In February of 2003, Appeals changed the reporting structure of the APS function within Appeals from the local office Chief, to the Director of APS. The Director of APS reports to the Director, Case and Operations Support in Appeals headquarters.

The APS specific Internal Revenue Manuals (IRM) are in IRM 8.20, Account and Processing Support (APS).

APS responsibilities are described in IRM 8.20.7.1.3, Responsibilities.

IRM 8.20, Account and Processing Support (APS), establishes the APS program and policy framework for Appeals.

The Director, Case and Operations Support (COS) is the executive responsible for designing, developing, delivering, and monitoring short- and long-range tax administration policies, programs, strategies, and objectives for the Appeals organization.

The Director, Policy, Planning, Quality and Analysis, is responsible for providing technical and procedural guidance to Appeals employees, establishing and maintaining policies and standard procedures for Appeals work streams.

Policy is comprised of two teams of analysts: Collection Policy and Examination Policy. The analyst(s) responsible for APS programs report to the Manager for Collection Policy.

The Policy analyst shown on the Product Catalog page as the originator is the assigned author of this IRM.

For more information on Appeals Policy, see the About Appeals - Case and Operations Support (COS) page on the Appeals website, where you can navigate to the two Policy teams’ web pages.

The Director, APS, is the senior manager responsible for the control and processing of all Appeals cases. The Director, APS, reports to the Director COS. For more information on APS, see the APS page on the Appeals website.

Appeals Account and Processing Support (APS) has primary responsibility for the following:

The APS function utilizes a variety of reports from the following systems to verify, control, analyze, monitor and close cases resolved under Appeals and/or Counsel jurisdiction:

The following IRMs provide specific information related to APS program reports:

The APS processing IRM terms and acronyms are provided in the following Exhibits:

Additional APS program information and resources are available as provided below:

A closing validation is required on all Appeals Cases using the Validation System on ACDS. The ATE first conducts a validation and submits the case for approval. Once the ATM has approved the case, it is then routed to the APS TE for an additional validation. Detailed explanations of these validations are discussed in IRM 8.10.3, Appeals Inventory Validation Process.

APS account adjustment work requires an understanding of multiple AIMS and IDRS Command Codes (CC). The most common CC’s used by APS are listed below and associated with a link to their respective IRMs. When an APS TE receives an error message based upon the data they’ve input, they must access the applicable IRM to locate the Error Message cause and cure. The IRM associated with the respective CC also provides detailed explanations for the various fields applicable to the CC.

When the ATE does not populate the "Instruction to APS" on the Form 5402, APS does not perform feedback loop procedures.

Several work streams e.g. ACDS Category IC and CIC case types among others, require the ATE or ATM to forward the Form 5402 and ACM to the Compliance Function and for these cases, the Form 5402 will not include "Instruction to APS" to forward the Form 5402.

When the ATE provides instructions to transmit a copy of the Form 5402 and ACM back to the originating function, APS must use a secure electronic process when available for the specific workstream; otherwise see (4) below. When necessary, make a copy of the Form 5402, Appeals Transmittal and Case Memo, and Appeals Case Memo (ACM) to retain the original in the administrative file.

General hardcopy Form 5402 Appeals Feedback Loop distribution procedures are detailed below and are used when electronic transmission is not possible:

ECC allows for a flexible closure process which enables the closure of selected Collection Appeals, Examination Appeals and Specialized Examination Programs & Referrals (SEPR) cases without requiring the actual shipment of the physical case file to APS. The ECC process eliminates shipping the physical case file between the ATM and APS. ECC is limited to the case types listed in the table below, Case Eligibility and Required Documentation.

ACDS was modified to systemically notify APS of an ECC closure when feature codes PL (Paperless) and EC (Electronic Closing) are entered. ATEs will enter feature codes PL and EC and upload all pertinent closing documents to ACDS.

The ATM will confirm that all documents required for APS processing are uploaded into ACDS. The ATE or ATM, as appropriate, will electronically sign closing letters. The ATM will sign and date other forms requiring the ATM's signature and ACAP the case in ACDS. The ATE/ATM will retain possession of the closed case file until shipping instructions are provided by APS. APS will perform the normal case closing actions, including any feedback loop processes. After APS has completed all closing actions:

Deviation Memorandum PQCS-15-01, Electronically Stored Documents in the Appeals Centralized Database System (ACDS), effective December 16, 2015, allows APS employees to discontinue printing documents for archiving if the documents are already uploaded to ACDS. The procedural change for printing documents during the closing stage is described below:

Account and Adjustment Source Documents must still be completed and affixed to the paper case file or adjustment authorization document(s) by APS when submitting the completed paper case to Campus Files function.

All manual interest computations must be printed and associated with the respective source document(s):

When APS closes a case on ACDS and the case is selected for AQMS Review, an automated and completed AQMS Coversheet will appear on the screen indicating where to send the case for AQMS Review. See Exhibit 8.20.7-2 for a sample of the AQMS Coversheet which auto-populates with the name of the AQMS Reviewer and his/her office location.

The APS employee closing the case will:

Four types of cases will be identified for AQMS review:

AQMS reviewed cases requiring account correction(s) will be returned to APS.

AQMS will:

APS will:

The following list provides an explanation of errors that result in AQMS-selected cases being returned to APS but do not require issuance of a PER:

Upon returning the case to APS for their action, an email is also sent to the APS Area Manager, Processing Team Manager (PTM) and APS Tax Examiner (TE). Appeals AQMS has no provision for informally returning or referring cases with errors to the Tax Computation Specialist (TCS), Appeals Examination, Appeals Collection, or Appeals Specialty Examination Program and Referrals (SEPR.)

The APS TE who processes the account correction is also responsible for suspense and monitoring actions until the adjustment/correction is fully posted.

When AQMS returns a case to an ATE or TCS for correction(s), APS is responsible for processing any account corrections based upon the ATE/TCS-corrected forms/schedules/documentation as necessary.

When an APS Tax Examiner prepares the Form 2859, Request for Quick or Prompt Assessment, a complete manual re-computation of the interest for the account which is also known as a "running module balance" is required. See IRM 20.2.5, Manual Computations and the specific paragraphs identified below in ( ) for the following information:

The online Form 2859 includes detailed instructions on page 3. Instruction 5, directs the reader to a table of Special Instructions specific to the respective Tax Return Form Number. Part C entries must be completed per the instructions based upon the MFT being assessed.

The interest transaction code (TC) and interest amount are entered in Item 17 of the Form 2859, using Transaction Code (TC) 190 (manually computed interest not restricted), or TC 340 (manually computed interest restricted.)

When a manual interest computation is prepared, the tax examiner who manually calculates the interest, must prepare and mail to the taxpayer, Letter 3535, Interest Computation Cover Letter and the ACT Report 490 Activity Summary in compliance with IRC 6631. Adherence to this requirement supports the Taxpayer Bill of Rights:

A PEAS CAR entry is required to document the date Letter 3535 and Report 490 Activity Summary are prepared and mailed to the taxpayer. A dated copy of the Letter 3535 and Report 490 Activity Summary must also be included in the administrative file.

Letter 3535 can be accessed via the IRS publishing web site, or ACDS APGolf.

For additional information on the requirement to provide manual interest computations to the taxpayer, see IRM 20.2.5 Manual Computations (11).

See IRM 4.4.25, Research and Actions Required Prior to Quick Assessment, CCP or Campus Examination Procedures for IDRS related actions.

See IRM 4.4.25, Quick Assessment Procedures, CCP or Campus Examination Procedures for additional guidance of preparation of the Form 2859, Request for Quick or Prompt Assessment.

See http://serp.enterprise.irs.gov/databases/who-where.dr/prompt-quick-jeopardy-termination-assessments.html, SERP - Prompt, Quick, Jeopardy & Termination Assessments for a list of Campus fax numbers and After-hours Assessment Contacts for each Campus Accounting Function.

See IRM 4.4.25, Quick Assessment Verification Form 3552, CCP or Campus Examination Procedures paragraphs (1) - (3) are included below for emphasis and insertion of specific APS actions:

IRM 4.4.25, Follow-up on Form 3552 paragraphs are partially duplicated below for emphasis and insertion of specific APS actions:

When quick assessment procedures are used to process the account adjustments, the APS TE must record the Form 5403 Item 800 and 801 entries in the same manner as if the account adjustments had been included in Items 12 and 15. The Item 80X entry process ensures that the AIMS database correctly reflects systemic accounting for Appeals and Counsel audit adjustment results and reporting purposes.

The PEAS record can be closed upon completion of the following actions:

Once the tax, penalty (if any) and interest has been processed for assessment using a Form 2859, Request for Quick or Prompt Assessment, the APS TE must also prepare a Form 5403 to post the item and reference entries to the taxpayer’s account, update the AIMS database and properly close the AIMS controls.

The following acronyms and abbreviations are used within Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed:

See Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed for detailed instructions.

Appeals is the second IRS function approved to utilize the SB/SE Corporate Database Initiative (CDI) Transmittal Database. This transition. when fully implemented, will replace the paper Form 3210 printing multiple copies, filing, follow-up, physical retention and maintenance, storage and manual purge process with an electronic process. The SBSE Corporate Database Initiative (CDI) Transmittal Database SharePoint Site provides an active user with the following benefits and efficiencies:

IRM 1.2.17, Policy Statement 8-48, states that Appeals may consider and accept proposals for "Specific Dollar Settlements" . Whenever the ATE resolves their case by means of a "Specific Dollar Settlement" , they will provide the following statement on the Form 5402 in the Remarks Section: "This is an Appeals Settlement for a specific dollar amount. There is no audit statement or schedule or adjustments, and the change to AGI and TXI can’t be determined."

The ATE must provide APS with the "interest-related" forms, schedules, worksheets, and spreadsheets in the same manner as any other case despite the fact that the "Specific Dollar Settlements" will not go through a Tax Computation Specialist (TCS). See Exhibit 8.20.7-12, Interest-Related Internal Revenue Codes (IRC), Revenue Procedures (Rev. Proc.), Revenue Rulings (Rev. Rul.), and Applicable Internal Revenue Manual (IRM) References for additional information.

When Counsel resolves their case by means of a "Specific Dollar Settlement" , the Counsel Attorney will include a Counsel Settlement Memorandum within the case as well as a notation on the Form 1734, Transmittal Memorandum to alert APS that there are no tax computations associated with the case that match the tax and/or penalty included in the Entered Decision Document. See Chief Counsel Directives Manual, Settlements by Counsel 35.5.2.9 for additional information.

The Counsel Attorney must provide APS with the "interest-related" forms, schedules, worksheets, and spreadsheets in the same manner as any other case despite the fact that the "Specific Dollar Settlements" will not go through a Tax Computation Specialist (TCS) for the purpose of a tax computation or Rule 155 Computation. See Exhibit 8.20.7-12, Interest-Related Internal Revenue Codes (IRC), Revenue Procedures (Rev. Proc.), Revenue Rulings (Rev. Rul.), and Applicable Internal Revenue Manual (IRM) References for additional information.

Each tax return/tax class has a variety of Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) which populate and/or update the associated field on the transcript of account when reported on a filed return, or are adjusted during the IRS review, correction, or audit process.

Document 6209, IRS Processing Codes and Information contains a detailed listing of CRNs and IRNs for the following types of Tax Returns/Forms:

For additional information on account analysis and account codes, see:

The Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) provided in this IRM are the most common adjustment types for Appeals’ and Counsel cases accounts. The CRNs and the IRNs are entered in Item 15 of Form 5403 when AIMS controls are open and are entered on a Form 3870 or a Form 8485 when AIMS controls are not open.

Income Tax Credits apply to Income Tax Forms 1040 (MFT 30), 1041 (MFT 05) and 1120 (MFT 02). Income Tax MFT 30/05/02 accounts also include Item Reference fields which must be adjusted to reflect the changes associated with the income tax adjustment whenever applicable. MFT 30 accounts are controlled on the Individual MF (IMF) and MFT 05 and MFT 02 accounts are controlled on the Business MF (BMF).

Form 5403, Appeals Closing Record Items 51, 52, and 53 are used whenever an IMF Reason Code (RC) must be associated with a CRN/IRN adjustment. The AMCLS IMF Reason Codes mimic the purpose of the ADJ54 IMF Reason Codes and their entry, (up to 3), triggers the correlating message on the taxpayer’s notice to explain the item(s) adjusted on their IMF account. When more than one IMF RC is required, enter them in ascending numeric order e.g. lowest IMF RC in Item 51 to highest Item 52 or Item 53. See Exhibit 8.20.7-13, Table of the Most Common Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account. For a complete listing of IMF Reason Codes, see Document 6209, Section 8C 2-2 IMF Reason Codes or IRM 21.6.7-1 Exhibit Reason Codes.

When the CRN and IRN adjustment entries exceed the maximum number of entries allowable on either type of adjustment document, use the decision table in IRM 8.20.7.10.4 (5) below to accurately process multiple account adjustments input within the same IDRS Cycle.

When two separate adjustment documents must be used in order to input the full range of CRNs/IRNs applicable to that tax period’s account, use the decision table below to determine how the first and the final adjustment documents must be prepared for the AIMS or the Non-AIMS adjustment(s).

Credits associated with a taxpayer’s account can serve the purpose of reducing the net tax amount due, or they can serve the purpose of reducing the amount the taxpayer owes once the tax amount is determined. The Internal Revenue Tax Code differentiates between a credit which is refundable (Refundable Credit), and a regulated credit which only serves the purpose of reducing the amount of tax due (Non-Refundable Credit). Some Non-Refundable Credits are limited to the current years tax liability, and others can be carried back to prior years or carried forward to subsequent years to offset a tax deficiency. IDRS uses specific codes to identify and record the refundable credits and credit amounts. Whenever a refundable or non-refundable credit is adjusted as a result of an Appeals or Counsel settlement, the TCS will provide the IRN and CRN adjustment information to APS via the Form 5403 Instruction Worksheet.

A credit which is refundable serves a dual purpose, first, it is applied to pay the tax liability and if any excess credit remains, it becomes available for offset to pay another outstanding liability for the taxpayer or it can be released as a refund to the taxpayer.

A regulated credit is Non-Refundable and is limited to the amount of the tax liability.

See IRM 21.6.3, Non-Refundable Credits Procedures and IRM 21.6.3, Refundable Credits for additional information.

See IRM 8.20.7.27, EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC) for detailed processing requirements subject to Recertification procedures.

Self-employment adjustments for returns posted after December 31, 1985, are updated using reference numbers on the Form 5403, Appeals Closing Record in Item 15. The ATE or TCS who prepares the settlement computation provides the correct Item Reference Number(s) (IRN) and adjustment amount(s) via the Form 5403 Instructions to APS Worksheet.

The Form 5403, Appeals Closing Record, for a no-change case with self-employment income/tax adjustments must reflect any adjustments to IRN 878/879, 895/896, and 889. Complete as follows for Items 12, 13, and 15:

To view the Social Security Tax Rate Table and Wage Limitation established for each tax year see:
✓ http://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209ch03.14.htm.

See the following resources for additional information:

Schedule H can be filed with a Form 1040, Form 940, Form 941 or it can be filed separately. Schedule H carries it’s own Assessment Statute Expiration Date (ASED) which is NOT based on the filing requirements of the taxpayer’s F-1040, F-940, F-941. Schedule H taxes can be assessed even if the original filer’s ASED has expired per IRM 21.6.4, Schedule H, Household Employment Taxes (7).

Schedule H adjustments, when are authorized by a signed Form 2504 or a signed Form 2504-AD. Schedule H adjustment amount(s) are provided to APS via the following forms:

The following Item Reference Numbers are used to process Social Security and Medicare adjustments to the MFT 30 Schedule H account fields:

See IRM 21.7.2, Advanced Earned Income Tax Credit (AEITC) - Form 941, Form 943, Form 944, and Schedule H for additional information on how this credit was allowed and when it was eliminated.

When the ATE identifies that IRC § 6205, Interest-free provision applies, use a TC 308/298 for the Schedule H Medicare Tax amount only. If there is also a general tax adjustment use a TC 300/290 for the applicable assessment amount. A TC 308/298 requires an Interest Computation Date entry to identify the underpayment interest start date for the amount of tax entered with the TC 308/298. The applicable interest start date is provided by the ATE. See IRM 21.6.4, Schedule H, Household Employment Taxes - Interest - Free Provisions - Underpayments for additional information.

The following Item Reference Numbers are used to process Federal Unemployment Tax Act (FUTA) adjustments to the MF Schedule H account fields:

Schedule H adjustments must be processed correctly to avoid the following Unpostables:

Item Reference Numbers (IRN) for Form 706, Estate Tax Return, and Form 709, Gift Tax Return, are provided by the TCS or the ATE who prepare the computations and Form 5403 Instruction Worksheet.

Estate and Gift tax IRNs are used to identify adjustments to each specific tax type:

IRN 074 when entered on either an Estate Tax or Gift Tax adjustment will be combined with the IRN 076 or IRN 077 amount to = the TC 300 amount.

IRN 076 is required on all Estate Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered per IRM 8.20.7.10.8 (3) above.

IRN 077 is required on all Gift Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered per IRM 8.20.7.10.8 (3) above.

The following fields are also entered for MFT 51/54 on page 2 of Form 5403, when adjustment amounts are included on the Form 5403 Instructions to APS prepared by the TCS:

The employee who prepares the settlement computation is responsible for completing the Form 5403 Instruction Worksheet. If a Counsel case is received by APS and the Form 5403 Instruction Worksheet is not included, APS can submit a Form 3608, Request for TCS Service to request preparation of a Form 5403 Instruction Worksheet. See IRM 8.20.7.2 (10) for instructions on how to prepare and submit Form 3608.

Report Generation Software (RGS) version 16.0 (and subsequent versions) use more specific penalty reference numbers (PRN) for the accuracy related penalty previously entered in Item 15 of Form 5403, via a single PRN "680." When the TCS does not use the RGS generated From 5403 to prepare the tax computation and report, then the TCS should identify the correct PRN for APS on the Form 5403 Instructions.

The new more specific PRNs are as follows:

Interest on Accuracy Related Penalties is applicable per IRM 20.2.5, Interest on Penalties and Additions to Tax.

Penalty Reason Codes (PRCs) were established to enable the IRS to systemically track the abatement and suppression of penalties. Accurate reporting of the PRC is vital for the Service to generate an accurate report to Congress. PRCs provide the basis for determining a taxpayer’s compliance history and also provides the foundation for analyzing trends in penalty abatements. PRCs are used with both BMF and IMF Document Code 54 and 47 transactions. See IRM 20.1.1, MF Penalty Reason Codes for source guidance and additional information.

IRM 20.1.1, Master File Penalty Reason Codes (4) c. "Appeals: The PRC must be used to identify the reason for the abatement or non-assertion of a penalty when completing any of the following forms: Form 5403, Appeals Closing Record (CC: ADJ47), Form 5402, Appeals Transmittal and Case Memo (CC: ADJ54), and Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties (CC: ADJ54)."

APS TEs process adjustments on AIMS and Non-AIMS cases. The Form 5403 is an AIMS adjustment document (Document Code 47), and the Form 5403 Item 02, Penalty Reason Code is a 2 digit code entered by the APS TE to identify the justification provided by the ATE or Counsel Attorney for reducing or suppressing the penalty(ies) proposed by the Compliance Revenue Agent. Reduction of a proposed penalty is different than reduction of a previously assessed penalty because although the penalty amount was proposed, it has not been assessed prior to being transferred into Appeals’ or Counsel Jurisdiction. For procedures on partially or fully abating "previously assessed" penalties using a Non-AIMS Command Code ADJ54, see the following IRM section(s) as applicable:

When the Appeals Technical Employee (ATE) considers a case on which a penalty is proposed, the ATE must always select the appropriate Penalty Resolution Reason ID (1 through 10) when preparing the Form 5402. Identification of the applicable Penalty Resolution Reason ID communicates the ATE’s penalty determination for the respective case and provides APS with the necessary case processing information to accurately adjust the taxpayer’s account and accurately employ penalty suppression techniques as appropriate to avoid erroneous computer generated penalty assessments.

Whenever a docketed case decision is entered and the penalty is NOT fully sustained and the penalty relief reason is not otherwise identified, APS will enter the correct PRC based upon the disposition of the penalty Item 02 on Form 5402.

The APS TE must recognize and determine the appropriate processing actions to take when the proposed (not yet assessed) penalty is only partially sustained, or when the taxpayer is granted full relief from the penalty assessment. Master File (MF) programming will systemically assess IRC 6651(a)(1), Failure to File Penalty (TC 166) and IRC 6651(a)(2), Failure to Pay Tax Shown on Return Penalty (TC 276) on a balance due delinquent return unless the penalty is manually restricted via input of a TC 160 or TC 270 for a specific dollar amount or manually suppressed via input of a TC 160 or TC 270 for 0.00+.

When the FTP (TC 27X) is sustained but has not previously been restricted and has not been calculated to be assessed at a specific dollar amount, APS may use a Priority Code (PC) to trigger the IDRS programming computation and adjustment for FTP (TC 27X). See list below for PC 5 and PC 9 criteria:

When the taxpayer’s AIMS account reflects a late filed return (AMDISA Del-Ret-Ind = 1) and the ATE does not sustain assessment of the Failure to File Penalty (FTF) and/or Failure to Pay Tax (FTP) Penalty shown on the Revenue Agent Report (RAR) Form 4549 prepared by Compliance, the APS TE must systemically "suppress" Master File programming from generating the TC 16X and/or TC 27X penalty. APS will enter the applicable PRC in Item 02 of Form 5403, and also enter the applicable penalty TC in Item 12 with a 0.00 to suppress the FTF and FTP penalty.

To suppress master file programming from generating the FTF and/or FTP enter the manual assessment TC 160 and/or TC 270 in Item 12 Form 5403 with 0.00+. The TC 160 0.00 entry in Item 12 of Form 5403, bypasses the Delinquent Return Indicator (Del- Ret- Ind) and restricts MF from computer generated updates for this TC. The TC 270 0.00 entry in Item 12 of Form 5403, restricts computer generated updates of the IRC 6651(a)(2) FTP Penalty.

IRC 6651(a)(1) (FTF Penalty suppression) and IRC 6651(a)(2) TC 270 0.00 (FTP Penalty suppression). When ACDS includes an amount in the PropdPen field on ACDS and the APS TE enters a lesser amount in the Revsdpen field, then the APS TE must also enter the applicable PRC in Item 02 of F-5403.

IRC 6662, Accuracy Related Penalty (TC 240 assessed via entry of the applicable Penalty Reference Number (PRN) in Item 15). The Accuracy Related Penalty is not systemically assessed by MF programming, thus a proposed Accuracy Related Penalty which is not sustained only requires entry of the PRC on Form 5403 in Item 02 but does not require a manual entry of a penalty suppression TC 240 for 0.00 in Item 12 or Item 15. The IRC 6662 Accuracy Related Penalty is only posted and adjusted via a manual assessment or a manual abatement entry input via CC: AMCLS or CC: REQ54.

The PRCs available for manual input in Item 02 of Form 5403 on a non-docketed or docketed case are as follows:

Restricted interest and/or special processing actions may apply to a variety of case types. APS TE's will perform interest computation and special processing actions as appropriate to each tax period. The TCS prepares the following forms and/or notates the Form 5403 Instructions to APS Worksheet when specific interest provisions apply:

See IRM 8.17.6, Interest Issues in Settlement Computations for additional information.

See IRM 20.2, Interest, for service-wide guidance and procedures for all interest-related topics.

See IRM 20.2.1, Notice Requirements, for guidance on providing the manual interest computation to the taxpayer.

If the adjustment involves railroad retirement tax Form CT-1, Employer's Annual Railroad Retirement Tax Return (MFT 09) and/or Form CT-2, Employee Representative's Quarterly Railroad Tax Return (MFT 72), the ATE or ATCL will prepare the disclosure information package for APS to forward to the Railroad Retirement Board (RRB):

APS will use Form 3210/E3210 to transmit the disclosure package to the Railroad Retirement Board (RRB) at the following address:

APS will not enter a Disclosure Code in Item 39 on Form 5403 for RRB Disclosures.

Below is a list of forms prepared in different cases but not necessarily in every case. The following guidance is provided for associating these forms with the tax return at closing.

Appeals sends a closing letter to notify taxpayers that their case is being closed.
The ATE:

Generally, APS dates and mails the closing letter, although an ATM may direct a secretary or other employee under their supervision to date and send the closing letter. The date on the closing letter must be on or after the ACAPDATE.

The employee who sends the closing letter will:

If the statute is open under a Form 872-Aand the return is closed no-change, the ATE will prepare a Form 872-T which APS will mail to the taxpayer with the closing letter.

Exercise caution prior to sending a Form 872-T on a no change case. You must ensure carryback years with statutes controlled by the originating year Form 872-A are protected or assessed. The statute date for any carryback returns open under an originating year Form 872-A is 90 days from the date Form 872-T is mailed.

Account and Processing Support (APS) also receives cases for closing action which are not controlled on AIMS.

These Non-AIMS adjustment closings are explained within this IRM under each case type:

Form 3870, Request for Adjustment is prepared and approved by the ATE/ATM and is submitted to APS for processing Non-AIMS account adjustments via CC: REQ54/ADJ54. The Approving Official Signature authorizes APS to process the account adjustments requested by the ATE.

IRM 2.4.16, IDRS Terminal Input - Command Codes REQ54 and ADJ54 provides detailed item entry instructions and explanations for reference by APS TEs authorized to input Non-AIMS adjustments.

APS must verify the following items when entered by ATE, or complete the following items on Form 3870 as follows:

A Form 8485, Assessment Adjustment Case Record or Form 12249, Adjustment Document can be prepared by APS, based on the Form 3870 provided by the ATE, to process the Non-AIMS account adjustments if additional fields are needed since the Form 3870 only allows for 4 TC Numbers to be entered.

The APS TE must verify that their adjustments have posted to the account before closing the PEAS record. PEAS Suspense must be used as appropriate. See IRM 8.20.10, Account and Processing Support - Processing Employee Automated System (PEAS), for additional information.

All adjustments AIMS and Non-AIMS must have the Adjustment Source Document associated with the administrative file as well as a copy of the Adjustment Source Document sent to Campus Files for association with the Form 5147, IDRS Transaction Register when Item 25 SD = "Y" .

The adjustment source document must be affixed to the face of the return or if no return is present, on top of the case closing package serving as the administrative file under Appeals jurisdiction.

The following IRM references provide guidance on Non-AIMS Adjustments and the Correspondence Received Date (CRD):

The Taxpayer Bill of Rights, A Framework for Effective Tax Administration, requires all account actions to be made in a timely and accurate manner. The APS TE must ensure the account actions/updates/adjustments are completed as authorized and the applicable balance due notice, refund of overpayment, and interest adjustment(s) support the following taxpayer rights are upheld with the closing of the Appeals or Tax Court case:

When a case is decided or determined with finality, by Appeals, Counsel, or the United States Tax Court (USTC), the APS Tax Examiner is responsible for taking the following actions:

When the taxpayer's account after posting of the adjustment(s) results in a balance due, a notice to the taxpayer is computer generated unless a HC 2, 3, or 4 is input with the adjustment transaction(s).

When the taxpayer's account after posting of the adjustment(s) results in a credit balance, IDRS will (in most cases) offset the credit to any outstanding balance due account(s) for the taxpayer, and then refund the remaining credit with applicable overpayment interest unless a HC 2 is input with the adjustment transaction(s).

A HC should only be used when appropriate. When the APS TE uses a HC for a specific reason i.e., to hold a credit balance until the credit can be offset to an outstanding balance, the APS TE must ensure that upon completion of the transfer action, the HC is released to allow final settlement of the taxpayer's account.

When the taxpayer's accounts require manual processing of the offset of credit to an outstanding balance due account, the tax examiner performing the account adjustment(s) must ensure that their action fully resolves the taxpayer's accounts before the PEAS record is closed.

The ATE will identify a bankruptcy case on Form 5402, Appeals Transmittal and Case Memo.

The following conditions identify a bankruptcy filing:

Bankruptcy cases require unique processing, statute control and closing procedures.

The ATE will address all Bankruptcy conditions on their case prior to forwarding the case to APS for processing actions whether the case is agreed, or unagreed. The Service is not prohibited from making assessments and the ASED is not suspended as a result of the bankruptcy filing. APS must be aware that on Non-docketed cases, the assessment must be made or the Statutory Notice of Deficiency (SND) must be issued prior to the existing ASED.

Form 5402, Appeals Transmittal and Case Memo, Form 5403, Appeals Closing Record, and closing letter are forwarded to APS by the ATE. The ATE will identify the correct ASED for APS in Item A on the Form 5403.

APS will otherwise use general closing procedures to complete the case processing.

When the ATE submits the unagreed case to APS for issuance of the Statutory Notice of Deficiency (SND), APS will take the following steps:

When the taxpayer files an objection to the Government’s claim during the time the case is in the ATE's active inventory, the ATE will stop working the case, identify the Counsel or the Department of Justice Office address where the administrative file must be sent after issuance of the notice, and forward the case to APS for the following actions:

See IRM 8.20.7.11, Integrated Automation Technology (IAT), for a link to the ESTAB Tool and additional information.

Certain docketed cases may be dismissed by the Tax Court due to lack of jurisdiction.

11 U.S.C.§362(a)(8), states that a case may not be filed with the Tax Court if the automatic stay is in place due to a bankruptcy filing.

To identify these cases, the typical wording from the court on its order of dismissal will state "On (MM-DD-YYYY), respondent filed a Motion To Dismiss for Lack of Jurisdiction, on the ground that the petition was filed in violation of the automatic stay imposed under 11 U.S.C.§362(a)(8). Respondent states in the motion to dismiss that petitioners do not object to the granting of the motion. ORDERED that respondent's Motion To Dismiss for Lack of Jurisdiction is granted and this case is dismissed for lack of jurisdiction."

APS will not process the assessment on these cases.

Docketed cases that are dismissed due to this reason must be returned to the originating function to monitor the bankruptcy. When the automatic stay is lifted or terminates, the originating function will make the assessment at the appropriate time or send the case back to Appeals as a new docketed case if the taxpayer repetitions the Tax Court.

Field sourced cases will be returned to Examination Technical Services Bankruptcy Coordinator. http://mysbse.web.irs.gov/exam/tip/bankruptcy/contacts/12268.aspx

Campus sourced cases will be sent back to the campus functional unit that issued the SND:

To return the case to the originating function, APS will take the following actions:

Complete Form 3210/E3210 as follows:

Complete the remaining fields of Form 3210/E3210 as appropriate.

Figure 8.20.7-1

Completed Form 3210/E3210 for docketed cases being dismissed due to a bankruptcy filing.

Please click here for the text description of the image.

The ATE will prepare and provide Form 5402 with the revised penalty amounts APS needs to update ACDS.

Depending on the resolution, a Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties is prepared by the ATE, and is used as the source document for APS processing adjustment(s).

The following ACDS cc’s apply to the Abusive Transaction Penalty WUNO:

If there is a related income tax work unit, regular closing codes and procedures apply.

Use general closing guidelines for additional ACDS updates required at closing.

Expedited processing is required for these cases.

All adjustments must be made within 5 business days of receipt of the case in APS.

The ACDS cc’s for these types of cases are as follows:

APS will send a copy of the Form 5402, Appeals Transmittal and Case Memo and ACM to the Compliance location identified by the ATE in the remarks section.

Return Preparer Penalties are closed the same as other civil penalty cases with the following additions:

The following ACDS cc’s apply:

Forward copy of ACM and Form 5402 to Compliance per the instructions on the Customized Form 5402.

APS will assess or abate the penalty per the ATE prepared Form 5402 and Form 8278 instructions.

If, in response to a notice of deficiency, the taxpayer submits an agreement or fails to file a petition within the time provided, a notice of claim disallowance must be issued before the case is forwarded for assessment, unless the taxpayer submits Form 2297, Waiver of Statutory Notification of Claim Disallowance.

The tax law provides for interest on overpayments in respect to any internal revenue tax, in accordance with IRC 6611. For an examination-sourced case, Appeals will expedite the closing of an overpayment case that meets the "large dollar criteria" - described in IRM 4.4.18, AIMS Procedures and Processing Instructions, Large Dollar Cases and as shown on Exam’s Form 3198, Special Handling Notice for Examination Case Processing. An overpayment case meets the "large dollar criteria" if the total amount of a period’s tax overpayment plus penalties exceeds $100,000.

Under IRC 6404(e)(1), the Service has the authority to abate interest in certain situations.

The ATE will provide APS with an Abatement of Interest customized Form 5402, an ACM, and Form 3870, Request for Adjustment for each claim period.

For abatement of interest claims allowed in full:

For abatement of interest claims allowed in part:

For abatement of interest claims disallowed in full:

Update ACDS for all abatement of interest closings using general closing procedures and the following cc’s:

The APS TE must resolve all freeze codes on the taxpayer's account to ensure that any refund due to the taxpayer is released and refunded timely.

Use PEAS Suspense when an account adjustment must be monitored until fully posted.

Upon completion of the account adjustment and verification that the appropriate refund amount has been released to the taxpayer, remove the case from PEAS suspense and close PEAS.

See Exhibit 8.20.7-7, for guidance on processing an Interest Abatement case which can be submitted to APS as a partial (interim) or a final determination closing.

Campus claims are normally not controlled on AIMS.

When AIMS controls have not been established, process the adjustment to IDRS using Non-AIMS CC: REQ54:

A separate Form 3870 or Form 8485 is needed for each tax period being adjusted.

Date and mail one of the following closing letters, prepared by the ATE:

These cases are not held for suspense.

The following are the ACDS entries required at closing:

Actions for inputting the adjustment on claims: