- 8.7.13 e-file Cases
- 220.127.116.11 e-file Cases
- 18.104.22.168 IRS e-file Overview
- 22.214.171.124 Origin of e-file Cases
- 126.96.36.199 The Administrative Review Process
- 188.8.131.52 Verification of Case Summary Card Information in e-file cases
- 184.108.40.206 Working e-file Cases in Appeals
- 220.127.116.11.1 Paperless e-file Case Process
- 18.104.22.168.2 Cases referred to Appeals without Criminal Investigation (CI) indicators
- 22.214.171.124.3 Premature Referral - Cases with Criminal Investigation (CI) Indicator(s)
- 126.96.36.199.4 Appeal Not Timely
- 188.8.131.52.5 Premature Referral Withdrawal of the Request for an Appeal
- 184.108.40.206.6 Premature Referral - Other Reasons
- 220.127.116.11 e-file Case Closing Procedures
- 18.104.22.168.1 Closing Letters and Closing the Case
Part 8. Appeals
Chapter 7. Technical and Procedural Guidelines
Section 13. Array
February 16, 2016
(1) This transmits revised IRM 8.7.13, E-file Cases.
(1) Made editorial changes and updates throughout.
(2) Incorporated the changes from Interim Guidance Memorandum AP-08-0915-0007, Interim Guidance on Paperless e-file Case Procedures, dated September 8, 2015.
(3) IRM 22.214.171.124 added that incarcerated individuals are restricted from participation and continuous Level 2 or Level 3 infractons may result in expulsion.
(4) IRM 126.96.36.199 was revised to state that Appeals may receive physical case files or electronic paperless files. Updated address of Appeals Office working e-file cases. Revised the information required to be in a case file received by Appeals.
(5) IRM 188.8.131.52.1 added that a participant may be denied due to ID theft.
(6) IRM 184.108.40.206 corrected the source codes for e-file cases.
(7) IRM 220.127.116.11 deleted that ex parte does not apply to e-file cases.
(8) Added IRM 18.104.22.168.1 to describe the paperless e-file process.
(9) IRM 22.214.171.124.4 changed procedures for cases involving untimely appeal requests. They will no longer be returned as premature referrals.
(10) IRM 126.96.36.199.1 changed the required forms for closing an e-file case.
John V. Cardone
Director, Policy, Quality and Case Support
This IRM section describes the process for working Authorized IRS e-file Provider denial and sanction cases in Appeals. IRS e-file is a process by which tax returns are submitted to the IRS by way of data communications and processed electronically. Filing a tax return through IRS e-file can be accomplished by using an Electronic Return Originator (ERO). An ERO is the first point of contact for most taxpayers in filing a tax return and it is the Authorized IRS e-file Provider that originates the electronic submission of an income tax return to the IRS. Refer to IRM 3.42.10 , Authorized e-file Providers .
Several sources of information are available to assist you in working e-file denial and sanction cases. IRM 188.8.131.52.2, IRS e-file Publications, provides a complete list of publications to be used in working e-file denial and sanction cases. In addition, the following will also assist you:
Rev. Proc. 2007-40 2007-26 I. R. B. 1488 (June 25, 2007)
Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns .
Publication 3112, IRS e-file Application and Participation .
In addition to the above, there are updates to IRS e-file which are posted to the Electronic Filing System Bulletin Board (EFS Bulletin Board) and the IRS web site at http://www.irs.gov.
There are several court cases that will assist you in working e-file cases. Refer to:
Michael v. United States, 36 Fed. Appx. 821,89 AFTR 2d 2002-3066 (6th Cir. 2002)
Brenner Income Tax Centers, Inc. v. Director of Practice of the Internal Revenue Service, 87 F.Supp.2d 252, 2000-1, USTC P 50,308 (S.D.N.Y. 2000)
Ekanem v. United States, 98-2 USTC P 50,257 (D. Md. 1998)
Forehand v. United States, 877 F. Supp. 592, 75 AFTR 2d 95-1186 (M.D. Al. 1995)
Sabat v. United States, 2000-1 USTC P 50,328 (W.D .Pa. 2000)
An Authorized IRS e-file Provider is a business authorized by the IRS to participate in IRS e-file. The business may be a:
Submits an application
Is accepted or denied participating in IRS e-file
If accepted, is assigned an Electronic Filing Identification Number (EFIN) and
Receives credentials, i.e., an acceptance letter or a security letter that allows continued participation in IRS e-file
The Internal Revenue Service reviews each Firm, Organization, Principal, and Responsible Official on the application. Suitability is used by the IRS to determine if the Firm or individuals listed on the applications are "suitable" to participate in IRS e-file. A suitability check is performed on every applicant, Principal, and Responsible Officer. Each can be denied participation in IRS e-file for a variety of reasons. For a complete discussion on suitability, refer to IRM 3.42, Electronic Tax Administration, Publication 3112, IRS e-file Application and Participation, and Rev. Proc. 2007-40.
Once the applicant is accepted to participate in e-file, the Provider must adhere to specific requirements in order to continue participation in IRS e-file. The IRS monitors Authorized IRS e-file Providers for compliance with the Revenue Procedures and IRS e-file requirements.
Individuals incarcerated in prison are restricted from participation in IRS e-file while incarcerated.
The Internal Revenue Service may sanction an Authorized IRS e-file Provider, Principal, or Responsible Official for violating any provision of the Revenue Procedure as well as any publications or notices governing IRS e-file. Sanctions that the IRS may impose range from a written reprimand to expulsion, depending on the seriousness of the infraction. There are different categories of infractions:
Level One – violations of the rules governing IRS e-file that have little or no adverse impact on the quality of electronically filed returns or IRS e-file. The IRS may send a letter of reprimand for a Level One infraction. Refer to IRM 184.108.40.206.11.1.
Level Two- violations of the rules governing IRS e-file that have an adverse impact upon the quality of electronically filed returns or on IRS e-file. Depending on the infractions, the IRS may either restrict participation in IRS e-file or suspend the Provider, Principal, or Responsible Official from participation in IRS e-file for one year. Refer to IRM 220.127.116.11.11.2.
Level Three – violations of the rules governing IRS e-file that have a significant adverse impact on the quality of electronically filed returns or on IRS e-file. Depending on the infractions, the IRS may suspend the Provider, Principal, or Responsible Official from participation in IRS e-file for two years, or depending on the severity of the infraction, e.g., fraud or criminal conduct, could result in expulsion from participating in IRS e-file indefinitely. Refer to IRM 18.104.22.168.11.3 for examples of Level Three infractions.
Suspended Providers, Principals, and Responsible Officials may reapply to participate in IRS e-file after the suspension period ends, or sooner if they resolve the suitability issues.
Appeals receives cases from the Director, Electronic Products & Services Support (EPSS) or from Field SBSE.
Appeals may receive physical case files from the Field or will receive 100% paperless files through encrypted e-mail on all cases originating from EPSS.
Physical e-file cases will be sent to the following address to be carded in:
Office of Appeals
290 Broadway, 11th Floor
New York, NY 10007-1823
Attn: Processing Team Manager, APS Unit
The cases are worked by the team in the Westbury, NY Appeals Office.
See IRM 22.214.171.124.1 for instructions for paperless e-file procedures.
Each case received must have the following information in it:
A copy of the application screen from TPDS which will contain the most current information for the Provider
Copies of all correspondence related to that particular sanction or any non-compliance history or suitability
First appeal suitability recommendation worksheet and appeal rights suitability recommendation worksheet
Copy of protest
Any compliance memoranda issued with regard to the Provider (i.e., Criminal Investigation (CI) and Criminal Investigation Branch (CIB) memorandum and documentation)
Any related Employer Identification Numbers (EIN) and tax years (if applicable)
Power of Attorney (if applicable)
For Field SBSE cases only, copies of the SBSE visitation worksheets and rebuttals
An applicant and/or participant has a right to an Administrative Review when:
The applicant is denied participation into IRS e-file and the applicant, Principal, or Responsible Official files a timely appeal or
The Provider, Principal, or Responsible Official is suspended or expelled while participating in IRS e-file and files a timely appeal
For a complete lists of IRS e-file letters, forms, and suitability review letters, refer to the exhibits in IRM 3.42.10.
All Authorized IRS e-file Providers, except those that function solely as a Volunteer Organization or as Software Developers, pass a suitability check on the firm as well as on all Principals and Responsible Officials of the firm prior to acceptance in IRS e-file. The IRS reviews each firm or organization, Principal, and Responsible Official listed on the IRS e-file Application. An applicant, Principal, or Responsible Official may be denied participating in IRS e-file for a variety of reasons that include, but are not limited to:
An indictment or conviction of any criminal offense under the laws of the United States or of a state or other political subdivision, or an active IRS criminal investigation
Failure to file accurate federal, state or local tax returns
Failure to pay any federal, state, or local tax liability unless appropriately addressed (e.g., installment agreement)
Assessment of fraud penalties
Suspension/disbarment from practice before the IRS or before a state or local tax agency
Disreputable conduct or other facts that may adversely impact IRS e-file
Misrepresentation on an IRS e-file Application
Unethical practices in return preparation
Non-compliance with IRC 6695(g) (Preparer Earned Income Credit Due Diligence)
Stockpiling returns prior to official acceptance to participate in IRS e-file
Knowingly and directly or indirectly employed or accepted assistance from a firm, organization, or individual denied participating in IRS e-file, or suspended or expelled from participating in IRS e-file. This includes any individual whose actions resulted in denial, suspension, or expulsion of a firm from IRS e-file
Knowingly and directly or indirectly accepting employment as an associate, correspondent, or as a subagent from (or sharing fees with) any firm, organization, or individual denied participation in IRS e-file, or suspended or expelled from participating in IRS e-file. This includes any individual whose actions resulted in denial, suspension, or expulsion of a firm from IRS e-file
Prohibited from filing returns by a federal or state court injunction or prohibited from filing returns by any federal or state legal action that prohibits them from participation. A type of such legal action is a Federal Executive Order such as Executive Order 13224 (September 23, 2001), which involves prohibitions directed at terrorist individuals and organizations
Applied for or obtained an EFIN using a stolen identity or e-filed returns using stolen identities
IRM 126.96.36.199.5.4 addresses reasonable cause.
An applicant, Principal, or Responsible Official who is denied participation in IRS e-file has the right to an administrative review. Within 30 calendar days of the date of the denial letter from the Director, Electronic Products & Services Support, they may mail a written response to the address shown on the denial letter. Upon receipt of the written response, the IRS will reconsider the denial of participation in IRS e-file. That denial may either be
Withdrawn and the applicant accepted to participate in IRS e-file; or
Sustained, and a second denial letter, providing the right to an appeal to the Office of Appeals.
An applicant, Principal, or Responsible Official who receives a second denial letter from the Director, Electronic Products & Services Support, is entitled to an appeal. The appeal must be mailed to the address shown in the second denial letter within 30 calendar days of the date of the second denial letter. The written appeal must contain detailed reasons, with supporting documentation, showing why the recommended sanctioning should not be imposed. Failure to respond within 30 calendar days beginning with the date of the proposed sanctioning letter described above, terminates the right to an administrative review or an appeal.
Any Authorized IRS e-file Provider, Principal, or Responsible Official who has been advised of a proposed sanction has the right to an administrative review. If a Provider, Principal, or Responsible Official receives a letter proposing a sanction, they may mail a detailed written explanation with supporting documentation as to why the proposed sanction should be withdrawn within 30 calendar days of the date of the letter proposing the sanction. Upon receipt of the written response, the Internal Revenue Service will reconsider the proposed sanction and may either withdraw its proposed sanction or affirm it by issuing a recommended sanctioning letter depending on the severity of the infraction.
If a Provider, Principal, or Responsible Official receives a recommended sanction letter affirming the sanctioning, they may appeal to the Office of Appeals at the address on the letter. The appeal must be in writing and mailed to the Internal Revenue Service office that issued the recommended sanctioning letter within 30 calendar days of the date of the letter recommending a sanction.
A sanction is a measure that may restrict or suspend the privileges of an Authorized IRS e-file Provider, Principal, or Responsible Official from participating in IRS e-file. Sanctioning may be a written reprimand, suspension, or expulsion from IRS e-file, depending on the seriousness of the infraction. Sanctions may be appealed through the administrative review process to include an initial review from the office proposing the sanctions. Suspensions and expulsions may have a subsequent review by the Office of Appeals.
The Provider’s written appeal must contain detailed reasons, with supporting documentation, showing why the recommended sanctioning should not be imposed. Failure to respond within 30 calendar days beginning with the date of either the proposed sanctioning letter or the recommended sanctioning letter described above, terminates an Authorized IRS e-file Provider’s right to an administrative review or an appeal.
Beginning October 1, 2012, Principals and Responsible Officials with PTINs who have had their PTINs suspended or revoked by the Return Preparer Office (RPO) and had the right to an appeal of the PTIN suspension/revocation will also be suspended from IRS e-file but will not have a right to an e-file appeal of denial or suspension/expulsion from IRS e-file. Only the applicants or Providers (firms) that are other than sole proprietors on which they are Principals or Responsible Officials will be able to have an IRS e-file appeal.
For information regarding Account and Processing Support (APS) carding procedures, refer to IRM 188.8.131.52, e-file Cases.
Upon receipt of the case in Appeals, the Appeals Technical Employee (ATE) will verify the following case summary card information within five business days of receipt. The ATE will review the case file for e-file application information, for the name, address, and EFIN number(s).
Field Name Description TP Name The TP Name of the EFIN applicant TP Address The TP Address of the EFIN applicant Representative The Representative of the EFIN applicant WUNO Note: For each EFIN the taxpayer has, there will be a separate WUNO created Type Code DOP Source Code SC (For cases from EPSS) or FE (For cases from SBSE Field) Category Other Subcategory DOP Appeals Officer The assigned Appeals Technical Employee (ATE) Date Assigned The date the case was assigned to the ATE Date Received The date the case was received in Appeals Date Created System generated - the date the case was created on ACDS ReqAppl date The date the EFIN applicant requested an appeal Key Period 2099
The Office of the Professional Responsibility transferred responsibility to Appeals for the administrative review of proposed denial of entry into e-file or sanctions imposed on current Providers, Principals, or Responsible Officials.
Please refer to Rev. Proc. 2012-18 or IRM 8.1.10 regarding Ex Parte Communications.
Cases originating from EPSS in Andover will use the 100% paperless process.
The following table outlines the step by step instructions for 100% paperless e-file cases:
Step Description Notes / Information 1 e-file appeal request is received by APS from EPSS Andover via secure e-mail Electronic Products and Services Support in Andover (EPSS), the originating function, uses encrypted e-mail to transmit the request to Appeals to e-mail box "*AP-PQCS-AP-East-NYC ACDS Update Request" with the subject line containing a team number and initials of the EPSS employee so when Appeals "replies" the case will be identified by the specific assistor.
Subject Line Example:
T2 (Team Number) CD (assistor initials) EPSS-DOP-Appeals-To APS
Cases originating from the field may continue to use the normal procedure for sending a case to Appeals.
2 e-file sanction Appeal received The electronic case file received by e-mail will contain all correspondence, protest, any related EIN numbers and tax years, copy of e-file application screen from TPDS, history sheet, suitability recommendation, power of attorney (if applicable) and any compliance memorandums. IDRS prints are no longer necessary. 3 Manhattan APS cards in e-file case making it ready for assignment Once delivered via secure e-mail to Manhattan APS group mailbox, APS will assign new receipts to APS TEs to establish on the ACDS database. Once the new receipt is carded in, the APS TE will attach the electronic file received from EPSS to the ACDS database. The TE will then send a secure e-mail to the ATM in Westbury, NY, with the subject line of the e-mail "T2 (Team Number) CD (assistor initials)EPSS-DOP-Appeals-(WUNO Number) " to inform that the case is ready for assignment. 4 ATM assigns case and notifies AO via encrypted e-mail The ATM assigns the case on ACDS and sends notification of assignment to the Appeals Officer (AO) by encrypted e-mail. 5 AO will accept case and verify entity information The AO will accept receipt of the case and verify the case summary card information within 5 work days of receipt and will make a determination if the case needs to be returned to EPSS or if the case is ready for Appeals’ consideration. The AO will generate Letter 4301, Acknowledgement Letter - ERO, and attach a copy of the letter to ACDS. See Step 6 for naming conventions. 6 AO hold conference and reaches case decision The AO holds the conference and works the case to reach a decision. The AO prepares the appropriate closing letter (and cover letter to the POA if applicable), Appeals Case Memorandum (ACM) and Form 5402 electronically. The AO will attach an electronic copy of all documents as attachments to the ACDS case database. Any documents that are received in paper form will be converted to an electronic medium and attached to the ACDS database. Documents will be attached to ACDS and named as follows:
1. WUNO (Followed by the WUNO number)
2. A brief description of the document
7 Notification of case closure is submitted by AO to ATM via encrypted e-mail for approval Upon case completion, the AO will send an encrypted e-mail to the ATM to notify that the case is ready for approval and closing. All closing documents will be attached and signed electronically on ACDS. 8 ATM approves settlement and case closure The ATM downloads the closing letter and Form 5402 from ACDS, approves settlement, and electronically signs 5402 and closing letter. The ATM uploads the approved copies and deletes the old copies. The ATM inputs the ACAPDATE on ACDS and signs and mail a copy of the closing letter to the customer and POA (if applicable). 9 Case is assigned to an APS Tax Examiner for closing Upon approval of the case decision, the ATM inputs the ACAPDATE and closing code which drops the case into PEAS. The case then becomes part of the APS inventory and must be assigned to an APS employee. All closing documents are attached to the ACDS database and no administrative file will follow. 10 APS performs closing actions on ACDS APS will make the necessary closing entries on ACDS upon receipt of the case closure. 11 APS sends the needed documents to Andover EPSS via encrypted e-mail to internal e-mail box "*W&I EPSS OOA" APS will send the necessary closing documents to EPSS via an internal mailbox. The mailbox address is "*W&I EPSS OOA" . The TE will attach a copy of the closing letter and Form 5402 by encrypted e-mail to EPSS Andover to the originator of the case. The subject line of the e-mail will include "T2 (Team number) CD (assistor initials) EPSS-DOP-Appeals-WUNO-Closure to EPSS" . 12 Entire electronic file resides on ACDS Appeals employees will not keep copies of e-mails or files on their computers. They will purge temporary files once the process is complete. It will no longer be necessary to send an administrative paper file to "files" , as the administrative file will be housed on ACDS. EPSS will be notified of Appeals’ decision via encrypted e-mail.
Appeals Officers may receive the following types of e-file cases:
Applicants denied from participation in IRS e-file
Providers, Principals, or Responsible Officials sanctioned while participating in IRS e-file or
Providers, Principals, or Responsible Officials asking for a reconsideration of a prior Appeals’ decision in an e-file case.
The Appeals Team Manager or designee should issue the e-file acknowledgement Letter 4301 from APGolf. The purpose of the e-file acknowledgement letter is to provide a contact person’s name and phone number and inform the Provider what can be expected from Appeals in the resolution of the case.
The Appeals Officer assigned to work the case will review the case file prior to issuing the conference Letter 4304. The conference letter will:
Schedule a conference
Ask for any additional information, if applicable, with respect to the appeal of the case and
Explain consequences of the appellant's failure to respond or participate in the conference
At the conclusion of the conference, the Appeals Officer will prepare an Appeals Case Memorandum (ACM) in each case. The Decision may be:
A sustained sanction, including a lesser sanction
A reconsideration of a former Decision made in Appeals
A denial of participating in IRS e-file
Not sustaining a sanction
Allowing participation in IRS e-file
Each ACM should contain:
The Revenue Procedure(s) prescribing the eligibility requirements to participate in the program
The standard of conduct
The scope of authority, circumstances and conditions under which a Provider, Principal, Responsible Official, or applicant may participate in IRS e-file to exercise the privilege of electronic filing federal income tax returns
A brief synopsis explaining the information provided by Andover e-Help in each case and
Considerations Appeals made in the case
An e-file case may be received in Appeals with a CI indicator present. These modules will have a freeze code on the Integrated Data Retrieval System (IDRS).
Transaction Code Freeze Indicator Definition ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
Any cases with a CI indicator will not be worked in Appeals as Appeals does not have jurisdiction over the case. The case will be returned to Andover e-Help as a Premature Referral. Appeals Officers will:
Review the case file and determine if there is an active CI indicator on the IDRS prints
Document the case activity record
Use case closing code 20, premature referral
Prepare closing Letter 4302(a) advising the case is being returned to Andover e-Help; and
Prepare Form 5402
Occasionally Appeals receives cases where the appeal was untimely. If the Appeals Officer determines the appeal is untimely, the Appeals Officer will:
Not return the case as premature
Document the case activity record that the appeal request was untimely
Make a determination as to whether the suitability issues have been resolved or not without holding a conference
Prepare the appropriate closing letter advising the customer that the appeal request was late and whether the denial or sanction is sustained or overturned. Refer to IRM 184.108.40.206.1 .
Prepare Form 5402 using the appropriate closing code. Refer to IRM 220.127.116.11.1 .
Prepare brief Appeals Case Memorandum (ACM)
Submit the completed closed case file to the Appeals Team Manager for approval and closing
When an appellant withdraws the request for an appeal, the appellant's appeal is now moot. If an appellant withdraws the request for an appeal, the Appeals Officer will:
Document the case activity record and
Prepare premature referral Letter 4303(b) on APGolf
Use case closing code 20, premature referral
Prepare Form 5402 .
Occasionally Appeals receives cases that are premature for consideration, such as incomplete compliance actions, pending claims for abatement/refund or an incomplete case file. If the Appeals Officer determines the case is not ready for Appeals consideration, the Appeals Officer will:
Document the case activity record
Prepare premature referral Letter 4302(b) on APGolf
Use case closing code 20, premature referral
Prepare Form 5402.
Refer to the Account and Processing Support (APS) e-file closing procedures in IRM 18.104.22.168 for information on how APS closes e-file cases.
The closed case file must contain the appropriate APGolf letter generated to the appellant and the POA (if applicable), and:
Customized Form 5402
Appropriate closing letter
Submit the completed closed case file to the Appeals Team Manager for approval and closing.
In each case, the Appeals Officer will document the case activity record on the outcome of the conference and prepare:.
Enter the appropriate closing code for the e-file case on the customized Form 5402:
Closing Code Definition Letter 14 Reconsideration Denied Letter 4303 (a) 14 Rejection/Reprimand Sustained Letter 4305(a) 15 Rejection/Reprimand Not Sustained Letter 4305(c) 16 Partially Sustained Letter 4305(b) 20 Premature Referral Letter 4302(a), Letter 4302(b) or Letter 4303(a) 20 Appeal Withdrawn Letter 4303(b)