4.103.1 CDE Application and Use

Manual Transmittal

May 17, 2011


(1) This transmits new IRM 4.103.1, Compliance Data Environment (CDE), CDE Application and Use.

Material Changes

(1) Compliance Data Environment (CDE) is a new system that replaced the Midwest Automated Compliance System (MACS). It is a workload identification, planning, and delivery system that operates in a web-based environment, and it is used to filter, order, classify and deliver returns.

Effect on Other Documents



Small Business and Self Employed (SB/SE), Wage and Investment (W&I), and Large Business and International (LB&I) employees that use the CDE application.

Effective Date


Karen Schiller
Director, Operations Support
Small Business/Self Employed Division


  1. Compliance Data Environment (CDE) is a workload identification, planning, and delivery system that operates in a web-based environment. It is used to filter, order, classify and deliver returns.

  2. CDE utilizes the Infrastructure Shared Services (ISS) and Modernization & Information Technology Services (MITS)-18 General Support System (GSS) infrastructure to provide secured web-enabled access to its users through the Employee User Portal (EUP). The system architecture for CDE includes the use of a Business Logic server and Database servers (MITS-30) that physically reside at an Enterprise Computing Center.

  3. CDE is a secure, centralized database supplementing the current Planning and Special Programs (PSP) return ordering and classification process through the campus. CDE replaced the Midwest Automated Compliance System (MACS).

  4. CDE automates the classification process and provides a single source for all information required for workload management. CDE provides the information required to classify a return including a three-year return facsimile, entity data, related tax returns, and related information from external sources. Updates are automatically sent to AIMS. This on-line system incorporates an Electronic Classification Checksheet (ECC).

  5. Returns are identified and delivered in Discriminant Function (DIF) descending order.

Benefits of CDE

  1. Some of the benefits of CDE are:

    • Streamlines the audit workflow, supports workload identification and delivery for both DIF and strategic initiatives

    • Provides a 3 year return facsimile, entity information, preliminary T-Account and related returns

    • Obtains information from outside sources - Integrated Data Retrieval System (IDRS), Currency and Banking Retrieval System (CBRS), and Third Party Data

    • Allows for on-line classification and review of returns reducing travel for classification details

    • Provides "just-in-time" inventory delivery (returns can be delivered in days instead of months)

    • Provides for faster input of returns into the audit stream

    • Allows users to create a Workload Set or Strategy Set from a Filter Result Set

    • Allows a Campus User to create a TC424 Request File or Tickler File from a Filter Result Set

    • Provides a paperless process

    • Allows for printing of case files to designated network printers

Tax Return Data Available

  1. Data is available for the most current year and prior three years.

  2. The following return types are available:

    • 1040 series

    • 1120 series

    • 1120S

    • 1065 series

    • 1041 series

  3. The CDE database contains tax return data from the return posted to Master File using Transaction Code (TC) 150. Subsequent amendments, duplicates, claims, etc., are not included in the database.

  4. Tax return data refers to those lines that are transcribed at the Campus during processing (located in the Returns Transaction File (RTF)), as well as certain information from the Master File such as Post of Duty (POD), date of birth, audit history, and DIF score.

CDE Roles

  1. The following roles are found in CDE:

    • Workload Creator

    • Classification Coordinator

    • Classifier

    • Reviewer

    • Delivery Coordinator

    • Virtual Inventory Administrator

    • Strategy Creator

    • Filter Creator

    • User Administrator (CDE staff only)

    • System Administrator (CDE staff only)

  2. Information and duties for each role can be found in IRM, CDE Roles.

CDE Uses

  1. CDE can be used for the following:

    • Case Building

    • Profiling

    • Issue Identification

    • Classification of Returns

    • Delivery of Returns

    • Filtering

    • CDE Research Requests

    • CDE Extract Requests

Case Building

  1. Case building provides additional information related to a tax return. The following information is available to order in CDE:

    • CDE facsimile (The CDE facsimiles resemble original tax returns in a 1 year format or 3 year comparative format.)

    • Related Returns

    • K-1's

    • Third Party Data

    • IDRS

    • CBRS Data


  1. A profile is a summary of one or more significant filing characteristics of a population of returns. It is limited to the information contained in the CDE database.

  2. CDE can profile actual return filings of areas and analyze the makeup of their populations. Understanding the characteristics of a filing population can improve the processes of allocating resources, developing outreach activities, and identifying filing trends.

  3. National Users can profile on a multi-area or national level.

  4. Some examples of profiling are:

    • Return Type Analysis by Post of Duty (POD). For example, a profile can identify the number of 1040, 1120, 1065, 1120S and 1041 returns filed by POD and Activity Code. A profile indicating a large increase in the number of 1120S filings could indicate a change from 1120 to 1120S returns and a need to reallocate resources to 1120S audits.

    • Market Segment Analysis. For example, knowing how many taxpayers fall within a particular market segment is useful in developing educational efforts structured toward that market segment.

    • Trend Analysis. For example, the number of returns with Schedule A’s, Earned Income Credit, Foreign Earned Income, businesses with losses, etc. can be identified through this type of population analysis.

Issue Identification

  1. CDE has the ability to identify returns containing specific issues. For example, all returns in a specific market segment with a net profit percentage of less than 5%.

  2. CDE can statistically stratify a Filter Result Set as well as generate a random sample of returns for testing. The Filter Result Set can be used to create a Workload Set, a Strategy Set, or a TC424 Request File or Tickler File for campus use.

  3. A Compliance Initiative Project (CIP) is required for all CDE identified projects. The exception is for returns identified only by the same elements as a DIF order (Activity Code, POD) and which are above the locally defined DIF cutoff score. See IRM 4.17Compliance Initiative Projects for CIP procedures and information.

Classification of Returns

  1. CDE is used for the online classification of returns. It contains the current processing year and 3 prior years data. It allows for a 3-year comparison of the taxpayer's return information (if it is available and ordered for classification). The multi-year comparison gives the classifier a better financial overview of the taxpayer, improving the selection process.

  2. Through the CDE system, returns are identified and classified for various programs including, but not limited to the following:

    • DIF

    • Training

    • CIP

    • Return Preparer Program (RPP)

  3. When classifying individual returns, CDE can be used to view the K-1's received by that individual and also the related business returns of the K-1 payer, if ordered for classification.

  4. When classifying business returns, CDE can be used to view the K-1's issued by the business, and the related shareholders’ or partners’ (payee) returns, if ordered for classification.

Delivery of Returns

  1. CDE is used to deliver returns from the CDE Virtual Inventory. A user can:

    • Deliver an entire Workload Set.

    • Deliver Case Files by Criteria Search.

    • Deliver a single Case File.

    • Reprint a Delivery Set.

    • Reprint a Delivery Set 3210.


  1. Filters allow CDE Filter Creators to run queries against tax returns (individuals, business or trust) in the CDE database, then further refine the results of the queries by eliminating tax returns from the results with additional queries. A Filter is a set of conditions against which all returns in the filing population are compared. CDE allows users to design Filters to identify groups of returns containing particular issues or characteristics. For example, Filtering may be used:

    • To identify returns with potential for specific issues.

    • To identify returns by a preparer for a RPP.

    • To identify returns for a CIP.

  2. CDE has the following thresholds when Filtering:

    • Four Filters can be run concurrently. If 4 Filters are already in process, the 5th Filter will go into a queue until 1 of the 4 is finished.

    • The maximum number of returns identified by a Filter is 500,000.

    • The maximum time a Filter will run is 24 hours.

  3. The following Filters can be created in CDE:

    • Execution Filter - An Execution Filter is used to query the CDE database, which contains the current processing year and prior three years Return Transaction File (RTF) data plus related Master File data. When the Filter is executed it creates a Filter Result Set with all tax returns that meet the criteria of the Execution Filter definition.

    • Test Filter - A Test Filter is an Execution Filter with the Filter Result Set being limited to the first 25 returns that meet the Filter criteria.

    • Taxpayer Identification Number (TIN) Upload - A TIN Upload Filter is used to identify a set of tax returns by uploading a TIN List. A Filter Result Set is created by matching the TIN List against the tax returns in the CDE database. Instructions discussing the required TIN List format can be found in the CDE website "Job Aids" folder at http://mysbse.web.irs.gov/exam/tip/cde/jobaids/default.aspx.

    • Elimination Filter - An Elimination Filter is applied to a Filter Result Set (Execution Filter or TIN Upload) to remove specified returns from the Filter Result Set. More than one Elimination Filter can be applied to a Filter Result Set. Elimination Filters can be saved and reused and also be applied to other Filter Result Sets.

  4. A Filter Result Set can then be used to create a:

    • Filter Summary Report - See IRM Summary Report.

    • Filter Stratification Report - See IRM Stratification Report.

    • Filter Sample Utility Report - See IRM Sample Utility Report.

  5. After the Filter results and reports have been analyzed, the User can create a Workload Set or Strategy Set from the Filter Result Set. Campus Users can also create a TC424 Request File or Tickler File.

  6. Filter Results Sets are maintained on the system for two weeks and are automatically deleted if not accessed within this time. If the Filter Result Set is deleted, the Filter can be re-executed to create a new Filter Result Set.

TC424 Request and Tickler Files
  1. There are two different files created specifically for Campus Filter Creators:

    • TC424 Request File

    • Tickler File

TC424 Request File
  1. Campus Filter Creators can create a TC424 Request File for tax returns identified in a Filter Result Set or sampled Filter Result Set.

  2. TC 424 Requests can not be created from a Test Execution Filter Result Set.

  3. TC 424 Requests can not be created for business or trust Filter Result Sets.

  4. The TC424 Request file is used by the Campus to further analyze the Filter Result Set data. CDE creates the file and transfers it to another Campus system for processing.

  5. The following information is required when inputting a TC424 Request File:

    • Campus code

    • Source code

    • Project code

    • Employee group code

    • Charge-out/label indicator (0 = Original return, charge-out label, 1 = Charge out and label only, 3 = No return, charge-out label)

    • Push code indicator

  6. The following information is provided by CDE for each tax return in the Filter Result Set when CDE creates a TC424 Request File:

    • TIN

    • TIN type (0 = valid Social Security Number (SSN), 1 = invalid SSN)

    • Name control

    • Tax period

    • Business Operating Division (BOD) code

Tickler File
  1. Campus Filter Creators can create a Tickler File for tax returns identified in an Execution Filter Result Set.

  2. Tickler Files can not be created by a Test Execution Filter Result Set.

  3. Tickler Files can not be created for business or trust Filter Result Sets.

  4. The Tickler File is used to further filter the returns through a process performed outside of CDE. CDE creates the file and transfers the file to another system from which the user can securely access it for processing.

  5. The following information for each tax return in the Filter Result Set is provided when CDE creates a Tickler File:

    • Primary Social Security Number (PSSN) (9 digit primary TIN)

    • PSSN type (0 = valid SSN, 1 = invalid SSN)

    • Secondary Social Security Number (SSSN) (9 digit secondary TIN)

    • SSSN type (0 = valid SSN, 1 = invalid SSN)

    • Name Control

    • Tax Period

    • BOD Code

    • Activity Code

    • Document Locator Number (DLN)

    • Filing Status

    • Preparer Employer Identification Number (EIN)

    • Preparer SSN

    • Preparer Tax Identification Number (PTIN)

    • PTIN - Indicator (PTIN - IND)

    • Electronic filing indicator (ELF- IND)

    • Total Positive Income (TPI)

    • Adjusted Gross Income (AGI)

    • Total deductions - Schedule A

    • Child Tax Credit

    • Additional Child Tax Credit

    • Dependent SSN1

    • Dependent SSN2

    • Dependent SSN3

    • Dependent SSN4

    • State Income/Sales Tax

    • State Income/Sales Tax Indicator

    • Moving Expense

    • Other Income/Sales Tax Indicator

    • Moving Expense

    • Other Income - Form 1040

    • Lifetime Learning Credit

    • Hope Learning Credit

Filtering Techniques
  1. When creating an Execution Filter, include "Common Favorite Fields" and only a few other lines of criteria to make the Filter process faster. Then create and apply an Elimination Filter to remove returns and further refine the Filter Result Set.


    "Common Favorite Fields" are frequently used indexed fields that allow CDE to process Filters faster.

  2. Each field in a Filter definition must be identified by the exact name used in the CDE data dictionary. Fields are classified as individual, business or trust in the Filter definition (e.g. the field AGI is only used in an individual Filter definition). To find the name for a field:

    • Click the "Find Criteria Field" icon to access a look up window containing form, fields and field definitions or

    • Start typing the field name and a list of options appears in a drop down list.

  3. Use the following operators when creating Execution Filters and Elimination Filters:

    • = (equal to)

    • < (greater than)

    • > (less than)

    • <= (greater than or equal to)

    • >= (less than or equal to)

    • >< (not equal to)

  4. The following values are used when creating Execution and Elimination Filters:

    • Numeric fields - e.g. AGI or number of dependents

    • Code fields - e.g. Activity Codes and North American Industry Classification System (NAICS) codes

    • Date fields (MM/DD/YYYY) - e.g. 06/04/2009

    • Cycle fields (YYYYWW) - e.g. 200949 for the 49th week of 2009

    • Tax periods (YYYYMM) - e.g. 200912 for December 2009

    • Year (YYYY) - e.g. 2009

  5. Each line of an Execution Filter or Elimination Filter is connected to the next line with either an AND or an OR operator. If AND is used, a return must meet both criteria to be selected. If OR is used, a return must meet one of the criteria to be selected. When using AND and OR statements within a Filter, it is imperative that parenthesis be used to group each of those statements to ensure proper order. It is also recommended that the AND statements be entered at the top of the Filter and the OR statements at the bottom. The last line of the Filter is followed by an EXIT operator.

  6. A "CDE Filtering Best Practices" document, which contains additional Filtering tips and Filter examples can be found in the CDE website "Job Aids" folder at http://mysbse.web.irs.gov/exam/tip/cde/jobaids/default.aspx.

CDE Research Request

  1. A CDE Research Request is required for all Filtering requests.

  2. See IRM, CDE Research Request Overview.

CDE Extract Request

  1. A CDE Extract Request is required for any requests submitted to the CDE Development Center.

  2. See IRM, CDE Extract Request Overview.

Requesting Access

  1. Access to CDE is a two step process:

    1. Request access through the EUP

    2. Then submit an Online 5081 for the requested user role(s).

  2. See IRM, Access to CDE.

CDE Help

  1. CDE has the following options for securing assistance with the CDE application:

    • CDE Help Desk

    • CDE Reference Materials

    • CDE Virtual Tour

CDE Help Desk

  1. For CDE system operation questions/issues contact the CDE Help Desk via e-mail at *SBSE Exam CDE Development Center.

CDE Reference Materials

  1. CDE News, Contacts, and Job Aids can be found on the following website: http://mysbse.web.irs.gov/exam/tip/cde/default.aspx.

  2. Contact the CDE Help Desk at *SBSE Exam CDE Development Center for CDE training materials.

  3. The PSP CDE Workspace provides PSP users a single work space to coordinate schedules, organize documents, and participate in discussions within the organization and over the Intranet. Specific PSP User Role Handbooks can be found on the following SharePoint site: http://wsep.ds.irsnet.gov/sites/co/dcse/sbse/exam/epd/cdews/default.aspx. This is a restricted site and access is approved by the Headquarters EPD Analyst.

CDE Virtual Tour

  1. The CDE Program contains a virtual tour for various roles. A virtual tour is an approach to learning CDE that uses a hands-on process without viewing or accessing live data. All the screens are pictures of actual screens. These screens have hot spots where you can click on the screen, usually an icon, to replicate the CDE program. The CDE Virtual Tours are accessed through the Help button in CDE.

CDE Responsibilities

  1. This section describes the responsibilities of individuals who administer, oversee, maintain, and use CDE.

Director, SB/SE Examination

  1. The Director, SB/SE Examination is the owner of CDE. The office of the Director, SB/SE Examination is responsible for setting national standards and policies for the implementation and operation of CDE. It is responsible for providing staffing and funding for the ongoing operation of CDE.

SB/SE Examination, Exam Operations Support (EOS)

  1. The Director of EOS has overall authority and responsibility for the security and proper operation of CDE. EOS ensures national guidelines and standards are met.

  2. EOS must ensure that:

    • Security requirements are met and continuously maintained with support from SB/SE Business Systems Planning (BSP).

    • Privacy and disclosure safeguards are met.

    • All Information Technology (IT) policies and standards are followed.

  3. EOS provides program direction, oversight, and monitoring of the CDE Development Center.

CDE Development Center

  1. CDE Development Center is responsible to the Director of EOS for the development, enhancement, and maintenance of CDE. This includes:

    • Researching and designing CDE

    • Analyzing and testing program changes to update and improve the system

    • Establishing user requirements

    • Collecting user suggestions for system enhancements

    • Prioritizing system enhancements based on user input and system/resource limitations

    • Gathering, verifying and correcting system defects

    • Maintaining security certification and accreditation

    • Ensuring CDE is 508 compliant with each release

    • Producing extracts for approved requests

    • Maintaining a database with the most current data available

    • Providing telephone assistance to CDE customers

    • Maintaining current CDE user technical guidance

    • Participating in user meetings and conference calls upon request

    • Working with other business units in Modernization efforts

    • Maintaining the CDE website

    • Conducting site visits, when appropriate

    • Informing users and other internal customers of system changes and other developments of interest or importance

SB/SE Examination, Exam Planning and Delivery (EPD)

  1. The Director of EPD is responsible for providing CDE policy guidance, assistance and oversight to the Areas and Campuses.

  2. EPD serves as a liaison between CDE Users and the CDE Development Center on policy related issues.

Area PSP Territory Manager (TM)

  1. The Area PSP TM has responsibility for the proper use and administration of CDE. These responsibilities include:

    • Approving appropriate user access to CDE roles

    • Ensuring CDE printers are located in secured areas

    • Ensuring security incident and integrity procedures are followed

    • Ensuring Headquarters policies and procedures are followed

    • Approving Research Requests

    • Approving Extract Requests

    • Approving access to Internal Revenue Service (IRS) employee returns

PSP Coordinator

  1. The PSP Coordinator responsibilities are dependent on their authorized CDE user role. A Coordinator's responsibilities can include the following:

    • Developing compliance projects designed to identify noncompliant taxpayers and preparers

    • Coordinating classification, case building and assignment of CDE returns

    • Preparing and analyzing the appropriate CDE reports to manage and maintain CDE inventory and monitor classification details

    • Providing area profiles

    • Promoting awareness of CDE as a compliance system through presentations, memorandums, local procedural documents and individual assistance

    • Serving as a point of contact for program related inquiries and providing technical, clerical and managerial personnel with instruction, guidance and feedback on program operations

CDE Security

  1. CDE operates within all IRS security parameters and has been certified by Mission Assurance (Cybersecurity Office).

Security Features

  1. Security features of CDE include:

    • Accesses are restricted to authorized individuals

    • Accesses are logged and monitored

    • Audit trails are maintained

    • Employee returns are identified to allow appropriate handling

    • Negative TIN check procedures are in place to restrict users from inappropriate access

    • Access to return data on the users local machine is restricted

Glossary of Terms

Term Definition
Additional Data Includes CBRS, IDRS, Third Party Data ( data from an asset locator/people locator electronic service), K-1’s and Related Returns (Payer and Payee).
CDE Facsimile Tax return information from the CDE database in a one or three year format.
Case File A Case File consists of a 1 year CDE facsimile or a 3 year comparative CDE facsimile. It can also include Additional Data, if ordered by the Workload Creator or Strategy Creator.
Case File ID A unique identification number assigned to each case file by CDE. It cannot be changed.
Case File List The Case File List for a Classifier contains ECFs they have classified. For a Reviewer, it displays classified ECFs by all Classifiers assigned to a Workload Set.
Deletion Set Case Files or Workload Sets deleted (surveyed) by the Virtual Inventory Administrator in CDE.
Deletion Set ID A unique identification number assigned to each Deletion Set by CDE. It cannot be changed.
Deletion Set List A listing of all Deletion Sets in CDE by the Virtual Inventory Administrator.
Delivery Set A group of case files that are delivered for examination. A Delivery Set is identified by Workload Set, Criteria Search, or specific TIN.
Delivery Set ID A unique identification number assigned to each Delivery Set by CDE. It cannot be changed.
Delivery Set List A listing of all Delivery Sets created by a specific Delivery Coordinator.
Electronic Case File (ECF) Contains a cover sheet, 1 or 3 year CDE facsimile return, an Electronic Classification Check sheet, and additional data (if ordered).
Electronic Classification Check sheet (ECC) An ECC is an electronic version of a classification check sheet.
Elimination Filter An Elimination Filter is used to query a Filter Result Set and remove the rows from that result set that meet (or don't meet) the criteria for the Elimination Filter definition.
Execution Filter An Execution Filter is used to query the entire CDE database and create a Filter Result Set with the tax returns that meet the criteria of the Execution Filter definition.
Filter A series of one or more Boolean statements used to identify returns with a specified characteristic or group of characteristics.
Filter Result Set A Filter Result Set is a set of tax returns created when a user executes an Execution Filter or uploads a TIN List.
Market Segment A group of returns with similar filing characteristics.
Profile A summary of one or more significant filing characteristics of a population.
Sample Seed A number representing the starting point in the random number sequence for the statistical sampling process. A Sample seed value is used to initialize a random number generator. A Filter Creator can specify a seed value to randomly select returns from each Filter stratum. The same sample result can be recreated using the seed number if recreated using the same Filter Result Set and stratification. CDE creates the seed value if no seed value is specified.
Strategy Set Strategy Sets are used to validate current strategies and create new strategies. Case files in a Strategy Set are not classified or moved to virtual inventory. Once CDE builds the case files and external data is retrieved (if requested), the Strategy Set is ready for printing.
Strategy Set ID A unique identification number assigned to each Strategy Set by CDE. It cannot be changed.
Strategy Set List A listing of all Strategy Sets created by a specific Strategy Creator.
Strategy Set Name A name, number or combination of both that is input when the Strategy Set is created.
T-Account A list of sources and applications of funds compiled from transcribed tax return information for IMF returns.
TIN Upload A TIN Upload is a type of Execution Filter created by uploading a TIN List, comparing the TINs to the tax returns in the CDE database and returning a Filter Result Set with the tax returns that match the TINs in the list.
Transcribed Data Information transcribed from the return into a database during tax return processing at the submission processing campus.
Virtual Inventory The population of Electronic Case Files (ECF) selected for Exam through CDE. Case files are stored in Virtual Inventory until delivered or deleted.
Workload Set A Workload Set is a set of electronic case files created by a workload coordinator and managed by assigned classification coordinators. The case files are classified online through CDE. When classification is complete, the case files selected for audit are moved to Virtual Inventory for later delivery (or deletion).
Workload Set ID A unique identification number assigned to each Workload Set by CDE. It can’t be changed.
Workload Set List A listing of all Workload Sets created by a specific Workload Creator.
Workload Set Name A name, number or combination of both that is input when the Workload Set is created.


Acronym Definition
AGI Adjusted Gross Income
AIMS Audit Information Management System
AIS Automated Information System
BMF Business Master File
BOD Business Operating Division
BSP Business Systems Planning
CBRS Currency and Banking Retrieval System
CDE Compliance Data Environment
CIP Compliance Initiative Project
COTS Commercial Off the Shelf
DIF Discriminant Function
DLN Document Locator Number
ECC Electronic Classification Checksheet
ECF Electronic Case File
EGC Employee Group Code
EIN Employer Identification Number
EOS Exam Operations Support
EPD Exam Planning and Delivery
ERCS Examination Returns Control System
ERS Exam Return and Selection
EUP Employee User Portal
FOIA Freedom of Information Act
GII Generalized IDRS Interface
GSS General Support System
IDRS Integrated Data Retrieval System
IMF Individual Master File
IRM Internal Revenue Manual
IRS Internal Revenue Service
IS Information Services
ISS Infrastructure Shared Services
IT Information Technology
LAN Local Area Network
MACS Midwest Automated Compliance System (replaced by CDE)
MITS Modernization & Information Technology Services
NAICS North American Industry Classification System
PBA Principal Business Activity
POD Post of Duty
PSP Planning and Special Programs
PSSN Primary Social Security Number
PTIN Preparer Tax Identification Number
RPP Return Preparer Program
RTF Return Transaction File
SB/SE Small Business/Self Employed
SEID Standard Employee Identifier
SSN Social Security Number
SSSN Secondary Social Security Number
TC Transaction Code
TIN Taxpayer Identification Number
TM Territory Manager
TPI Total Positive Income
VI Virtual Inventory
VIA Virtual Inventory Administrator
WLS Workload Set