4.86.5 Conducting Indian Tribal Government Examinations

Manual Transmittal

September 15, 2015


(1) This transmits new IRM 4.86.5, Indian Tribal Governments (ITG) Procedures, Conducting Indian Tribal Government Examinations.


The IRS office of Indian Tribal Governments (ITG) was established in 2000 to serve as the primary contact in the IRS for federally recognized Indian tribes.

Indian Tribal Governments (ITG), Internal Revenue Manuals (IRM) are being completely restructured, rewritten and consolidated in Part 4, Examining Process, Chapter 86, Indian Tribal Governments (ITG) Procedures. Chapter 86 title has been changed from Indian Tribal Governments Administrative Guidance to Indian Tribal Governments (ITG) Procedures.

Material Changes

(1) Although this is a new manual, some of these procedures were previously contained in IRM 4.87.1, Indian Tribal Governments Inventory Management, and IRM 4.88.1, Indian Tribal Governments Examination Issues and Procedures. This transmittal incorporates new text, reissues existing information and updated procedures.

(2) Moved, rewrote and expanded text in all subsections moved to this new IRM 4.86.5, Indian Tribal Governments (ITG) Procedures, Conducting Indian Tribal Government Examinations. The website addresses, IRM and legal resources were checked and corrected, where necessary.

(3) IRM, Overview, formerly IRM, Inventory Overview. Material added and text expanded.

(4) IRM, Compliance Program. Material added.

(5) IRM, Wage Reporting Compliance Program. Material added.

(6) IRM, Information Return Reporting Compliance Program. Material added.

(7) IRM, Excise Tax, formerly

(8) IRM, Examination Control and Processing, formerly IRM

(9) IRM, Delinquent Returns, formerly IRM Added link to the ITG Case Work Procedures Desk Guide.

(10) IRM, Using RCCMS, formerly IRM

(11) IRM, Statute of Limitations (SOL), formerly IRM, Statute Controls. Added text to include approved procedures established in RCCMS Process Procedural Gaps - Memorandum #7 - Statute Control Procedures Utilizing Reporting Compliance Case Management System (RCCMS), issued in 2009 for all Tax Exempt and Government Entities (TE/GE) employees.

(12) IRM, Scope of the Examination, formerly IRM Material added and text expanded.

(13) IRM, Pre-contact Analysis, formerly IRM Material added and text expanded.

(14) IRM, Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821), formerly IRM Material added and text expanded.

(15) IRM, Examination Techniques. Material added.

(16) IRM, Contacting and Working with Tribes, formerly IRM Material added and text expanded.

(17) IRM, Restructuring and Reform Act of 1998, Section 3705. Material added. Identifies employee contact information all IRS employees must provide to contacts they make while working on tax related matters. Added a note to specialists to document that they gave their contact information to each "new" contact in their Form 9984, ITG Specialist’s Activity Record, in order to pass Quality Measurement System Standard 1, Element G.

(18) IRM, Conducting the Interview. Material added.

(19) IRM, Required Filing Checks. Material added.

(20) IRM, Securing Records. Material added.

(21) IRM, Authority to Request Books, Records, and Accountant’s Workpapers, formerly IRM

(22) IRM, Third Party Contacts, formerly IRM Revised text and included reference to Servicewide procedures for all employees making third party contacts located in IRM 25.27.1, Third Party Contact Procedures.

(23) IRM, Summons Procedures, formerly IRM

(24) IRM, Communicating Identified Issues. Material added.

(25) IRM, Workpapers. Added section regarding workpaper preparation, including the completion of Form 4318, Examination Workpapers Index, and Form 9984, ITG Specialist’s Activity Record.

(26) IRM, Claims for Refund or Abatement, Adjusted Returns and Audit Reconsiderations, Text expanded for changes to procedures for establishing, working and closing employment tax refund or abatement claims, including special processing instructions for Adjusted Employment Tax Returns. These changes are necessary when working and processing various types of taxpayer requests made when filing 94X-X series of returns. Added a link to the ITG Case Work Procedures Desk Guide.

(27) IRM, Claim Disallowance. Added a note Letter 5376, Full or Partial Disallowance - Employment Tax, replaces Letter 569, Full/Partial Preliminary Claim Disallowance Letter, when disallowing employment tax claims in full or in part.

(28) IRM, Closing Procedures, formerly IRM Material added and text expanded to include procedures applicable to specialists when closing cases.

(29) IRM, Closing Procedures for Managers. Added procedures applicable to managers when closing cases.

(30) IRM, Standard Time Frame for Closing Cases. Added text for the national timeframes for closing cases from the group.

(31) IRM, Timeframes for Submitting Cases to CPM. Added chart establishing timeframes for submitting cases to CPM. Included the definition for the date a case is considered as "Received in CPM" .

(32) IRM, Cases Returned from CPM, Actions by the ITG Specialist. Added text to explain actions specialists should take when a case is returned from CPM.

(33) IRM, Cases Returned from Appeals. Material added.

(34) IRM, Form 5666, Referral Information Report, formerly IRM Revised text for clarity.

(35) IRM, Inadequate Records Notices. Material added.

(36) IRM, Early Referral Procedures, formerly IRM

(37) Made plain language edits to comply with the Plain Writing Act. See http://www.plainlanguage.gov.

Effect on Other Documents

Information from this manual supersedes IRM subsections, IRM, IRM through IRM, IRM, IRM through IRM, IRM through, dated December 11, 2009. Information from this manual also supersedes IRM subsections, IRM through IRM, IRM, IRM through IRM Content was updated and text revised, where appropriate, and moved to this new IRM section.


Tax Exempt and Government Entities
Indian Tribal Governments

Effective Date


Christie J. Jacobs
Director, Indian Tribal Governments
Tax Exempt and Government Entities


  1. Indian tribal governments are treated as states for certain Internal Revenue Code (IRC) purposes; however, they aren’t for employment taxes (IRC 7871). Therefore, services taxpayers perform for a tribal government are subject to employment taxes the same as other services for other taxpayers.

  2. This section provides information about ITG's compliance program and contains general audit guidelines. This guidance applies to all ITG work types, including, but not limited to:

    • Employment Tax Audits

    • Income Tax Audits (1040, 1120, etc.)

    • Information Return Audits

    • Voluntary Tip Agreements

    • Tip Compliance Reviews

    • Compliance Checks

Compliance Program

  1. A significant part of ITG's compliance program is ensuring tribal governments/enterprises comply with wage and information return reporting requirements.

Wage Reporting Compliance Program

  1. Employers must give employees the tax return copy and the employee's copy of Form W-2, Wage and Tax Statement, to report wages they paid them during the calendar year. The Form W-2, Wage and Tax Statement, must show, among other information, the total amounts of:

    • Wages paid subject to withholding of income tax.

    • Wages paid subject to Federal Insurance Contributions Act (FICA) tax.

    • Federal income tax withholding and FICA tax deducted and withheld.


    Employers have until January 31 of the next year to give employees Form W-2, Wage and Tax Statement.

  2. Employers must file a copy of each Form W-2, Wage and Tax Statement, with the transmittal Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA).


    Employers generally have until the last day of February after the calendar year for which the payments are made and March 31 (for electronically filed returns) to file Forms W-2 and W-3 with SSA.

  3. Employers’ correct and timely reporting of employment taxes is key to our voluntary compliance system and the cornerstone of the Social Security system.

  4. Employment taxes include:

    • Income tax withholding.

    • Social security and medicare taxes under the Federal Insurance Contributions Act (FICA).

    • Unemployment taxes under the Federal Unemployment Tax Act (FUTA).

  5. Studies show that issuing a Form W-2, Wage and Tax Statement, greatly increases the likelihood that a taxpayer will report the income.

  6. We gain significant benefits from working with our customers to understand problems and practices unique to tribal governments. Voluntary compliance usually improves when customers understand their tax obligations.

Information Return Reporting Compliance Program

  1. IRS studies show widespread non-compliance when payers don’t correctly file information returns. Studies also show that issuing a Form 1099 will greatly increase the likelihood that a taxpayer will report the earnings.

  2. Filed Forms 1099 are included in the Information Reporting Program (IRP) matching process. The process matches taxpayer reported earnings to identify payers who didn’t file Form 1099.

Excise Tax

  1. The ITG office is responsible for all wagering tax issues for federally recognized Indian tribal governments/enterprises. It serves as the "single point of contact" in the IRS to authorize or make contact with Indian tribal governments.

  2. The Office of Specialty Programs (formerly known as the Office of Excise Tax or OET) has jurisdiction over all other excise tax issues, but notifies ITG prior to initiating any audit or outreach activity with an Indian tribal government/enterprise. Find the Memorandum of Understanding (MOU) between ITG and Office of Specialty Programs (formerly known as the Office of Excise Tax or OET) at: www.irs.gov/Government-Entities/Indian-Tribal-Governments/ITG-Memorandum-of-Understanding/.

Examination Control and Processing

  1. ITG uses the following inventory control systems to manage and close examined return case files.

    • Reporting Compliance Case Management System (RCCMS)

    • Audit Inventory Management System (AIMS)

  2. ITG generally follows the exam case file control and processing procedures in IRM 4.5, TE/GE AIMS Manual.

  3. See IRM, TE/GE AIMS Forms, for other procedures for establishing, updating, correcting and deleting AIMS information.

  4. See IRM 4.23, Employment Tax, and IRM 4.24, Excise Tax, for general TE/GE audit procedures, including Package Audit, Survey of Returns, Suspense Procedures, and Basic Report Writing.

  5. See IRM 4.88.1, Indian Tribal Governments Examination Issues and Procedures, Examination Issues Pertaining to ITG Cases, for taxation issues and audit procedures with a specific impact on Indian tribal governments/enterprises.

Delinquent Returns

  1. Before processing a delinquent return, the specialist should review an account transcript. Procedures for processing a delinquent return depend upon whether or not a TC 150 has posted.

  2. Use these IRMs to process delinquent returns:

    • IRM, Processing Delinquent and Substitute Returns

    • IRM 4.23.12, Delinquent Return Procedures

    • IRM 20.1.2, Failure to File/Failure to Pay Penalties

    • IRM 4.4.9, Delinquent and Substitute for Returns Processing

    • IRM, Delinquent Forms W-2 and 1099

  3. See the ITG Case Work Procedures Desk Guide at: https://organization.ds.irsnet.gov/sites/tege-cl/ITG/itg-case-work-procedures-desk-guide.pdf for delinquent return processing procedures.


  1. ITG uses RCCMS as its inventory control system for compliance activity casework. Cases are assigned through RCCMS. AIMS updates are through the RCCMS interface with AIMS.

  2. All employees involved in case assignment update RCCMS:

    • Compliance Program Management (CPM) classifiers

    • Administrative support staff

    • CPM reviewers

    • Specialists

    • Group managers


    The group manager must approve updates initiated by specialists.

  3. CPM administrative support staff also act as IDRS operators on RCCMS.


    Compliance assignments such as SS-8 Determinations, Information Return Examinations, Non-return (Civil Penalty), IRC 7871 Letter Issuance, Voluntary Tip Agreement Negotiation, and Compliance Checks aren’t controlled on AIMS. They are only controlled on RCCMS.

  4. Cases controlled on RCCMS:

    • Cases Classified in CPM. These cases are assigned from CPM to the group managers on RCCMS in Status Code 10, Assigned, No Taxpayer Contact, and no time applied. Once the specialist makes contact, they will update RCCMS to Status Code 12, Assigned, Taxpayer Contact Made. Status Code 10 means the case is assigned to the group and/or specialist. Status Code 12 means the specialist started the case.

    • Cases Originated in the Field. These cases are established on AIMS through RCCMS, and AIMS updates are made through RCCMS. The cases are normally in Status Code 12, Assigned, Taxpayer Contact, if the specialist is currently working on the case and applying field time.

    • Cases Assigned, Taxpayer Contact. These cases are already established on AIMS and RCCMS, and in Status Code 12. If the case is in Status Code 10, the AIMS update will be made through RCCMS.

    • Cases Closed to CPM Review. Cases closed from the group are updated on AIMS through RCCMS and transferred to CPM Review using Status Code 20. CPM accepts the cases on RCCMS. Use Form 3210, Document Transmittal, only if a paper file exists in addition to the RCCMS file. The case remains in the group’s organizational code.

    • Cases Returned to the Field from CPM. These cases are updated on AIMS and RCCMS, and returned to the group for additional clarification, development or processing in Status Code 12. The reviewer will prepare a Form 3990, Reviewer’s Report, to transmit the case.


    Anytime you update a case, you must update it in RCCMS, which updates AIMS.

Case Assignment

  1. Establish all audit cases through CPM. See IRM 4.86.2, Classification, Case Selection and Referral Procedures.

  2. Assign cases to specialists, based on workload needs, on RCCMS, in status 10.

  3. Consider factors which could prevent a specialist from starting an audit before analyzing a return for exam issues.

Statute of Limitations (SOL)

  1. The Internal Revenue Code requires that the IRS will assess, refund, credit, and collect taxes within specific time limits. These limits are known as "Statutes of Limitations" . When they expire, the IRS can no longer assess additional tax, allow a claim for refund by the taxpayer, or take collection action.

  2. Use statute controls for all tax returns and/or information returns (filed and non-filed) under audit. Effective statute control procedures are a result of a collaborative effort. Any individual handling a return has the responsibility for identifying and protecting statutes of limitations for return(s) in their custody. Statute controls ensure the following:

    • Statute expiration dates for tax returns are properly determined and the records are annotated to reflect the correct assessment statute expiration date (ASED).

    • Miscellaneous civil penalties that have statute expiration dates, and are controlled on RCCMS and not AIMS, are properly determined and monitored.

    • Cases are closely monitored to prevent unintended expiration of the assessment statute of limitations.


    Failing to protect the statute of limitations can result in disciplinary action.

  3. See IRM 25.6.1, Statute of Limitations Processing and Procedures, and IRM 25.6.23, Examination Process - Assessment Statute of Limitations Controls, for Servicewide guidance on identifying, monitoring, controlling, and updating statute of limitations dates.

  4. Group managers are responsible for the overall supervision of statute controls for assigned and unassigned returns in the group. Group managers: when you receive cases in the group,

    1. Ensure you have policies to verify the statute of expiration is accurate, including proper determination of assessment statute expiration date (ASED) or any alpha codes used or to be used.

    2. Properly identify statute expiration dates on tax returns and/or information returns (filed and non-filed).

    3. Closely monitor and protect all statutes of limitations to prevent their expiration.

  5. Group managers are responsible for completion of Form 895 for any cases in the group’s unassigned inventory with less than 270 days on the statute.


    In RCCMS there is a red (!) next to cases that have statutes that will expire within 270 days.

  6. Specialists are responsible for:

    1. Identifying and protecting the statute of limitations for returns in their inventory, including all primary and related returns covered by the scope and depth of exams being conducted.

    2. Verifying the correctness of the statute of limitations date shown on RCCMS/AIMS for each return in their inventory.

    3. Initiating and completing Form 895, Notice of Statute Expiration, for any case (AIMS and non-AIMS) with less than 270 days left on the statute of limitations, or otherwise meeting control criteria. Cases coming to CPM also require Form 895 to be prepared for all cases with less than 270 days on the statute.


      Complete instructions for preparation of Form 895 may be found in IRM Exhibit 25.6.23-1, Form 895 Instructions.

    4. Send Form 895 to your group manager via secured e-mail for approval and digital signature. Upon return of the digitally signed Form 895 from your group manager, delete the original Form 895 (if any) from RCCMS and load the new form Form 895 to the RCCMS Office Documents folder.

    5. Place a red folder around the case file and attach Form 895 to the front of the paper case file (if any), on top of all other documents.

  7. If a decision is made to allow a statute to expire, there must be a memo in the case file approved by the ITG Director before allowing the assessment statute expiration date (ASED) to expire. Form 895 will be appropriately noted and initialed by the specialist and group manager. Use the "Remarks" section to indicate why an extension of the statutory period is unnecessary. Appropriate notes should be made on the original, group manager’s copy and the electronic copy of Form 895.

  8. If you determine that the statute date is incorrect, update it per IRM Exhibit 25.6.23-3, Instructions for Updating Statute on AIMS.

  9. After you determine the correct statute date and updated it, if necessary, continue to monitor the statute date to protect the government's interest.

    1. The statute date doesn’t change unless you update it to reflect an executed statute extension or to an alpha statute code.

    2. The group manager and specialist must continue to monitor the statute.

    3. Use ITG Inventory Validation guidelines, monthly reconciliation of AIMS Table 4.0, Returns with Statute Date Pending, and RCCMS, to ensure you start statute control procedures within 270 days of its expiration.

  10. A statute of limitations to assess tax can be extended with the taxpayer's consent.

    1. Clearly identify the need for a consent before you solicit it.

    2. Obtain your group manager's approval before you request a taxpayer to execute a consent and document his/her approval in the case file.

    3. See IRM 25.6.22, Extension of Assessment Statute of Limitations By Consent, for instructions on obtaining consents, and see IRM, Assessment, for a list of some conditions that allow a statute extension.


      A specialist cannot begin an audit on any return or requisition any return for audit if fewer than twelve months remain on the statutory period for assessment, without prior ITG Director’s approval.

    4. Once a statute extension is secured and properly executed, the specialist should update the Form 895 for the updated statute date. Send updated Form 895 to your group manager via secured email for final approval and updated digital signature. The email should state that the executed extension (indicate type) is being sent regular mail (or express shipping if necessary). Upon return of the digitally signed updated Form 895 from your group manager, delete the original Form 895 (if any) from RCCMS and load the new form Form 895 to the RCCMS Office Documents folder.

    5. Attach the original consent form to the back of the first page of the appropriate return. For case files where there is no tax return (i.e., penalty case), the executed consent form should be placed in a visible place within the case file. Attach updated Form 895 to the front of the paper case file, on top of all other documents. Remove red folder from the case file if the statute will no longer expire within 270 days.

  11. When sending a case with a short statute to CPM, the group manager of the specialist should contact the CPM manager before sending the case. A short statute case is defined as a statute case with less than 180 days remaining for an agreed or no-change case, and 270 days remaining on an unagreed case when they are received in CPM. These cases must include documentation of the approval of the ITG Director prior to closure to CPM.

  12. All actions with respect to the statute of limitations, steps to protect the statute of limitations, Form 895 completion date(s) and consents to extend should be notated in the Form 9984, ITG Specialist’s Activity Record.

  13. Unagreed cases closing to Appeals must have 450 days (15 months) remaining on the statute of limitations for assessment on the date CPM receives the case. See IRM, Timeframes for Submitting Cases to CPM.

  14. Certain ITG procedures differ from those in IRM 25.6.23 as follows: Request for Technical Advice cases are to be processed on Form 13842, ITG Request for Technical Assistance,and must have at least one year remaining on the statute when received in CPM. See IRM, Technical Advice Memorandums (TAM).

Consideration of Collectibility

  1. Consider collectibility during the pre-contact audit phase as a factor in determining scope and depth. See IRM, Consideration of Collectibility, and IRM, Collectibility.

Scope of the Examination

  1. Determine an audit’s scope when selecting issues warranting exam. The scope of the audit is listed on the classification check sheet during the classification process. However, don’t limit the scope of an audit to the classified issues if you discover other significant issues during the audit.

  2. Many tribal governments are complex entities with multiple subdivisions including various governmental functions and tribal commercial enterprises.

    1. In some instances, different subdivisions have separate employer identification numbers (EIN) and separate, well-defined books and records.

    2. In other instances, many subdivisions are operated under one EIN and combined on the tax returns.

  3. Consult your manager, and exercise judgment as to the audit’s scope and depth and your decision to expand or contract the scope.

    1. Conduct the audit to a point where you determine the reported employment tax liability is substantially correct.

    2. Determine whether the entity correctly filed information returns and wage statements.

    3. Determine whether the entity met all applicable federal return requirements.

  4. If you expand the audit scope to include another tax period(s):

    1. Notify the taxpayer in writing.

    2. Give the taxpayer time to secure a Power of Attorney (POA) for the additional tax period(s) (if the taxpayer has a power of attorney and it doesn’t cover the tax period(s) you pick up for audit).

    3. Allow the taxpayer time to submit records for the added year.

    4. Use the appropriate appointment confirmation letters.

  5. Document in the workpapers the factors you considered to determine whether to expand/contract the audit scope and your manager’s involvement.

Pre-contact Analysis

  1. When you prepare your audit before contacting tribal representatives, it enhances the quality of our service and forms mutual respect and cooperation.

  2. Examples of pre-contact analysis:

    1. Review the classification check sheet and case building materials.

    2. Review (RICS) returns for the quarters under audit, when available.

    3. Review Integrated Data Retrieval System (IDRS) data.

    4. Check Command Code CFINK to see if the taxpayer has a POA or Tax Information Authorization (TIA), and if so, for which periods.

    5. Research the ITG Tribal Database.

    6. Review Internet websites for economic and historical information about the tribe.

    7. Discuss the specific tribe or issue with your manager.

    8. Identify the recognized tribal leadership and the location of tribal offices. The Bureau of Indian Affairs (BIA) maintains a list of federally recognized tribes and a Tribal Leader's Directory on their website at www.bia.gov/.

    9. Determine if you should request a W-2/1099 Program Database.

Evaluation of Audit Potential

  1. When you complete the pre-contact analysis, determine if the return warrants examination. If there are audit potential indicators, plan the audit.

  2. If you/manager decide to survey the return, follow the survey procedures in the ITG Case Work Procedures Desk Guide at: https://organization.ds.irsnet.gov/sites/tege-cl/ITG/itg-case-work-procedures-desk-guide.pdf.

Opening the Examination

  1. When you open the work assignment, initially call or send a letter.

  2. Update AIMS/RCCMS:

    • For audits, update the AIMS status via RCCMS to Status Code 12 (audit opened).

    • For non-return compliance activities not on AIMS, update RCCMS to Status Code 12.

  3. Confirm that the source code, activity code, project and tracking codes are accurate.

Establishment of Related, Prior and Subsequent Period Returns

  1. When you identify an issue that requires you to establish additional periods or related returns, ask your manager before you establish either in RCCMS. Use:

    • Source Code 05 (Related Pick-up) for all related returns.

    • Source Code 40 (Multi-Year Examination) for all prior and subsequent period returns.

  2. Normally, there is only one period with a primary source code on RCCMS and AIMS.

  3. In most cases, carry the project/tracking codes of the primary return to all related returns.


    ITG uses exam data to capture business results, develop the work plan, and answer questions from internal and external stakeholders about resource application and results. Therefore, it’s important to use consistent and accurate coding for application of time and case data.

Power of Attorney (Form 2848) and Tax Information Authorization (Form 8821)

  1. Attorneys, certified public accountants, enrolled agents or other representatives may submit a Form 2848, Power of Attorney and Declaration of Representative, (POA), or Form 8821, Tax Information Authorization, (TIA) on behalf of an Indian tribal government/entity.

  2. The Centralized Authorization File (CAF) function doesn’t process Forms 2848 submitted using a version older than the October 2011. So, if a POA submits an obsolete form, ask them to resubmit using the most current revision.

  3. Secure a valid Form 2848 and/or Form 8821 containing the following information if the taxpayer wants a POA or third party representative:

    1. Taxpayer name (i.e. Indian tribal entity), address, employer identification number or social security number, and telephone number.

    2. Employee Plan Number, if applicable.

    3. Representative(s) or appointee(s) full name(s), address, telephone and fax numbers, and the representative's CAF number, if known. The taxpayer should check the appropriate boxes if the IRS should send the representative/appointee notices and communications.

    4. Type of specific tax involved (e.g., employment, excise, etc.) and/or the federal tax form number.

    5. The years covered must be specifically listed. It’s unacceptable to list "all years" .

    6. The taxpayer's signature is required (e.g., authorized tribal government official) and date of signature.

    7. For Form 2848, the representative must sign and date the declaration (Part II) and enter the designation under which he/she is authorized to practice before the IRS.


      Don’t accept the Form 2848 if the appointed representative isn’t qualified to sign Part II, or the form is incomplete or inaccurate. Don’t accept the Form 8821 if it’s incomplete or inaccurate. Return invalid forms to the taxpayer.

  4. Process the completed form to the appropriate CAF unit within five business days of receipt.

    1. Mark your name, telephone number, function, and date on the form.

    2. Fax or mail completed Forms 2848 and Forms 8821 to the CAF unit.

    3. Document the date you sent the form to the CAF unit on Form 9984, ITG Specialist's Activity Record. Also document any delays in processing on Form 9984.

    4. Follow-up by researching CFINK to ensure the CAF unit processed the POA/TIA.

    5. Attach a copy of Form 2848 or Form 8821 to each return. Mark on the form the date you faxed it to the CAF unit.

  5. Specific use authorizations generally are not recorded on the CAF database. These authorizations must be provided by the representatives with each contact with the IRS. Don’t detach the POA/TlAs filed for specific issues from its related document or send it to the CAF function, unless the POA/TIA authorizes a return in addition to the specific issue. If so, send a copy of the POA/TIA to the CAF unit to input the return portion on the CAF system. Examples of specific issues include, but are not limited to the following:

    • Form SS-4, Application for Employer Identification Number

    • Form W-2 Series

    • Form W-3, Transmittal of Wage and Tax Statements

    • Form W-4, Employee's Withholding Allowance Certificate

    • Form 843, Claim for Refund and Request for Abatement

    • Form 1096, Annual Summary and Transmittal of U.S. Information Returns

    • Form 1099 Series

    • Form 1128, Application to Adopt, Change or Retain a Tax Year

    • Form 5308, Request for Change in Plan/Trust Year

    • "General" or "Durable" POA. Even if these instruments contain sufficient information to function as IRS power of attorneys, they usually lack information sufficient to process on CAF. If the taxpayer submits a general or durable POA, attach a completed Form 2848 (a transmittal POA) and send both forms to the CAF unit for processing.

  6. See IRM, Third Party Authorization/Power of Attorney, and IRM 21.3.7, Processing Third Party Authorization onto the Centralized Authorization File (CAF) for additional information about third-party authorization/power of attorney.

Examination Techniques

  1. Use a variety of techniques to efficiently resolve the audit:

    • Conduct appropriate interviews.

    • Secure and review taxpayer records.

    • Document audit findings in workpapers (place in exam case file).

Contacting and Working with Tribes

  1. Follow these steps when scheduling a visit to a tribal entity:

    1. Identify the tribal leader (Chairman, President, Chief) for the tribe or tribal entity and secure their current contact information.

    2. Call or mail a letter to the tribal leader. Set an appointment for a convenient time.

    3. Inform the tribal official(s) of the purpose of the appointment.


      Outreach or education endeavor, compliance review, or an exam.

    4. Determine the tribal official designated by the tribe to work with the IRS concerning federal tax issues.

    5. Establish a communication agreement with the tribe. It may be in writing, but doesn’t have to be. Each tribe has different protocols for handling audits and correspondence. Document this information in the file. Recognize the government-to-government relationship of federally recognized Indian tribes with the Federal Government. If you don’t establish a communication agreement, confirm with the tribal leader who should receive original correspondence and who should receive copies.

    6. Issue all letters, publications and reports per the communication agreement. Send any audit correspondence you send to the designated tribal official also to the tribal leader.


      Send all correspondence to both the designated tribal official and the tribal leader for: an audit, an outreach, compliance check, audit expansion, or notification to the tribal leader that someone else from the IRS will be working on their reservation.

    7. Prepare a Form 4564, Information Document Request (IDR), and specify the information you need. Be specific, understandable and appropriate for the issue type. Include a specific response date and attach the IDR to the initial appointment letter.

    8. Conduct the initial meeting with the tribal official(s) or a designee of the tribal official(s). Introduce and discuss the issues and information you need. It’s best to have personal contact to obtain an understanding of tribal perspectives and concerns. This also gives the tribal officials a chance to meet with you and build trust at the beginning of the work assignment. Schedule any necessary, additional appointments with the designated tribal official to complete your work. Provide a follow-up IDR if additional information is needed.

    9. Keep the tribal leader and responsible tribal official(s) apprised of your major steps and decisions during the assignment, and be prepared to answer any questions or concerns.

    10. Closely coordinate your activities with the tribal official(s) or designee (when multiple IRS employees participate in a work assignment).

    11. Determine immediately, the scope of the other agency's involvement and elevate that information to your manager (if another federal agency is currently working with the tribe on matters which closely relate to tax administration). Interagency cooperation may resolve conflicts and avoid misunderstandings.


      Confidential taxpayer information cannot be disclosed to any federal agency.

    12. Meet with the tribal official(s) to inform them of any findings, recommendations or proposed tax adjustments when you complete your assignment. If the tribal leader isn’t in the closing meeting, explain your audit results in a letter. Thank the tribal official(s) for their cooperation.

Restructuring and Reform Act of 1998 Section 3705

  1. IRS employees working tax related inquiries must give taxpayers information to identify the appropriate employee who can address any further questions (RRA section 3705). Therefore, provide the following information:

    1. During a telephone or personal contact - name, title, and employee identification (ID) number.

    2. On all correspondence - same as above and a telephone number for the taxpayer's questions.

  2. You don’t have to repeat your employee ID number on subsequent contacts with the "same" tribal official(s) or designated tribal official.

  3. However, you must repeat your name and employee ID number to each new subsequent contact you make during the work assignment. Document the person’s name, title and the date when you gave them your contact information on Form 9984, ITG Specialist’s Activity Record. Also complete Workpaper 5.105, RRA 98 Check Sheet, and include it in your RCCMS case file. This workpaper has check boxes and a space to document the name(s), title(s) and dates of any subsequent new contacts.


    Quality Measurement System Standard 1, Element G, requires you to provide your RRA 98 contact information to each new contact you make while you are working on tax related matters, either by phone or in person. If you don’t document that you gave your contact information for each "new" contact, you’ll fail QMS Standard 1, Element G.

Conducting the Interview

  1. Explain/discuss the audit process and your taxpayer's rights in your initial interview:

    1. Document in the case file that you sent Publication 1, Your Rights as a Taxpayer, with the audit notification letter.


      Publication 1 fulfills your requirement to inform the taxpayer of the audit process and their rights during this process at or before the initial interview. (IRC 7521(b))

    2. Answer any questions the taxpayer may have concerning their rights.

    3. See IRC 7521, Procedures Involving Taxpayer’s Interviews, and IRM, Taxpayer Rights, for other provisions that affect taxpayer interviews.

  2. Conduct appropriate interviews to obtain information to make informed judgments. Interview the person who has sufficient knowledge and able to answer questions in a factual context for the area(s) of interest. Conduct interviews with the tribal leader, person(s) designated by the tribe to work with the IRS concerning federal tax issues, or an authorized tribal representative.

  3. Discuss the availability and form of books and records.

  4. Secure information on unusual or questionable items. Ask follow-up questions to clarify questionable areas.

  5. Record interviews conducted in the case file. If you limit the audit scope, still conduct the interview. Document the workpapers with who you interviewed and what you discussed.

Required Filing Checks

  1. Perform required filing checks and related case analysis on all exams. Determine that taxpayers have complied with all federal tax return filing requirements and have timely filed all returns with the substantially correct tax.

  2. Return filing checks include employment tax, excise tax and information returns. Taxpayers are required to report various types of payments to both the IRS and payees. These payments include wages and payments that the entity makes in the course of a trade or business to another person (i.e., Form 1099's).

  3. See IRM 4.10.5, Required Filing Checks, for procedures for verifying the filing of required returns by the taxpayer and assessing the audit potential of these returns.

Securing Records

  1. Use Form 4564, Information Document Request, to request information from the taxpayer. It’s vital to the audit process that you timely review and request records.

    1. Include only relevant information to cover all apparent issues on the return in your initial information request.

    2. Include a response date, such as a specific date or specific timeframe, and the manner in which they should submit data (by mail; made available on next field visit).

    3. Be specific, clear and concise.

  2. Prepare subsequent document requests clearly, concisely and with established response deadlines. Discuss each IDR with the taxpayer and/or representative, and address any questions or concerns to ensure mutual understanding of expectations. Check on the IDR status at the response date mid-point.

  3. If the taxpayer is either unable or unwilling to provide the necessary records to perform a quality audit, IRC 7602 provides the authority to summons. Discuss your audit’s particular circumstances with your manager. Typically, we secure the records from third parties using a summons, third party contact or another type of contact.

  4. See IRM, Third-Party Contacts for third party contact procedures.

  5. See IRM, Summons Procedures, for summons procedures.

Authority to Request Books, Records, and Accountants Workpapers
  1. You’re authorized to request and receive books, records, etc., necessary to properly examine an entity's tax return (IRC 7602, Examination of Books and Witnesses, and 26 CFR 301.7602-1(a), Examination of Books and Witnesses.)

  2. Insist courteously for the records, even when a taxpayer is reluctant to provide them. Follow these guidelines to handle this situation:

    1. Apprise the taxpayer of the appropriate requirements to produce books and records. Explain that denying access to the records only prolongs the audit/investigation because we’ll initiate third party inquiries and this further lengthens the process.

    2. Don’t attempt to mislead or misrepresent the audit/investigation scope in an effort to secure records.

    3. Don’t assert your authority in a manner that could be interpreted as a threat.

    4. Don’t summons the records unless you obtain your manager’s approval.

  3. Accountant's workpapers used to audit tax records or prepare a tax return aren’t the taxpayer’s property or privileged information. Therefore, you can summon the workpapers.

  4. See IRM 4.10.20, Requesting Audit, Tax Accrual, or Tax Reconciliation Workpapers.

Third-Party Contacts
  1. See IRC 7602(c) and related regulations for all third party contacts. IRS policy requires us to obtain information relating to a liability or collectibility determination directly from the taxpayer whenever possible. See IRM, Collecting Information Relating to Individuals from Third Party Sources.

  2. Generally, we make contacts with third parties when unable to obtain the information from the taxpayer or to verify information provided by the taxpayer. However, make every effort to first obtain information from the taxpayer. See IRC 6103(k)(6) and corresponding regulations which apply to all third-party contacts.

  3. For third party contacts made for the purpose of determining or collecting a tax liability, IRS is required under IRC 7602(c) to provide:

    1. Advance notice to the taxpayer that third party contacts may be made.

    2. A list of third party contacts to the taxpayer upon request.


      IRC 7602(c) doesn’t require IRS employees to obtain taxpayer authorization to contact a third party. A taxpayer may not prevent an IRS employee from contacting a third party by refusing to provide authorization. Obtaining authorization only means that IRS employees aren’t required to give reasonable notice in advance that they may make a third party contact.

  4. See IRM 25.27.1, Third Party Contact Procedures, for Servicewide procedures.

  5. Third-party contact procedures don’t apply to whistleblower claims for awards. Case files involving whistleblowers shouldn’t contain any reference to the whistleblower in the primary case documentation. Even making reference to Form 11369, Confidential Evaluation Report on Claim for Reward, or to the whistleblower in the activity record is prohibited because the administrative case file is subject to Freedom of Information Act (FOIA) and could lead to disclosure. See IRM, Confidentiality of the Whistleblower.

Summons Procedures
  1. Attempt to obtain information voluntarily from the taxpayer. However, in certain circumstances, you may need a summons to obtain the records or testimony needed to conduct a quality audit.

  2. See IRM, Delegation Order 25-1 (formerly DO-4, Rev. 23), Summonses, Oaths, Certifications, and Related Functions for our authority to issue, serve and enforce summonses, and to perform other related duties. Your manager or supervisory official above that level must authorize the issuance of a summons.

  3. See IRM, Delegation Order 25-6 (formerly DO-178, Rev. 6), Cost of Complying With a Summons, for the authority to obligate appropriated funds for payment of search costs, reproduction costs and transportation costs connected to third party summonses. Submit an estimate of summons expenses to your manager when you issue a summons.

  4. Consult your manager when considering issuing a summons.

  5. Consider all surrounding circumstances before issuing a summons. Analyze each situation’s facts and circumstances and weigh the importance of the desired information. Use the summons as a last resort after you’ve tried all other ways to get information. Don’t issue a summons for a tribal membership list.

  6. Consult Area Counsel for any summons questions. See IRM, Issues to Bring to Counsel's Attention.

  7. See IRM 25.5, Summons, for general summons information, procedures, and examples.

Coordinating Summonses with Other Divisions
  1. Due to the unique laws affecting Indian tribes, IRS employees issuing summonses to a tribal entity must ensure that the information being sought is legally obtainable, and that the summons can be enforced, if necessary. For that reason, employees should strongly consider designated ITG field Counsel review their summons. This includes any IRS summons, except those initiated by Criminal Investigation, served to a tribal government/enterprise, regardless of its source.

  2. Other business units (except Criminal Investigation) must notify ITG before they serve a summons to a tribal entity. This includes summonses originating in other IRS operating divisions (LB&I, SB/SE, etc.) or in any other TE/GE office.

Communicating Identified Issues

  1. A critical part of the audit process is continually communicating with the taxpayer and/or the taxpayer’s representative. When you identify a potential issue(s), discuss it with the taxpayer and/or the taxpayer's representative as soon as possible. Discussing the potential issue(s) can lead to an early resolution of the case.


  1. This subsection provide guidelines to develop lead sheet and workpaper content, and organize your workpapers and case file. Refer to IRM 4.23.4, Workpapers - Employment Tax Examinations, and IRM 4.10.9, Workpaper System and Case File Assembly, for details on preparing, formatting and the volume of workpapers.


    Apply all guidance listed and referred to in this subsection to audit workpapers. However, you should apply these same general theories and principles equally to all case files you generate.

  2. Lead sheets and workpapers are key in supporting all IRS positions taken when making adjustments. They must include all the information necessary to support the audit results. Lead sheets and workpapers serve the following purposes:

    1. Provide a framework to plan the audit, including analyzing internal documents and setting the audit scope.

    2. Document the evidence gathered, audit steps and techniques applied, tests performed, analyses conducted during the audit process.

    3. Provide support for factual and technical conclusions.

    4. Provide a basis for review by: management, technical review, specialists/agents (for subsequent audits), and/or preparation of technical advice requests.

    5. Support the IRS position for any appealed or litigated case.

Workpaper Preparation
  1. Use the Employment Tax (ET) lead sheets and the ET Audit report program available in RCCMS.

  2. Prepare workpapers for every work assignment.

  3. Properly prepared workpapers must provide adequate documentation to support conclusions. Without sufficient documentation, your manager or reviewer can’t evaluate your work scope or the basis of the actions you took. Always cite legal authority, such as the Internal Revenue Code, applicable regulations and/or court cases to support conclusions.

  4. Make sure workpapers are:

    1. Neat, legible, and clearly state the issue, facts, audit steps, law, taxpayer’s position, and conclusion for each issue audited.

    2. Legible - an important aspect of the overall quality of the work assignment and improves a reviewer/taxpayer’s understanding.

    3. Include a heading that clearly shows the name of the taxpayer, tax year audited (or discussed in the case of a non-examination case), date workpapers were prepared, your name or initials, and the issues/items being audited or discussed.

    4. Completed electronically, to the extent possible.

    5. Prepared contemporaneously.

    6. Indexed, numbered, securely fastened together and/or uploaded into RCCMS and synchronized. Case synchronization ensures that all uploaded work is saved to the RCCMS server in cases of computer failure.

  5. Save copies of all workpapers, forms and letters you generate in the RCCMS Office Documents folder using the RCCMS Naming Convention. Every document in the file should have some relevance. If not, omit it.

Workpaper System
  1. The workpaper system is designed to facilitate consistent organization of case files and eliminate duplication. The workpaper system includes:

    1. Form 4318, Examination Workpapers Index,

    2. Form 9984, ITG’s Specialist Activity Record, and

    3. Lead Sheets and Supporting workpapers.

Form 4318, Examination Workpapers Index
  1. Form 4318, Examination Workpapers Index, is the cover sheet that indexes the administrative and issue lead sheets and supporting documents (e.g. information document requests, correspondence, case building materials). It pertains to one taxpayer and includes all tax years under audit.

Form 9984, ITG Specialist’s Activity Record
  1. Use Form 9984, ITG Specialist’s Activity Record, to document each action you take on the work assignment. Documentation includes the date, location, time charged, and a explanation of each activity or contact. The activity record should be prepared contemporaneously, and provide a complete and concise case history. Write all entries factually and professionally, and omit personal opinions. Other employees responsible for activity on the case must also document their actions using the same criteria listed above (e.g. group manager, CPM staff, clerical staff, etc.)


    Don’t write brief, vague entries on Form 9984 such as "worked on case."

  2. Record information on Form 9984 such as, but not limited to:

    • All substantive actions taken on the issues. Meaningful action should occur at least every 45 days.

    • Reason for all delays and time gaps.

    • Significant case work prior to taxpayer contact.

    • Examination start date. This should be the same date as your RCCMS/AIMS Status 12 date.

    • Date you mailed the appointment letter.

    • Date you gave the taxpayer Pub 1, Your Rights As A Taxpayer,Notice 609, Privacy Act and Paperwork Reduction Notice. This should be upon initial contact. Also document any discussions with the taxpayer regarding their rights.

    • RRA 98 notifications.

    • Work performed prior to, during, and subsequent to taxpayer contact.

    • All research activities conducted.

    • Significant travel time to and from the work assignment location.

    • Brief summaries of telephone conversations.

    • All contacts with taxpayers, representatives, and third parties.

    • Causes for any delays by the IRS (training, details, etc.), the taxpayer and/or representative, and whether or not delays were communicated to any of the affected parties.

    • All actions with respect to the statute of limitations (e.g., verification, steps to protect the statute of limitations, Form 895 completion date(s), and consents to extend).

    • Follow-up dates for IDRs or other key dates.

    • Dates and explanation of manager involvement.

    • Dates and explanation of Counsel involvement, including the name of the attorney, and the attorney’s telephone number.

    • Date you issued the report and the date you received the signed report. Note that the Pub 3498, The Examination Process, was issued (if required) to close the case.

    • Date you notified the taxpayer of your recommendation to close the case.

    • Date you closed the audit to your manager.

    • Date you submitted/shipped the audit to the manager.

  3. Group manager documentation: note your involvement such as, but not limited to:

    • Formal and informal discussions

    • In-process case reviews

    • On-the-job visitations and workload reviews

    • Plan to close meetings

    • Fraud awareness meetings

    • Approval regarding penalty assessments/abatements, etc.

    • Date you closed case

Lead Sheets and Supporting Workpapers
  1. Use lead sheets to plan and prompt activities to comply with administrative, procedural, and technical requirements. Lead sheets also serve as a workpaper index for specific issues. Number, index and refer all workpapers to the issue lead sheet.

  2. Administrative lead sheets list the administrative items that require your comment (taxpayer rights, RRA 98 notifications, statute controls, initial interview, required filing checks, payment solicitation, etc.). You can also use them as guides to properly complete the audit.

  3. Issue lead sheets identify the issue and steps or actions taken to develop the facts, determine the applicable law, conclusions made, and the taxpayer’s position for issues examined.

  4. If an administrative or issue lead sheet contains check boxes, use them to note an applicable action was taken. Include supporting documentation to explain the action taken. Generally, check boxes by themselves are not adequate supporting documentation.

  5. In addition to the Issue Lead Sheets, include other relevant supporting workpapers and documents in the case file.

    1. File workpapers or documents behind the appropriate Issue Lead Sheet,

    2. Include workpapers and documents that support the procedures and testing described on the Issue Lead Sheets, or otherwise referenced.

    3. Index the workpapers to the corresponding Form 4318 section, and cross reference them to the Issue Lead Sheets or other workpapers as appropriate.

  6. Examples of workpapers include your generated workpapers and documents from the taxpayer:

    • Photocopies of relevant documents secured from the taxpayer during the audit.


      Original documents obtained from the taxpayer or third parties should not be marked, indexed, hole punched, or in any way altered by the specialist.

    • A workpaper documenting samples taken, verifications made and conclusions reached.

    • Relevant correspondence from the taxpayer and/or representative.

    • Lists of questions or items raised during the audit and conclusions reached.

    • Tax law research supporting legal authority for conclusions reached.

ITG RCCMS Naming Convention

  1. Follow the procedures for naming electronic documents within, or imported into, RCCMS. By doing so, anyone viewing the RCCMS case can easily identify and locate case file documents.

  2. The naming convention ensures that documents in RCCMS case files are arranged within RCCMS in the order they’d be arranged in a paper file. Therefore, following the naming convention ensures that documents are sorted properly within RCCMS.

  3. For a discussion on the ITG RCCMS Naming Convention, see the ITG Case Work Procedures Desk Guide at: https://organization.ds.irsnet.gov/sites/tege-cl/ITG/itg-case-work-procedures-desk-guide.pdf/.

Concluding the Examination

  1. When you finish an audit:

    • Issue the audit report and attach Pub 3498, The Examination Process.

    • Discuss proposed adjustments with the taxpayer and/or taxpayer’s representative including the law, regulations, rulings and court decisions supporting your conclusions.

    • Provide your employee information again when you issue the report. Refer to IRM, Providing Taxpayers with Employee Contact Information.

    • Inform taxpayer the report is subject to the acceptance of the ITG, Director.

    • Solicit agreement.

    • Request full payment of tax, penalties and interest.

    • Obtain taxpayer’s position, if unagreed.

    • Provide workpapers, if requested.

Report Writing

  1. Your report should contain all information necessary to ensure a clear understanding of the adjustments and show how you computed the tax liability.

  2. Exam reports (unlike workpapers) are legally binding documents and, when executed, serve as the basis for assessment and collection action. Make sure the reports are accurate.

  3. See IRM 4.23.10, Report Writing for Employment Tax Examinations, for instructions on the preparing exam reports covering employment tax returns. See IRM 4.24.10, Excise Tax Examination Reports, Case Closing and Appeals Procedures, and IRM 4.10.8, Report Writing, for guidance on excise and individual exam reports, respectively.

  4. Agreed employment tax cases: prepare and furnish the taxpayer a copy of the report at the audit’s conclusion. If the taxpayer doesn’t pay the additional tax, indicate the last day for an interest-free adjustment on the report.


    Note on the Form 3198-A, TE/GE Special Handling Notice, if the taxpayer is entitled to an interest-free period per IRC 6205. Also, on the closing document (Form 5599, Examination Closing Record), show TC 308 with the interest start date if the taxpayer is entitled to an interest-free period. See IRM 20.2.12, Interest - Employment Taxes.

  5. Unagreed cases: with your group manager, examine and confirm the statute date to determine whether a 30-Day Letter, Statutory Notice of Deficiency (90-Day Letter), or Notice of Determination of Worker Classification (NDWC) should be issued. See IRM, Eligibility for Appeals Conference and Preliminary Letters, and IRM, Unagreed Case Procedures. Complete unagreed case write-up.

  6. Separate reports MUST BE prepared for IRC 7436 and non-section 7436 issues. See IRM, Employment Tax Change Report.

  7. Unagreed Worker Classification issue, specialist must complete TABLE 1 and TABLE 2 to be included with Letter 3523, Notice of Determination of Worker Classification. See IRM, Special Procedures for Notices of Determination of Worker Classification or Section 530 Relief.

Claims for Refund or Abatement, Adjusted Returns and Audit Reconsiderations

  1. Claims are a source of work and considered priority work. Generally, CPM receives claims with issues from tribal entities that can’t be addressed at the campus level. CPM classifies and assigns them within 30 days of receipt. Claims can also be received on a case already under exam, and it should be considered during such exam.

  2. Request for Adjustment, Refund or Abatement – An adjusted return, claim for refund or abatement, tentative allowance or other request submitted by or for a taxpayer to reduce liabilities previously assessed. Such requests for adjustments, refunds or abatements include:

    • Form 843, Claim for Refund and Request for Abatement

    • Form 8849, Claim for Refund of Excise Taxes

    • Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund

    • Form 945-X, Adjusted ANNUAL Return of Withheld Federal Income Tax or Claim for Refund

    • Form 1040X, Amended U.S. Individual Income Tax Return

    • Form 1120X, Amended U.S. Corporate Income Tax Return

    • Form 1139, Corporation Application for Tentative Refund

    • Informal claims filed after the due date and showing a decrease in liability.

    • A letter or other document (informal claim) which contains all the facts necessary to decide that a reduction in tax liability is involved.

  3. An amended return that shows an increase in tax over the originally reported tax isn’t a claim. Protect the statute of limitations, and assess the additional tax as soon as possible.

  4. A claim for abatement of an excise tax or employment tax that was assessed as the result of a prior audit is considered an Audit Reconsideration.

  5. The specialist must determine what type of request the taxpayer has made to properly examine, close and process the case. The following are the types of requests:

    • Claims for refund (Form 941-X, Box 2 checked or appropriate box on amended return)

    • Claims for abatement (Form 941-X, Box 2 checked or appropriate box on amended return)

    • Adjusted returns (Form 941-X, Box 1 checked or appropriate box on amended return)

    • Audit reconsideration requests

  6. The new "X" forms allow taxpayer’s to file either an "adjusted" (Box 1 for Form 941-X) or "claim" (Box 2 for Form 941-X) employment tax return. While the taxpayer’s selection between the two boxes does not affect how the specialist works the case, it does affect the final processing of the case. Returns with the "adjusted" box 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. See IRM Exhibit 4.23.13-2, Instructions for Completion of Form 3870 by the Examiner.

  7. Formal claims have a Source Code of 30, and informal claims have a Source Code of 73, if established on AIMS.

  8. See the ITG Case Work Procedures Desk Guide at: https://organization.ds.irsnet.gov/sites/tege-cl/ITG/itg-case-work-procedures-desk-guide.pdf/ for processing procedures for claims for refund or abatement, adjusted returns and audit reconsideration cases.

  9. Research IRM 4.23.13, Employment Tax Refund and Abatement Claims, when working claims that involve any employment tax.

  10. See IRM 4.24.8, Claims for Excise Refund or Abatement, for excise tax claims.

  11. All claim cases need a completed Form 5599, TE/GE Examined Closing Record. Prepare the Form 5599 and include it in RCCMS Office Documents folder in addition to completing the RCCMS closing tabs. See IRM, Processing TE/GE Examined Closing Record, Form 5599, for instructions on completing Form 5599.

  12. Put claims in a pink folder for closing, if there is a paper file.

Surveyed Claims

  1. You may survey claims for refund, including amended returns and informal claims, after assignment, if you determine that the claim issue is clearly allowable in full and the return doesn’t warrant exam.

  2. Complete Form 2503, Survey After Assignment – Excise or Employment Tax, to explain why the claim is being surveyed.

  3. Claims may also be allowed without establishing them on AIMS when you receive an amended return from the taxpayer.

  4. Form 5599, TE/GE Examined Closing Record, is used to make the adjustment to the taxpayer’s account to allow the claim.

  5. The closing tabs in RCCMS must be completed as well.

Claim Disallowance

  1. Disallowed claims (in whole or in part): send, a notification letter to the taxpayer. Prepare the following forms to notify the taxpayer of a full or partial disallowance of the claim:

    1. Form 2297, Waiver of Statutory Notification of Claim Disallowance

    2. Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit

    3. Letter 569, Full/Partial Preliminary Claim Disallowance Letter
      Use with the above forms to notify the taxpayer of the partial or full disallowance of the claim. Prepare the appropriate reports, unless the claim is disallowed in full, and there are no other adjustments.


      Use Letter 5376, Full or Partial Disallowance - Employment Tax,

      when disallowing employment tax claims in full or in part.

  2. Prepare other report forms for claims involving employment taxes. Refer to IRM, Employment Tax Claim Report, and IRM 4.23.13, Employment Tax Refund or Abatement Claims.

  3. If the taxpayer doesn’t sign Form 2297, Waiver of Statutory Notification of Claim Disallowance, a certified notice of claim disallowance must be issued. Prepare the appropriate letter to notify the taxpayer of the full or partial disallowance of their claim:

    1. Letter 905, Final Partial Claim Disallowance Letter

    2. Letter 906, Final Full Claim Disallowance Letter


      Include the reason for the disallowance in the letter.

  4. Place the unsigned and undated letter, in the RCCMS Office Documents folder for issuance by CPM upon final closure. Notate Form 3198-A, TE/GE Special Handling Notice.

  5. Complete Form 5599, TE/GE Examined Closing Record, and include it in RCCMS Office Documents folder in addition to completing the RCCMS closing tabs.

Case Closing Procedures

  1. When you complete the audit, make sure your conclusion reached is technically correct and you follow closing procedures:

    1. Specialist prepares the appropriate CPM issued closing letter and Letter 937, Transmittal Letter for Power of Attorney. Place the unsigned and undated letter(s) in the RCCMS Office Documents folder for issuance by CPM upon final closure.

    2. Verify workpaper documentation supports the conclusion reached and properly index them to the Form 4318, Examination Workpaper Index. If files are too large for RCCMS, record them on an encrypted CD-ROM labeled only with the taxpayer’s Inventory Control Number (ICN).

    3. Ensure the case file is properly assembled. IRM 4.10.9, Workpaper System and Case File Assembly.

    4. Complete Form 3198-A, TE/GE Special Handling Notice, to note special instructions or case features.

    5. Purge unnecessary documents, including duplicate letters, envelopes, routing slips, etc.

    6. Correctly complete closing tabs on the RCCMS compliance activity.


      A Form 5599, TE/GE Examined Closing Record, is required for claims, partial assessments, and cases being sent to Appeals. Therefore, in these instances the specialist should prepare the Form 5599 and include it in RCCMS Office Documents folder in addition to completing the RCCMS closing tabs. CPM will update any needed information, and sign the form. See IRM, Processing TE/GE Examined Closing Record, Form 5599, for instructions on completing Form 5599.

  2. See IRM 4.5, TE/GE AIMS Manual, for AIMS Special Processing procedures for TE/GE employees for case control and closing procedures.

  3. Timely request case closure through RCCMS and immediately ship the paper case file to your manager, if requested, or to CPM. See IRM, Closing Procedures for Managers, for CPM’s address.


    Properly package and ship paper files included with RCCMS file per instructions in IRM, Shipping Personally Identifiable Information (PII), using Form 3210, Document Transmittal.

Closing Procedures for Managers

  1. All completed case files are sent through the group manager for closing.

  2. Managers should:

    1. Review the case timely.

    2. Ensure the conclusion reached is technically correct.

    3. Ensure case processing procedures were followed.

    4. Approve any penalties requiring manager approval. (IRC 6751)

    5. Initial and date the bottom of Form 9984 to indicate his/her review has been completed.

    6. Approve the case for closing in RCCMS, or

    7. Return the case to the specialist where appropriate.

  3. Properly package and immediately ship paper files included with RCCMS file from the group to CPM per instructions in IRM, Shipping Personally Identifiable Information (PII), using Form 3210, Document Transmittal, to:

    Internal Revenue Service
    55 North Robinson Avenue, Mail Stop 4900
    Oklahoma City, OK 73102-9229

  4. If no paper file, then transfer is solely electronic through RCCMS.


    Check the box in RCCMS marked "All Electronic" .

Standard Time Frame for Closing Cases

  1. Generally, cases should be closed from the group within the following timeframes:

    Calendar Days Measured From Responsible Person Required Action
    10 Date the agreement is secured or the no-change determination was made – from the first date that the report is received or from the date that the no-change status is communicated to the taxpayer. Specialist Close agreed or no-change audits.
    20 The earlier of the protest date or the 30-day letter default date – from the date the 30-day letter defaults or from the date that the request for Appeals conference is received from the taxpayer. Specialist Close unagreed audits.
    10 Receipt from the specialist Group Manager Initial and date the case activity record.


    4 days - for case closures for agreed high dollar unpaid deficiency or overassessment cases - See IRM 4.4.18, AIMS Procedures and Processing Instructions - Large Dollar Cases.

    Receipt from the specialist Group Manager Initial and date the case activity record.
  2. Specialists and manager: document any delays in processing, and the dates of closing actions on the Form 9984, ITG Specialist’s Activity Record.

Timeframes for Submitting Cases to CPM

  1. CPM Review performs the final review of cases before closure to Appeals or to the GE Closing Unit. Both CPM and the GE Closing Unit need sufficient time for processing. The chart below provides timeframes for submitting cases to CPM.

  2. The date considered as "Received in CPM" is the latter of:

    • the date the RCCMS case file is closed to CPM, or

    • the date that paper documents to be associated with the RCCMS case are physically received in CPM.

    If ... Then ...
    An unagreed case is initially closed to Appeals. The case must have 450 days (15 months) remaining on the statute of limitations for assessment on the date "CPM receives the case" .
    Appeals returns a case to ITG for consideration of new information/issues, and the case remains unagreed after ITG considers the new information/issues, the case may be returned to Appeals as long as 270 days or more remain on the statute at the time the case is closed to CPM. If less than 270 days remain on the statute and the taxpayer does not extend the statute, the case will be closed unagreed without returning to Appeals. The case is closed from the field to CPM with a minimum of 270 days (9 months) remaining on the statute.
    Appeals returns a case to ITG to consider new information or new issues raised by the taxpayer, and the case is now agreed after considering new taxpayer information/raised issues. The case is closed from the field to CPM with a minimum of 180 days (6 months) remaining on the statute.
    Unagreed cases (without protest to Appeals) The case must have 270 days (9 months) remaining on the statute for assessment on the date "CPM receives the case" .
    Agreed cases The case must have 180 days (6 months) remaining on the statute of limitations for assessment from the date "CPM receives the case" .
  3. Close Unagreed cases with a valid Protest to Appeals with a 30 day letter and manager’s signature and using AIMS Disposal Code 07/RCCMS Disposal Code 601.

  4. Close Unagreed cases without a valid Protest to Appeals using AIMS Disposal Code 10/RCCMS Disposal Code 604.

  5. Email the CPM manager, of all cases (include no-change and survey cases) that don’t have the required amount of time remaining on the statute before you forward them to CPM.

Cases Returned from CPM, Actions by the ITG Specialist

  1. When the specialist receives a case file with Form 3990 (Inquiry or Correction Memo):

    1. Discuss the case with your manager and agree on a course of action.

    2. Reactivate the case on Form 6490, TE/GE Technical Time Reporting System WebETS.

    3. Make every attempt to timely respond to the inquiry (within 60 days). If the response will take longer than 60 days, submit a short memo providing a status report at 60 days to CPM. Explain in the memo the case name, tax years, ICN(s), earliest statute of limitations, status explanation/reason for delay, and expected completion date.

    4. If it is necessary to recontact the taxpayer, contact will be made within 15 days of receiving the case. Your group manager may choose to be present when the taxpayer is informed of a change in the government’s position.

    5. Keep all voided portions of the exam report and workpapers in the case file. If the report doesn’t contain math changes or additions, mark Form 3990, Item 7 box and initial in the space provided.

    6. Complete Form 3990, Item 10, using Form 886-A if you need additional space.

    7. Correspond your responses on Form 3990, Item 10, to the order of the CPM reviewer’s comments on Form 3990.

    8. Sign and date Form 3990, Item 11, when you complete all actions. Ask your manager to approve by completing Form 3990, Item 12, and return the case back to CPM using appropriate closing procedures.

  2. Retain Form 3990 and Form 886-A as follows:

    1. Keep originals in the administrative case file, if applicable.

    2. Include a copy of each form on the inside left of the case file.

    3. Save electronic versions of Form 3990 in the RCCMS Office Documents folder using the RCCMS Naming Convention.

Cases Returned from Appeals

  1. Periodically, Appeals may return cases to ITG for further development. Criteria for returning Appeals cases include:

    • If the matter is factual.

    • If the case requires further development or verification of new information or evidence.

    • If it is more efficient and/or expedient for a specialist to complete the work.

    • If taxpayer raises a new issue to Appeals.

  2. The Appeals Office returns cases to CPM at:

    Internal Revenue Service
    55 North Robinson Avenue, Mail Stop 4900
    Oklahoma City, OK 73102-9229

  3. If Appeals releases jurisdiction of the case, AIMS will be updated to Status 12 and the case will be returned to the specialist. If Appeals doesn’t release jurisdiction, AIMS will not be updated, but case is returned to the specialist. When the specialist completes the additional actions, return the closed case to CPM for processing. CPM will return the case to Appeals.

Form 5666, Referral Information Report

  1. ITG group managers and specialists may submit leads to CPM by submitting a Form 5666, TE/GE Referral or Information Report, and attaching any supporting documentation that provides details about potential noncompliance. Forward referrals to CPM immediately for consideration. See IRM, and IRM Exhibit 4.5.1-12, Instructions for Preparing Form 5666, TE/GE Referral or Information Report.

Inadequate Records Notices

  1. Every taxpayer is required by law and regulations to maintain records with sufficient detail to prepare a proper tax return. See 26 CFR 1.6001-1.

  2. Whenever taxpayer’s books and records are deemed inadequate for purposes of an audit, consider issuing an Inadequate Records Notice (IRN) at the audit’s conclusion.

  3. Inadequate Records Notices notify taxpayers that their recordkeeping practices are deficient and must be improved. The issuance of an IRN may result in a follow-up audit and is a tool to enforce taxpayer compliance with legal requirements to keep adequate records and properly report tax liabilities. See IRM, Inadequate Records Notices, for procedural guidance.

Early Referral Procedures

  1. Taxpayers may request, under Rev. Proc. 99-28, 1999-2 C.B.109, Early Referral of Issues to Appeals, an early referral of one or more unresolved audit or collection issues to the Appeals Office.

  2. Appropriate issues for early referral are limited to those that:

    1. Are fully developed.

    2. If resolved, can reasonably be expected to result in a quicker resolution of the entire case.

    3. Both the taxpayer and the Director, ITG agree to.

    4. Are part of a case where the remaining issues are not expected to be completed before Appeals could resolve the early referral issue.

Private Letter Rulings and Technical Advice Requests

  1. Technical questions arising in ITG tax cases involving the interpretation and application of tax laws, regulations, or other precedents published by ITG to a specific set of facts may involve a request for a Private Letter Ruling (PLR) (by the taxpayer) or a request for a Technical Advice Memorandum (TAM) (by the ITG specialist). See Rev. Proc. 2015-4 and Rev. Proc. 2015-5, (revised annually, and are always the first and second revenue procedure of each year) for procedures for requesting private letter rulings and technical advice, etc.

  2. Upon written request, the IRS issues interpretations to taxpayers or their authorized representatives to advise them of the proper application to specific situations of the provisions of the Internal Revenue laws, related statutes and regulations, or revenue rulings and other precedents.

  3. Technical advice is furnished to help IRS employees to close cases and establish and maintain uniformity in the treatment of issues.

  4. TE/GE Counsel is responsible for providing interpretations for ITG and its customers. When releasing letter rulings, technical advice, information letters, closing agreements, and determination letters that result from an Indian tribal or ITG request, Counsel sends the Director, ITG an unredacted copy of the document.

  5. IRM, Private Letter Rulings and Technical Advice Requests, for ITG procedures for the submitting Technical Advice Memorandums and Private Letter Rulings (PLR).