5.7.1  FTD Alerts

Manual Transmittal

November 29, 2012


(1) This transmits updated IRM 5.7.1, Collecting Process, Trust Fund Compliance Handbook, FTD (Federal Tax Deposit) Alerts.

Material Changes

(1) Added EFTPS requirement information.

(2) Added TIGTA (Treasury Inspector General for Tax Administration) correction action timely alert assignment information.

(3) Added direction to close the Alert prior to creating the Bal Due account.

(4) Added Note regarding Automatic stay.

(5) Editorial changes were made throughout the document.

Effect on Other Documents

This material supersedes IRM 5.7.1, dated May 15, 2012.


The intended audience is revenue officers in SBSE Field Collection.

Effective Date


Signed by
Scott Reisher
Director, Collection Policy
Small Business/Self-Employed  (05-15-2012)
Federal Tax Deposit FTD Alerts

  1. Federal Tax Deposit (FTD) Alerts are used to determine an employer's compliance with employment tax deposit requirements for the quarter of the Alert issuance, and for subsequent quarters until the taxpayer is brought into full compliance.

  2. The FTD Alert process identifies, at an early stage (i.e., before the return is due), taxpayers who have fallen behind in their deposits.

  3. Beginning January 1, 2011, all FTDs must be made by means of the Electronic Federal Tax Payment System (EFTPS). Prior to January 1, 2011, many employers were permitted to make their federal tax deposits at an authorized financial institution accompanied by an FTD coupon. EFTPS is a system designed to use electronic funds transfer (EFT) to pay Federal taxes. The EFT number is shown.  (05-15-2012)
Criteria for FTD Alert Issuance

  1. FTD Alerts are issued on taxpayers who are classified as semiweekly depositors and who have not made FTDs during the current quarter or who have made them in substantially reduced amounts. They may be identified by the presence of TC 971 AC 046 on a tax module.

  2. There are two levels of Alert issuances, both of which are assigned for field contact. They are identified by the following systemically generated codes:

    • Potential Pyramider, identified by an Alert priority code of "A" . The taxpayer had modules in notice status in each of the prior two quarters.

    • Potential Noncompliant, identified by an Alert priority code of "B" . The taxpayer is considered to be likely to owe without intervention based on our identification and selection process.  (05-15-2012)
Process for Alert Issuance

  1. Master File conducts the FTD Alert analysis in the twelfth cycle week of each calendar quarter. The FTD Alerts generate in March, June, September, and December.  (11-29-2012)
Receipt of FTD Alerts

  1. FTD Alerts are sent directly from Master File to the Integrated Collection System (ICS) for direct assignment to the field.

  2. Revenue Officer inventories should be at a level that will allow for the immediate assignment of the alerts; however, in no circumstances should the assignment date exceed seven calendar days from the date the alert arrives in the group designation hold file.

  3. Contact the taxpayer within 15 calendar days of assignment of the Alert. If timely contact is not possible, notify the group manager. The group manager will decide if reassignment of the Alert is appropriate. If contact is delayed for more than 15 calendar days, note the reason for the delay in the case history.  (11-29-2012)
Pre-Contact Research and Analysis

  1. Pre-contact analysis must be conducted on all alerts prior to making a field call. If the pre-contact research and analysis reveal:

    1. The taxpayer is not liable for deposits, close the Alert. Verify final return information is posted on IDRS.

    2. The taxpayer is assigned to Automated Collection System (ACS), contact ACS. Determine the account’s status. If ACS indicates that the taxpayer is current or no longer liable for employment taxes, close the Alert. If this information is unavailable, work the Alert, request that ACS transfer the account, close the Alert and create bal due modules on ICS.

    3. The taxpayer is in bankruptcy, inform Insolvency of the FTD Alert and determine if Insolvency is monitoring the taxpayer’s compliance. If Insolvency is monitoring compliance, request input of TC 136, if it has not already been input and close the Alert. A TC 136 prevents future Alerts from generating. It is reversed with a TC 137. If Insolvency is not monitoring the taxpayer's compliance, continue working the Alert. Do not, however, request a collection information statement, demand payment or take any enforced collection action unless Insolvency indicates that the action will not violate the automatic stay.


      Some of the acts prohibited under the automatic stay include: collecting debts incurred before the filing of the bankruptcy petition, as well as taking possession of, or exercising control over, property of the estate and the debtor to collect any debt. See IRM Automatic Stay -11 USC § 362.

    4. Upon receipt of the Alert, ensure the case sub code is listed as FTD Alert 105, per IRM, Field Collection Area Procedures and, ICS and Entity Subcodes ( Field Collection Area only). If the sub code is not listed as 105, immediately update ICS.

  2. Review BMFOLI to verify compliance history, including prior TFRP assessments. Establish the total amount of deposits made in previous quarters to assist in deposit verification during the field call. Additional things to consider as a part of pre-contact analysis, but not all inclusive:

    • Review cross compliance.

    • Determine if taxpayer previously qualified for the COBRA credit.

    • Determine if the taxpayer has a representative.

    • Decide what issues to address during the initial contact with the taxpayer.

    • Schedule field/telephone call within 15 calendar days of receipt.  (05-15-2012)
Contact Procedures

  1. Initial taxpayer contact by telephone within 15 calendar days from the date of receipt, is considered a timely initial contact.

  2. A telephone call that does not result in taxpayer contact will not meet the timely contact requirements. Leaving a message within this period is also not considered a timely contact, though this action should be documented in the case history.

  3. Follow the procedures in IRM, Effective Initial Contact.

  4. Explain the reason for the visit/call. Recognize that FTD Alerts generate based on the probability that the taxpayer has fallen behind in deposit payments.

  5. Provide the taxpayer with Publication 1, Your Rights as a Taxpayer.

  6. If the taxpayer provides documentation or other substantiating information confirming full compliance, verify that the amount deposited is accurate based on prior quarter deposits. If the amount of the deposits are less than prior quarters, ask additional questions regarding possible reduced payroll or wages and close the Alert.

  7. If the taxpayer is no longer required to deposit (i.e., out-of-business, no employees), ensure there are no other outstanding modules, promptly request input of TC 591 and close the Alert.

  8. If the taxpayer is in compliance, but due to sporadic or seasonal payrolls the Alert analysis is unable to predict deposit compliance, request input of TC 136 and close the Alert. During the contact, briefly review Federal Tax Deposit requirements with the taxpayer and provide Notice 931, Deposit Requirements for Employment Taxes, or other documents outlining the deposit rules to help explain the requirements. This may help ensure the taxpayer maintains future compliance.  (05-15-2012)
Taxpayer Not in Compliance

  1. FTD Alerts on delinquent taxpayers provide an early opportunity to assist and educate taxpayers before their liability pyramids and the growing debt becomes more difficult to resolve.

  2. Review Federal Tax Deposit requirements with the taxpayer. Give the taxpayer Notice 931, Deposit Requirements for Employment Taxes, Publication 15, Circular E, Employer's Tax Guide, Publication 3151-A, The ABCs of FTDs or other documents outlining the deposit rules to help explain the requirements.

  3. Discuss the cost for failing to deposit taxes on time. Explain the FTD penalty to the taxpayer. Consider explaining the cost to the taxpayer by showing the taxpayer the penalties incurred in the Alert quarter as well as prior quarters.

  4. Ensure that the taxpayer understands the consequences of continued noncompliance. Discuss the Notice of Federal Tax Lien (NFTL), levy and seizure provisions. When applicable, discuss the provisions for the Trust Fund Recovery Penalty (TFRP).

  5. Monitor and document the taxpayer’s compliance with deposits for the Alert quarter and subsequent quarters until the account is resolved. If the taxpayer cannot satisfy past due deposits while meeting current deposits, encourage the taxpayer to make current deposits first while working to resolve past due deposits.

  6. After contacting the taxpayer, document the case history to show FTD requirements and penalty assessment were discussed with the taxpayer. Also, document that the taxpayer was informed of the consequences of non-compliance.

  7. If the taxpayer is unable to make the required deposits or remain in compliance, see IRM, Working FTD Alerts.  (05-15-2012)
Working FTD Alerts

  1. If the taxpayer is unable to make the required deposits or become compliant, secure a Collection Information Statement and follow the procedures listed in IRM, Effective Initial Contact. Request assignment of the case and close the Alert.

  2. Explain the TFRP provisions, provide Notice 784, Could you be Personally Liable for Certain Unpaid Federal Taxes? and make TFRP determination.

  3. Ensure ICS histories are clearly documented. See IRM, Case Histories.

  4. Ensure timely follow-ups are met. See IRM, Timely Follow-ups.  (05-15-2012)
Alert Closing Procedures

  1. Close the FTD Alert at the earliest, most appropriate time.

  2. Secure the 941 return for the Alert quarter. Use the appropriate closing code with TC 599 for the return secured.

  3. If full payment of tax, penalty, and interest is not received with the return, proceed with prompt assessment action and see IRM, Working FTD Alerts.

  4. Close the Alert when the taxpayer is brought into full compliance. Full compliance includes, filing of all tax returns on or before the required due date; making appropriate tax deposits in the proper amount, by the appropriate due date; and paying any tax due with the return at the time the return is filed.

  5. If the taxpayer is not in compliance and there is a Bal Due, or Del Ret open, request assignment of the case and close the Alert.

  6. If a Bal Due or Del Ret is received on the FTD module, prior to requesting assignment, the FTD Alert will systemically close and will be assigned to the RO.

  7. The following ICS options are available to close an Alert:

    1. Return Secured : The taxpayer was not in compliance with FTDs, and the revenue officer secured a balance due return for the Alert quarter. The revenue officer should close the FTD Alert, create a pre-assessed or prompt assessed Bal Due on ICS, and pursue collection.

    2. TP is in Compliance : The taxpayer was required to deposit and was fully current with payment and filing requirements at the time of initial contact on the Alert.

    3. Not Required to Deposit : The taxpayer was not required to deposit for the Alert quarter.

    4. TP is Sporadic/Seasonal : The taxpayer is either a sporadic or seasonal employer with a fluctuating payroll. If the Alert analysis would be unable to predict the taxpayer's deposit compliance, the revenue officer should manually request input of TC 136 to suppress future Alerts and close the Alert.

    5. Brought into Compliance : The revenue officer ensured the taxpayer made all required deposits and secured the return for the Alert quarter. The taxpayer is fully current on the alert and current quarter at the time of closure, and there are no additional balances owed.

    6. Baldue/DelRet Received : The revenue officer received another ICS module by which to control the case. FTD Alerts should be closed when there is an open Bal Due or Del Ret on ICS.


      If another module is listed on IDRS in status 21 or 58 for the same taxpayer, use appropriate procedures to request assignment and create an ICS Bal Due/Del Ret. Once case is assigned, close FTD Alert.

  8. If a new FTD Alert is issued while an Alert from a prior quarter is still open in inventory, the old Alert will be systemically closed and replaced with the new Alert.  (05-15-2012)
Transfer of FTD Alerts

  1. If the taxpayer is in another area, the FTD Alert can be transferred without a prior Courtesy Investigation.

  2. Due to the time-sensitive nature of FTD Alert contacts, call and advise the receiving office of the transfer.

  3. Transfer FTD Alerts only if the business itself, not merely one or more officers or partners, is located in the transferee area.

More Internal Revenue Manual