4.75.4  Planning, Classifying, and Selecting Returns and Processing Claims

Manual Transmittal

July 12, 2012


(1) This transmits a complete revision of the table of contents and text for IRM 4.75.4, Planning, Classifying, and Selecting Returns and Processing Claims.

Material Changes

(1) This IRM reflects use of the term, "whistleblower" , or "WB" , instead of the term, "informant" , to reflect the terminology used by statute, IRC 7623 is updated to reflect policy statements for selecting cases for examination.

(2) IRM section is expanded to further explain the term "examination" .

(3) IRM, EO Implementing Guidelines, was removed because its content was not reflective of the purpose of this IRM.

(4) IRM now contains Examination Process which was previously located at IRM This section has also been revised to replace the task previously attributed to Examinations Program and Planning (EPP) to Compliance Segment Critical Initiatives.(CSCI).

(5) IRM, "Office of Director, Exempt Organizations Examinations," was removed because the information it contained was not reflective of the purpose for this IRM.

(6) IRM now contains the information previously included in IRM 4.75.7, Claims Processing

(7) IRM now includes the information previously included in IRM, "Claims Statute of Limitations." Also, paragraph (3) procedures are presented in table format.

(8) IRM, Surveyed Claims, now includes the information previously included in IRM, Additionally, item 2b) and 2d) of the former, have been removed because there is no longer a need for the original return to be included in the claim package. Lastly, a note that Managers must approve all types of surveys before stamping the returns.

(9) IRM section, Disposition of TEP Claim Cases, which was previously located in IRM 4.75.7 has been revised to take out reference to the TEP case selection sheet and the TEP closed Balanced measures reference

(10) IRM includes the information previously included in IRM, "Claims Subject to Section 4962" .

(11) IRM includes the information previously included in IRM, "Net Operating Loss (NOL) or Capital Loss Carrybacks." Also, added instruction on completing Form 2285 and Form 5599.

(12) IRM now includes the information previously included in IRM, "Protective Claims" .

(13) IRM includes the information previously included in IRM, "EO Penalties," . Additionally, more accurate guidance on EO Penalties has been added.

(14) IRM includes the information previously included in IRM, "Joint Committee Claim Cases (IRC 6405)."

(15) IRM, now contains new information regarding Team Examination Program (TEP) Claims Processing Procedures.

(16) New IRM, Category “B” Whistleblower Form 211 Claim Procedures has been added with corresponding subsections.

(17) Exhibit 4.75.4-1, Summary of EO Taint Review has been added to show the steps in processing Whistleblower claims.

(18) Some editorial and grammatical changes were made throughout this IRM and are not identified in this listing.

Effect on Other Documents

This IRM replaces and obsoletes IRM 4.75,4, Planning, Classifying, and Selecting Returns and Processing Claims, dated February 1, 2003 and obsoletes memorandum T: EO:E:04-2009, Category "B" Whistleblower Form 211 Claim Procedures dated January 12, 2009.


TE/GE (Exempt Organizations Examinations)

Effective Date


Signed by
Lois G. Lerner
Director, Exempt Organizations
Tax Exempt and Government Entities  (07-12-2012)

  1. This IRM contains Exempt Organization (EO) procedures and instructions for researching, classifying and selecting returns and claims. Refer to IRM 4.75.6, Exempt Organizations Returns Inventory and Classification System (RICS), which is used to identify and select EO returns which relate to specific types of compliance activities set out in the approved work plan.

  2. These instructions are provided for the EO Classification–Referrals (Classification) group and examination group personnel.  (07-12-2012)
Background Information

  1. Policy Statement P-7-20 (IRM states the primary objective of the Employee Plans and Exempt Organizations examination program of returns is regulatory, with emphasis on continued qualification of exempt organizations and employee benefit plans.

  2. For EO, the purpose of selection and examination of returns is to:

    • Promote the highest degree of voluntary compliance with the statutes governing qualification of exemption of certain types of organizations from tax

    • Determine the extent of compliance and the causes of noncompliance with the tax laws by organizations

    • Conduct examinations of exempt organizations through a review of the purposes, activities and legal structures of such organizations.  (07-12-2012)
Glossary of Terms

  1. Returns Inventory and Classification System (RICS): an automated system that provides users access to return and files information related to filing and processing of returns to the Tax Exempt/Government Entities (TE/GE) operating division.

  2. RICS Condition Code: Codes that identify specific data that is needed to select the returns that fit a project issue.

  3. Non-Master File (NMF): a collection of revenue accounting transactions on taxpayer accounts which provides a means for the assessment of taxes and the collection of revenue. An Automated NMF System has replaced the manual NMF accounting system.

  4. Examination: A review of books, records, and other data to develop all significant issues, to ensure a proper determination of exempt status, qualification, or tax liability where appropriate, and to determine that applicable statutory requirements are satisfied.


    IRC 7602 and Treas. Reg. 301.7602-1(a) provides the authority to examine returns. Whether a compliance activity constitutes an "examination" is relevant for such purposes as IRC 7605(b), relating to restrictions on examinations of taxpayers; IRC 7611, relating to church tax inquiries; and section 530 of the Revenue Act of 1978, relating to prior audit safe havens for worker classification issues. For distinguishing between examinations and other compliance activities, refer to Rev. Proc. 2005-32.  (07-12-2012)
Examination Process

  1. The Strategic Planning Working (SPWG) and Compliance Strategy Critical Initiatives (CSCI) groups determine the selection of returns to be examined and conducts a segment analysis throughout the nation and develops potential compliance issues. Once these issues are identified, CSCI develops condition codes to identify the returns that meet the issues in question.

  2. Once CSCI produces the project and condition codes, the data is given to the Case Selection and Delivery unit (CS&D) for return retrieval. The CS&D utilizes the RICS system to pull the necessary returns to satisfy the project needs. All returns must have a minimum of 18 months remaining on the statute.

  3. Upon receipt CS&D establishes a full account on the Automated Information Management System (AIMS), and transfers the returns to the examination group that covers the geographic area where the organization is located.

  4. The examination group conducts the audit on the organizations for which the returns were pulled.  (02-01-2003)
Claims Processing

  1. The Ogden Service Center (OSC) receives and processes claims. If a claim is received by any other group of TE/GE, send the claim to the OSC for processing.

  2. OSC forwards all claims that cannot be processed by them to the CS&D. OSC should establish all such claims on AIMS in the Integrated Data Retrieval System (IDRS) before sending them to CS&D.

  3. If the claim is without an AIMS account, the CS&D will establish the claim on IDRS.

  4. If there is an AIMS account on IDRS, the CS&D will record the claim on the claims database and establishes the claim on Reporting Compliance Case Management System (RCCMS).  (02-01-2003)
Claims - Statute of Limitations

  1. Verify the statute of limitation date for filing a claim. The taxpayer must file a claim for refund within 3 years from the date the original return was filed or 2 years from the date the tax was paid, whichever is later (IRC 6511).

  2. If no return was filed, a claim may be allowed if filed within 2 years from the date of payment.

  3. Use the following procedure to verify the statute of limitations date for filing claims:

    1. Check the Assessment Statute Expiration Date (ASED) on IDRS and print TXMODA.
    2. Compare the claim's OSC received date with the statute date for assessment (ASED).
    a If the received date is earlier than the ASED, the claim is filed timely.
    b If not earlier, then check the postmark on the envelope.
    c. If still not earlier, return the case to the OSC Statute Control Group. EO CS&D does not have disapproval authority.
    3. Check if the claim was signed by the taxpayer:
    a. If not signed, but the current date is still before the statute expiration date, then send a request to the taxpayer requesting a signed copy of the claim.
    b. If not signed, and the statute expiration date has already passed, return the case to the OSC Statute Control Group. A claim without a signature is not a valid document, and it is already too late to file a claim if the statute has already expired.
    4. Check to see if a transaction code (TC) 976, Posted Duplicate Return, has been posted to the return module in question. This TC appears on the IDRS print TXMODA. This TC, when added to the module that has a posted TC 150, creates an " -A" freeze preventing a refund or offset from the module until an adjustment is made.
    a. If no TC 976 is posted to the module, make a copy of the claim and send the copy to the Field Agent Support Team (FAST) for posting.
    b. Assign the claim to the Return Classification Specialist (RCS) for processing.  (02-01-2003)
Surveyed Claims

  1. CS&D surveys claims which are clearly allowable. Prepare Form 1900, obtain approval by the CS&D Group Manager, and stamp the return "surveyed before assignment." .


    The manager must approve all surveys before stamping the return.

  2. If the claim cannot be surveyed, the Return Classification Specialist (RCS) will:

    1. Prepare a statement explaining why the claim is being sent to the examination group. Include all the concerns and/or questions found from the preliminary overview of the claim.

    2. Record "Action" taken on the claims database.

    3. Update AIMS and RCCMS (using Form 5595 and RCCMS for NMF records, or RCCMS alone for AIMS MF records). .


      An original return is not needed for closing. Examination Special Support (ESS) accepts SEIN copies (or BRTVU if SEIN is not available). SEIN denotes Statistics of Income EO Return Image Net.

  3. If there is not an AIMS Account on IDRS, CS&D will create an AIMS account on RCCMS.

  4. In situations where expedite processing is required, such as a Taxpayer Advocate case, CS&D will process the claim without establishing it on AIMS, with management approval. Use Form 3870 to process these claims. Control Form 3870 on the claims database.

  5. See IRM 4.75.16, Case Closing Procedures, for general survey procedures.  (02-01-2003)
Claims Subject to IRC 4962

  1. If the claim is on an assessment of 1st tier tax only, use the procedure for claims shown in IRM 4.5.3.

  2. The CS&D establishes the 2nd tier assessment on IDRS NMF, using the individual's Social Security Number (SSN) or an organization's Taxpayer Identification Number (TIN) if the organization is the entity being assessed. This process allows the 2nd tier assessment to be processed through the closing unit with Form 5599.

  3. If Form 4720 (MFT 66) reflects assessment of both 1st and 2nd tier tax:

    1. Include a Manual Accounting Replacement System (MARS) transcript with the claim, showing the assessment of excise tax against an organization or an individual with a SSN attached. Process the 2nd tier assessment using Form 3870.


      The MARS transcript is for AIMS NMF accounts.

    2. If the claim has a 2nd tier tax assessment and no Automated NMF transcript is attached, send the claim back to OSC for processing on Automated NMF. Once the transcript is received, process the 2nd tier tax assessment.  (02-01-2003)
Net Operating Loss (NOL) or Capital Loss Carrybacks.

  1. A taxpayer creates a Net Operating Loss (NOL) when their deductions exceed their income. A NOL lowers taxes in an earlier year, allowing a refund for taxes already paid. These deductions must relate to a trade or business. Any loss remaining after applying the NOL to preceding years lowers taxes in a succeeding year. The taxpayer must use the NOL before applying unused credits.

  2. A NOL arising in taxable years beginning after August 5, 1997 can take a NOL back 2 years and forward 20 years. Prior to this change a taxpayer could take a NOL back 3 years and forward 15 years.

  3. Verify the statute of limitation. Carryback claims differ from other claims for years beginning after November 10, 1978. An extension of time to file which has been granted does not terminate on the date the return is filed. The claim is valid if filed on or before the extended due date, regardless of the filing date of the original tax return.

  4. The procedure to verify the statute is the same as other claims except for the extension issue. Use alpha code BB, which represents a Carryback Update.

  5. Prepare Form 2285 when there are two loss years being carried back to one year and when there is a carryback and a general adjustment to the receiving year. See IRM 20.2.9, Interest on Carryback of Net Operating Loss, for instructions and examples regarding the completion of Form 2285.

  6. Prepare Form 5599, TE/GE Examined Closing Record, to show the needed adjustment(s). Use Form 5599 for all claims that have an AIMS account. Use TC 309 for NOL tax adjustment postings on Form 5599 instead of using TC 301 which is for non-NOL tax adjustments.  (02-01-2003)
Protective Claims

  1. Protective Claims are formal claims or amended returns for credit or refund normally based on expected changes in a:

    • Current IRC section

    • Current Regulation

    • Pending legislation

    • Current litigation

  2. Consider the following as "Protective Claims" :

    • Claims identified as a pending court case or decision

    • Claims recomputing the Foreign Tax Credit based on the foreign taxes "deemed paid" per IRC 902

    • IRC 403(b) claims

  3. If you identify a claim as a protective claim, update AIMS and RCCMS to status 38. Place the claim in suspense.  (07-12-2012)
EO Penalties

  1. Exempt organizations may be subject to various penalties when they fail to meet the established guidelines set forth by the Internal Revenue Code. These penalties include:

    • Daily Delinquency Penalty (IRM 20.1.8)

    • Failure to File and Failure to Pay Penalties (IRM 20.1.2)

    • Estimated Tax Penalty (IRM 20.1.3)

    • Information Return Penalties (IRM 20.1.7)

    • Failure to Deposit Penalty (IRM 20.1.4)

    • Erroneous Claim and Other Return Related Penalties (IRM 20.1.5)

    • EO Civil Penalties and other Miscellaneous Penalties (see IRM 20.1.8 and IRM 20.1.10)

  2. Decisions on penalty issues are guided by the applicable statutes, rules, and regulations addressed within the IRC.

  3. Refer to IRM Chapter 20.1, Penalty Handbook, for general guidance on penalties. For specific penalties relevant to EO, refer to IRM 20.1.8, Employee Plans and Exempt Organizations Miscellaneous Civil Penalties. See also IRM 4.75.13, Issue Development, and IRM 4.75.22, EO Delinquent, Amended, and Substitute for Return Procedures, for additional penalty information.

  4. Managerial approval is required on most penalty assessments. See IRM, Managerial Approval for Penalty Assessments, for more discussions on managerial approval for penalty assessments and the exceptions.


    Additions to tax under IRC 6651 (excluding IRC 6654, IRC 6655), or any other penalty automatically calculated through "electronic means" do not require written managerial approval.

  5. All EO penalty abatement requests are worked in either the EO Accounts units or by TE/GE telephone account representatives. The Exempt Organization Compliance Area (EOCA) may also resolve penalty abatements.  (02-01-2003)
Joint Committee Claim Cases (IRC 6405)

  1. Process any case that involves a request for the return of overpayment of $2 million or more and to the appropriate EO examination group. Once the examination group completes its examination and prepares its report, send the case file to the Joint Committee representative for review. See IRM Chapter 4.36, Joint Committee Procedures.  (07-12-2012)
Team Examination Program (TEP) Claims Processing Procedures

  1. CS&D surveys TEP claims received that do not involve technically complex issues or tax law applications, and for which adequate documentation and substantiation is included in the case file.

  2. CS&D forwards all TEP claims not surveyed to the TEP Disallowance Agent DA in the TEP Examination Group. The DA updates the AIMS and RCCMS controls. Generally, these cases are characterized by the following:

    1. Claims that should be disallowed based on facts contained within the case file. For example, claims submitted for which the statute of limitations has expired, or claims that are clearly based on improper or frivolous interpretation of tax law.

    2. Claims that involve complex technical issues or in-depth research and interpretation of tax law. These claims require taxpayer contact or inspection of the EO’s books and records and normally require use of field examination techniques and report writing.

    3. Claims that appear to be based on proper interpretation of tax law, but the case file does not contain supporting documentation and needs development through minimal amounts of taxpayer contact, supporting documentation, and technical research.  (07-12-2012)
Claims Related to Current or Recent TEP Examinations

  1. If AMDISA or BMFOLZ IDRS inquiries indicate an organization has been previously examined for the claim year(s), or it is under current examination, contact the TEP Program Manager and provide information regarding the claim. If requested, send the claim to the TEP group for further action or the claim or the TEP manager can decline further review, and the claim may be surveyed and closed CS&D. See IRM 4.75.29 for procedures involving TEP examinations.  (07-12-2012)
TEP Claims

  1. After review, CS&D forwards claims to the TEP DA that require consideration for TEP field examination.

  2. The TEP DA is an experienced Grade 13 TEP field agent who acts as an intermediary between CS&D and the TEP field groups. Primary responsibilities are (1) disallowance, and (2) further review and development of TEP claims that were not surveyed in CS&D. There are two types of claim cases forwarded to the TEP DA:

    1. In Type (1) Case disallowances the TEP DA completes the required claim disallowance forms. The TEP DA's field group processes the claim(s) according to current claims closing procedures.

    2. In Type (2) Cases if it is determined after further review that the claim(s) should be worked as a TEP field examination, the DA will notify CS&D. If the TEP determines that the claim(s) do not warrant a TEP field examination, survey and close the claim(s) in the TEP group.

  3. All TEP claims not surveyed in CS&D will be will be worked by TEP field groups. The TEP program manager will be responsible for maintaining the case status.

  4. Record and report on WebETS claims assigned to the TEP like any other examination case for time reporting and case tracking purposes.  (02-01-2003)
Disposition of TEP Claim Cases by the TEP Disallowance Agent (DA)

  1. The TEP may survey a claim employing regular claims survey procedures, except that a pre-approved Form 1900 from the TEP Program Manager is not required.

  2. Some TEP claims may be worked by the TEP without further involvement of a TEP field group.

  3. Treat a claim examined by the TEP as a TEP Return Examined. Include the claim in the Balanced Measures "TEP Returns Closed " category for the Area and group in which the TEP is located.


    This will not require any separate reporting by the TEP or group. Establish and close the claim on AIMS with a TEP Project Code.

  4. The TEP may recommend assignment to a TEP group. All normal TEP examination procedures,, managerial approval of Form 1900, and completion of TEP reports, will apply. Balanced Measures reporting of TEP Taxpayers Closed and TEP Returns Closed are required for all cases.  (07-12-2012)
Category "B" Whistleblower Form 211 Claim Procedures

  1. There are two types of Whistleblower (Informant) Form 211 claim cases:

    1. Discretionary award IRC 7623(a) cases (Category "A" cases). IRC 7623(a) provides for payment of discretionary awards to informants. "A" cases flow from the Whistleblower Office (WO) , through the Whistleblower Office - Ogden, to Classification–Referral. There are well established processes and procedures for "A" cases in IRM 25.2.2.

    2. Mandatory award IRC 7623(b) cases (Category "B" cases). IRC 7623(b) provides for mandatory payment of an award to a whistleblower (WB) where the amount recovered by the Service is over $2 million (and in the case of an individual that has an income of $200,000 or more.)

  2. These procedures are limited to the Category "B" cases, which is the category of WB case that the WO has targeted for the Operating Division Subject Matter Experts (SME). These procedures augment and/or supplement the WO procedures found in IRM 25.2.1 and IRM 25.2.2.

  3. In the various materials on "B" cases terms such as "Taint Team" , "claim review team" , or "claim team" are generally used interchangeably. These "teams" are those persons that EO Exam and TE/GE Counsel have determined are to:

    • Review the WO claim package and the merits of the issues to determine if an examination is warranted (essentially the classification of the referral)

    • Interview or debrief the WB, as appropriate or necessary, to assess the information provided by the WB, determine if the WB may have other information of value and what, if any, of the information is tainted

    • If an examination is recommended, ensure that if any information is tainted, it is removed from the file before the case is assigned for exam

  4. It is anticipated that the Whistleblower" B" case processing will be completed within 240 days of receipt from the Whistleblower office. It is anticipated that the following benchmarks are to be established as suggested times to ensure that Whistleblower claims can be monitored correctly.

    • EO Exam WB Coordinator will forward the package to Taint Teams within 30 days of receipt of the claim package from the Whistleblower office.

    • The Taint Teams will strive to evaluate the claim for audit potential, determine whether counsel involvement is needed, conduct the necessary debriefing, and return the file back to the EO Exam WB Coordinator within 180 days of initial receipt.

  5. The EO Exam WB Coordinator follows up periodically with the Taint Teams as to the progress of their assigned claims.  (07-12-2012)
EO Exam Infrastructure For Category" B" Cases

  1. A brief summary of the infrastructure for the processing and/or examination of Category "B" cases are as follows:

    • EO Exam WB Coordinator: Oversees the EO Exam WB Process for "B" cases. Effectively the EO Exam WB Coordinator serves as the EO Exam WB Subject Matter Expert (SME). The actual taint reviews are delegated to the two Financial Investigative Units (FIU) in the FIU Area.

    • Taint Teams: The two FIU groups will serve as the Category "B" case taint review teams with assigned TE/GE Counsel.

    • Classification-Referrals Group: If a Category "B" case is recommended for examination or if review of the referral is required by the Referral Committee or the appropriate Critical Initiatives Project Committee, the cases are sent to the Planning, Classifying, and Selecting Returns and Processing Claims Unit for processing, case building, and assignment for exam as appropriate.

    • EO Exam Groups: Category "B" cases may be assigned to General Program (GP), TEP, or FIU groups, as appropriate, for examination.  (07-12-2012)
Category "B" Case Processing Procedures

  1. Upon receipt of a Category "B" case from the WO, the EO Exam WB Coordinator performs an initial intake and screening of the case to:

    1. E-mail Classification–Referrals with the basic information needed to log the case in the EO Referral Database.

    2. Verify that the entity involved is a currently recognized tax exempt organization.

    3. Determine if the issue(s) involve(s) matters within the purview of EO.

    4. Determine if the matter involves an EO or issue which must eventually be reviewed/approved by the Referral or Critical Initiative Project Committees (i.e. cases involving churches, elected officials, sensitive matters).

    5. Determine if the subject taxpayer is already currently assigned for examination or under examination.

    6. Keep the WO informed on the progress and movement of the cases within EO Exam, as well as inventory and update e-track as the claims move through EO Exam.

    7. Review and transmit completed Forms 11369, Confidential Evaluation Report on Claim for Award, to the WO.

  2. If the case involves a critical initiative project subject to expedite procedures, the EO Exam WB Coordinator immediately contacts the project team leader to determine if the case is subject to the expedited processing procedures. If so, send the Category “B” case file to the project team leader by overnight mail. As a result, the review of the Category "B" case bypass procedures provided in this manual. However, the project referral committee must still be aware of the following:

    1. The possibility of the referral being tainted by information provided by the whistleblower or as a result of debriefing the whistleblower.

    2. The need to remove any tainted information prior to assignment of the case for exam.

    3. The continued need for processing of the Form 11369.

    4. The project team leader should coordinate with the EO Exam WB Coordinator as the case is reviewed and processed.

  3. If the case does not involve a tax exempt organization, a matter within the jurisdiction of EO, or clearly does not meet the $2 million threshold, the EO Exam WB Coordinator:

    • Completes and processes Form 11369 (with the required two signatures)

    • Returns the" B" case package to the WO and to Classification–Referrals so that it can update the EO Referral Database  (07-12-2012)
Taint Team Reviews

  1. The primary objectives of Taint Team reviews are threefold:

    1. Review the WO claim package and the merits of the issues to determine if any examination is warranted (this is essentially the classification of the referral and may result in a recommendation that no examination be conducted.)

    2. Interview or debrief the whistleblower, as appropriate and necessary, to assess the information provided by the whistleblower, determine if the whistleblower may have other information of value and what, if any, of the information is tainted.

    3. If an examination is recommended ensure that if any information is tainted, remove it from the file before the case is assigned for exam. Send tainted information to the EO WB Coordinator who returns it to the WO analyst indicating the information is tainted and updates e-trak with this action.

  2. The Taint Team charges time devoted to the Taint review to CS&D AC 313 and PC 0999. The Taint Team maintains a case chronology of the significant events and actions taken on the case as well as interview notes if the whistleblower is debriefed

  3. After receiving the WB claim file from the EO Exam WB Coordinator, the FIU Taint reviewer will determine if either an examination may be warranted and/or debriefing of the WB should be conducted..

    If Then
    The FIU Agent recommends that an examination is not warranted. There is no need for a Taint review or for a TE/GE Counsel Attorney to be assigned.
    The Taint recommends either an examination may be warranted and/or the WB should be debriefed. There is a need for taint Counsel and either the FIU Manager or the FIU Taint sends, though their FIU Manager, an e-mail to TE/GE Counsel as soon as possible to request the assignment of a TE/GE Counsel Attorney. Include the following in the e-mail:
    The claim number assigned by the WO
    Name and location of the subject exempt organization
    The name and telephone number of the FIU Agent that will serve as the taint
    A brief description of the potential substantive issues reflected in the claim (for example, UBI, inurement, employment taxes, excess compensation, etc.)

  4. TE/GE Counsel advises the FIU Manager and the FIU Taint of the Counsel Attorney assigned.

  5. Upon notification of the TE/GE Counsel Attorney assignment, the FIU Taint coordinates with the assigned TE/GE Counsel Attorney (including providing Counsel with copy of the claim package). The Taint and TE/GE Counsel attorney jointly review and evaluate the claim package relative to the Taint aspect and concerns and take all steps necessary, including debriefing the whistleblower (as appropriate and necessary) and Counsel’s preparation of a taint review risk analysis as may be necessary. Complete the taint review as expeditiously as possible given the workload of the taint and assigned TE/GE Counsel Attorney.

  6. During the course of the review of the WB claim and/or the conducting of the debriefing,

    If the FIU Taint secures a Form 2848, take the following steps:
    1 Date stamp the Form 2848 with date it was received.
    2 Make a copy of the Form 2848 and place the copy in the claim file.
    3 Mail the original Form 2848 to the WO Analyst with a Form 3210 which includes the WB Claim Number assigned to the claim.

  7. In the event that the issues or subject exempt organization involve matters within the purview of either the EO Referral Committee or the appropriate critical initiatives project referral committee, then the final decision as to whether an examination is recommended rests with those committees. In these situations, the Taint Team still conducts the taint review and offers an opinion as to whether or not an examination is recommended, but processes the Category "B" case using the procedures described in IRM (8) and IRM (9) below.

  8. If the Taint Team determines that no legal issues/risk (tainted information) exists then they debrief the WB, completing the Debriefing Checksheet (IRM Exhibit 25.2.2-4), and evaluate the claim package for examination potential.

  9. If the recommendation is that an examination should not be conducted then the Taint Team completes the Summary of EO Taint Review Exhibit 4.75.4-1 along with the case chronology and any notes prepared during the review of the claim.

  10. In addition, the Taint Team completes Form 11369, items 1-8 and 14 and attaches a brief narrative to the Form 11369 as to why an examination is not recommended. Form 11369 requires both the Taint and the FIU Manager's signature. Electronic signatures are acceptable.

  11. Mail the Form 11369 and claim file back to the EO Exam WB Coordinator who reviews the file and, if complete, sends the file to the WO for final processing of the claim. This step does not apply to cases described in IRM (7) above. The EO Exam WB Coordinator advises Classification–Referrals so that it can update the EO Exam Referral Database.

  12. If the recommendation is made that an examination should be conducted or if the case is described in IRM (7) above (whether or not an exam is recommended), the Taint Team completes the Summary of EO Taint Review. See Exhibit 4.75.4-1.

  13. If the case is described in IRM (7) above, the Taint Team indicates whether they believe an examination should or should not be conducted for whatever value it may have to the Referral Committees that make the final decision.

  14. Staple the case chronology and any notes, prepared as described in IRM (2) above, to the back of the Summary of EO Taint Review.

  15. Include the completed Summary of EO Taint Review, case chronology and other documents generated by the Taint Team in the Category "B" claim file and return it to the EO Exam WB Coordinator.

  16. If the taint and Counsel determine that legal issues/risk (tainted information) does exist then follow the WO’s process with respect to the necessary risk analysis and handling of the tainted information. If the recommendation is made that an examination should be conducted:

    • The Taint Team and any one involved in the taint review is “tainted” and may not conduct or be involved in the conduct of the examination.

    • Remove/redact the tainted information from the file prior to sending the file forward for examination, unless the requirements of the information in the next section are met. Place removed or redacted info in confidential envelopes with the WO Claim Number and send them the EO Exam WB Coordinator who forwards the redacted information to the WO.

    • Any recommendation to include potentially tainted information in the file that is forwarded for potential examination must include Counsel’s Risk Analysis and approval by the Director, EO Examinations.

    • The taint prepares the Summary of EO Taint Review and otherwise processes the case as described in IRM (9) through IRM (16) above.

  17. Should the FIU Taint secure additional information from the WB and/or their POA, forward this information to the WO Analyst assigned the WB claim. In addition, forward a copy of the FIU Taint’s debriefing notes along with the taint review memorandum secured from TE/GE Taint Counsel to the WO Analyst assigned the WB claim.

  18. Send all information directly to the WO Analyst assigned to the WB claim. The FIU Taint notifies the EO Exam WB Coordinator via an e-mail of the information forwarded to the WO Analyst. Be sure to include the applicable WO claim numbers for identification.

  19. See Exhibit 4.75.4-1 for a summary of the EO Taint Review.  (07-12-2012)
Classification Procedures

  1. Upon receipt of a Category "B" case from a Taint Team that has either recommended an examination or involves an entity or issue subject to review by the EO Referral Committee or a critical initiative project referral committee, the EO Exam WB Coordinator forwards the claim package to Classification–Referrals with a cover memorandum and the Taint Team’s Summary of EO Taint Review.

  2. While the Taint Team has essentially already classified the WB referral and recommended an examination, do not give Category" B" Whistleblower cases any additional priority simply because a whistleblower is involved. The decision to assign and examine a Whistleblower case (which is essentially an informant referral) must be made within the context of existing examination priorities and workload.


    All assignments of cases are done by the CS&D – Case Selection and Delivery Section.

  3. Upon receipt of the claim package from the EO Exam WB Coordinator, Classification–Referrals adds the case to EO Exam’s Referral Database (if not already entered on the database) and annotate it as a category "B" 211 case.

  4. If the case involves an entity or issue that must be considered by either the EO Referral Committee or a critical initiative project referral committee, then in accordance with CS&D’s procedures, send the claim package to the appropriate committee for consideration and final determination as to whether an examination should be conducted.

  5. If a decision is made to survey or not examine/assign the WB Category "B" case, whether or not that decision is made by a referral committee or by the Classification–Referrals group, the Classification–Referrals group completes the Form 11369, items 1-8 and 14, and attaches an explanation to the Form 11369 as to why an examination is not recommended. Mail the Form 11369 and claim file back to the EO Exam WB Coordinator who reviews the file and, if complete, sends the file to the WO for final processing of the claim.

  6. If a decision is made to assign the case for examination, the Classification–Referrals group uses Special Definer Code 4030 when it establishes the case on AIMS (this will allow for tracking of the Category "B" cases.)

  7. Once the case has been established on AIMS (in any status), the Classification–Referrals group sends an e-mail to the ICE group to the attention of the ICE Coordinator or ICE Lead, and cc: to the EO Exam WB Coordinator requesting that the ICE Indicator "1" be placed on AIMS for the primary return being assigned for examination. Include in the e-mail:

    • The Whistleblower Claim Number

    • Taxpayer name

    • EIN

    • MFT

    • Tax year

  8. The ICE Indicator prevents the AIMS account from closing until the required Form 11369 has been submitted to and accepted by the Whistleblower Office.

  9. When the case is assigned, CS&D will advise the EO Exam WB Coordinator, by e-mail, of the group assignment.

  10. When assigning the case, CS&D will keep the examination case file it builds separate from the Whistleblower Category “B” Claim files. No whistleblower (informant) related material should be in the examination case file.

  11. CS&D will include a copy of "EO Exam Group Form 211 Whistleblower Category B Case Instructions" , in the Whistleblower file that will be associated with the examination case file when the case is assigned.  (07-12-2012)
EO Examination Group Procedures

  1. EO Exam Group Form 211 Whistleblower Category "B" Case Instructions should be in the Whistleblower case file when the examination is assigned to the group. This document provides basic procedures and guidance for an EO Exam group with respect to the Whistleblower aspects of the examination. There are a number of important aspects of Whistleblower Category "B" cases that are addressed in this section and are highlighted below.

  2. Keep the Whistleblower file and all references to a whistleblower (informant) separate from the examination file and do not reveal the existence of a whistleblower to the taxpayer.

  3. The Whistleblower file requires special protection. Keep it in a locked cabinet.

  4. Complete Form 11369 and send it to the EO Exam WB Coordinator:

    • When a decision is made to survey or to conduct an examination (complete items 1-8 & 14 and attach a brief explanation)

    • If the case is transferred to another group or assigned to another agent (complete items 1-8 & 15)

    • At the time of final disposition of the issues that arose out of the whistleblower’s information, this may or may not be when the case is ready to close (it could be earlier or later depending upon the circumstances)

    1. Send all Forms 11369 to the EO Exam WB Coordinator, who ensures that they are complete and forwards them the WO. Send the completed Forms 11369 to:

      EO Examination WB Coordinator
      1100 Commerce Street
      MC 4970DAL
      Dallas, TX. 75242

    2. A type of Freeze Code called an ICE Indicator Code "1" has been placed on the primary return that has been assigned. The return cannot be closed off AIMS, examined or non-examined, until the Form 11369 has been submitted, reviewed by the WO and the ICE unit removes the indicator.

    3. Do not include or associate with the examination files whistleblower information, whistleblower files, or any references to a whistleblower when sending for closing or to Appeals. Return the whistleblower files to the EO Exam WB Coordinator with the completed final Form 11369.

Exhibit 4.75.4-1 
Summary of EO Taint Review

This is a coversheet which is completed for all Whistleblower cases which contain information regarding the claim number, EO Organizations name, FIU agents name, Manager's name, Area Counsel's name, recommendations for exam, whether or not it was assigned to a FIU group, and whether or not a debriefing was held. Lastly, a brief description of the significant issues.

(Prepare for all reviews)
WB Office Claim #:  
Name of EO:  
Taint (FIU Agent):  
TE/GE Counsel Attorney:  
Recommended for exam? ___No __Yes
Assign case to FIU Group? ___No __Yes to FIU group # ____
Debriefing Conducted? ___No __Yes (Attach Debriefing notes checklist)
Brief description of significant issues. (Do not reference or discuss tainted information, documents or issues.)
List Specific Entities, Tax Returns Recommended for Exam (If Referral Committee case or Critical Initiatives Project Committee case include whether you recommend or do not recommend an exam. This is not the final determination.)
Taint 's Signature Manager's Signature
Date: Date:

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