5.20.1 Abusive Tax Avoidance Transaction Program 126.96.36.199 Overview of Abusive Tax Avoidance Transaction (ATAT) Program188.8.131.52 Collection's Role in ATAT184.108.40.206 Sources of ATAT Casework220.127.116.11 Casework directed to ATAT18.104.22.168 Coordinating Early Intervention with Other Functions22.214.171.124 Assistance on Promoter/Preparer Investigations126.96.36.199 Collection ATAT Coordinator Responsibilities188.8.131.52 Assigning ATAT Cases within Collection184.108.40.206 Finding ATAT Inventory220.127.116.11 Prioritization of ATAT Work Part 5. Collecting ProcessChapter 20. Abusive Tax Avoidance Transactions (ATAT)Section 1. Abusive Tax Avoidance Transaction Program 5.20.1 Abusive Tax Avoidance Transaction Program Manual Transmittal January 12, 2016 Purpose (1) This transmits revised IRM 5.20.1, Abusive Tax Avoidance Transaction Program. Material Changes (1) IRM 18.104.22.168(3) updated IRM cite. (2) IRM 22.214.171.124(1) updated IRM cites. (3) IRM 126.96.36.199 updated to include preparers. (4) IRM 188.8.131.52(1) updated ATAT Coordinator responsibilities to include assignment and routing of estate and gift tax cases, review of ATAT hold file and ENTITY queries. (5) IRM 184.108.40.206(2) added to include ATAT Coordinator responsibilities in regards to ATAT Automated Inventory Delivery system. (6) IRM 220.127.116.11(2) updated to include estate & gift taxes cases to the list of cases that generally should remain assigned within the ATAT program. (7) IRM 18.104.22.168(2) added to include guidance on the ATAT Automated Inventory Delivery system. (8) IRM 22.214.171.124(3) updated to include new ENTITY queries available to search for ATAT inventory. (9) IRM 126.96.36.199 updated information on risk levels of ATAT cases for clarity. (10) Editorial corrections and changes made throughout. Effect on Other DocumentsThis material supersedes IRM 5.20.1, Abusive Tax Avoidance Transaction Program, dated June 20, 2013. AudienceThe target audience is SB/SE Collection employees. Effective Date(01-12-2016)Kristen E. BaileyDirector, Collection Policy Small Business/Self-Employed 188.8.131.52 (01-12-2016) Overview of Abusive Tax Avoidance Transaction (ATAT) Program This IRM serves as a quick reference guide for collection procedures on Abusive Tax Avoidance Transactions (ATAT) investigations. It provides an overview of the Collection ATAT program and refers the reader to supporting references. Refer to IRM 4.32, Abusive Transactions, for additional guidance on Servicewide ATAT programs. Note: In FY 2010, SB/SE Examination created the office of Abusive Transaction and Technical Issues (ATTI) which includes the program formerly known as ATAT. SB/SE Collection continues to use the acronym ATAT for its abusive transactions program. Definition of ATAT An abusive tax avoidance transaction includes the organization or sale of any plan or arrangement promoting false or fraudulent tax statements or gross valuation misstatements, aiding or assisting in the preparation or presentation of a return or other document to obtain tax benefits not allowed by law, and actions to impede the proper administration of Internal Revenue laws. This general definition includes both tax shelters as defined in various sections of the IRC and other types of abusive tax promotions. These strategies may be organized and marketed, often through the internet. The definition is not merely limited to activities that reduce tax liability but may also include transactions that conceal assets and/or income from Collection. ATAT promotions include, but are not limited to, programs that rely on: False statements about the allowance of tax benefits to participants that are contrary to clearly established law. Intentional manipulation or misapplication of IRC sections to improperly claim tax benefits. Sham arrangements having no economic significance or business purpose other than the avoidance or evasion of tax. Gross valuation misstatements that ascribe a value to an asset or service that is at least twice the correct value and result in a tax reduction. Noncompliance with disclosure requirements of IRC 6111, Disclosure of Reportable Transactions. Noncompliance by material advisors with the list maintenance requirements of IRC 6112, Material Advisors of Reportable Transactions Must Keep Lists of Advisees, etc. Attempts to impede the proper administration of tax laws. Gross overstatement of withholding or refundable credits to obtain false refunds. Issue Management Teams (IMT) are established for some schemes and promotions. These teams are cross-functional - generally between Exam and Counsel. See IRM 184.108.40.206 for additional guidance. The role of the IMT is to: Develop strategy and guidance for an issue. Provide a focal point for an issue. Provide a consistent approach for in-process issues. Act as a coordination point with other operating divisions, Counsel and within SB/SE. A list of current IMTs can be found on the Abusive Transactions website at:http://mysbse.web.irs.gov/AboutSBSE/Exam/at/imt/default.aspx 220.127.116.11 (01-12-2016) Collection's Role in ATAT There is an ATAT program in each Field Collection Area with one or more ATAT Coordinators (group managers) who provide oversight and act as a central point of coordination for the ATAT program in their Area. SB/SE Collection Policy supports Area ATAT programs by providing policy guidance, technical assistance and training. The Collection ATAT program partners with other divisions including SB/SE Examination and LB&I, to assist in the development of abusive scheme promoter/preparer investigations and to ensure effective collection action is taken, when necessary, as early as is allowable by law against promoters, preparers and participants in abusive schemes. In addition to supporting Exam ATTI programs, ATAT revenue officers are in a position to uncover new or similar abusive schemes and possible promoters/preparers in the course of their collection investigations. This information can then be provided to the SB/SE Lead Development Center (LDC) which is the conduit for promoter/preparer leads. Procedures for making referrals to the LDC are listed in IRM 18.104.22.168, Making a Referral to the SB/SE Lead Development Center (LDC). 22.214.171.124 (01-12-2016) Sources of ATAT Casework Most identified balance due ATAT cases are a direct result of an examination. Organizational priorities have dictated that the Examination function target, classify, and examine these abusive promotion cases. Continued emphasis on abusive schemes by Examination and other operating divisions has resulted in a steady flow of abusive tax promotion cases into revenue officer inventories. The Collection ATAT program provides support for settlement initiatives related to certain abusive transactions. Groups of taxpayers that have participated in a specific abusive transaction are sometimes offered an opportunity to accept a settlement of the examination issues related to that transaction. The terms of the settlement are specific and the time frame for accepting the settlement offer may be firmly established. The settlements are temporary compliance projects with specific conditions related to the payment of the liability. Collection plays a key role in ensuring those conditions are met. For this type of casework, procedures are established and made available to the revenue officers who are assigned collection referrals. Refund schemes based on false withholding claims or refundable credits are another type of abusive scheme. If campus operations fail to stop bogus refunds from issuing, ATAT revenue officers may be contacted to assist with refund recovery. Refund scheme cases are generally identified by the Frivolous Return Program (FRP), which creates an assessment for the falsely claimed credits and contacts SB/SE Collection Policy to coordinate assignment of the resulting ATAT case to the field. 126.96.36.199 (01-12-2016) Casework directed to ATAT ATAT program support also extends to certain high priority cases that have been identified as casework that is to be assigned to ATAT revenue officers. Taxpayers identified under the Federal Payment Levy Program (FPLP) that meet specific criteria identified in IRM 188.8.131.52.1, Case Transfer to Abusive Tax Avoidance Transaction (ATAT) Group, are designated as ATAT casework. Estate and Gift tax casework is assigned to ATAT revenue officers. This includes modules with Master File Tax (MFT) codes of 51, 52, 53, 54, 77, 78 and non-master file accounts. In a wagering case with an excise tax liability of $75,000 or greater examiners are directed to request the assistance of an ATAT revenue officer to determine collectibility. See IRM 184.108.40.206.3, Excise Examinations with Wagering Issues. In highly technical and specialized probation and restitution cases, the Advisor will issue an Other Investigation (OI) to an ATAT Collection group if one or more of the criteria listed in IRM 220.127.116.11.2, Issuing Other Investigations (OI) to Abusive Tax Avoidance Transaction (ATAT) Collection Groups, are met. 18.104.22.168 (01-12-2016) Coordinating Early Intervention with Other Functions Referrals for ATAT revenue officer involvement can come from SB/SE Collection, Examination, LB&I, FRP, Counsel, Criminal Investigation or any other function within the Service. Examination procedures direct revenue agents to consult, coordinate and cooperate with ATAT revenue officers during the examination phase when circumstances warrant. Collection support in the form of early intervention can save time and provide both functions with valuable leads. An early exchange of information assists the revenue officer with preparing a collection strategy and expedites the collection process. Early intervention is a request for the assistance of an ATAT revenue officer, usually originating from the Examination function, in advance of an assessment. The revenue officer assists Examination in one or more of the following ways: To evaluate collection potential To assist in possible jeopardy situation To explain payment options to taxpayers To assist with the development of a promoter/preparer investigation To share leads on income and assets located To research ongoing or prior collection activities that could provide important context to the investigation The ATAT Coordinator is the central Collection contact point for examiners and Examination group managers. Examiners conducting promoter/preparer investigations, requesting early intervention case assignments or needing Collection assistance on any ATAT case should contact the local ATAT Coordinator through their group manager. A list of ATAT Coordinators can be located on MySB/SE at:http://mysbse.web.irs.gov/Collection/toolsprocesses/CollATAT/contacts/19487.aspx. The ATAT Coordinator will assign the case based on established work plan priorities to a revenue officer. If a revenue officer is expected to charge over 30 minutes of time working with an examiner, a Compliance Initiative Program (CIP), CIP-Other, will be opened on Integrated Collection System (ICS). A CIP authorizes revenue officers to work cooperatively with examiners, maintain a history of actions taken, and charge time to the case. 22.214.171.124 (01-12-2016) Assistance on Promoter/Preparer Investigations Once a promoter/preparer lead is approved by the SB/SE Lead Development Center and assigned to an examiner, Collection Policy sends the local ATAT Coordinator a copy of the approved IRC Section 6700/6701 investigation and posts the memorandum to the ATAT shared server. Prior to assessment of a promoter/preparer penalty, the ATAT Coordinator is responsible for determining if a promoter/preparer investigation should be assigned to an ATAT revenue officer. The ATAT Coordinator will consult with the local Examination ATTI manager to decide if or how a revenue officer might assist in the investigation. Generally if the promoter/preparer or a related entity has a preexisting liability, assignment to an ATAT revenue officer is warranted. The ATAT Coordinator will ensure assessed promoter/preparer penalties in their Area are assigned to ATAT revenue officers. See IRM 126.96.36.199, Collection ATAT Coordinator Responsibilities, for instruction on using the ENTITY system to identify these penalties in the Area queue. See IRM 5.20.8, Abusive Tax Avoidance Transactions, Promoter/Preparer Investigations, for more information on promoter/preparer investigations. 188.8.131.52 (01-12-2016) Collection ATAT Coordinator Responsibilities The Collection ATAT Coordinator is responsible for ensuring that ATAT cases are controlled and transitioned properly from Examination to Collection. The ATAT Coordinator will: Act as a central Collection point of contact for Area employees for Collection/Examination ATAT issues. Coordinate Collection support for examinations involving ATAT taxpayers. Ensure appropriate assignment and routing of cases from Examination to Collection. This may include monitoring cases after the closing of an examination and prior to assessment, and securing and delivering appropriate documents from examination files to Collection groups on cases identified for field assignment. Ensure appropriate assignment and routing of estate and gift tax cases to revenue officers designated and trained to work this specific inventory. Ensure Area ATAT cases are properly sub-coded at the time they are identified and assigned. Act as a resource person for Collection employees working ATAT investigations. Foster cooperative efforts between Collection, Examination and Criminal Investigation. Act as liaison for technical and case related ATAT issues between SB/SE analysts and revenue officers. Provide a central Collection point of contact for appropriate assignment and routing of cases from Appeals to Collection. Conduct periodic reviews of available ATAT inventory (ATAT hold file, ENTITY queries, Examination Stat 90 listings) to identify ATAT cases for prompt assignment to the field. Identify and monitor the status of Special Compliance Program (SCP) designations for Collection employees working ATAT cases. See IRM 184.108.40.206, Special Compliance Program Designation, for additional information. Serve as a subject matter expert and assist with training within the Area on emerging ATAT issues. The ATAT Automated Inventory Delivery System delivers certain ATAT cases directly to a designated ICS hold file established for each Area’s ATAT program. The ICS hold files AOTOXX75, AOTOXX92, and AOTOXX93 are designated for the ATAT Automated Inventory Delivery System and no other cases are to be housed there. The criteria for delivery is a case that has a balance due greater than $100,000, and at least one module on the account has an ATAT Exam special project code, ATAT civil penalty code or is an estate and gift tax case. These cases are designated as high priority. Each ATAT Coordinator has the responsibility to: Review the designated ICS hold file bi-weekly to select applicable work pertaining to their group or geographical area of coverage. Monitor cases for assignment to a revenue officer. Address any impending ASED/CSED statute issues. Ensure that only ATAT work that meets the criteria above is placed in the designated ATAT hold file and not co-mingled with other types of ATAT or general program casework. Ensure cases are not residing in the designated hold file for more than 120 days. If a case cannot be assigned within 120 days, it should be returned to the queue. 220.127.116.11 (01-12-2016) Assigning ATAT Cases within Collection The ATAT Coordinator is the central contact point for brokering ATAT cases within Collection. Although all revenue officers may work collection cases involving ATAT schemes, a Collection group manager may initiate a request to their Area’s ATAT Coordinator to transfer these cases to an ATAT group. The ATAT Coordinator will determine whether to accept case transfer based on workload priority and case appropriateness. If the case is not accepted for transfer, the ATAT Coordinator may offer the assistance of an ATAT revenue officer in working the case. Cases with an ATAT sub-code may be worked by a general program revenue officer. However, as defined in IRM 18.104.22.168, Prioritization of ATAT Work, ATAT promoters/preparers, Compliance Impact – High Profile ATAT cases, Refund Schemes, Exam Referrals on settlement initiatives and estate & gift tax cases generally should remain assigned within the ATAT program. The local ATAT Coordinator will determine whether to keep a case within the ATAT program or work with the general program to assign the case. Example: When a taxpayer relocates outside the geographic area covered by the ATAT group, the ATAT Coordinator will ensure any investigation of assets in the taxpayer’s original location is concluded. The ATAT Coordinator will generally transfer the case to the local ATAT Coordinator where the taxpayer resides. The local ATAT Coordinator will determine whether to assign the case to an ATAT revenue officer or work with a local general program group manager to assign the case to a general program revenue officer. Similarly, the ATAT Coordinator issuing an OI to research a taxpayer’s assets may route the OI to the local ATAT Coordinator. The local ATAT Coordinator will either assign the OI to an ATAT revenue officer or work with a local group manager to assign the OI to a general program revenue officer. 22.214.171.124 (01-12-2016) Finding ATAT Inventory ATAT Coordinators have several resources available to identify and assign the most productive ATAT cases. ATAT Coordinators should regularly check these resources to ensure high priority work is assigned to the field in a timely manner. The ATAT Automated Inventory Delivery System delivers certain ATAT cases directly to a single ICS hold file established for each Area's ATAT Program. ATAT Coordinators can directly assign cases from the ICS hold files. Since the Automated Inventory Delivery System has limitations in finding and systemically delivering all appropriate ATAT work, the ATAT Coordinators may need to search the queue for additional ATAT work in order to meet revenue officer inventory needs. ATAT Coordinators can search for balance due ATAT cases using several ENTITY queries which are stored under Module Management. The cases can be assigned from the queue through the ENTITY system. The queries enable ATAT Coordinators to search for cases by Exam special project code, ATAT civil penalty code or a combination of the two. Examination uses special project codes to identify examinations from special projects, including those connected with Abusive Transactions. These codes are found on TXMOD for modules with a deficiency resulting from an ATAT examination. Example: 424R 09292009 0.00 20094008 19277-272-20000-9 SOURCE-CD<40 SPCL-PROJ<0996 The queries can be run for all ATAT open or queue modules in the Area. ENTITY queries in Module Management do not always display a complete list of all balance due modules for the taxpayer’s account. For modules that appear to be low priority in the ENTITY queries below, research IDRS to determine if additional modules not appearing on the report would convert the case into a higher priority. The following is a list of the available queries: ATAT All Codes (Civ & Spec)- Lists ALL ATAT special project codes and civil penalty codes in one query- National Public Query ATAT All Codes (High Risk)- Lists ALL ATAT special project codes and civil penalty codes in one query- Only includes modules that are high risk (99-108)- National Public Query ATAT All Codes / Case = $100K+- Lists ALL ATAT special project codes and civil penalty codes in one query- Only includes modules that have a case balance of $100,000 or more - National Public Query ATAT CIVIL PENALTY CODES- Civil penalty code: 628, 631, 648, 659, 660, 666, 668, 625, 634, 636, 595, 596, 565, 687, 597, 598 or 594 - National Public Query ATAT ESTATE & GIFT National- MFT: 51, 52, 53, 54, 77 or 78 - National Public Query ATAT PROJECT CODES- Special Project Codes - National Public Query A complete list of the codes included in the query can be displayed by clicking F10 after the query has been loaded. The Exam Closed Case Status 90 Report is a report that is pulled by Exam Planning and Special Programs (PSP) using Exam ATAT project and tracking codes. Collection Policy receives the stat 90 listing quarterly and has the list run against IDRS to facilitate the identification of closed SB/SE Exam and LB&I ATAT cases with collection issues. Contact SB/SE Collection Policy ATAT analysts to receive the report. The ATAT Coordinator may also contact their local PSP office to request an Area stat 90 report. ATAT Coordinators can search for balance due estate & gift non-master file cases using Automated Non-Master File (ANMF). Request access to ANMF via the Online 5081 Application. A query under "Research Open Non-Master File Account" can be performed using MFT 53 and 54. 126.96.36.199 (01-12-2016) Prioritization of ATAT Work Risk levels have been identified for ATAT casework in order to assist in the assignment of priority cases to revenue officers. However these scores are not always reflected in automated collection systems. Collection will prioritize and work ATAT cases in the following order: ATAT Promoters/Preparers – A balance due account for taxpayers involved in an abusive tax avoidance transaction, who are the subject of an approved IRC 6700 or 6701 investigation, will be the highest priority cases for revenue officers. The risk level for promoter/preparer penalty (IRC 6700/6701) cases is high priority. Note: The ATAT Coordinator is responsible for determining if a preassessed promoter/preparer investigation should be assigned to an ATAT revenue officer after consulting with the Examination ATTI manager. See IRM 188.8.131.52, Coordination with the Examination Function, for more information. Compliance Impact – High Profile ATAT Cases – Any case involving promoter associates, promoter trustees, other close involvement with the promoter, and any cases with unpaid balance of assessments in excess of $1 million are considered of the highest priority work for revenue officers. The risk level for these cases is high priority. Refund Schemes - If the case requires the use of jeopardy procedures in order to recover fraudulent refunds the case should be designated as high priority. Examination Referrals connected to a specific settlement initiative - These compliance initiatives have limited time frames and are established to encourage voluntary compliance. It is critical all necessary and appropriate actions be taken timely and coordinated with the referring operating division. These cases are designated as high priority. Estate & Gift Tax Cases - For revenue officers designated to work estate & gift inventory, any case with an unpaid balance of assessment in excess of $1 million will be designated as high priority. Large Dollar ATAT Cases – Large dollar cases, for ATAT purposes, are those with unpaid balance of assessments in excess of $100,000 (IMF cases). This includes cases delivered to the designated hold files from the ATAT Automated Inventory Delivery system, which may include non-master file accouns. These cases are designated as high priority. Lower dollar ATAT cases - Lower dollar cases, for ATAT purposes, are those with unpaid balance of assessments less than $100,000 (IMF case) that are not whipsawed. The risk level for these cases is medium priority. Estate & gift tax cases are assigned based on the systemic risk score assigned to each case.