4.75.37 Claims, Requests for Abatement and Examination Reconsiderations 4.75.37.1 Program Scope and Objectives 4.75.37.1.1 Authority 4.75.37.1.2 Responsibilities 4.75.37.1.3 Terms 4.75.37.1.4 Acronyms 4.75.37.1.5 Related Sources 4.75.37.2 Claims Received During an Examination 4.75.37.3 Statute of Limitations (IRC 6511) 4.75.37.4 Refunds Barred by the Statute of Limitations 4.75.37.5 Procedures on Processing Claims for Refund 4.75.37.5.1 EO and Employment Tax Cases: Survey Before or After Assignment 4.75.37.5.2 Examined Claims 4.75.37.5.2.1 EO Claim Disallowed in Full without Additional Tax Due 4.75.37.5.2.2 Employment Tax Cases: Claim Disallowed in Full without Additional Tax Adjustment 4.75.37.5.2.3 EO Claim Disallowed in Full with Additional Tax Due 4.75.37.5.2.4 Employment Tax Cases: Claim Disallowed in Full with Additional Tax Adjustments 4.75.37.5.2.5 EO Claim Partially Disallowed without Additional Tax Due 4.75.37.5.2.6 Employment Tax Cases: Claim Partially Disallowed Without Additional Tax Adjustments 4.75.37.5.2.7 EO Claim Partially Disallowed with Additional Tax Due 4.75.37.5.2.8 Employment Tax Cases: Claim Partially Disallowed with Additional Tax Adjustments 4.75.37.5.2.9 Claim Allowed in Full with Offsetting Adjustments 4.75.37.5.2.10 EO Claim Allowed in Full 4.75.37.5.2.11 Employment Tax Cases: Claim Allowed in Full with no Additional Tax Adjustments 4.75.37.5.2.12 Employment Tax Cases: Claim Allowed in Full with an Additional Refund 4.75.37.5.2.13 Employment Tax Cases: Claim Allowed in Full with Additional Tax Adjustments 4.75.37.6 Employment Tax Cases: Adjusted Amended Return Resulting in a Credit Balance 4.75.37.6.1 Employment Tax Cases: Part 1 of Form 94X-X Process 4.75.37.6.2 Employment Tax Cases: Procedures for Adjusted Amended Return Resulting in a Credit Balance 4.75.37.6.3 Employment Tax Cases: Instructions for Completion of Form 3870 4.75.37.7 Other Claim Procedures 4.75.37.7.1 Claims in Cases Previously Considered by Appeals 4.75.37.7.2 Requests for Reconsideration of Disallowed Claims 4.75.37.7.3 EO Cases: Request For Withdrawal of a Claim 4.75.37.7.4 Employment Tax Cases: Barred Refunds 4.75.37.7.5 Employment Tax Cases: No Consideration Given To Certain Refund Claims 4.75.37.7.6 Employment Tax Cases: Requests for Reconsideration of Disallowed Claims 4.75.37.7.7 Employment Tax Cases: Request for Withdrawal of a Claim 4.75.37.7.8 Adjudication of a Claim 4.75.37.7.9 Case File Assembly - Claims 4.75.37.7.10 Joint Committee Cases 4.75.37.8 Employment Tax Cases: Claim for Abatement of Employment Tax 4.75.37.9 Requests for Abatement under IRC 4962 4.75.37.9.1 Working the Request 4.75.37.9.2 Full Denial 4.75.37.9.3 Full Abatement 4.75.37.9.4 Partial Abatement 4.75.37.10 Informal Request for Abatement of UBIT or other Income Taxes 4.75.37.11 Request for Abatement - Examination Reconsideration 4.75.37.11.1 Working the Request 4.75.37.12 Request for Withdrawal of an Abatement Request 4.75.37.13 Case File Assembly - Abatements 4.75.37.14 Offer in Compromise - Doubt as to Liability (OIC-DATL) 4.75.37.14.1 OIC-DATL Terminology 4.75.37.14.2 OIC-DATL Processing 4.75.37.14.2.1 OIC - Adjustments 4.75.37.14.2.2 Case Resolution - Returning an Incomplete Offer 4.75.37.14.2.3 Case Resolution - All Other Situations 4.75.37.14.3 OIC-DATL Final Processing 4.75.37.14.3.1 EO Mandatory Review, Manager 4.75.37.14.3.2 Case Resolution - Reviewer 4.75.37.14.3.3 Case Resolution - EO Mandatory Review, Manager 4.75.37.14.3.4 Returning Case to the Group - Reviewer 4.75.37.14.3.5 Case Return Receipt - Examiner Exhibit 4.75.37-1 IRC 7122 Offer In Compromise (Doubt As To Liability) Checksheet Exhibit 4.75.37-2 30-Day Letter - Full Denial - IRC 4962 Exhibit 4.75.37-3 Closing Letter - Agreed Full or Partial Denial of Abatement - IRC 4962 Exhibit 4.75.37-4 30-Day Letter - Partial Abatement - IRC 4962 Exhibit 4.75.37-5 Examination Reconsideration Letter - Full Denial Exhibit 4.75.37-6 Examination Reconsideration Letter - Partial Abatement Part 4. Examining Process Chapter 75. Exempt Organizations Examination Procedures Section 37. Claims, Requests for Abatement and Examination Reconsiderations 4.75.37 Claims, Requests for Abatement and Examination Reconsiderations Manual Transmittal February 07, 2020 Purpose (1) This transmits a partial revision and table of contents and text for IRM 4.75.37, Exempt Organizations Examination Procedures, Claims, Requests for Abatement and Examination Reconsiderations. Material Changes (1) This revision incorporates editorial and procedural corrections from the previous version. (2) Director’s title revised to Director, Exempt Organizations and Government Entities. (3) This revision incorporates the relevant sections of IRM 4.90.7, Examining Process, Chapter 90, Federal State and Local Governments, Section 7, Claims. (4) The terms "examiner" or "examiners" replaces "agent" or "agents" . The terms "examination," "examining," or "examined" replaces "audit," "auditing" or "audited" where appropriate, in compliance with the Plain Language Act. See www.plainlanguage.gov. Generally, official titles and designations do not reflect this change. (5) Revised IRM 4.75.37.1 Program Scope and Objectives, to reflect updated language. (6) Revised IRM 4.75.37.1.1 Authority, to reflect newly consolidated IRM 1.2.1, Servicewide Policy Statements and IRM 1.2.2, Servicewide Delegation of Authority. (7) Revised IRM 4.75.37.2(2) to include references to the important changes to the NOL rules, due to the implementation of the Tax Cuts and Jobs Act of 2017 (P.L. 115-97), which may affect claims and abatements. (8) Incorporated Interim Guidance Memorandum TEGE-04-0419-0010, Reissuance: Procedures Following the TE/GE Reorganization, dated April 23, 2019, throughout this IRM. (9) Referenced Interim Guidance Memorandum TEGE-04-0618-0016, Form 10904 Deletion Requests, dated June 22, 2018 in IRM 4.75.37.8.8(1) e. (10) Incorporated Interim Guidance Memorandum TEGE-04-0718-0020, Abatement of Qualified First Tier Chapter 42 Taxes, dated July 19, 2018 into IRM 4.75.37.9. (11) Incorporated Interim Guidance Memorandum TEGE-04-0819-0015, Consolidation of Policy Statement and Delegation Orders into Two New IRM Sections, dated August 23, 2019, throughout this IRM. (12) Referenced Interim Guidance Memorandum TEGE-04-1018-0022, Revised Process for Surveying a Case When Using Certain Non-Examination Disposal Codes, dated October 2, 2018 in IRM 4.75.37.5.1. (13) Removed Exhibit 4.75.37-1, Form 1271, Rejection or Withdrawal Memorandum, Completion Instructions. (14) Removed Exhibit 4.75.37-2, Form 3870, Request for Adjustment, Completion Instructions. (15) Removed Exhibit 4.75.37-3, Form 7249, Offer Acceptance Report, Completion Instructions. (16) Removed Exhibit 4.75.37-8, Improper Request Under IRC 4962 example and replaced with references to new Letter 6264. Effect on Other Documents The May 11, 2017 revision of this manual has been superseded. Incorporated Interim Guidance Memorandum TEGE-04-0419-0010, Reissuance: Procedures Following the TE/GE Reorganization, date April 23, 2019. Referenced Interim Guidance Memorandum TEGE-04-0618-0016, Form 10904 Deletion Requests, dated June 22, 2018. Incorporated Interim Guidance Memorandum TEGE-04-0718-0020, Abatement of Qualified First Tier Chapter 42 Taxes, dated July 19, 2018. Incorporated Interim Guidance Memorandum TEGE-04-0819-0015, Consolidation of Policy Statement and Delegation Orders into Two New IRM Sections, dated August 23, 2019. Referenced Interim Guidance Memorandum TEGE-04-1018-0022, Revised Process for Surveying a Case When Using Certain Non-Examination Disposal Codes, dated October 2, 2018. Audience Tax Exempt and Government Entities Exempt Organizations and Government Entities Exempt Organizations Examinations Effective Date (02-07-2020) Margaret Von Lienen Director, Exempt Organizations and Government Entities Tax Exempt and Government Entities 4.75.37.1 (02-07-2020) Program Scope and Objectives Purpose: This IRM section describes the processing of claims, abatements and examination reconsiderations. Topics addressed include: Examining claims. Surveying claims. Processing requests for abatements cases. Processing examination reconsiderations cases. Processing Offer in Compromise- Doubt as to Liability (OIC-DATL) cases. Note: For IRC 45R credit for small tax-exempt employers, refer to IRM 4.75.38. Audience: The procedures are directed toward IRS employees authorized to conduct examinations. This manual is also a key reference for their managers and reviewers, as well as other TE/GE employees in supporting roles. These employees are: EO examiners. FSL/ET examiners. Tax law specialists and reviewers. Tax examiners. Front-line examination group managers. Policy Owner: Director, Exempt Organizations and Government Entities. Program Owner: Exempt Organizations and Government Entities. Contact Information. To recommend changes or make any other suggestions to this IRM section, email the EO Examinations Mandatory Review office at *TEGE EO Review Staff. 4.75.37.1.1 (02-07-2020) Authority The authorities for the procedures outlined in this manual are: California Thoroughbred Breeders Association v. Commissioner, 47 TC 355 (1996). Delegation Order 7-11. IRC 4962. IRC 6404. IRC 6502. IRC 6511. IRC 6513. IRC 6532. IRC 7121. IRC 7122. IRC 7429(a)(2). IRC 7459. Policy Statement 4-103. Policy Statement P-4-88. Tax Increase Prevention and Reconciliation Act of 2005. 4.75.37.1.2 (05-11-2017) Responsibilities For a claim, examiners are responsible for: Working claims as high priority cases. Taxpayers may sue for a refund if we don’t take action within six months of a claim filing. Opening claims within 30 days of receipt (put in AIMS status 12). Limiting the scope of the examination to the claim issue. Exception: If you find signs of non-compliance, discuss expanding the scope of the examination with your group manager. Considering both the Assessment Statute Expiration Date (ASED) and Refund Statute Expiration Date (RSED). Closing the claim: Survey, after assignment. Allowed in full. Disallowed in full or part or Assess additional tax. For an abatement request, examiners are responsible for: Reviewing the examination file. Contacting the taxpayer and obtaining any necessary additional information. Evaluating the information and fully documenting your work. Making a final determination. For an OIC-DATL case, examiners are responsible for: Working the file as a high priority case. Contacting taxpayer and obtain additional information, if necessary. Adhering to time frames, as outlined in IRM 4.75.37.14.2 (2). Fully documenting your work. Completing OIC-DATL checksheet, when required. Making final determination. 4.75.37.1.3 (02-07-2020) Terms General EO terms and definitions: Term Definition Amended Return Any subsequent return which changes information submitted on the original filed return. The taxpayer will send the amended return to the campus center where the original return was filed. A TC 976/977 will generally be posted to the taxpayers account to indicate an amended/duplicate return has been filed. These TCs will generate an -A freeze code. The examiner needs to determine whether the TC 976/977 indicates the filing of a claim. Claim Request for a refund or credit of an overpayment of amounts already assessed and paid. This includes tax, penalties, and interest. It may be a request for an adjustment of tax paid or credit not previously reported or allowed. A claim can be formal or informal. Examination Reconsiderations A taxpayer request to reevaluate the results of a prior examination with additional tax assessments that remain unpaid or with reversed tax credits. The taxpayer must provide information not previously considered during the original examination. In accord with Policy Statement P-4-103, when employment taxes are assessed based upon an examination, the taxpayer will generally be required to pay the assessment and file a claim for refund before receiving any further consideration on the case. However, some cases may warrant prior consideration. For additional guidance, refer to IRM 4.23.13.4. Formal Claim Claim submitted either on an amended return or on Form 843, Claim For Refund and Request for Abatement for refund or credit of income, employment, gift, or estate tax that has been made following the statutory requirements of Federal Tax Regulation 301.6402. The claim must set forth in detail and facts sufficient to apprise the Commissioner of the exact basis, including the appropriate tax periods. Informal Claim Request for refund that does not satisfy all of the formal requirements, but that courts have found is sufficient to put the Service on notice of the claim and, thereby, to toll the period of limitations. The Service may require compliance with the formal requirements before allowing the claim. See IRM 25.6.1.10.2.6.3, Informal Claims. Also, see United States v. Kales, 314 U.S. 186 (1941); Newton v. Unites States, 163 F. Supp. 614 (Ct. Cl. 1958) Protective Claim Formal claim filed to preserve the taxpayer’s right to claim a refund when the taxpayer's right to the refund is contingent on future events and may not be determinable until after the statute of limitations (SOL) expires. See IRM 25.6.1.10.2.6.5, Protective Claims. Taxpayers file protective claims based on expected changes in a: Current IRC section. Current Regulation. Pending legislation. Current litigation. Requests for Abatement Request where we've assessed the taxes, interest, or penalties but the taxpayer hasn’t paid. It isn’t a claim because the tax isn't paid. A taxpayer can: File a request for abatement on a Form 843 or via an amended return. Make an informal request as long as we have all the necessary information including the tax year, issue, and amount. For requests relating to employment taxes, refer to IRM 4.23.13, Employment Tax, Adjusted Returns, Abatements and Claims. For requests relating to Form 4720, excise taxes, see IRM 4.75.37.9. Claims don’t include: Requests for adjustments that increase the balance on an account, such as tax increases or credit decreases. Requests to correct math errors. See IRM 21.5.4, General Math Error Procedures. Requests for abatement. See IRM 4.75.37.9. Amended returns increasing tax. Note: A taxpayer may mistakenly request an abatement even though the account is fully paid. A review of the transcript of account should disclose that the submission should be treated as a claim for refund. 4.75.37.1.4 (02-07-2020) Acronyms The table lists commonly used acronyms and their definitions. Acronym Definition AIMS Audit Information Management System AM Area Manager AOIC Automated Offer in Compromise ASED Assessment Statute Expiration Date BMF Business Master File CP&C Compliance Planning & Classification DATL Doubt As To Liability DC Disposal Code EO Exempt Organizations EPMF Employee Plans Master File FICA Federal Insurance Compensation Act GM Group Manager IAR Independent Administrative Review IDRS Integrated Data Retrieval System IMF Individual Master File IRC Internal Revenue Code IRM Internal Revenue Manual IRS Internal Revenue Service JC Joint Committee LB&I Large Business and International LUQs Large, Unusual, Questionable items MFT Master File Tax NOL Net Operating Loss OCEP Office/Correspondence Examination Program OIC Offer in Compromise OSC Ogden Service Campus PARP Pre-Approval Request Package RBP Revenue Base Protection RCCMS Reporting Compliance Case Management System RGS Report Generation Software RSED Refund Statute Expiration Date SC Source Code SOL Statute of Limitations SRS Specialist Referral System TC Transaction Code TE/GE Tax Exempt and Government Entities TIN Taxpayer Identification Number TIPRA Tax Increase Prevention and Reconciliation Act of 2005 T/P Taxpayer 4.75.37.1.5 (02-07-2020) Related Sources The following are related sources that provide guidance on the procedures outlined in this IRM section: IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements. IRM 1.2.2, Servicewide Delegations of Authority. IRM 4.5.2, TE/GE Examined and Non-Examined Closures. IRM 4.10.8, Examination of Returns, Report Writing. IRM 4.23.13, Employment Tax, Adjusted Returns, Abatements and Claims. IRM 4.24.10, Excise Tax Appeals Referral Procedures. IRM 4.36.3, Joint Committee Procedures, Examination Team Responsibilities. IRM 4.75.15, Exempt Organizations Examination Procedures, EO Closing Letters and Reports of Examinations. IRM 4.75.16, Case Closing Procedures. IRM 4.75.21, EO Special Examination Procedures. IRM 4.75.38, Small Employer Health Care Tax Credit Under Section 45R. IRM 5.8.8, Offer in Compromise, Acceptance Processing. IRM 5.19.7, Monitoring Offer in Compromise. IRM 8.7.7, Technical and Procedural Guidelines, Claim and Overassessment Cases. IRM 20.1.1, Penalty Handbook, Introduction and Penalty Relief. IRM 20.1.5, Penalty Handbook, Return Related Penalties. IRM 20.2.7, Abatement and Suspension of Interest. IRM 21.5.4, General Math Error Procedures. IRM 21.5.9, Account Resolution, Carrybacks. IRM 21.6.6, Individual Tax Returns, Specific Claims and Other Issues. IRM 25.5.9, Summons Handbook, Fees and Costs for Summoned Witnesses. IRM 25.6.1, Statute of Limitations Processes and Procedures. IRM 25.6.23, Statute of Limitations, Examination Process-Assessment Statute of Limitations Controls. 4.75.37.2 (02-07-2020) Claims Received During an Examination If you receive a claim for refund during your examination: Verify the claim is timely filed. See IRM 4.75.37.3. Continue your examination. Don’t limit the scope of the examination as directed in IRM 4.75.37.1.2 (1). Verify whether the claim is on AIMS. If on AIMS, update via RCCMS or Form 5598, TE/GE Correction Request. Input the claim amount. If not on AIMS, establish on AIMS via RCCMS or Form 5597, TEGE IMF/BMF/EPMF Request. Input the claim amount. If you receive an amended return, Form 843 or other claim for refund on an open examination (Status 12) showing a decrease in tax liability, you should request a current IDRS transcript, to determine whether the claim has been paid. ▸ If the claim has been paid, it is no longer a claim. You should verify that the allowance of the claim was correct. If not correct, then the appropriate adjustment should be considered as part of the examination. ▸ If it hasn’t been paid, consider the issues presented as part of the examination. If the claim issues will be disallowed, follow the appropriate disallowance procedure. If the claim issues will be allowed as part of the exam, follow normal examination procedures. If the claim received is a protective claim, send the claim to Classification. Put into AIMS status code(SC) 38, Suspense, All Other. You may close claims you receive on returns not under examination separate from (and before) the rest of the examination. 4.75.37.3 (02-07-2020) Statute of Limitations (IRC 6511) A taxpayer must file a claim for credit or refund by the later of two periods: Three years from the filing of the original tax return. Two years from the payment of tax. Note: See IRM 25.6.1.6.15, When a Document Is Treated As Filed Under the IRC, for the rules for determining when a return is filed. See revised IRM 21.5.9.5.14.11 - Tax Cuts and Jobs Act of 2017 (P.L. 115-97), Sections Affecting Net Operating Losses and revised IRM 21.5.9.5.14.11.1 -Tax Cuts and Jobs Act - NOL Carryback and Carryforward Periods which provide important changes to the NOL rules. See IRM 25.6.1.10.2.8.1, Net Operating Loss (NOL) Carryback or Capital Loss Carryback to determine timely filed NOL or capital loss carryback claims for additional guidance. The amount credited or refunded is limited under IRC 6511(b)(2) to the tax paid (which includes tax, penalties, and interest) during the period of: Three years prior to the filing of the claim, plus any extensions of time for filing (IRC 6511(b)(2)(A)). Note: SOL on Form 990-T is governed by the SOL of the Form 990 series return, if filed. See, California Thoroughbred Breeders Association v. Commissioner, 47 TC 335 (1966). Two years (IRC 6511(b)(2)(B)). If making a downward adjustment without a claim having been filed, either the three year period above or the two year period, depending on when the allowance (in other words adjustment) is made (IRC 6511(b)(2)(C)). Consider advance payments as made on the due date of the tax return per IRC 6513(a). See IRM 25.6.1.7.2, Time When Payments and Credits Are Considered to be Made. This chart shows general rules governing a refund claim: RETURN FILED CLAIM FILED MAXIMUM AMOUNT OF REFUND OR CREDIT ALLOWABLE On or before due date Within 3 years from due date of return Taxes paid within the 3 year period. IRM 4.75.37.3 (3)(a). On or before due date More than 3 years from due date of return Taxes paid within the 2 years prior to filing. IRM 4.75.37.3 (3)(b). On or before due date None If allowance is within 3 years from due date of return, limited to the taxes paid within the 3 year period. IRM 4.75.37.3 (3)(c). If allowance is more than 3 years from due date of return, limited to the taxes paid within the 2 years prior to the allowance. IRM 4.75.37.3 (3)(c). After the due date Within 3 years from filing of return Taxes paid within the 3 year period. IRM 4.75.37.3 (3)(a). After the due date More than 3 years from filing of the original return Taxes paid within the 2 years prior to filing. IRM 4.75.37.3 (3)(b). After the due date None If allowance is within 3 years from filing of the return, limited to the taxes paid within the 3 year period. IRM 4.75.37.3 (3)(c). If allowance is more than 3 years from due date of return, limited to the taxes paid within the 2 years prior to the allowance. IRM 4.75.37.3 (3)(c). None (such as, deficiency assessment) Within 2 years from the date the tax was paid Taxes paid within the 2 years prior to the filing. IRM 4.75.37.3 (3)(b). None (such as, deficiency assessment) None Taxes paid within the 2 years prior to the assessment. IRM 4.75.37.3 (3)(c). The filing of a claim doesn't affect the ASED. Note: If a return is filed within the last 60 days before expiration of the ASED, then we have 60 days from the date received to make the assessment. The amount that may be claimed is limited. See IRM 25.6.1.10.2.7.3, Extension of Time by Agreement. Timely filed claims provide an open statute for examining the claim, as reflected by the use of alpha codes, such as AA and BB. See IRM Exhibit 25.6.23-3, Instructions for Updating the Statute on AIMS, for a list of alpha codes. If you allow the claim, further action on that tax year is barred once the ASED expires. (For erroneous refunds, the government may bring suit to recover within the period provided in IRC 6532(b). When a customer files a claim timely, the statute remains open for the IRS to examine it. If the IRS takes no action on the claim within six months from the time it was filed, the customer can file suit in court to recover the amount claimed. The period for filing suit lasts until two years after the date a certified notice of claim disallowance is mailed to the taxpayer or the date the taxpayer signed Form 2297, Waiver of Statutory Notification of Claim Disallowance. Additional information for Employment Tax Cases, see IRM 4.23.13.2.2. An executed consent extends the time to file a claim. If a customer does not file for a claim within the time limits prescribed by IRC section 6511(a), the customer may still file a claim if the statute of limitation for assessment has been extended by agreement of the Service and the customer (IRC 6511(c)). This filing period will last until six months after the expiration of the extension period. If, after the execution of a consent and within six months after the expiration of the extension period, a claim is filed, or a credit or refund is allowed when no claim is filed, the amount of credit or refund is limited. This limit is the portion of the tax paid after the execution of the consent and before the filing of the claim (or making of the credit or refund), PLUS the portion of the tax paid within the period which would be applicable under IRC section 6511(b)(2) if a claim had been filed on the date the consent was executed. If the Service allows the claim (this could be done by at the Campus Center prior to the case being sent to the field for examination), it is no longer a claim. Generally, the Service must assess tax within two years from making the refund. See IRC 6502 and 6532(b). 4.75.37.4 (02-07-2020) Refunds Barred by the Statute of Limitations Any tax withheld for a wage earner is deemed paid on the fifteenth day of the fourth month following the close of the wage earner’s taxable year (individual returns only)(IRC 6511 and IRC 6513(b)(1)). Any estimated tax payments made during any calendar year are deemed paid on the last day prescribed for filing the return for that year without considering any extensions IRC 6513(b)(2). If a taxpayer files a tax return more than three years after the due date for the return (including valid extensions), any overpayment due on the tax return is barred (forfeited) and won’t be refunded to the taxpayer. Taxpayers can’t carry forward or back barred refund amounts to offset delinquent accounts or future tax liabilities. The refunds post to an excess collections account using Form 8758, Excess Collection File Addition. If a taxpayer files a claim for refund after the RSED to perfect a claim filed before the RSED, the claim should be considered. A general claim may be amended after the RSED has expired, provided that the original claim has not been formally disallowed by the IRS at the time the amendment is filed and the amendment merely makes clear the specific matters the Service has already considered by investigating the original defective claim. The supplemental claim will not generally be considered an amendment if the Service took final action on the original claim by rejecting the original claim or allowing it in whole or in part. A final action disallowing a claim does not occur until the notice of claim disallowance is sent. If no formal disallowance was made, there is no specific time period within which the supplemental claim must be filed. To close a claim case with a barred refund: Issue Letter 3602, Claim Disallowance. Insert the applicable form number in the letter. Mandatory Review issues Letter 906 Final Full Claim Disallowance on unprotested cases. Check box next to Prepare/Issue Letter on the Form 3198-A, TE/GE Special Handling Notice. Write in the blank to the right, "906 –Final Full Claim Disallowance." 4.75.37.5 (02-07-2020) Procedures on Processing Claims for Refund Upon receipt of a claim, check IDRS to ensure we haven't already paid, issued, or credited the claim. If the SC is 30 and the claim has been paid, the SC needs to be updated to 31. The examiner should verify that the allowance of the claim was correct. If the SC is correct, the claim can be surveyed, once updated to SC 31 because the claim has been refunded to the T/P. If not correct, then the appropriate adjustment should be considered as part of the examination. Verify that the claim was timely filed. Review the original return, the claim, and notes from classifiers. Consider the issues raised by the claim. Decide if there is a basis for a change to the tax liability. For Employment Tax Cases: When reviewing claims, you should: Reconcile all assessments and adjustments beginning with the original Form 941 (or applicable amended return) and any subsequent abatements and assessments to determine the correct amount of tax. Reconcile these with Form W-2 and W-2c to ensure employees were issued correct Form W-2. You may gather information from the t/p to do this. Request documents related to all assessments and adjustments to the original TC 150 from RCCMS or the Campus to complete reconciliation. You can request the needed documents from the Campus by using IDRS command code ESTAB and the appropriate DLN (Document Locator Number) per TXMOD or BMFOLT. When you receive a Form 941-X, directly from the Campus or the t/p, you must contact the CSP Coordinator to request any CSP or Ad Hoc Closing Agreements on file for the t/p. Any existing closing agreements will be reviewed by you to ensure the claim under consideration doesn’t involve an issue that was the substance of a prior agreement. Determine if the ASED is open. If open, include any other LUQs as warranted. Note: The Service doesn’t normally secure consents to extend the ASED in claim cases, unless there may be an additional deficiency. Exceptions to this are: • Joint Committee cases. • Closing Agreement cases . •See IRM 8.7.7.2.3, Technical and Procedural Guidelines, Claim and Overassessment Cases: Securing Statute Consents in Claim and Overassessment Cases. For Employment Tax cases: If the taxpayer presents a valid claim for refund, an examination can include any other LUQs that warrant examination and isn’t limited to those issues raised in the claim. If the ASED has passed, the Service may net out the amount requested with adjustments, provided the refund involves the same taxpayer and the same tax period. Move the unassessable portion to XSF. See IRM 25.6.1.10.2 for more information. You aren't limited to the issues raised in the claim, but can also expand the examination to make adjustments that can offset the claim in full which would result in additional tax deficiency. Discuss the expansion of the scope with and obtain approval from your manager. See IRM 4.75.37.5.2.9, Claim Allowed in Full with Offsetting Adjustments. Verify the claim amount shown on AMDISA and Reporting Compliance Case Management System (RCCMS). Using RCCMS, correct the amount if wrong or missing. (Check the Update AIMS box.) Prepare a Form 5598, TE/GE Correction Request, to correct AIMS manually, if needed. You may disallow the claim (fully or partially) or allow the claim in full. The group manager reviews all closed claims. A claim may be surveyed. Before deciding to survey, examiners and managers must consider all case facts. Only the group manager approves the decision to survey a return and must document it in the RCCMS case file. Both managers and examiners must document the case file with all case actions. If revenue base protection applies (money is prevented from leaving the Treasury), complete Form 5599, TE/GE Examined Closing Record, items 22, 23 and 24, and the corresponding fields on the Closing Record in RCCMS. See IRM 4.5.2.4.1.38, Revenue Base Protection Section (RBP). Close claims to EO Closing Unit, unless subject to Mandatory Review. See IRM 4.75.16.6, Case Closing Procedures, for a list of Mandatory Review cases. Note: Form 1139, Corporation Application for Tentative Refund, isn't an amended return. The campus must process Form 1139 within 90 days of receipt. Any amounts refunded may be reassessed provided the ASED is open. See IRM 21.5.9.5.34, Reassessing Carryback Form 1045 and Form 1139. 4.75.37.5.1 (02-07-2020) EO and Employment Tax Cases: Survey Before or After Assignment Under rare circumstances, a TE/GE group may make the determination not to examine a return selected for examination and close it by survey. Employees will carry out this duty per Policy Statement 1-236, "Fairness and Integrity in Enforcement Selection." See IRM 1.2.1.2.36. Surveys aren’t subject to mandatory review. These cases will be closed fully electronically as 100% paperless closings. See IRM 4.75.16.3.2, Surveying Returns, for procedures to survey and process surveyed claims allowed in full. Note: Don’t survey the following claims: •Claims including interest and/or penalties. Close as a partial disallowance. See IRM 4.75.37.5.2.5. •Claims received after an examination is closed, but still on AIMS. Return to the examiner. Consider the issues, and include any allowable adjustment in the examination report. 4.75.37.5.2 (05-11-2017) Examined Claims To disallow a claim in full or in part, solicit: Form 2297, Waiver of Statutory Notification of Claim Disallowance. Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit. See IRM 4.10.8.10.4.1, Instructions for Completing Form 2297, and IRM 4.10.8.10.5.1, Instructions for Completing Form 3363. To assess additional tax, see the table below for the type of tax and form to solicit: Type of tax Forms to use (agreed) Forms to use (unagreed) Income Form 4621, Form 4549 Form 4549-A, Form 870 Excise tax (Chapter 42) Form 4883, Form 870-E Form 4883, Form 870-E Excise tax (gaming) Form 5384 Form 5385, Form 2504-E Use Report Generation Software (RGS) to generate: Form 4549, Income Tax Examination Changes. Form 4549-A, Income Tax Discrepancy Adjustments. Refer to the IRMs below for instructions to complete the required forms. Form 4883, Exempt Organizations Excise Tax Audit Changes - IRM 4.75.15.7.6, Closing Letters and Reports of Examination. Form 870, Waiver of Restrictions on Assessment & Collection of Deficiency in Tax & Acceptance of Overassessment, and Form 870-E, Waiver of Restriction on Assessments and Collection of Deficiency and Acceptance of Overassessment -IRM 4.10.8.5.3, Instructions for Completing Waiver. Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and Form 5385, Excise Tax Examination Changes, IRM Exhibit 4.24.20-1, Instructions for Completing Forms 5384 and 5385. Complete Form 5599 to close all claims. Enter Items 12, 13, 15, 20–24, 31–33, 39, 40, 42 and 50 as needed. All non-claim related examination items should be entered on Form 5599. Enter time spent on the claim in Item 23. Enter time spent on exam issues in Item 28. If using DC 03 (RCCMS - 102), enter at least one hour in Item 28. You must also enter 1- Fully Paid in Item 42. If you expand the scope of the examination beyond claim issues, address all non-claim related examination items on Form 5599. Enter time spent on the claim in Item 23. Enter time spent on exam issues in Item 28. If using DC 03 (RCCMS-102), enter at least one hour in Item 28. Refer to the following table for the DC to use. RCCMS codes are in parenthesis: Claim Disposal code Allowed in full 03 (102) Partially allowed - agreed 03 (102) Partially allowed - unagreed 07 (601) or 10 (604) for unagreed cases Disallowed in full 01 (210) for agreed cases, 07 (601) or 10 (604) for unagreed cases Additional assessment 03 (102) for agreed cases, 07 (601) or 10 (604) for unagreed cases Note: If multiple years are open, you may have a different DC for each year. Example: You may have an agreed claim disallowance for one year (DC 01 (210)), and an agreed claim disallowance along with an agreed additional tax assessment in another year (DC 03 (102)). Refer to IRM 4.75.15 for report writing procedures. 4.75.37.5.2.1 (05-11-2017) EO Claim Disallowed in Full without Additional Tax Due Issue Letter 3602, Claim Disallowance Check the box for full disallowance. Insert the applicable form number in the letter. If Form 2297 is... If Form 3363 is... Then... Signed Signed Close as agreed. Signed Not signed Close as agreed. See note below. Not signed Signed Close as unagreed without protest. Not signed Not signed Close as unagreed without protest. See Note below. Note: If the taxpayer files a protest, close the case as unagreed - protest to Appeals. The taxpayer doesn't need to sign an agreement/waiver form (Forms 870, 870-E, 2504-E, 4549, or 5384) for an agreed closure. However, EO Closing Unit needs the form for input onto IDRS. If the issue is unagreed: Prepare a Form 886-A, Explanation of Items. Close the case to Mandatory Review. On Form 3198-A, TE/GE Special Handling Notice. Check the Mandatory Review Unagreed Case and Proposed Adverse boxes. Check the Claim Case box under Expedited Processing. Check the Close to REVM box under EPIC/EOIC Instructions. Enter your name and telephone number. If the issue is unagreed without protest: On the Form 3198-A, TE/GE Special Handling Notice. Mandatory Review will prepare and issue Letter 906, Final Full Claim Disallowance. Note: Close the case as unagreed without protest, if no response is received after 30 days. Refer to IRM 4.75.37.5.2, Examined Claims, for the DC. 4.75.37.5.2.2 (02-07-2020) Employment Tax Cases: Claim Disallowed in Full without Additional Tax Adjustment Form 4666 will be issued to the taxpayer. On Form 4666, the following statement must be included: “On (date) you filed claim form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, the claim was disallowed in full.” When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. You will solicit Form 3363 and 2297 using Letter 5376, Form 4666 and 886-A: If the taxpayer signs both forms, you will use DC 01 (303). No other closing letter will be issued. If the taxpayer refuses to sign Form 2297, the case can still be closed agreed, if the agreement is secured on Form 3363. However, you will need to prepare and issue Letter 906, Certified Notice of Claim Disallowance, in order to begin the two year statute. You will type on Form 3198-A: "Issue Letter 906". You will use DC 01 (303). If there is no reply from the t/p after 30 days or the taxpayer doesn’t agree but doesn’t provide a protest, you will close the case and prepare and issue Letter 906. You will use DC 01 (303). If the taxpayer doesn’t agree with the disallowance of the claim and files a protest, you will prepare a written rebuttal, if necessary or make a copy of the unagreed issue workpapers. The rebuttal or workpapers should be given to the t/p. You will prepare Form 4665, Report Transmittal, which can provide additional confidential information or a summary of the unagreed issues. See IRM 4.23.10.16. You will close the case using DC 07(601). If SC 30 and if using DC 01(303), the following RCCMS fields, in addition to normal examination fields, need to be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim Hours, Claim Amount Disallowed of $X, Examiner’s Time (leave blank), Assessment Information on RCCMS (TC 300 and $0). There are no Adjustments (Reference Numbers) required. If SC 30 and if using DC 07 (601), the following RCCMS fields, in addition to normal examination fields, need to be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim Hours, Claim Amount Disallowed of $X, Examiner’s Time (time related to additional assessment), and Assessment Information on RCCMS (TC 300 and $0). There are no Adjustments (Reference Numbers) required. 4.75.37.5.2.3 (05-11-2017) EO Claim Disallowed in Full with Additional Tax Due Issue Letter 3602-B, Claim Disallowance with Additional Tax Due. Check the box for full disallowance with additional tax due. Insert the applicable form number in the letter. Form 4621, Report of Examination, or Form 4883, Exempt Organizations Excise Tax Audit Changes, as appropriate. Prepare Form 886-A, Explanation of Items. In the table below substitute Form 870, Form 870-E, Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, or Form 5384 for Form 4549 as appropriate. If Form 2297 is... If Form 3363 is... If Form 4549 is... Then... Signed Signed Signed Close as agreed. Signed Signed Not signed Close as unagreed without protest. See Notes 1 and 3. Signed Not signed Signed Close as agreed. See Note 1. Signed Not signed Not signed Close as unagreed without protest. See Notes 1 and 3. Not signed Signed Signed Close as unagreed without protest. See Notes 1 and 2. Not signed Signed Not signed Close as unagreed without protest. See Notes 1, 2, and 3. Not signed Not signed Signed Close as unagreed without protest. See Notes 1 and 2. Not signed Not signed Not signed Close as unagreed without protest. See Notes 1 2, and 3. Note: 1) If the taxpayer files a protest, close the case as unagreed - protest to Appeals. On Form 3198-A, check "Forward to Appeals" . Note: 2) If the claim disallowance is unagreed, Mandatory Review issues a statutory notice of claim disallowance. On Form 3198-A, check "Prepare/Issue Letter" . To the right, write "906 - Final Full Claim Disallowance." Note: 3) If the additional tax is unagreed, Mandatory Review issues a statutory notice of discrepancy. On Form 3198-A, check "Prepare/Issue Letter" . To the right, write "Statutory Notice of Deficiency." Note: Close the case as unagreed without protest, if no response is received after 30 days. All unagreed cases are closed to Mandatory Review. On Form 3198-A check the "Mandatory Review, Unagreed Case, and Proposed Adverse" boxes. Check the Claim Case box under Expedited Processing. Refer to IRM 4.75.37.5.2 Examined Claims, for the DC. 4.75.37.5.2.4 (02-07-2020) Employment Tax Cases: Claim Disallowed in Full with Additional Tax Adjustments When examining claims, you may encounter LUQs that result in additional tax assessments not related to the claim. If it is determined that the claim isn’t the primary examination issue, then you need to change the SC from 30 to 92 or other applicable SC. If SC is changed from 30, the RCCMS claim information fields discussed below aren’t required. But, the forms and letters discussed below will remain applicable. You will solicit Form 3363 and 2297 using Letter 5376, Form 4666 and 886-A. If the taxpayer refuses to sign Form 2297, the case can still be closed agreed if the agreement is secured on Form 3363. However, Letter 906 will need to be prepared and issued. If there is no reply from the t/p after 30 days or the t/p doesn’t agree and doesn’t provide a protest, you will close the case. You will prepare and issue Letter 906. If the t/p doesn’t agree with the disallowance of the claim and files a protest, you will prepare a written rebuttal, if necessary or make a copy of the unagreed issue workpapers. The rebuttal or workpapers should be given to the t/p. You will prepare a Form 4665, Report Transmittal, which can provide additional confidential information or a summary of the unagreed issues. See IRM 4.23.10.16. Form 2504, 2504-S, and/or 2504-T, 4666, and 4668 will be issued to the t/p for the net tax adjustments (net of claim and additional adjustments). On Form 4666, the following statement must be included: “On (date) you filed claim Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, we disallowed your claim in full.” When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. If the taxpayer signs Form 2504, you will prepare Letter 3382. The GM will mail the letter if subject to sample review. If subject to mandatory review, the reviewer will issue the letter. If the taxpayer refuses to sign Form 2504, the case will be processed in the same manner as an unagreed case. If SC 30, the following RCCMS fields, in addition to normal examination fields, must be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim hrs, Claim Amount Disallowed of $X, Examiner’s Time (time related to additional assessment), Assessment Information on RCCMS (TC 308 (or 300 if not interest-free) and amount of adjustment and Credit and Tax Computation Adjustment (Reference Numbers) based on the tax and wage adjusted amounts. If all issues (claim and additional tax adjustments) are agreed, the examiner will use DC 03 (102). If there are unagreed issues, either related to the claim or the additional tax adjustments, you will use DC 10 (604) or DC 07(601), depending on whether the case is appealed. 4.75.37.5.2.5 (08-21-2014) EO Claim Partially Disallowed without Additional Tax Due Issue Letter 3602, Claim Disallowance. Check the box for a partial disallowance. Insert the applicable form number in the letter. Prepare Form 886-A Explanation of Items, if the case is unagreed. In the table below substitute Form 870, Form 870–E, Form 2504-E or Form 5384 for Form 4549 as appropriate. If Form 2297 is... If Form 3363 is... If Form 4549 is... Then... Signed Signed Signed Close as agreed. Signed Signed Not signed Close as agreed. Signed Not signed Signed Close as agreed. Signed Not signed Not signed Close as unagreed without protest. Not signed Signed Signed Close as unagreed without protest. Not signed Signed Not signed Close as unagreed without protest. Not signed Not signed Signed Close as unagreed without protest. Not signed Not signed Not signed Close as unagreed without protest. See Note below. Note: If the taxpayer files a protest, close the case as unagreed - protest to Appeals. Note: Close the case as unagreed without protest, if no response is received after 30 days. All unagreed cases are closed to Mandatory Review. On Form 3198-A check the "Mandatory Review, Unagreed Case, and Proposed Adverse " boxes. Check the "Claim Case" box under "Expedited Processing" . If the issue is unagreed without protest: On the Form 3198-A check the box "Prepare/Issue Letter." Write in the blank to the right "905 – Final Partial Claim Disallowance." Mandatory Review will prepare and issue the Letter 905, Final Partial Claim Disallowance. Refer to IRM 4.75.37.5.2, Examined Claims, for the DC. 4.75.37.5.2.6 (02-07-2020) Employment Tax Cases: Claim Partially Disallowed Without Additional Tax Adjustments Form 4666 and 4668, will be issued to the t/p. On Form 4666, the following statement must be included: “On (date) you filed claim Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, we allowed your claim in part as shown in the attached report. ” When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. You will solicit Form 3363 and 2297 using Letter 5376, Form 4666, 4668 and 886-A. If the taxpayer signs both the Form 3363 and 2297, you will use DC 03(102). If the taxpayer refuses to sign Form 2297, the case can still be closed agreed if the agreement is secured on Form 3363. However, you should prepare and issue Letter 905, Letter Notifying Taxpayer of Partial Refund Claim Disallowance, in order to begin the two-year statute. You will use DC 03(102). If there is no reply from the taxpayer after thirty days or the taxpayer doesn’t agree, the examiner will close the case and should prepare and issue Letter 905. You will use DC 10 (604). If the taxpayer doesn’t agree with the disallowance of the claim and files a protest, you will prepare a written rebuttal, if necessary, or make a copy of the unagreed issue workpapers. The rebuttal or workpapers should be given to the taxpayer. You will prepare a Form 4665, Report Transmittal, which can provide additional confidential information or a summary of the unagreed issues. See IRM 4.23.10.16. You will close the case using DC 07(601). If SC 30, the following RCCMS fields, in addition to normal examination fields, need to be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim Hrs., Claim Amount Disallowed of $X, Examiner’s Time (at least 1 hour), Assessment Information on RCCMS (TC 301 and Amount allowed) and Credit and Tax Computation Adjustment (Reference Numbers) based on the tax and wage adjusted amounts. 4.75.37.5.2.7 (05-11-2017) EO Claim Partially Disallowed with Additional Tax Due Issue Letter 3602-B, Claim Disallowance with Additional Tax Due. Check the box for a partial disallowance with additional tax due. Insert the applicable form number in the letter. Prepare Form 4621, Report of Examination or Form 4883, Exempt Organizations Excise Tax Audit Changes, as appropriate. Prepare Form 886-A, Explanation of Items. In the table below substitute Form 870, Form 870-E, Form 2504-E or Form 5384 for Form 4549 as appropriate. If Form 2297 is... If Form 3363 is... If Form 4549 is... Then... Signed Signed Signed Close as agreed. Signed Signed Not signed Close as unagreed without protest. See Notes 1 and 3. Signed Not signed Signed Close as agreed. See Note 1. Signed Not signed Not signed Close as unagreed without protest. See Notes 1 and 3. Not signed Signed Signed Close as unagreed without protest. See Notes 1 and 2. Not signed Signed Not signed Close as unagreed without protest. See Notes 1, 2, and 3. Not signed Not signed Signed Close as unagreed without protest. See Notes 1 and 2. Not signed Not signed Not signed Close as unagreed without protest. See Notes 1 2, and 3. Note: 1) If the taxpayer files a protest, close the case as unagreed - protest to Appeals. On Form 3198-A, check "Forward to Appeals" . Note: 2) If the claim disallowance is unagreed, Mandatory Review issues a statutory notice of claim disallowance. On Form 3198-A, check "Prepare/Issue Letter" . To the right, write "905 - Final Partial Claim Disallowance." Note: 3) If the additional tax is unagreed, Mandatory Review issues a statutory notice of deficiency. On Form 3198-A, check "Prepare/Issue Letter" . To the right, write "Statutory Notice of Deficiency." Close the case as unagreed without protest, if there is no response after 30 days. Close all unagreed cases to Mandatory Review. On the Form 3198-A check the "Mandatory Review, Unagreed Case, and Proposed Adverse" boxes. Check the "Claim Case" box under "Expedited Processing" . For unagreed without protest cases, Mandatory Review prepares and issues the Letter 905 or Statutory Notice of Deficiency or both as directed. Refer to IRM 4.75.37.5.2, Examined Claims for the DC. 4.75.37.5.2.8 (02-07-2020) Employment Tax Cases: Claim Partially Disallowed with Additional Tax Adjustments When examining claims, examiners may encounter items that result in additional tax assessments not related to the claim. If it is determined that the claim is not the primary examination issue, then the examiner needs to change the SC from 30 to 92, or other applicable SC. If the SC is changed from 30, the RCCMS claim information fields discussed below are not required. But, the forms and letters discussed below will remain applicable. The examiner will solicit Form 3363 and 2297 using Letter 5376, Form 4666, 4668, and 886-A. If the t/p refuses to sign Form 2297, the case can still be closed agreed if the agreement is secured on Form 3363. However, you will need to prepare and issue Letter 905 in order to begin the two year statute. You will indicate on Form 3198-A: "Issue Letter 905.” If there is no reply from the t/p after 30 days or the t/p doesn’t agree and provide a protest, you will close the case. You will prepare and issue Letter 905. If the t/p doesn’t agree with the disallowance of the claim and files a protest, you will prepare a written rebuttal, if necessary, and Form 4665 to provide any additional information rebutting the taxpayer’s protest. See IRM 4.23.10.17. Form 2504, 2504-S, and/or 2504-T, 4666, and 4668 will be issued to the t/p for the net tax adjustments (net of claim and additional adjustments). On Form 4666, the following statement must be included: “On (date) you filed claim Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, we allowed your claim in part as shown in the attached report.” If the taxpayer signs Form 2504, 2504-S and/or 2504-T, you will prepare Letter 3382. The GM will mail the letter if subject to sample review. If subject to mandatory review, reviewer will issue the letter. If the t/p refuses to sign Form 2504, the case will be processed in the same manner as an unagreed case. The GM will mail the letter if subject to sample review. If subject to mandatory review, reviewer will issue the letter. When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. If the t/p agrees to only a portion of the additional tax adjustments or the claim disallowance, the case will be closed as a partially agreed case. The GM will mail the letter if subject to sample review. If subject to mandatory review, reviewer will issue the letter. If SC 30, the following RCCMS fields, in addition to normal examination fields, must be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim Hrs., Claim Amount, Examiner’s Time (time related to additional assessment), Assessment Information on RCCMS (TC 308 - if net increase in tax or 300, if net increase is not interest-free, or 301, if a net decrease in tax) and Amount of Adjustment and Credit and Tax Computation Adjustment (Reference Numbers) based on the tax and wage adjusted amounts. If all issues (claim and additional tax adjustments) are agreed, you will use DC 03 (102). If there are unagreed issues, either related to the claim or the additional tax adjustments, you will use DC 10 (604) or DC 07(601), depending on whether the case is appealed. 4.75.37.5.2.9 (08-21-2014) Claim Allowed in Full with Offsetting Adjustments When allowing a claim in full, if proposing offsetting adjustments which reduce the amount refundable, treat the claim as a partially or fully disallowed claim. Follow the procedures for claims disallowed in full or in part as applicable. See IRM 25.6.1.10.2.5.6.1, Claim for an Amount Paid Before the ASED, for the offset of a refund with a time-barred upward adjustment from the same time period. 4.75.37.5.2.10 (08-21-2014) EO Claim Allowed in Full Forms 2297 and 3363 aren’t required. While Form 4549 is required, no signature is necessary on Form 4549 (or equivalent agreement/waiver form). Exception: Joint Committee cases require a signature. Prepare and issue Letter 3601, Examination Report (Claim Allowed in Full). Prepare and include with Letter 3601, Form 886-A, showing analysis, facts, and law. Close the case as agreed. Refer to IRM 4.75.37.5.2, Examined Claims for the DC. 4.75.37.5.2.11 (02-07-2020) Employment Tax Cases: Claim Allowed in Full with no Additional Tax Adjustments Form 4666 and 4668, will be issued to the t/p. On Form 4666, the following statement must be included: “On (date) you filed claim Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, we allowed your claim in full as shown in the attached report.” When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. You will prepare Letter 570, Examination Report (Claim Allowed in Full). The GM will mail the letter if subject to sample review. If subject to mandatory review, will issue the letter. Use DC 03(102). The case file may be closed 100% electronically. If SC 30, the following fields in RCCMS, in addition to normal examination fields need to be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Hrs., Claim Amount Disallowed of $0, Examiner’s Time (at least 1 hour), Assessment Information on RCCMS (TC 301 and Amount allowed) and Credit and Tax Computation Adjustment (Reference Numbers) based on the tax and wage adjusted amounts. If the amended return is an “adjusted” overreported amount (Box 1), you will use the special procedures described in IRM 4.75.37.6.2. to complete the Form 3870. 4.75.37.5.2.12 (02-07-2020) Employment Tax Cases: Claim Allowed in Full with an Additional Refund If during the examination of the claim additional overassessments are discovered, you will secure amended returns (e.g., F941-X) or an informal claim to address the additional overassessments. If the employer doesn’t agree with the overassessments, proceed allowing the original claim as filed. Follow the procedures in IRM 4.75.37.5.2.11. 4.75.37.5.2.13 (02-07-2020) Employment Tax Cases: Claim Allowed in Full with Additional Tax Adjustments When examining claims, you may encounter LUQs that result in additional tax assessments not related to the claim. If it is determined that the claim isn’t the primary examination issue, then you need to change the SC from 30 to 92, or other applicable SC. If the SC is changed from 30, the RCCMS claim information fields discussed below aren’t required but, the forms and letters discussed below will remain applicable. Form 2504, 2504-S, and/or 2504-T, 4666, and 4668 will be issued to the t/p for the net tax adjustments (the net of claim and additional tax adjustments). On Form 4666, the following statement must be included: “On (date) you filed claim Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, or an informal claim for a refund of $___ for (period/year). As a result of our examination, we allowed your claim in full. The total amount of the refund is, however, decreased by other adjustments, as shown in the attached report.” When there are multiple claims, include a summary listing quarters and amounts on a Form 886-A. In addition, the appropriate Section 530 language must be included. If the t/p signs Form 2504, you will prepare Letter 3382, Notification Letter for Agreed Audit Changes. The GM will mail the letter if subject to sample review. If subject to mandatory review, MR will issue the letter. You will use DC 03(102). If the t/p refuses to sign Form 2504, the case will be processed in the same manner as a partial unagreed case. You will use DC 10 (604) or DC 07 (601), depending on whether the case is appealed. If SC 30, the following fields in RCCMS, in addition to normal examination fields, must be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Hrs., Claim Amount Disallowed of $0, Examiner’s Time (time related to additional assessment), and Assessment Information on RCCMS (TC 308 if net increase in tax (or 300, if net increase is not interest-free, or 301 - if a net decrease in tax) and Amount of Adjustment and Credit and Tax Computation Adjustment (Reference Numbers) based on the tax and wage adjusted amounts. If the amended return is an “adjusted” overreported amount (Box 1), the examiner will use the special procedures described in IRM 4.75.37.6 to complete the Form 3870. 4.75.37.6 (02-07-2020) Employment Tax Cases: Adjusted Amended Return Resulting in a Credit Balance Form 94X-X series amended returns (including Form 941-X, 943-X, 944-X, 945-X and CT-1) permit t/ps to apply credit balances (refunds) to the Form 94X-X for the period during which the amended return was filed. The “X” forms allow the taxpayer to file either an “adjusted” (Box 1) or “claim” (Box 2) employment tax return. While the t/p’s selection between the two blocks doesn’t affect how the case is worked by the examiner, it does affect the final processing of the case. Returns with the “adjusted” block marked cannot result in a refund issued to the taxpayer. Any credit balance resulting from the exam or processing of the return MUST be moved to the quarter in which the “X” adjusted return was filed. Any credit balance transfer will be completed using a Form 3870 after the examination. The following additional procedures are necessary to ensure that the refunds are applied to the appropriate tax periods. If the examiner determines that the credit is no longer needed to pay an unemployment tax liability, then an additional Form 3870 will need to be prepared to release the credit from the quarter the money was moved to. 4.75.37.6.1 (02-07-2020) Employment Tax Cases: Part 1 of Form 94X-X Process If the “Claim box” is checked (Form 941-X, Part 1, box 2), or if the examination results will not create a credit balance (refund), the case will be processed using normal procedures. The procedures in IRM 4.75.37.6.2 will only apply when: Line 1 - Adjusted Employment Tax Return box is checked. See explanation in Part 3 Line 21 - first bullet (941-X 1-2011 revision). Note: line number is different for each Form 94X-Xseries and revision date) AND Examination results will create a credit balance (amount to be refunded) on the module. 4.75.37.6.2 (02-07-2020) Employment Tax Cases: Procedures for Adjusted Amended Return Resulting in a Credit Balance You will inform the t/p that the credit request will NOT be applied to the quarter for the tax period in which they filed the Form 94X-X until the examination is completed, and NOT to rely on the credit as a payment toward any taxes due. If an amended return is received on which Line 1, Adjusted Employment Tax Return, is checked and is related to a quarter of an on-going exam, the examiner should explain to the TP that this may affect the credit requesting to be applied to the quarter the F94X-X was received. Upon completion of the examination: Prepare case for final closure from the group. Prepare a Form 3870 (example and instructions below) for each separate quarter of the Form 94X-X (i.e. 03, 06, 09 and 12). • If multiple Form 94X-X for the same quarter (e.g., 201709) are filed in the same “tax period” (e.g., filed January 1, 2018 and February 2, 2018) in which the form is filed/received, then one Form 3870 is prepared to transfer the funds to the same tax period (201803). • If multiple Form 94X-X for the same quarter (e.g., 201709) are filed in different tax periods (January 1, 2018 and November 30, 2018) in which the form is filed/received, one Form 3870 can be prepared to transfer the funds to the different tax periods (201803 and 201812). The “tax period” in which the form is filed is determined by the received date stamp on the front of the F94X-X. You and your GM must digitally sign the Form 3870. Place the Form 3870 at the front of the case file and upload into RCCMS Office Documents. The naming convention for the Form 3870 should start with “2” for RCCMS purposes. Enter Hold Code 2 in the Closing Records General tab on RCCMS. This will keep the credit balance from being refunded to the taxpayer. Enter “Adjusted Return involving a Credit Balance” in the comment section on the Form 3198-A and on the Comments tab on the RCCMS Closing Record. Closing Unit will monitor the accounts to verify the necessary postings were made and review the Form 3870 for accuracy. 4.75.37.6.3 (02-07-2020) Employment Tax Cases: Instructions for Completion of Form 3870 Complete all pertinent information in Blocks 1 – 10. Complete Block 11 with the following wording: The Taxpayer filed a Form 94X-X (Note a) Adjusted Employment Tax Return on Date (Note b). Please input the following credit transfer: From MFT XX (Note c) Tax Period XXXXXX (Note d) TC: 830 Date: XX/XX/XX (Note e) Amount: $XX (ii) To MFT (Note f) XX Tax Period (Note g) XXXXXX TC: 710 Date (Note h) XX/XX/XX Amount: $XX Notes: 94X-X will be the specific type of amended return (941, 943, 944, and 945 that were filed). Date – The date the F94X-X was received by the Service. MFT – Specific MFT for the type of return. Tax Period – The quarter of the amended F94X-X. Date – The due date of the return for which the F94X-X was filed. MFT – Specific MFT for the type of return. Tax Period – The quarter the F94X-X was received by the Service. Date – The 1st day of the quarter in which the F94X-X was filed. If you determine that the credit is no longer needed to pay an employment tax liability in the quarter to which the money was moved, then an additional Form 3870 will be needed to release the credit. TC 290 for $0 will be used. 4.75.37.7 (08-21-2014) Other Claim Procedures There are additional procedures related to reconsideration of a claim and withdrawal of a claim. 4.75.37.7.1 (02-07-2020) Claims in Cases Previously Considered by Appeals If a claim is received on a case that was previously closed by Appeals, the examiners will need to determine whether the claim issue is related to the issues considered by Appeals. See IRM 4.23.13.5. 4.75.37.7.2 (05-11-2017) Requests for Reconsideration of Disallowed Claims Don’t treat requests for reconsideration as original claims. The issuance of the final notice of claim disallowance starts the two year period of limitations in IRC 6532(a) for a taxpayer to file suit. There’s no provision in the law or regulations authorizing or requiring the issuance of a certified notice of the denial or disallowance of a customer's request for reconsideration of a claim for refund previously disallowed by certified notice. Your report must not state or imply that the IRS will issue a certified notice of disallowance. 4.75.37.7.3 (08-21-2014) EO Cases: Request For Withdrawal of a Claim If a taxpayer files a request for withdrawal of a claim, the only action required is issuance of a certified notice of claim disallowance. If the taxpayer advises that they filed the claim for the sole purpose of instituting suit and that they don't wish to exercise appellate rights, state this in the "Other Information" section of the examination report. Close the case to Mandatory Review to issue Letter 906, Final Full Claim Disallowance. In the letter, Mandatory Review lists as the reason for disallowance "the taxpayer withdrew the claim request" . Use DC 01 (RCCMS - 210). If this is a church tax inquiry, create a memo to the file to explain the circumstances of the closing. Approval from area counsel, area manager, Mandatory Review manager, and the group manager is required on the memo. Also, when the EO Closing Unit receives the file, the manager of the EO Closing Unit initials the use of DC 01. 4.75.37.7.4 (02-07-2020) Employment Tax Cases: Barred Refunds The filing of an original tax return reflecting an overpayment constitutes a claim for credit or refund. Accordingly, a tax return and claim for refund can be filed simultaneously through one document. The taxpayer who files an original tax return reflecting an overpayment is considered to have filed a claim within three years of filing a return, and a refund would be allowed if payment was made within three years of the date the original return/claim for refund is considered filed, as long as no petition is filed with the Tax Court. If no return had been filed as of the date of mailing of the notice of deficiency, and the notice of deficiency was mailed more than 3 years after the due date of the return (with extensions), the taxpayer is only entitled to recover amounts paid within two years prior to the mailing of the notice of deficiency. IRC 6513(b)(1) provides that for purposes of IRC 6511 any tax withheld with respect to a wage earner shall be deemed to have been paid on the fifteenth day of the fourth month following the close of the wage earner's taxable year (individual returns only). Similarly, IRC 6513(b)(2)provides that any estimated tax payments made during any calendar year are deemed paid on the last day prescribed for filing the return for that year without regard to any extensions. Therefore, if a customer files a tax return more than three years after the due date for the return (including valid extensions), any overpayment due on the tax return as a result of income tax withheld or estimated tax payments is forfeited and will not be refunded to the customer. Furthermore, barred refund amounts cannot be carried forward or back to offset delinquent accounts or future tax liabilities of the customer. The refunds are posted to an excess collections account using Form 8758, Excess Collection File Additions. Issue a preliminary claim disallowance Letter 5376, when a delinquent return seeks a claim for refund for withheld / estimated taxes, earned income credits or payments that are barred by the period of limitations under IRC 6511. If an Appeals conference is not requested, Letter 906 will be issued). Annotate Form 3198-A, "Issue Letter 906, Certified Notice of Claim Disallowance - Transfer barred refund to an excess collections account ". Examiner will prepare and issue Letter 906. 4.75.37.7.5 (02-07-2020) Employment Tax Cases: No Consideration Given To Certain Refund Claims There are instances where claims will not be considered. Requests for Reconsideration of Disallowed Claims, and Requests for Withdrawal of a Claim, are the two that will most likely be encountered by examiners. For other instances, refer to IRM 4.23.13.6. 4.75.37.7.6 (02-07-2020) Employment Tax Cases: Requests for Reconsideration of Disallowed Claims Requests for reconsideration will not be treated as original claims. There is no provision in the Internal Revenue laws or regulations authorizing or requiring the issuance of a certified notice of the denial or disallowance of a customer's request for reconsideration of a claim for refund6previously disallowed by certified notice. Your report must not state or imply that a certified notice of disallowance will be issued. See IRM 4.23.13.9. 4.75.37.7.7 (02-07-2020) Employment Tax Cases: Request for Withdrawal of a Claim If a customer files a request for withdrawal of a claim, the only action required is to issue a Letter 906, which starts the two-year statute. If the customer advises that the claim was filed for the sole purpose of instituting suit and that he or she doesn’t wish to exercise appellate rights, you state this in the "Other Information” section of the examination report. You will use DC 01(303). The following RCCMS fields, in addition to normal examination fields, need to be completed: On the Compliance Activities Record: Claim Type and Claim Amount. On the Closing Record: Claim Rejection Date, Claim Hrs., Claim Amount Disallowed, Examiner’s Time (leave blank), Assessment Information on RCCMS (TC 300 and $0). There are no Adjustments (Reference Numbers) required. 4.75.37.7.8 (02-07-2020) Adjudication of a Claim If a claim under examination is placed in suspense pending adjudication of an issue upon which the claim was based, and Counsel or a Campus processes the claim outside of the examination process as ordered by the federal courts, there is no further examining of the claim issue. Assuming there are no other issues, close the examination as follows: If allowing the claim in full or in part, verify payment of the claim using IDRS command code BMFOLT. Notify any project or program analysts or team leaders of the IRS posting of the court order or settlement in IDRS. Indicate a zero claim amount by processing Form 5598, CC AMAXUO. If in AIMS Status 12, close the claim as a no-change, DC 02 (107). If in AIMS Status 10, delete the claim account using Form 10904 with DC 33 (901). See IRM 4.75.16.3.1.1, Disposal Code 33 Procedures. Example: An example of a claim issue previously placed in suspense pending judicial decision was the medical resident FICA claims issue. See IRM 21.6.6.4.42, Federal Insurance Compensation Act (FICA) Claims from Medical Residents. 4.75.37.7.9 (05-11-2017) Case File Assembly - Claims Use pink case file folders for claims. See IRM 4.75.16, Case Closing Procedures for case file assembly guidelines. 4.75.37.7.10 (08-21-2014) Joint Committee Cases You are responsible for determining whether a claim case falls under Joint Committee (JC) jurisdiction. A case with a refund or credit in excess of $2 million ($5 million for C corporations) is a JC case. Refer to IRM 4.36.2, Identification of Joint Committee Cases. Note: Always use Form 4549-A and Form 870 instead of Form 4549 for JC income tax cases. Go onto the Special Referral System (SRS) and submit a request to have a Joint Committee (JC) Specialist assigned to your case for an In-process Review. A JC specialist will instruct you to mail them certain documents. He/she will provide you with a list of documents they need. You are responsible for the SOL. If a case has a short statute, the JC Specialist won't be able to update the case to their status code. Consequently the case stays in AIMS status 12 while the JC Specialist works the case. Refer to IRM 4.36.1, Joint Committee Process Overview, which describes the entire process. Note: An inquiry from the Joint Committee on Taxation (JCT) is treated as a congressional inquiry. Therefore, treat any inquiry from the JC Specialist, JC Review Staff or the JCT as a high priority. Additional sources for information on Joint Committee procedures include the following: Examiner’s responsibilities are provided in IRM 4.36.3, Joint Committee Procedures, Examination Team Responsibilities. Refer to https://irssource.web.irs.gov/LBI/Lists/KMNECPA/AllItems.aspx. E-mail your inquiry to the mailbox at *lbi.joint.committee.assistance@irs.gov LB&I Joint Committee Assistance. Mail your inquiry to: Internal Revenue Service Attn: LB&I:PFTG:JC:1956 Mailstop 1987 CHI, Room 2200 230 South Dearborn Street Chicago, IL 60604 Close all JC cases to Mandatory Review. Mandatory Review doesn't review these cases unless you indicate on Form 3198-A that the case is subject to review for one of the other reasons listed in IRM 4.75.16.6 (1). Note on Form 3210 that this is a Joint Committee case. Note on Form 3198-A, the case is a Joint Committee case. Check the restricted interest box on Form 3198-A if applicable. 4.75.37.8 (02-07-2020) Employment Tax Cases: Claim for Abatement of Employment Tax A claim for abatement of an employment tax examination assessment (Examination Reconsideration) will be considered on its merits after employment taxes have been assessed and the circumstances in IRM 4.23.13.4, Employment Tax Abatement Claims, have been met. When it is determined that an examination reconsideration request should be considered on its merits, the taxpayer will be afforded consideration by the Appeals Office. Refer to IRM 4.23.13.3.5. When it is determined that an abatement (Examination Reconsideration) request should not be considered on its merits, or there has been no previous examination action, the t/p will be issued a no-consideration letter and will not be afforded consideration by the Appeals Office. Use Letter 924, No Consideration Letter on Abatement Claim, for all claims for abatement of employment taxes that are not considered. Never use Letter 5376, Form 3363 and 2297, or any other letter that explains appeal rights. The customer has no appeal rights beyond the group level without paying the tax and filing a formal claim. This should be explained to the customer with the following paragraph: "If you do not agree with our determination, you may, after paying the additional tax due, file an amended return or claim for refund. If you file a claim or amended return, you should do so within three years from the date your return was filed or, if later, two years from the time the tax was paid." 4.75.37.9 (02-07-2020) Requests for Abatement under IRC 4962 The IRS has discretionary authority under IRC 4962(a) to not assess, or to abate or refund, any "qualified first-tier tax" (including interest) as long as the taxable event was: Due to reasonable cause. Not due to willful neglect. Corrected within the appropriate correction period. Qualified First-tier Chapter 42 Excise Taxes described under IRC 4962(b) include the sections listed below: IRC 4942(a). IRC 4943(a). IRC 4944(a). IRC 4945(a). IRC 4955(a). IRC 4958(a). IRC 4966(a). IRC 4967(a). Note: These requests don’t apply to taxes assessed under IRC 4941(a). If a taxpayer or their POA makes a request for abatement for IRC 4941(a) taxes, deny the request. Also, for other Chapter 42 taxes, if neither the taxpayer nor the POA submitted the request, deny it. Prepare and issue Letter 6264. Close the case with DC 01 (RCCMS - 210). These cases are not subject to mandatory review. Note: Form 5774-A, Private Foundation - IRC 4962 Abatements don’t include IRC sections 4966 and 4967 taxes. Write-in or enter these taxes anywhere in the Applicable Internal Revenue Code Sections portion of the form. Follow the instructions on IRM 4.75.37.9.1 for approval of IRC 4962 abatement requests. A taxpayer’s requests under IRC 4962 must be worked as an abatement, whether the tax has or hasn’t been paid. Taxpayers file these requests for abatement by filing a Form 843 or an amended return. The taxpayer may also make an informal request as long as we have all the necessary information including the tax year, issue, and amount. 4.75.37.9.1 (02-07-2020) Working the Request CP&C: Classification & Case Assignment assigns the case with a SC of 30, Claims for Refund. If the taxpayer paid any part of the tax for which an abatement is sought, treat the request as a claim. Approval of abatements under IRC 4962 are still required in accordance with IRM 4.75.37.9.3. Use project definer code 8499, Request for Abatement. The project code is 8089, Claims (Non-TEP). Contact the taxpayer and obtain any necessary additional information. Evaluate the information and make a determination. Fully document your work in your workpapers. See IRM 20.1.1.3.2, Penalty Handbook, Introduction and Penalty Relief, for discussion on reasonable cause. The Director, Exempt Organizations and Government Entities holds the authority to abate a qualified first-tier Chapter 42 excise tax over $200,000, as per Delegation Order 7-11 (IRM 1.2.2.8.11, Delegation Order 7-11 (Rev. 1)), revised July 2, 2018. The Manager, FSL/ET; Area Managers, EO Examinations, and Manager, Compliance Planning & Classification (CP&C) Classification & Case Assignment hold the authority to abate a qualified first-tier Chapter 42 excise tax of $200,000 or less, as per Delegation Order 7-11 (IRM 1.2.2.8.11, Delegation Order 7-11 (Rev. 1)), revised July 2, 2018. As a result of the changes to Delegation Order 7-11, field groups should follow the instructions in the table below: IF THEN IRM reference Full abatement <$200,000 -Examiner prepares PARP -Group Manager (GM) secure emails PARP to Area Manager (AM). -AM secure emails approval or denial to GM. -If abatement is denied, see IRM 4.75.37.9.2. -If abatement is approved, see IRM 4.75.37.9.3.(8). Full Abatement >$200,000 -Examiner prepares PARP -GM secure emails PARP to AM. -AM secure emails PARP to the Sr. Program Analyst for Director, EO Exam. -Sr. Program Analyst secure emails PARP to Technical Advisor for the Director, EO/GE. -Technical Advisor secure emails PARP to Director, EO/GE for final approval. -AM informs GM of approval or denial. -If abatement is denied, see IRM 4.75.37.9.2. -If abatement is approved, by EO/GE Director, see IRM 4.75.37.9.3 (10). Partial Abatement <$200,000 -Examiner prepares PARP -GM secure emails PARP to AM. -AM secure emails approval or denial to GM. -If abatement is denied, see IRM 4.75.37.9.2. -If abatement is approved, see IRM 4.75.37.9.4.(7). Partial Abatement >$200,000 -Examiner prepares PARP -GM secure emails PARP to AM. -AM secure emails PARP to the Sr. Program Analyst for Director, EO Exam. -Sr. Program Analyst secure emails PARP to Technical Advisor for the Director, EO/GE. -Technical Advisor secure emails PARP to Director, EO/GE for final approval. -AM informs GM of approval or denial. -If abatement is denied, see IRM 4.75.37.9.2. -If abatement is approved, see IRM 4.75.37.9.4.(9). Note: Abatement requests packages no longer need to be routed through Mandatory Review. 4.75.37.9.2 (08-21-2014) Full Denial Prepare Form 886-A. Prepare and issue 30-Day Letter - Full Denial IRC 4962 in Exhibit 4.75.37-2, along with Form 870-E. Indicate Request for IRC 4962 Abatement Denied in Full, in the IRC section column. Indicate zeros in the amount of tax and penalty columns. If the taxpayer: Signs Form 870-E, prepare and issue closing letter, Agreed Full or Partial Denial of Abatement in Exhibit 4.75.37-3. Use DC 01 (RCCMS – 210), Regulatory/Revenue Protection. Follow normal case closing procedures in IRM 4.75.16, Case Closing Procedures. Files a formal protest, follow the normal case closing procedures in IRM 4.75.16. Doesn't respond to the 30-day letter or doesn't file a formal protest, close the case with DC 10 (RCCMS - 604), Unagreed-Without Protest. Close the case to EO Closing Unit. 4.75.37.9.3 (02-07-2020) Full Abatement Prepare an examination report including: Form 870-E. Form 4621. Form 4883. Form 886-A. The taxpayer’s signature on Form 870-E isn’t necessary because we're giving a full abatement. Form 886-A shows the amount of the decrease in tax. Ensure the taxpayer understands we won’t issue a refund because the amount wasn’t paid. Obtain the abatement approval before issuing a report to the taxpayer by submitting a Pre-Approval Request Package (PARP). A PARP consists of the following: Form 5774-A, Private Foundation - IRC 4962 Abatements. For abatement requests of $200,000 or less, prepare a memo to your Area Manager (AM), or manager indicated in Delegation Order 7-11, stating the amount to be abated (labeled as either in full or in part), and explaining the reasons for allowing the abatement. For abatement request of more than $200,000, prepare a memo to the Director, EO/GE, stating the amount to be abated (labeled as either in full or in part), and explaining the reasons for allowing the abatement. A copy of the draft examination report as shown in IRM 4.75.37.9.3 (1). If the abatement request of $200,000 or less is denied, follow the steps in IRM 4.75.37.9.2. If the abatement request of $200,000 or less is approved, follow the steps below: Prepare and issue Letter 2738, Audit Reconsideration - Complete Abatement. Inclusion of the reports prepared in IRM 4.75.37.9.3 (1) is optional. If the taxpayer signs Form 870-E, prepare and issue closing letter, Agreed Full or Partial Denial of Abatement IRC 4962 in Exhibit 4.75.37-3. Close the case with DC is 03 (RCCMS – 102), Agreed Tax or Penalty Change. Follow normal case closing procedures in IRM 4.75.16. If the taxpayer files a formal protest, follow the normal case closing procedures in IRM 4.75.16. If the taxpayer doesn't respond to the 30-day letter or doesn't file a formal protest, close the case with disposal code 10 (RCCMS - 604), Unagreed – Without Protest. Close the case to the EO Closing Unit. If the abatement request of over $200,000 is denied, follow the steps in IRM 4.75.37.9.2. If the abatement request of over $200,000 is approved, follow the steps below: Prepare and issue Letter 2738, Audit Reconsideration - Complete Abatement. Inclusion of the reports prepared in IRM 4.75.37.9.3 (1) is optional. If the taxpayer signs Form 870-E, prepare and issue closing letter, Agreed Full or Partial Denial of Abatement IRC 4962 in Exhibit 4.75.37-3. Close the case with DC is 03 (RCCMS – 102), Agreed Tax or Penalty Change. Follow normal case closing procedures in IRM 4.75.16. If the taxpayer files a formal protest, follow the normal case closing procedures in IRM 4.75.16. If the taxpayer doesn't respond to the 30-day letter or doesn't file a formal protest, close the case with disposal code 10 (RCCMS - 604), Unagreed – Without Protest. Close the case to the EO Closing Unit. 4.75.37.9.4 (02-07-2020) Partial Abatement Prepare an examination report including: Form 870-E. Form 4621. Form 4883. Form 886-A. Form 886-A is to show the amount of the decrease in tax. Ensure the taxpayer understands we won't issue a refund because the amount wasn't paid. Obtain the abatement approval prior to issuing a report to the taxpayer, by submitting a PARP. A PARP consists of the following: Form 5774-A, Private Foundation - IRC 4962 Abatements. For abatement requests of $200,000 or less, prepare a memo to your Area Manager (AM), or manager indicated in Delegation Order 7-11, stating the amount to be abated (labeled as either in full or in part), and explaining the reasons for allowing the abatement. For abatement request of more than $200,000, prepare a memo to the Director, EO/GE, stating the amount to be abated (labeled as either in full or in part), and explaining the reasons for allowing the abatement. A copy of the draft examination report as shown in IRM 4.75.37.9.3 (1). If the abatement request of $200,000 or less is denied, follow the steps in IRM 4.75.37.9.2. If the abatement request of $200,000 or less is approved, follow the steps below: Prepare and issue 30-Day Letter - Partial Abatement IRC 4962 in Exhibit 4.75.37-4. If the taxpayer signs Form 870-E, prepare and issue closing letter, Agreed Full or Partial Denial of Abatement IRC 4962 in Exhibit 4.75.37-3. Close the case with DC is 03 (RCCMS – 102), Agreed Tax or Penalty Change. Follow normal case closing procedures in IRM 4.75.16. If the taxpayer files a formal protest, follow the normal case closing procedures in IRM 4.75.16. If the taxpayer doesn't respond to the 30-day letter or doesn't file a formal protest, close the case with disposal code 10 (RCCMS - 604), Unagreed – Without Protest. Close the case to the EO Closing Unit. If the abatement request of over $200,000 is denied, follow the steps in IRM 4.75.37.9.2. If the abatement request of over $200,000 is approved, follow the steps below: Prepare and issue 30-Day Letter - Partial Abatement IRC 4962 in Exhibit 4.75.37-4. If the taxpayer signs Form 870-E, prepare and issue closing letter, Agreed Full or Partial Denial of Abatement IRC 4962 in Exhibit 4.75.37-3. Close the case with DC is 03 (RCCMS – 102), Agreed Tax or Penalty Change. Follow normal case closing procedures in IRM 4.75.16. If the taxpayer files a formal protest, follow the normal case closing procedures in IRM 4.75.16. If the taxpayer doesn't respond to the 30-day letter or doesn't file a formal protest, close the case with disposal code 10 (RCCMS - 604), Unagreed – Without Protest. Close the case to the EO Closing Unit. 4.75.37.10 (02-07-2020) Informal Request for Abatement of UBIT or other Income Taxes A taxpayer can't file a claim for abatement of income tax under IRC 6404(b). However, because the IRS has the authority to abate the unpaid portion of tax under IRC 6404(a), the IRS may still consider an informal request filed by a taxpayer, for abatement of income taxes. See IRM 25.6.1.10.1, Requests for Abatement. This informal request should include the tax period involved, issue, and request to abate the tax. When assigned, the case has a SC of 30, Claims for Refund Verify on IDRS any payments the taxpayer made. If the taxpayer paid all of the prior assessments, follow the regular claim procedures. Use project definer code 8499, Request for Abatement. The project code is 8089, Claims (Non-TEP). Contact the taxpayer and obtain any necessary additional information. Evaluate the information and make a determination. Document your work in your workpapers. Prepare Form 4549, Income Tax Examination Changes, to reflect any adjustments to be made. If you determine there was an overassessment, your report should reflect a reduction in the unpaid tax. Clearly explain to the taxpayer that the overassessment won't be refunded and that it will only reduce or eliminate the existing balance due. If there is a reduction in any penalties, the "Other Information" section of the report should clearly explain the reduction: Other Information Section Entries: Amounts: Accuracy Related Penalty as Corrected $200 Amount Previously Assessed $500 Adjustment (reduction) in Accuracy Related Penalty ($300) The taxpayer receives no judicial rights because IRC 6404(b) indicates the taxpayer can't file a claim for abatement of income taxes. The taxpayer's recourse if the tax isn't abated is to pay the tax, and then file a claim for refund, or file an amended return. Prepare and issue Letter 693, Reply to Request for Reconsideration of Assessment. Select the appropriate box. No signature is required on the Form 4549 because any adjustments are in the taxpayer's favor. If making an adjustment: Notate on Form 3198-A, TE/GE Special Handling Notice, Supplemental Report - Reduction of Previously Assessed Tax. Use DC 03 (RCCMS - 102), Agreed Tax or Penalty Change. If disallowing the request for abatement, use DC 01 (RCCMS - 210), Regulatory/Revenue Protection. 4.75.37.11 (08-21-2014) Request for Abatement - Examination Reconsideration In order to request an examination reconsideration: The taxpayer must file a return. The IRS assessed currently unpaid amounts, or the IRS reversed tax credits the taxpayer is disputing. The taxpayer must identify the disputed adjustments. The taxpayer must provide additional information not previously considered during the original examination. Note: If the taxpayer is filing the request under IRC 4962, see IRM 4.75.37.9. Consider a request for reconsideration if any of the following apply: The taxpayer submits information not previously considered. The taxpayer files an original delinquent return as a result of an Substitute for Return assessment. There was an IRS computational or processing error. Don't consider a request for reconsideration if: We've already granted the taxpayer an examination reconsideration, and the taxpayer didn't provide any additional information with his/her current request that would change the results. We made the assessment as a result of a closing agreement entered into under IRC 7121. These agreements use Form 906, Closing Agreements on Final Determination Covering Specific Matters, or Form 866, Agreement as to Final Determination of Tax Liability, or some combination of the two forms. We made the assessment as a result of a compromise under IRC 7122. These agreements are final and conclusive. You can identify a final compromise determination on IDRS by the posting of a TC 788. We made the assessment as the result of final TEFRA administrative proceedings. This applies to joint ventures and partnerships that the EO may be part of. We made the assessment as a result of the taxpayer entering into an agreement on Form 870-AD, Offer of Waiver of Restrictions on Assessment and Collection of Deficiency in Tax. (Appeals and LB&I use this form.) The United States Tax Court entered a decision that becomes final, or a District Court or the United States Court of Federal Claims rendered a judgment on the merits that becomes final. Note: Forward to the Office of Associate Area Counsel any request for reconsideration on cases settled by Tax Court, District Court, or Court of Federal Claims. Note: When the Tax Court dismisses a case for lack of jurisdiction, it doesn't enter a decision and doesn't dismiss the case on the merits. See IRC 7459(d). Likewise, when a District Court or the United States Court of Federal Claims dismisses a case for lack of jurisdiction, the court doesn't dismiss the case on the merits. Per Policy Statement 4-103, (IRM 1.2.1.5.31, Policy Statement 4-103) where we made an assessment of excise or employment tax as a result of an examination action, the taxpayer generally must pay the assessment and file a claim for refund prior to any further consideration of his/her case. Consider abatement requests only if: A jeopardy assessment is involved. See Policy Statement P-4-88, (IRM 1.2.1.5.27, Policy Statement 4-88). For certain excise taxes subject to the deficiency procedures, see IRC 7429(a)(2). The taxpayer establishes a meritorious reason for considering the request, such as failure to receive a proposed tax change (30-day letter). Note: For employment tax cases, refer to IRM 4.23.13, Employment Tax Refund or Abatement Claims, for additional information. 4.75.37.11.1 (08-21-2014) Working the Request Classification assigns the case with a SC of 73, Taxpayer Request. If the case is on RCCMS, Classification asks the AIMS Analyst to retrieve the file from the RCCMS Library. Your group manager reviews the case upon receipt and assigns it within 15 days. Review the case. Verify on IDRS any payments the taxpayer made. If the taxpayer paid all of the prior assessments, follow the regular claim procedures. Call or write the taxpayer within 15 days of receipt. Inform them that EO Examinations received their case. Document your work in your workpapers. Evaluate the information and make a determination. Request additional documentation if necessary: Schedule an appointment when appropriate. Send a letter to the taxpayer confirming the appointment. Use Letter 3399, Audit Reconsideration-Request for Further Documentation, to obtain additional information. Close the case using DC 01 if the taxpayer doesn't: Furnish the additional information by the agreed upon deadline. Keep the scheduled appointment without adequate explanation. Use DC 01 to close the examination reconsideration request. The taxpayer may request a conference with your manager if they disagree with your findings. The taxpayer may submit a formal protest to Appeals for full or partial disallowances. Follow the Appeals procedures in IRM 4.75.15.11, Valid Formal Protest and IRM 4.75.15.12, Rebuttals to Formal Protests. Refer to the following table to determine the correct letter and DC to issue: Closing as: Closing Letter Actions: Full Abatement Letter 2738 with the RAR. Prepare the appropriate waiver/agreement form (follow the guidance in IRM 4.75.15 to determine the correct forms to use). Because we're reducing the tax, the taxpayer's signature isn't required. See note below for further instructions. Use DC 03 (RCCMS -102), Agreed Tax or Penalty Change. Follow normal case closing procedures. Full Denial Issue Full Denial - IRC 4962 30-day letter in Exhibit 4.75.37-2 with Form 886-A. Prepare Form 886-A. Use DC 01 (RCCMS -210), Regulatory/Revenue Protection, if the taxpayer doesn’t file a protest. If taxpayer: Files a protest, close the case to Mandatory Review. Doesn’t file a protest, close the case to the EO Closing Unit. Partial Abatement Issue Examination Reconsideration - Partial Abatement 30-day letter in Exhibit 4.75.37-4. Prepare the appropriate waiver/agreement form (follow the guidance in IRM 4.75.15 to determine the correct forms to use). Because we're reducing the tax, the taxpayer's signature isn't required. See note below for further instructions. Use DC 03 (RCCMS -102), Agreed Tax or Penalty Change, if the taxpayer doesn't file a protest. If taxpayer: Files a protest, close the case to Mandatory Review. Doesn't file a protest, close the case to the EO Closing Unit. Note: For partial or full abatements, make sure the taxpayer understands the amount won't be refunded, because it's unpaid. The report simply reduces the existing balance due. Clearly reflect the reduction in amounts in your report. Note: The "Per Return or As Previously Adjusted" amounts for both the taxable income and tax are the amounts shown on the previous report or notice of deficiency. Enter only adjustments to the previous report or notice of deficiency as adjustments. For agreed partial or full abatements, notate on Form 3198-A in the Other section: "Supplemental Report - Reduction of Previously Assessed Amounts" . 4.75.37.12 (05-11-2017) Request for Withdrawal of an Abatement Request If a taxpayer files a request for withdrawal of an abatement request: The taxpayer must provide a signed statement of withdrawal. Upon receipt, prepare and issue Letter 693. Check the box, "You didn’t provide the information we requested, therefore, we can take no further action on your request" . Prepare Form 886-A. Provide the date of the withdrawal. State that the taxpayer is withdrawing their abatement request. List the effected returns and year of the returns. Complete Form 5598. Complete Form 10904. 4.75.37.13 (08-21-2014) Case File Assembly - Abatements See IRM 4.75.16, Case Closing Procedures for case file assembly guidelines. 4.75.37.14 (02-07-2020) Offer in Compromise - Doubt as to Liability (OIC-DATL) If a taxpayer has a legitimate doubt that he/she owes part or all of the tax debt, he/she completes a Form 656-L, OIC-DATL. A taxpayer’s offer to compromise a tax liability should: Set forth the legal grounds for compromise. Provide enough information for the IRS to determine whether the offer fits within its acceptance policies. DATL: Exists when there is a genuine dispute as to the existence or amount of the correct tax debt under the law. Doesn’t exist if a final court decision or judgement determines the existence and amount of the debt. The Tax Increase Prevention and Reconciliation Act (TIPRA) of 2005 established legislation requiring the IRS to render a decision and notify the taxpayer on all offers in compromise within 24 months of the date the IRS received the offer or the offer is considered accepted (IRC 7122(f)). Any period during which any tax liability which is the subject of such offer-in-compromise is in dispute in any judicial proceeding shall not be taken into account in determining the expiration of the 24 month period. If the 24 month period expires while an employee works the offer, the employee coordinates with their manager and the FSL/ET Staff Assistant to prepare the paperwork required to accept the offer. See IRM 5.8.8.12.1(1) and IRM 5.8.8.12.2 for directions. 4.75.37.14.1 (02-07-2020) OIC-DATL Terminology General OIC-DATL terms and definitions: Terms Definition Acceptance The IRS accepts a DATL offer when there is a genuine dispute as to the existence or amount of the correct tax liability under the law and the offer amount reasonably reflects the amount the IRS would expect to collect through litigation. Rejection If you believe the tax is correct as assessed, reject the offer if the taxpayer doesn’t agree with the proposed adjustment (or non-adjustment). Rejections confer appeal rights. Returning an Incomplete Offer If the t/p doesn’t provide the necessary information, or files multiple and/or repetitive offers to substantially delay collection, you may request to return the offer to the taxpayer. When requesting to return the offer, fully document your reasons for doing so. Returning an offer confers no appeal rights. Submission A valid submitted DATL offer package consists of: A Form 656-L, signed under penalties of perjury. A written statement explaining why the tax debt or portion of the tax debt is incorrect. Supporting documentation or evidence that identifies the reason(s) for the doubt. The t/p must offer more than zero ($0). Note: No deposit or application fee is required for a DATL offer. If the IRS rejects or returns the offer or the taxpayer withdraws the offer, the IRS will return a deposit or application fee mistakenly paid with the offer. If the t/p agrees in writing, the IRS applies the amount paid with the offer to the amount owed. Withdrawal If you can resolve the issue to the mutual satisfaction of the taxpayer and the IRS, a compromise is unnecessary. In these cases, take the appropriate action as agreed and request that the t/p withdraw the offer. See IRM 5.19.24.14, Withdrawn DATL Offers. 4.75.37.14.2 (02-07-2020) OIC-DATL Processing Exam Group Manager: Assign the case to an examiner of appropriate grade level, within 15 days of receipt of an Offer case file from EO Classification. Don’t return cases to the EO Referrals Group or Classification. If unable to handle the case in your group, coordinate with your Area Manager to transfer the Offer to another group in the same area. Notify FSL/ET Staff Assistant of the case assignment, any reassignment and updates of case status, every 60 days. Examiner: Process the Offer case file as a high priority case. Delay all other actions on other cases. Postpone and reschedule any upcoming examination appointments for at least a month. Document all actions on Form 5464 or Form 9984. Review the prior examination file and the proposed offer. Evaluate supporting documents. Determine whether the taxpayer needs to provide additional documentation. Contact taxpayer within 30 days of receipt of the Offer case file. Notify them that you’re reviewing the Offer. Request additional documentation, as needed. If you don’t need additional documents, you have 30 days from the date of contact to render your decision as to whether to adjust the tax. Note: This includes any calculations needed to arrive at the new debt amount. If needed, prepare Form 4564, Information Document Request (IDR), and send to the taxpayer. Give taxpayer up to 30 days to provide additional documents. If the taxpayer doesn’t provide the requested documents within 30 days, you may provide an extension of another 15 days, with your manager’s approval. Schedule an appointment to meet with the taxpayer if preferable to receiving the documents by mail. Schedule appointments within 60 days from current date. Within 30 days from the date of receipt of the additional documents, decide either by mail or in person and complete any calculations. If the taxpayer fails to provide the requested documents by the end of the second time frame, determine whether the taxpayer’s argument and documentation merits an adjustment to the tax liability within 30 days from the second deadline. If the lack of documentation prevents and adjustment, return the Offer as incomplete. Note: All deadlines are in calendar days. 4.75.37.14.2.1 (05-11-2017) OIC - Adjustments Offer considerations normally involve reductions of assessed liabilities based on additional taxpayer supplied documentation. If unable to determine the correctness of the tax liability, advise the taxpayer that we may accept the offer, pending further review. If proposing a reduction in liability other than down to the amount offered, determine whether the taxpayer agrees with the adjustment. If the taxpayer: Agrees: Ask the taxpayer to submit or fax a written request to withdraw the offer. Doesn’t agree: Advise the taxpayer that further review is required and treat the case as a rejection. If the amount of the offer is greater than the final adjusted tax liability, solicit a withdrawal of the offer. If the taxpayer doesn’t submit a request to withdraw the Offer, treat the case as a rejection. If the documents provided with the Offer or in response to any IDR don’t support as doubt as to liability offer, reject the offer. If the IRS rejects or returns the offer or if the taxpayer withdraws the offer, the IRS will return a deposit or application fee mistakenly paid with the offer. If the taxpayer agrees in writing, the IRS applies the amount paid with offer to the amount owed. 4.75.37.14.2.2 (02-07-2020) Case Resolution - Returning an Incomplete Offer Examiner: Complete the OIC Checksheet attached to the folder. Create a new closing record. Use DC 45 to close the case and closing with "7- Paperless Non-Examined" . Close the case to your manager. Group Manager: Review the case. Send the paper file to the FSL/ET Staff Assistant. Approve the case closure on RCCMS. FSL/ET Staff Assistant: Update the AOIC to reflect the return of the offer to the DATL Unit. Send case to the DATL Unit. 4.75.37.14.2.3 (02-07-2020) Case Resolution - All Other Situations Examiner: Complete Form 1271, Rejection or Withdrawal Memorandum for withdrawals and rejections. Complete Form 7249, Offer Acceptance Report for accepted offers. Prepare Form 3870, Request for Adjustment, for all cases. Complete the form to adjust the liability to the correct amount regardless of whether the taxpayer withdraws the offer. Only one tax year per Form 3870. Instructions for the completion of Form 3870 are provided on the back of the form. Ensure that lines 6 and 11 provide the specific information shown below. ▸Line 6. Assessment date: TC 300 assessment date. ▸Line 11. Reason for Adjustment: "Abate TC 300 $ (amount of abatement) for OIC acceptance" (or withdrawal or rejection). Prepare the following forms to reflect the adjustments for EO Closing Unit input as applicable: Form 4549, Income Tax Examination Changes. Form 4883, Exempt Organizations Excise Tax Audit Changes. Form 4667, Examination Changes - Federal Unemployments Tax. Form 4668, Employment Tax Examination Changes Report, or Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection. Group Manager: Review the Offer case file in 10 days. Upon approval of the closure, send the case to Mandatory Review in Dallas. Close the RCCMS controls to Mandatory Review. If Form 7249, Offer Acceptance Report is present, sign the form if you agree with the examiner. Notify the FSL/ET Staff Assistant of the case disposition. Note: All deadlines are in calendar days. 4.75.37.14.3 (05-11-2017) OIC-DATL Final Processing The IRS is required under IRC 7122(e) to provide an independent administrative review of all proposed rejections of an offer in compromise before communicating the rejection to the taxpayer. Mandatory Review serves in this role. 4.75.37.14.3.1 (02-07-2020) EO Mandatory Review, Manager Assign the case to a reviewer within 15 days of receipt of the offer case file. Notify the FSL/ET Staff Assistant of the case assignment. Note: All deadlines are in calendar days. 4.75.37.14.3.2 (05-11-2017) Case Resolution - Reviewer Treat the case as your highest priority work item. Review the Offer case file, within 15 days. Determine the following: Did the taxpayer establish sufficient doubt as to the correctness of the liability? Did the examiner follow the IRM requirements? Did the examiner correctly consider and apply the tax law? Did the examiner thoroughly develop/document the facts and circumstances? Verify the accuracy of any adjustments. Ensure the following documents are in the file: Form 656-L, Offer in Compromise (Doubt as to Liability). Withdrawal letter from the taxpayer, if applicable. AOIC Exam Case Checklist. Form 1271, Rejection or Withdrawal Memorandum or Form 7249, Offer Acceptance Report, for accepted offers. Form 2848, Power of Attorney and Declaration of Representative, if applicable. Tax return (original, copy, TRDBV print). Original examination case file. Form 3870. Form 4549. Form 4883. Form 4667. Form 4668 and/or Form 5384. If the 24 month period expired, verify the acceptance paperwork required under IRM 5.8.8.12 is in the file. Sign Form 1271 in the field marked "Signature of Reviewer " or Form 7249 in the field marked "Signature (2nd level review)" if approving the examiner’s determination. Prepare a second folder containing: a copy of the Form 2848 (if applicable), the tax return, the original examination case file, Forms 656-L (copy), 3870, 4549 (4883/4667/4668/5384). Write your name in the field for" Independent Administrative Reviewer (IAR)/Technical Reviewer" . Write the date you complete your review. Check the box for sustained or not sustained. Verify the field examiner completed the disposition of deposit and remarks fields. If the Offer involves a total liability of $50,000 or more (before or after adjustment), send the case files to Area Counsel for approval. Forward the closed case to the Manager, EO Mandatory Review. 4.75.37.14.3.3 (02-07-2020) Case Resolution - EO Mandatory Review, Manager Review case. If the 24 month period expired, forward the case file to the National Offer in Compromise Program Director. If issues remain, return the files to the Reviewer. If no issues remain, forward the first file folder to the DATL Unit for issuance of the closing letter. For cases involving rejections, wait for the Doubt as to Liability (DATL) unit to notify you as whether the taxpayer is appealing the rejection. If the taxpayer files an appeal, forward the second folder to the DATL Unit for association with the first folder before the DATL Unit sends the files to Appeals. For cases involving acceptances, non-appealed rejections and withdrawals, forward the second folder to EO Closing Unit for input. Notify the FSL/ET Staff Assistant of the case’s disposition. 4.75.37.14.3.4 (05-11-2017) Returning Case to the Group - Reviewer Prepare Form 5456, Reviewer’s Memorandum - EP/EO, if issues are present that require returning the case to the group. Sign the Form 5456 and obtain the Manager, EO Mandatory Review’s counter signature. Place the signed Form 5456 on top of the files and ship them to either: The field group that reviewed the Offer. EO Classification for assignment if the Classifier rejected the Offer. Have the case controls on RCCMS transferred to the appropriate unit. 4.75.37.14.3.5 (05-11-2017) Case Return Receipt - Examiner Review Form 5456 and follow provided guidance. Prepare and sign Form 5457, Response to Reviewer’s Memorandum - EP/EO. Obtain manager’s signature. Electronic signatures are acceptable. Put Form 5457 on top of case file and close case back to Mandatory Review. Exhibit 4.75.37-1 IRC 7122 Offer In Compromise (Doubt As To Liability) Checksheet IRC 7122 Offer In Compromise (Doubt As Liability) Name of Organization Year(s) of Offer Action Date Initials Form 656-L Stamped As Received: Form 656-L Transferred to Classification: (≤ 15 Days) Form 656-L Received by Classification: Form 656-L Assigned to Classifier: (≤ 15 Days) Form 656-L Sent to Field: (≤ 15 Days) Form 656-L Received in Field Group: Form 656-L Assigned to Examiner: (≤ 15 Days) Initial Contact Made With Taxpayer: (≤ 30 Days) A Additional Documents Due By: (≤ 30 Days) Second Document Deadline: (≤ 30 Days) B Appointment Scheduled For: (≤ 60 Days) Case Closed to Manager: (≤ 30 Days) Case Forwarded to Mandatory Review (MR): (≤ 10 Days) Case Received in MR: Case Assigned to MR: (≤ 15 Days) Case Returned to Field: (≤ 15 Days) Case Received In Field Group: Case Reassigned to Examiner: (≤ 15 Days) Secondary Contact With Taxpayer: (≤ 30 Days) A Additional Documents Due By: (≤ 30 Days) Second Document Deadline: (≤ 30 Days) B Appointment Scheduled For: (≤ 60 Days) Case Closed to Manager: (≤ 15 Days) Case Forwarded to MR: (≤ 10 Days) Case Received in MR: Case Assigned to MR: (≤ 15 Days) Case Sent to Manager, MR: (≤ 15 Days) Form 656-L Package Sent to COIC: (≤ 10 Days) Case Closed to EO Closing Unit: (≤ 10 Days) Adjustments Input into IDRS: Checksheet Given to FSL/ET Staff Assistant: Exhibit 4.75.37-2 30-Day Letter - Full Denial - IRC 4962 Internal Revenue Service Tax Exempt and Government Entities Division Exempt Organizations: Examinations [Insert examiner’s street address] [Insert city, state, and zip code] Department of the Treasury Date: [Insert date] Taxpayer Identification Number: [Insert TIN] Form: [Insert Form Number] Tax Periods Ended: [Insert Periods] Person to Contact/ID Number: [Insert name] [Insert ID number] Contact Numbers: Telephone: [Insert phone number] Fax: [Insert fax number] Manager's Name/ID Number: [Insert name] [Insert ID Number] [Insert name of entity] [Insert c/o or Attn: and name] [Insert street address] [Insert city, state, and zip code] Manager's Contact Number: [Insert phone number] Response Due Date: [Insert date] Dear [Enter name]: Why you’re receiving this letter We've reviewed your request for the abatement of excise taxes under IRC Section 4962. We've determined that the information provided doesn't justify an abatement. The attached Form 886-A, Explanation of Items, explains how and why we made our decision. What you need to do if you agree If you agree with our findings, please sign the enclosed Form 870-E, Waiver of Restrictions on Assessment and Collection of Deficiency and Acceptance of Overassessment, and return it to the contact person at the address listed above within 30 calendar days from the date of this letter. Enclose payment of any applicable tax, interest, and penalties. Please make your check or money order payable to the United States Treasury. Publication 3498, The Examination Process, provides additional payment information. If you can’t pay the full amount, please call the contact person at the telephone number shown above to discuss different methods of paying, such as in installments. If you don’t enclose payment, we’ll bill you for any unpaid amounts. See Publication 594, The IRS Collection Process. What you need to do if you disagree 1. You may request a meeting or telephone conference with the manager identified above. 2. You may file a protest with the Appeals office of the IRS by submitting a written request within 30 calendar days from the date of this letter to the contact person at the address listed above. A valid protest must contain: • a statement of the facts you don't agree with, if any • the applicable law, if any, on which you are relying • arguments in support of your position • a penalty of perjury statement For more detailed information regarding what is required for a valid protest, see Publication 3498, The Examination Process. The Appeals office is independent of the Exempt Organizations division and resolves most disputes informally. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process. Please note that Fast Track Mediation referred to in Publication 3498, generally doesn't apply after issuance of this letter. 3. If you believe your disputed issue isn’t addressed in published precedent or is being treated inconsistently by the IRS, you may request technical advice, if it hasn’t already been submitted for technical advice. If you’d like to know more about this process, please notify the contact person. If you disagree with the technical advice decision, you may appeal that decision to the Appeals office, as explained above. 4. Pay the full amount due and file a claim for refund. You must file your claim within three years from the date the return was filed or two years from the date you paid the tax, whichever is later. If you don't respond to this letter If we don't hear from you within 30 calendar days from the date on this letter, we will process your case based on the recommendations shown on Form 886-A and this letter will become final. Contacting the Taxpayer Advocate Office is a taxpayer right The IRS office whose phone number appears at the top of this notice can best address and access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (TAS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Find the location and phone number of your local Taxpayer Advocate shown in the enclosed Notice 1214, Helpful Contacts for Your "Notice of Deficiency" or at www.taxpayeradvocate.irs.gov/contact-us, or by calling the TAS toll-free number at 877-777-4778 or TTY/TDD 800-829-4059. For more information about TAS and your rights under the Taxpayer Bill of Rights, go to www.taxpayeradvocate.irs.gov. Do not send your Tax Court petition to TAS. Use the Tax Court address provided earlier in this letter. Contacting TAS does not extend the time to file a petition. For additional information If you have any questions, contact the person listed at the top of this letter. Sincerely, [Insert name] Director, Exempt Organizations Examinations Enclosures: Form 886-A Form 870-E Exhibit 4.75.37-3 Closing Letter - Agreed Full or Partial Denial of Abatement - IRC 4962 Internal Revenue Service Tax Exempt and Government Entities Division Exempt Organizations: Examinations 1100 Commerce Street, MS 4900 DAL Dallas, Texas 75242-1100 Department of the Treasury Date: [Insert date] Taxpayer Identification Number: [Insert TIN] Form: [Insert Form Number] Tax Periods Ended: [Insert Periods] Person to Contact/ID Number: [Insert name] [Insert name of entity] [Insert c/o or Attn: and name] [Insert street address] [Insert city, state, and zip code] [Insert ID number] Contact Numbers: Telephone [Insert phone number] Fax: [Insert fax number] Dear [Enter name]: The enclosed report explains the agreed upon full or partial denial of your request for abatement of excise taxes under IRC Section 4962 for the form and year(s) listed above. __ |__| Thank you for your payment. If there is any additional tax, interest, or penalties owed, we’ll send you a bill. __ |__| We’ll send you a bill for the additional tax and any applicable penalties, plus interest. If you have any questions, contact the person at the top of this letter. Sincerely, [Insert name] Director, Exempt Organizations Examinations Exhibit 4.75.37-4 30-Day Letter - Partial Abatement - IRC 4962 Internal Revenue Service Tax Exempt and Government Entities Division Exempt Organizations: Examinations [Insert examiner’s street address] [Insert city, state, and zip code] Department of the Treasury Date: [Insert date] Taxpayer Identification Number: [Insert TIN] Form: [Insert Form Number] Tax Periods Ended: [Insert Periods] Person to Contact/ID Number: [Insert name] [Insert ID number] Contact Numbers: Telephone: [Insert phone number] Fax: [Insert fax number] Manager's Name/ID Number: [Insert name] [Insert ID Number] [Insert name of entity] [Insert c/o or Attn: and name] [Insert street address] [Insert city, state, and zip code] Manager's Contact Number: [Insert phone number] Response Due Date: [Insert date] Dear [Enter name]: Why you’re receiving this letter We've reviewed your request for the abatement of excise taxes under IRC Section 4962. We've determined that the information provided justifies a partial abatement. The attached report explains the amount of the abatement as well as how and why we made our decision. What you need to do if you agree If you agree with our findings, please sign the enclosed Form 870-E, Waiver of Restrictions on Assessment and Collection of Deficiency and Acceptance of Overassessment, and return it to the contact person at the address listed above within 30 calendar days from the date of this letter. Enclose payment of any applicable tax, interest, and penalties. Please make your check or money order payable to the United States Treasury. Publication 3498, The Examination Process, provides additional payment information. If you can’t pay the full amount, please call the contact person at the telephone number shown above to discuss different methods of paying, such as in installments. If you don’t enclose payment, we’ll bill you for any unpaid amounts. See Publication 594, The IRS Collection Process. What you need to do if you disagree 1. You may request a meeting or telephone conference with the manager identified above. 2. You may file a protest with the Appeals office of the IRS by submitting a written request within 30 calendar days from the date of this letter to the contact person at the address listed above. A valid protest must contain: • a statement of the facts you don't agree with, if any • the applicable law, if any, on which you are relying • arguments in support of your position • a penalty of perjury statement For more detailed information regarding what is required for a valid protest, see Publication 3498, The Examination Process. The Appeals office is independent of the Exempt Organizations division and resolves most disputes informally. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process. Please note that Fast Track Mediation referred to in Publication 3498, generally doesn't apply after issuance of this letter. 3. If you believe your disputed issue isn’t addressed in published precedent or is being treated inconsistently by the IRS, you may request technical advice, if it hasn’t already been submitted for technical advice. If you’d like to know more about this process, please notify the contact person. If you disagree with the technical advice decision, you may appeal that decision to the Appeals office, as explained above. 4. Pay the full amount due and file a claim for refund. You must file your claim within three years from the date the return was filed or two years from the date you paid the tax, whichever is later. If you don't respond to this letter If we don't hear from you within 30 calendar days from the date on this letter, we will process your case based on the recommendations shown in the report of examination and this letter will become final. Contacting the Taxpayer Advocate Office is a taxpayer right The IRS office whose phone number appears at the top of this notice can best address and access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (TAS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Find the location and phone number of your local Taxpayer Advocate shown in the enclosed Notice 1214, Helpful Contacts for Your "Notice of Deficiency" or at www.taxpayeradvocate.irs.gov/contact-us, or by calling the TAS toll-free number at 877-777-4778 or TTY/TDD 800-829-4059. For more information about TAS and your rights under the Taxpayer Bill of Rights, go to www.taxpayeradvocate.irs.gov. Do not send your Tax Court petition to TAS. Use the Tax Court address provided earlier in this letter. Contacting TAS does not extend the time to file a petition. For additional information If you have any questions, contact the person listed at the top of the letter. Sincerely, [Insert name] Director, Exempt Organizations Examinations Enclosures: Report of Examination Form 870-E Exhibit 4.75.37-5 Examination Reconsideration Letter - Full Denial Internal Revenue Service Tax Exempt and Government Entities Division Exempt Organizations: Examinations [Insert examiner’s street address] [Insert city, state, and zip code] Department of the Treasury Date: [Insert date] Taxpayer Identification Number: [Insert TIN] Form: [Insert Form Number] Tax Periods Ended: [Insert Periods] Person to Contact/ID Number: [Insert name] [Insert ID number] Contact Numbers: Telephone: [Insert phone number] Fax: [Insert fax number] Manager's Name/ID Number: [Insert name] [Insert ID Number] [Insert name of entity] [Insert c/o or Attn: and name] [Insert street address] [Insert city, state, and zip code] Manager's Contact Number: [Insert phone number] Response Due Date: [Insert date] Dear [Enter name]: Why you’re receiving this letter We reviewed the request for examination reconsideration for the year(s) shown above. However, we decided the tax amount is correct. The attached Form 886-A, Explanation of Items, explains how and why we made our decision. What you need to do if you agree If you agree, please pay the amount due. Please make your check or money order payable to the United States Treasury. Publication 3498, The Examination Process, provides additional payment information. If you can't pay the full amount, please call the contact person at the telephone number shown above to discuss different methods of paying, such as in installments. If you don't enclose payment, we'll bill you for any unpaid amounts. See Publication 594, The IRS Collection Process. What you need to do if you disagree 1. You may request a meeting or telephone conference with the manager identified above. 2. You may file a protest with the Appeals office of the IRS by submitting a written request within 30 calendar days from the date of this letter to the contact person at the address listed above. A valid protest must contain: • a statement of the facts you don't agree with, if any • the applicable law, if any, on which you are relying • arguments in support of your position • a penalty of perjury statement For more detailed information regarding what is required for a valid protest, see Publication 3498, The Examination Process. The Appeals office is independent of the Exempt Organizations division and resolves most disputes informally. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process. Please note that Fast Track Mediation referred to in Publication 3498, generally doesn't apply after issuance of this letter. 3. Pay the full amount due and file a claim for refund. You must file your claim within three years from the date the return was filed or two years from the date you paid the tax, whichever is later. If you don't respond to this letter If we don't hear from you within 30 calendar days from the date on this letter, this letter will become final and we will continue with Collection. Contacting the Taxpayer Advocate Office is a taxpayer right The IRS office whose phone number appears at the top of this notice can best address and access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (TAS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Find the location and phone number of your local Taxpayer Advocate shown in the enclosed Notice 1214, Helpful Contacts for Your "Notice of Deficiency" or at www.taxpayeradvocate.irs.gov/contact-us, or by calling the TAS toll-free number at 877-777-4778 or TTY/TDD 800-829-4059. For more information about TAS and your rights under the Taxpayer Bill of Rights, go to www.taxpayeradvocate.irs.gov. Do not send your Tax Court petition to TAS. Use the Tax Court address provided earlier in this letter. Contacting TAS does not extend the time to file a petition. For additional information If you have any questions, contact the person listed at the top of the letter. Sincerely, [Insert name] Director, Exempt Organizations Examinations Enclosures: Form 886-A Form 870-E Form 4621 Form 4883 Exhibit 4.75.37-6 Examination Reconsideration Letter - Partial Abatement Internal Revenue Service Tax Exempt and Government Entities Division Exempt Organizations: Examinations [Insert examiner’s street address] [Insert city, state, and zip code] Department of the Treasury Date: [Insert date] Taxpayer Identification Number: [Insert TIN] Form: [Insert Form Number] Tax Periods Ended: [Insert Periods] Person to Contact/ID Number: [Insert name] [Insert ID number] Contact Numbers: Telephone: [Insert phone number] Fax: [Insert fax number] Manager's Name/ID Number: [Insert name] [Insert ID Number] [Insert name of entity] [Insert c/o or Attn: and name] [Insert street address] [Insert city, state, and zip code] Manager's Contact Number: [Insert phone number] Response Due Date: [Insert date] Dear [Enter name]: Why you’re receiving this letter We reviewed the request for examination reconsideration for the periods shown above. We've determined that the information provided justifies a partial abatement. The attached report explains the amount of the abatement as well as how and why we made our decision. Because we reduced the original amount owed, you don't need to sign and return the report. What you need to do if you agree If you agree, please pay the amount due. Please make your check or money order payable to the United States Treasury. Publication 3498, The Examination Process, provides additional payment information. If you can't pay the full amount, please call the contact person at the telephone number shown above to discuss different methods of paying, such as in installments. If you don't enclose payment, we'll bill you for any unpaid amounts. See Publication 594, The IRS Collection Process. What you need to do if you disagree 1. You may request a meeting or telephone conference with the manager identified above. 2. You may file a protest with the Appeals office of the IRS by submitting a written request within 30 calendar days from the date of this letter to the contact person at the address listed above. A valid protest must contain: • a statement of the facts you don't agree with, if any • the applicable law, if any, on which you are relying • arguments in support of your position • a penalty of perjury statement For more detailed information regarding what is required for a valid protest, see Publication 3498, The Examination Process. The Appeals office is independent of the Exempt Organizations division and resolves most disputes informally. Publication 3498 also includes information on your rights as a taxpayer and the IRS collection process. Please note that Fast Track Mediation referred to in Publication 3498, generally doesn't apply after issuance of this letter. 3. Pay the full amount due and file a claim for refund. You must file your claim within three years from the date the return was filed or two years from the date you paid the tax, whichever is later. If you don't respond to this letter If we don't hear from you within 30 calendar days from the date on this letter, we will process your case based on the recommendations shown in the report of examination and this letter will become final. Contacting the Taxpayer Advocate Office is a taxpayer right The IRS office whose phone number appears at the top of this notice can best address and access your tax information and help get you answers. However, you may be eligible for free help from the Taxpayer Advocate Service (TAS) if you can't resolve your tax problem with the IRS, or you believe an IRS procedure just isn't working as it should. TAS is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. Find the location and phone number of your local Taxpayer Advocate shown in the enclosed Notice 1214, Helpful Contacts for Your "Notice of Deficiency" or at www.taxpayeradvocate.irs.gov/contact-us, or by calling the TAS toll-free number at 877-777-4778 or TTY/TDD 800-829-4059. For more information about TAS and your rights under the Taxpayer Bill of Rights, go to www.taxpayeradvocate.irs.gov. Do not send your Tax Court petition to TAS. Use the Tax Court address provided earlier in this letter. Contacting TAS does not extend the time to file a petition. For additional information If you have any questions, contact the person listed at the top of the letter. Sincerely, [Insert name] Director, Exempt Organizations Examinations Enclosures: Form 886-A More Internal Revenue Manual