or secured returns the taxpayer prepared

    • Copy of the examination report and attachments

    • Special agent’s evaluation report (if applicable) attached to Form 3949

    • Copies of Activity Records

    • Copies of appropriate lead sheets and workpapers

    • Any other information which may help the WB Office in determining an award amount

  8. Close the exam case file(s) according to normal procedures found in IRM 4.71.1, Employee Plans Examination of Returns, Overview of Form 5500 Examination Procedures.

  9. Contact the EP WB SME to coordinate mailing the Category A WB case file to the WB ICE Unit in Ogden.

    Note:

    The address for the ICE Unit is included in the case file when you receive it.

Category B Whistleblower Claim Procedures

  1. When the WB Office receives Form 211, they add the claim to the WB tracking system.

  2. If the WB Office determines that the case meets the $2,000,000 criteria to be a Category B case, they prepare a Category B WB case file (Form 211 and supporting information) and assign the claim in e-Trak to TE/GE in OD Classification status.

  3. The WB Coordinator assigns claims involving retirement plans to the Classification group in CP&C. If the claim has audit potential, it will be transferred to the EP WB SME for taint review and debriefing, and assigned to an EP Exam group to be worked.

Category B Whistleblower Claim Procedures for EP Agents

  1. The EP group will receive two files from the EP WB SME:

    1. The examination case file

    2. The Category B WB case file

  2. When you receive the Category B WB case file, carefully read the Category B Instructions in the WB case file. The Category B Instructions:

    1. Provide basic procedures and guidance for the examination.

    2. Explain the types of documents that must be in the WB case file. See IRM 4.71.24 Exhibit 6 at IRM 4.71 - Employee Plans Examination Exhibits for an example of the Category B Instructions.

  3. Follow these Category B WB case file special protection procedures:

    1. Keep the WB file in a locked cabinet.

    2. Include TD F 15-05.11 (SBU Cover Sheet) on the outside of the file.

    3. Keep all WB material, documents, interview notes, etc. separate from the examination case file.

    4. Don't mention the WB in the examination case file: Don't include any WB information in the case chronology record (CCR), exam workpapers, any audit file documents or RCCMS.

  4. Don't let the taxpayer know that there is a WB involved.

  5. If you think that an interview of the WB is warranted, contact the EP WB SME for assistance.

    Note:

    TE/GE Counsel will also need to be involved if the WB is interviewed; this will be coordinated by the EP WB SME.

  6. At the conclusion of the examination, complete Form 11369. See IRM 4.71.24 Exhibit 3 at IRM 4.71 - Employee Plans Examinations for an example of Form 11369.

    1. Complete Form 11369 for each taxpayer (with the exception of Forms 1040 that are jointly filed returns).

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    2. Clearly explain how the material provided by the WB affected the examination.

    3. Get approval of Form 11369 from your group manager.

      Note:

      The WB Office heavily relies on this form when deciding the amount to award the WB. The WB Office is responsible to determine whether an award is warranted and the amount of the award. You won't be involved with this decision; however, your case write-up of the WB's information and its importance and value is critical for the award determination.

  7. At the conclusion of the examination, mail the Category B WB case file in a confidential envelope to the WB Coordinator at the address listed in IRM 4.71.24.1.4 (2), Contact Information for Business Units and Sub-functions.

  8. When mailed, the WB case file should contain the following documentation, as appropriate and relevant:

    • Original WB Form 211 and attachments

    • Form 11369 for each taxpayer

      Note:

      Only one Form 11369 is required for a jointly filed Form 1040 (both spouses are combined on a single Form 11369)

    • Copies of all examined returns, including SFRs prepared during the examination and/or secured returns prepared by the taxpayer

    • Copy of the examination report and attachments

    • Special agent’s evaluation report (if applicable) attached to Form 3949

    • Copies of Activity Records

    • Copies of appropriate lead sheets and workpapers

    • Any other information which may assist the WB Office in determining an award amount.

  9. Close the examination case to EP Mandatory Review with Form 3198-A attached to the outside of the case file.

    Note:

    Other than the notation on Form 3198-A that the exam involves a Category B Whistleblower case, there should be no mention of the WB in the examination case file. Neither the CCR, exam workpapers nor any documents in the examination case file nor RCCMS should contain any information about the WB.

    Note:

    Do not issue the closing letter. Mandatory Review will issue the closing letter after their review is complete.

Survey or Transfer

  1. If the decision is made to survey a Category A case at the group level:

    1. The agent will complete items 1 through 8 and 14 of Form 11369 and contact the EP WB SME to coordinate mailing the form with the Category A WB case file to the WB ICE Unit in Ogden.

    2. The exam case file will be closed using the Survey procedures contained in IRM 4.71.7.

  2. If the manager/agent decide to survey a Category B case:

    1. The group manager must get the Area Manager's written approval and contact the WB Coordinator to discuss the reason the case is being surveyed.

      Note:

      If the case is a "sensitive case" , the WB Coordinator will secure the Sensitive Case Committee's written approval to not audit the case.

    2. Once approved for survey, the agent will complete items 1 through 8 and 14 of Form 11369 and mail the form with the Category B WB case file to the WB Coordinator and close the exam case file using the Survey procedures in IRM 4.71.7.

  3. If the case is transferred to another group, the agent will complete items 1 through 8 and 15 of Form 11369 and mail the form to the WB Coordinator.

  4. The address of the WB Coordinator is the address listed in IRM 4.71.24.1.4 (2), Contact Information for Business Units and Sub-functions.