8.20.7 Closing Procedures

Manual Transmittal

September 28, 2018

Purpose

(1) This transmits revised IRM 8.20.7, Account and Processing Support (APS), Closing Procedures.

Material Changes

(1) The numeric IRM references included as part of the section and sub-section titles in prior revision to identify Appeals Technical IRM source, are removed in this revision.

(2) To comply with IRM 1.11.2, Internal Management Documents System, Internal Revenue Manual (IRM) Process, a new section IRM 8.20.7.1, Program Scope and Objectives and subsections are added:

  • IRM 8.20.7.1.1, Background

  • IRM 8.20.7.1.2, Authority

  • IRM 8.20.7.1.3, Responsibilities

  • IRM 8.20.7.1.4, Program Reports

  • IRM 8.20.7.1.5, Terms and Acronyms

  • IRM 8.20.7.1.6, Related Resources

    Note:

    As a result, all IRM numbering has changed from the previously published version and thus requires the "Effective Date" of each re-numbered section and subsection be updated, even when the particular section includes no other material changes.

 

(3) Whenever an external IRM citation is provided within this IRM, the author provides a link to the Chapter, Part and Section (example IRM 7.7.7) followed by the exact title of the subsection to assist the reader in locating the original source IRM for the cited guidance along with the specific title the author is referring to. This change is necessary to allow accurate linking to IRM sections regardless of whether or not they have or have not been updated with the new Program Scope and Objectives section; which when next published, will result in numbering changes. When referring to an internal reference (within IRM 8.20.7) the exact section and subsection is provided in full along with the exact title of the section because the exact section number is known.

(4) Editorial changes and Plain Language Writing Style changes are made throughout this revision.

(5) New sub-sections are added, which further changes the IRM sub-section numbering from prior revisions.

(6) A link to the Taxpayer Bill Of Rights as well as references to specific Taxpayer Rights is included in this revision to educate and advise the reader how adherence to the guidance supports Effective Tax Administration and ensures taxpayer accounts are resolved accurately and with finality based upon the Appeals or the United States Tax Court (USTC) determinations (IRM 8.20.7.14.3, Final Disposition of the Taxpayer’s Account Balance). The requirement and step by step instructions for the APS TE to comply with IRC 6631 Notice Requirements whenever restricted interest is manually calculated and posted to the taxpayer’s account is also reinforced within this IRM revision in IRM 8.20.7.7.1, Quick Assessment Requirements.

(7) The term Brookhaven APS is changed to Holtsville APS, and Covington APS is changed to Florence APS for consistency with current APS Office Titles.

(8) Interim Guidance Memorandum AP-08-0915-0007, Interim Guidance on Paperless e-file Case Procedures, is incorporated into IRM 8.20.7.25, e-file Procedures to provide instructions for APS for paperless case closing of e-file Cases.

(9) Interim Guidance Memorandum AP-08-1015-0008, Electronic Storage and Transmittal of Forms 5402 and Appeals Case Memos for Small Business/Self-Employed (SB/SE) Field and Specialty Examination (Exam) Cases is incorporated into IRM 8.20.7.2, Introduction to Closing Procedures and IRM 8.20.7.2.3, Appeals Feedback Loop Requirements.

(10) Interim Guidance Memorandum AP-08-1115-0009, Interim Guidance for Account and Processing Support (APS) Offer Acceptance Report for Offer in Compromise Cases and IGM AP-08-0218-0001, Re-issuance of Interim Guidance for Account and Processing Support (APS) Offer Acceptance Report for Offer in Compromise Cases are incorporated into Accepted OIC - Appeals Considered, IRM 8.20.7.20.18.1.2 (8) and IRM 8.20.7.48.2, Collection Originated OIC Acceptance Procedures.

(11) Deviation Memorandum PQCS-15-01, Electronically Stored Documents in the Appeals Centralized Database System (ACDS) is incorporated into IRM 8.20.7.2.4, IRS Future State Transition to a Paperless Case Environment and IRM 8.20.7.2.4.1, Electronically Stored Documents in the Appeals Centralized Database System (ACDS).

(12) Supplemental Memorandum PQCS-16-02, Memorandum Supplementing Collection Due Process (CDP) Requirements in IRM 8.20.7, Account and Processing Support Closing Procedures is incorporated into this revision in Introduction to Closing Procedures, IRM 8.20.7.2 (6), and Verifying and Correcting CDP Tax Period Discrepancies, IRM 8.20.7.20.1.1 (1) table.

(13) Interim Guidance Memorandum AP-08-0716-0005, Interim Guidance on Specific Dollar Settlements is incorporated into IRM 8.20.7.10.1, Specific Dollar Settlements Under Authority of Policy Statement 8-48 - Non-Docketed Cases.

(14) Interim Guidance Memorandum AP-08-0916-0006, Interim Guidance on Closing Procedures in Collection Cases is incorporated into this IRM in the following sections:

  • IRM 8.20.7.19., Collection Appeal Program (CAP) Case Closing Procedures

  • IRM 8.20.7.20, Collection Due Process (CDP) Overview of Back-End Processing

  • IRM 8.20.7.60, Trust Fund Recovery Penalty (TFRP) Cases

(15) Interim Guidance Memorandum AP-08-0916-0007, Excise Tax Dyed Fuel and Refusal Penalty Cases, is incorporated into IRM 8.20.7.31.2, Dyed Fuel and Refusal Penalty Case Closing to provide guidance for APS to process the account adjustment(s) on this case type.

(16) Interim Guidance Memorandum AP-08-0517-0006, Electronic Storage of Offer in Compromise (OIC) Public Inspection Files (PIF), is incorporated into the following IRM sections:

  • IRM 8.20.7.20.18.1.2, Accepted OIC - Appeals Considered

  • IRM 8.20.7.48.2, Collection Originated OIC Acceptance Procedures

  • IRM 8.20.7.48.2.1, AOIC Closing Procedures for Accepted Offer

  • IRM 8.20.7.48.5.2, Examination or Specialty Originated DATL OIC Cases

(17) Interim Guidance Memorandum AP-25-0817-0009, Interim Guidance on Innocent Spouse Mirroring Requests is incorporated into IRM 8.20.7.39.4 (4), Innocent Spouse Preliminary Closing Procedures and a Note and see also tag to (4) is added in IRM 8.20.7.20.15.3, CDP With an Innocent Spouse Claim.

(18) Whenever Form 3210, Document Transmittal is mentioned, the term E3210 is also mentioned in order to provide flexibility in guidance to accommodate Appeals’ transition to using Small Business/Self Employed (SB/SE) Corporate Database Initiative’s (CDI) Document Transmittal to generate an electronic 3210 (E3210).

(19) IRM 8.20.7.2, Introduction to Closing Procedures includes significant updates:

  • (1) and (3) are updated and reorganized.

  • (4) is reworded to clarify that APS TE’s must follow the guidance and procedures provided in the 8.20 APS IRMs, but must also research the appropriate non-Appeals IRMs for general IDRS, AIMS, and account processing guidance. Non-Appeals specific IRM guidance is the primary source of policy and instructions to staff and is owned by the originating Business Operating Division (BOD). The consistent practice of referencing original source IRM guidance ensures consistency in policy and procedure application throughout the Service.

  • An example is added to (6) to clarify APS Tax Examiner Closing Actions for a CDP WUNO and table information is updated and reorganized based on original clearance comments.

  • (7) - (11) are new paragraphs included to provide clear guidance on the following APS TE responsibilities:
    ▸Verify ASED
    ▸Inventory suspense and monitoring requirements using the Processing Employee Automated System (PEAS)
    ▸Verify interest-related forms and documents are included when applicable
    ▸Prepare Form 3608, to request missing or corrected interest-related documentation
    ▸Entry of PEAS Case Activity Record (CAR) notations to specify actions taken or reason for using PEAS Suspense
    ▸Determine when Disclosure actions are required and complete the Disclosure process whenever applicable

  • (13) list is updated.

  • (14) Reminder is updated.

  • (17) is updated to remove the term "non-docketed" .

  • (20) list is updated.

(20) IRM 8.20.7.2.2, Common Account Adjustment and Research Command Codes Used by APS, is a new section.

(21) IRM 8.20.7.2.3, Appeals Feedback Loop Process and Requirements is a new section.

(22) IRM 8.20.7.2.4, IRS Future State Transition to a paperless Environment is a new section and includes a new subsection IRM 8.20.7.2.4.1, Electronically Stored Documents in the Appeals centralized Database System (ACDS).

(23) IRM 8.20.7.3, Appeals Quality Measurement System (AQMS) Review includes significant updates and also includes a new process for ACDS Category "IC" and "CIC" cases and a table for paperless case AQMS procedures. IRM 8.20.7.3.2.2, AQMS Cases Closed on ACDS and Processed by APS (1) includes a new Exception to define when Form 2275 is not required for a Field Collection-sourced case. A new subsection is added IRM 8.20.7.3.4, Errors That Require Correction but Do Not Require a Potential Error Report (PER).

(24) IRM 8.20.7.4, Complex Interest Quality Measurement System (CIQMS) Notification of Interest Error is added to codify procedures for controlling interest computation error reports and correcting interest errors on Appeals' account adjustments.

(25) IRM 8.20.7.5, Appeals Account and Processing Support Complex Interest Team (APS-CIT) is added to identify the APS-CIT interest-related support responsibilities for Appeals cases.

(26) IRM 8.20.7.7, Expedite Processing for certain Large Dollar Cases > $100,000 is updated and includes a table PEAS Field Entries for Large Dollar and/or Short Statute Expedite Processing. IRM 8.20.7.7.1, Quick Assessment Requirements is updated and (7) is added with a table History Items and Actions Required for Quick Assessments. IRM 8.20.7.7.2, Form 5403, Appeals Closing Record Preparation for AIMS Closure is a new section and the (2) table is now Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed. (3) refers the reader to the IRM Exhibit 8.20.7.14.

(27) IRM 8.20.7.8.1, E3210 Awareness is a new section.

(28) IRM 8.20.7.10, Form 5403 Instructions to APS Worksheet is reorganized and includes both corrected and updated information. Instructions are added to clarify guidance for Counsel Settled cases which do not include a Form 5403 Instruction Worksheet for Item 15 Entries. (4) is added to clarify specific interest related requirements for which APS must request TCS preparation of applicable forms or worksheets when they are not already provided within the case file. (8) is updated and includes instructions for when a case is settled for a specific amount agreed to by both parties.

(29) IRM 8.20.7.10.3, Credit Reference Numbers (CRN) and Item Reference Numbers (IRN), is updated to provide a list of the various returns, forms, and schedules which also have CRNs and IRNs associated with fields on the taxpayer’s account.

(30) IRM 8.20.7.10.4, General Income Tax Credit Reference Numbers and Item Reference Numbers is updated to identify the Form 5403 Item 51, 52, and 53 fields use as AIMS Reason Codes which are required when adjusting specific CRNs/IRNs in Item 15. (3) includes a link to Exhibit 8.20.7-13, Table of the Most Common Credit Reverence Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account. (4) includes a reference to the Decision Table in (5). (5) clarifies existing procedures when more than one adjustment document must be prepared and input to complete the account adjustments as well as a new Decision Table when more than one adjustment document is required to process the changes to the taxpayer’s account and a Reminder is included to ensure awareness of published procedure in IRM 20.2.5, Assessment of Interest Accruals.

(31) IRM 8.20.7.10.5, Refundable and Non-Refundable Credit Adjustments is a new section to clarify the difference between the two types of credit. (5) is added to refer the reader to the EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC) updated section.

(32) IRM 8.20.7.10.6, Self-Employment Tax Adjustment (2) includes a new Reminder to see Exhibit 8.20.7-13, Table of the Most Common Credit Reverence Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account.

(33) IRM 8.20.7.10.7, Schedule H Item Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) and Titles is a new section provided to assist APS with processing cases with this adjustment type.

(34) IRM 8.20.7.10.8, Item Reference Numbers for Estate Tax and Gift Tax (E&G) is updated.

(35) IRM 8.20.7.10.9, Penalty Reference Numbers for IRC § 6662 (Replace PRN 680) for 1040 and 1120 Adjustments is a new section.

(36) IRM 8.20.7.10.10, Penalty Reason Code Entered in Item 02 of Form 5403, Appeals Closing Record is a new section with significant new guidance to clarify the requirement and importance of accurately identifying and entering the correct Penalty Reason Code (PRC) in Item 02 of Form 5403.

(37) IRM 8.20.7.10.11, Restricted Interest and Special Processing Cases is updated to specify the forms Prepared by Compliance and Used to Identify if IRC 6404(g) Applies. This additional guidance is intended to improve interest accuracy and account resolution on Appeals and Counsel Individual Master File (IMF) cases.

(38) IRM 8.20.7.10.11.1, Form 5403, Appeals Closing Record, Item 08 Entry When There Are Two Agreements, IRM 8.20.7.10.11.2, Interest Related Account Features and Awareness, and IRM 8.20.7.10.11.3, APS Responsibility for Identifying and Securing "Interest-Related" Forms and Schedules are updated and/or added to provide APS with guidance to ensure the case received for closing includes all items necessary to ensure accurate account adjustments, correct billing notices and/or correct refunds are provided to the taxpayer.

(39) IRM 8.20.7.10.12, Railroad Retirement Tax is updated to identify the specific items that when present in the case file, are included in the disclosure package for the Railroad Retirement Board (RRB). (4) is added to specify that APS will not enter a Disclosure Code in Item 39 of the Form 5403 to systemically account for the RRB Disclosure.

(40) IRM 8.20.7.11, Integrated Automation Technology (IAT) includes new and updated information.

(41) IRM 8.20.7.13, Administrative File Closing Assembly Order and subsections are updated and reorganized. Assembly Order for Non-Collection Cases is provided in Exhibit 8.20.7-15.

(42) IRM 8.20.7.13.1, Forms Prepared in Appeals Cases (1) list is updated.

(43) IRM 8.20.7.14, AIMS CC: AMCLSA General Processing (4) includes a Caution to clarify that when the taxpayer signs an agreement for an account which includes a TC 150 0.00 Substitute For Return (SFR) and the account includes no other prior tax adjustment, the tax is assessed using deficiency procedures which requires the entry of an Agreement Date for association with the agreed tax assessment. IRM 8.20.7.14.2, Non-AIMS CC REQ54/ADJ54 (3) Caution and (8) added to increase awareness of the Correspondence Received Date (CRD) references in current IRS IRM sections. IRM 8.20.7.14.3, Final Disposition of the Taxpayer’s Account Balance is updated to include the Taxpayer Bill of Rights which are protected when the taxpayer’s account is accurately updated and processed to completion.

(44) IRM 8.20.7.15.4, Bankruptcy - Unagreed Case Processing/Closing is updated to reflect changes requested by Appeals Bankruptcy Program Analyst (04/16/2015).

(45) IRM 8.20.7.16, Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures is updated to specify APS procedures for establishing the Civil Penalty (CVPN) module when necessary and provide cross-reference links to applicable source IRM guidance. (9) last sentence is added to specify that APS will use the Blocking Series 96X to identify that Appeals has made a final determination on the respective account.

(46) IRM 8.20.7.17.6, Excess FICA Tax Claims Processing is added to provide processing guidance and cross-reference links to IRM procedures used by APS Tax Examiners.

(47) IRM 8.20.7.18, Closing Agreements (CA) is updated to correct the "mail to" contact’s name and provide guidance for entering the TC 971 AC 256 for each tax period covered by the CA.

(48) IRM 8.20.7.19, Collection Appeal Program (CAP) Case Closing Procedures is updated.

(49) IRM 8.20.7.20, Collection Due Process (CDP) Overview of Back-End Processing and subsections include significant updates and new sections providing instructions for APS to address and correct account discrepancies at closing.

  • IRM 8.20.7.20.1.1, Verifying and Correcting CDP Tax Period Discrepancies

  • IRM 8.20.7.20.1.2, Processing Employee Automated System (PEAS)

  • IRM 8.20.7.20.2, APS TE CDP Closing Responsibilities Overview

  • IRM 8.20.7.20.3.2.9, IDRS Closing Actions for CDP and EH Cases

  • IRM 8.20.7.20.5, How to Input TC 521 and TC 971 Transaction Codes

  • IRM 8.20.7.20.6, Input of TC 522 for Disregarded and Non-Processable Hearing Requests

  • IRM 8.20.7.20.8, CDP and EH Bankruptcy Case Closing Procedures

  • IRM 8.20.7.20.9, CDP Rapid Response Appeals Process (RRAP) APS Closing Procedures

  • IRM 8.20.7.20.10.1, ACS Notification of CDP and EH Closures Via EEFax

  • IRM 8.20.7.20.11.1, CDP Equivalent Hearing: Decision Letters

  • IRM 8.20.7.20.11.3, CDP/Equivalent Hearing (EH) Disregarded Hearing Letter

  • IRM 8.20.7.20.14, CDP Case Tax Court Decision Closing Procedure

  • IRM 8.20.7.20.14.2, CDP Assessment of Civil Penalties under IRC 6673 Closing Procedures

  • IRM 8.20.7.20.15.1, Currently Not Collectible (CNC)

  • IRM 8.20.7.20.15.2.3, CDP With Related TFRP WUNO

  • IRM 8.20.7.20.16, CDP With an Installment Agreement

  • IRM 8.20.7.20.18, CDP and EH Offer in Compromise (OIC) Processing: Overview and subsections are updated to remove and reorganize information based on previous clearance comments. All AOIC Update instructions are reorganized into Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures.

(50) IRM 8.20.7.21.3, Joint to Separate Return Conversion and IRM 8.20.7.21.4, Separate to Joint Return Conversion are updated for clarification and identification of source IRM guidance.

(51) IRM 8.20.7.23, Department of Justice Cases (8) is updated to clarify that Appeals does not process Department of Justice case determinations and also provides the reference citation IRM 25.3.6, Special Notices of Abatement/Adjustment for the current process in place.

(52) IRM 8.20.7.24, Docketed Cases is updated to specify that all Estate and Gift (E&G), all ACDS Category "IC" , and all ACDS Category "CIC" docketed closings must be processed by APS-CIT. When a docketed E&G, IC, or CIC case is received in an APS office, the Processing Team Manager (PTM) is responsible for preparing and submitting a CIT Referral Form to the *AP Complex Interest email address. (4) Exception is updated to reference the Premature Petition process managed and controlled by the APS DIMS Team.

(53) IRM 8.20.7.24.1, Docketed Cases: Appeals Campus and Appeals Field Closing (1) includes an Exception for "Premature Petition" cases, (4) Note is updated to require that APS verify the Entered Decision or Order of Dismissal is included within the administrative file assembly. (5) and (6) are inserted to provide two options for APS to secure the Entered Decision or Entered Order. (6), (7) is added to specify the APS TE responsibility for verifying the presence or absence of the waiver paragraph on the entered decision document. (8) provides instruction to APS when the waiver paragraph is not included and to provide a link to the Chief Counsel Directives Manual 35.8.2.4, Waiver Paragraph.

(54) IRM 8.20.7.24.2, Dismissed for Lack of Jurisdiction Case Closing, Other Than a Premature Petition or CDP NOD, title is updated, (1) includes new information, and (3) includes significantly updated instructions and 5th bullet statement includes a Reminder to use a Priority Code 8 when applicable to avoid an unpostable condition, a Reminder that the abatement must be posted before the assessment and a Caution to always determine if a hold code is required when processing the abatement adjustment to avoid an erroneous refund.

(55) The following subsections include reorganized, updated and new guidance:

  • IRM 8.20.7.24.3, Dismissed for Lack of Jurisdiction for Assessment of Less than the Notice of Deficiency Amount

  • IRM 8.20.7.24.4, Dismissed for Lack of Jurisdiction - Compliance-Issued Statutory Notice of Deficiency is No-Changes After Petition Filed

  • IRM 8.20.7.24.5, Dismissed for Lack of Prosecution Case Closing

  • IRM 8.20.7.24.7, Docketed Closing When a Delinquent Return has been Processed

  • IRM 8.20.7.24.8, Docketed Closing When a Substitute for Return (SFR) is the Only Return Posted

(56) IRM 8.20.7.25, e-file Procedures includes new procedures for paperless processing.

(57) IRM 8.20.7.27, EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC) includes significant updates as well as additional procedures and guidance to both identify and explain processing actions for setting or resolving the Recertification Indicator (RI) for the following Income Tax Credits covered by the Protecting Americans from Tax Hikes (PATH) Act and compliance with the Earned Income Tax Credit & Refundable Credits Policy & Coordination:

  • Additional Child Tax Credit (ACTC)

  • Child Tax Credit (CTC)

  • American Opportunity Tax Credit (AOTC) (both refundable and non-refundable)

  • Earned Income Credit (EIC)

(58) IRM 8.20.7.28, Employee Tax Compliance (ETC) Case Closing Procedures is updated and IAT information is added.

(59) IRM 8.20.7.29, Employment Tax Case Closing is updated to clarify the requirement for sending Form 5402, Appeals Transmittal and Case Memo to the appropriate feedback loop contact.

(60) IRM 8.20.7.29.1, FICA - Employee Share of FICA Tax Assessment (Form 1040) is updated to include (3) which provides instructions for using Posting Delay Code 1 to cycle the 1040 FICA adjustment and the 1040 Income Tax Adjustment documents.

(61) IRM 8.20.7.29.2, Federal Insurance Contribution Act (FICA) Form 941 (MFT 01) Adjustments is a new section requested by APS West Technical Advisor.

(62) IRM 8.20.7.29.3, IRC § 6205 Interest Free Adjustments Form 941 title is updated per input from APS Technical Advisor and this subsection is moved above IRM 8.20.7.29.4, Federal Unemployment Tax Act (FUTA) Form 940 MFT 10 Adjustments to associate the FICA tax subsections together.

(63) IRM 8.20.7.30, Estate and Gift Tax Case Closing is updated to identify the APS-CIT as the closing function for this case type and to add IAT Tool Fill Forms requirement. The IAT Tool Fill Forms requirement is also added to subsequent subsections. Subsection titles are updated.

(64) IRM 8.20.7.30.4, Docketed and Non-Docketed Estate Tax IRC § 6166 Closing is added to provide detailed guidance for this type of case closing.

(65) IRM 8.20.7.30.5, IRC § 2057 or IRC § 2032A Closing includes a new (8) with instructions for APS to close the case.

(66) IRM 8.20.7.31, Excise Tax IRC § 4251 - Direct Assessment (7) is updated and reorganized.

(67) IRM 8.20.7.31.2Dyed Fuel and Refusal Penalty Case Closing, title is changed and guidance for APS to process these Appeals closings is added. This case type was previously closed on ACDS by APS, who then transmitted the Appeals determination to the National Fuel Compliance Office (FCO) Territory for processing of the penalty adjustment(s) on the CVPN module. The FCO no longer performs the processing action(s) so in addition to updating and closing ACDS for this case type, the processing function for the respective technical employee will now make the CVPN account adjustments in compliance with the official determination made by the respective technical authority.

(68) IRM 8.20.7.37, ID Theft Liability Adjustments and subsections are updated and IDT 48/58 reference in added per previous clearance comment.

(69) IRM 8.20.7.39, Innocent Spouse Case Closing Overview and subsections are updated. IRM 8.20.7.39.4, Innocent Spouse Preliminary Closing Procedures (4) in new and incorporates AP-25-0817-0009, Interim Guidance on Innocent Spouse Mirroring Requests. IRM 8.20.7.39.12, Innocent Spouse AIMS Closings includes significant updated Form 5403 preparation information. IRM 8.20.7.39.14, Innocent Spouse Inputting TC 972 (2) Reminder is added. IRM 8.20.7.39.18, Innocent Spouse Validation Reports (5) includes updated information. IRM 8.20.7.40.2, Installment Agreement in a CDP Case - APS Processing Information is updated and includes new information in (1) and (3).

(70) IRM 8.20.7.40.1, "Installment Agreement (IA) APS General Information" , (9) is updated and (10) is removed to correct the guidance.

(71) IRM 8.20.7.43, MFT 31 Separate Assessment Module Overview and subsections include updated and reorganized guidance.

(72) IRM 8.20.7.43.1, MFT 31 Conditions (1) list is updated and reorganized. A Caution is added to clarify that APS does not have authority to assess, abate, or otherwise adjust an MFT 31 Restitution Based Assessment (RBA). A Reminder is added to clarify that once an SND is issued on an MFT 30 Married Filing Joint (MFJ) account, and each spouse takes a separate resolution action (Agree/Petition/Default) that IRC § 6601 Underpayment Interest law applies to each spouse based upon their respective resolution action. This individual interest application for each spouse was verified and confirmed by the Office of Servicewide Interest (OSI) who consulted with Chief Counsel.

(73) IRM 8.20.7.43.2, MFT 31 Mirrored Accounts, incudes significant changes related to the NEW MFT 31 Process used when one spouse is deceased and their entity Mail Filing Requirement is set to 08.

(74) IRM 8.20.7.44, Manual Refund Processing (2) is new and provides specific policy and procedure changes and links to source IRM guidance.

(75) IRM 8.20.7.45, Non-Docketed Case Closing and subsections are reorganized and include new and/or updated information.

(76) IRM 8.20.7.45.2, Delinquent Return Included in an Appeals Case and IRM 8.20.7.45.3, Substitute for Return (SFR) Cases Processed in Appeals are reorganized and extensively rewritten to provide clear and complete processing instructions for these case closing types.

(77) IRM 8.20.7.46, Non-Filer Barred Refund Statute Expiration Date (RSED) Overpayment Cases subsections were removed and reorganized into the sections identified in Material Change (76) above.

(78) IRM 8.20.7.47, Non-Master File (NMF) Processing includes significant updates and new information.

(79) IRM 8.20.7.48, Offer in Compromise (OIC) Non-CDP Cases subsections are updated to replace references of Letter 673 with Letter 5490, Appeals OIC Acceptance Letter or Letter 5521, Offer in Compromise Acceptance - Doubt as to Liability. Added the statement "or other written authorization, if applicable" following each instance of Form 3040, Authorization to Apply Offer in Compromise Deposit to Liability. Original Form 14640, Addendum to Form 656 is added in several locations per request of the OIC Policy Analyst. Updated subsection titles to include "Specialty" , since Doubt As To Liability (DATL) OICs can come to Appeals from a function other than Examination. OIC Acceptance Procedure sections are updated with the new Public Inspection File (PIF) process and requirements. All AOIC Update instructions have been reorganized into Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures.

(80) IRM 8.20.7.50, Petitioning/Non-Petitioning Spouse Case and all subsections have been significantly reorganized and updated with new and/or reworded information.

(81) IRM 8.20.7.51, Premature Referrals or Improper Referrals and subsections are updated.

(82) IRM 8.20.7.52, Reference Returns is updated.

(83) IRM 8.20.7.53, Statutory Notice of Deficiency (SND) 90-Day/150-Day Case Closing and subsections have been significantly updated and reorganized. IRM 8.20.7.53.1, APS Procedures to Close Agreed Appeals-Issued SND 90-Day/150-Day Cases (1) includes a new "If And Then See" table to outline case conditions and source IRM references for improved clarity of instructions to staff. (2) and (3) are added.

(84) IRM 8.20.7.54, Tax Equity and Fiscal Responsibility Act (TEFRA) Investor Case Closings is updated, reorganized, and (4) includes a new table "Table of Underpayment Interest Rules Applicable to Partnerships" to assist the APS TE with ensuring they have all of the documentation necessary to correctly adjust the taxpayer’s account. (5) includes a new table "Table of Overpayment Interest Rules Applicable to Partnerships" to assist the APS TE with ensuring they have all of the documentation necessary to correctly adjust the taxpayer’s account. IRM 8.20.7.54.3, ACDS Processing is reorganized and updated. IRM 8.20.7.54.5, Closing the CIC Corporation, Joint Committee or Other Corporate Specialty Investor Case is updated and reorganized. (4) incudes a new table "Account/System Update and Closing Instructions for APS Action" .

(85) IRM 8.20.7.56, Tax Exempt and Government Entity (TEGE) Cases is updated and the "TEGE-specific Form 5403 Entries and Instructions" are included in Exhibit 8.20.7-1, Form 5403, Appeals Closing Record Instructions.

(86) IRM 8.20.7.57, Taxpayer Advocate Service (TAS) Cases is a new section added to provide a link to the TAS & Appeals Service Level Agreement web page and resources for handling TAS cases.

(87) IRM 8.20.7.59, Transferee/Transferor Case Closing is updated and (3) includes new information with instructions for posting TC 130/131.

(88) IRM 8.20.7.60, Trust Fund Recovery Penalty (TFRP) Cases is updated. IRM 8.20.7.60.1.1, TFRP TBOR2 Cases for Appeals Quality Measurement System (AQMS) Review is updated, reorganized and includes new information.

(89) IRM 8.20.7.61, Unpostables is updated and IRM 8.20.7.61.2, APS Online Input and Non-AIMS Adjustment Monitoring Procedures (1) includes TC 13X and TC 53X.

(90) Exhibit 8.20.7-1, Form 5403, Appeals Closing Record (Instructions) is completely rewritten, includes significant new information and is restructured to adhere to 508 Compliance requirements. TE/GE Items 702 through 731 tables are appended to Exhibit 8.20.7-1 per previous clearance comment submitted by AP:COS Senior Tax Analyst. Form 5403, FICA Tax MFT 01 Item 12 and Item 15 Entries is a new table developed in conjunction with the new IRM 8.20.7.29.2, Federal Insurance Contribution Act (FICA) Form 941 (MFT 01) Adjustments.

(91) Exhibit 8.20.7-2, Sample AQMS Coversheet is updated and Exhibit 8.20.7-3, ACDS Attachments Required for the AQMS TE/TCS Reviewers is updated.

(92) Exhibit 8.20.7-4, Innocent Spouse - ACDS STATDATE/Statute CODE Table is updated and restructured to adhere to 508 Compliance requirements.

(93) Exhibit 8.20.7-5, Sources of Information and IDRS References is a new exhibit provided to assist the APS TE with processing back-end collection alternatives.

(94) Exhibit 8.20.7-6, How to Determine the TC 521 Date is a new exhibit to assist the APS with accurately identifying the TC 521 Date.

(95) Exhibit 8.20.7-7, APS Instructions - Method and Example For Computing interest Abatement is updated and restructured to adhere to 508 Compliance requirements.

(96) Exhibit 8.20.7-8, General Acronyms and Acronym Definitions included in APS IRMs 8.20.5, 8.20.6, and 8.20.7 is updated to include new acronyms in this revision.

(97) Exhibit 8.20.7-9, Appeals Centralized Database System (ACDS) Acronyms and Codes Included in IRMs 8.20.5, 8.20.6, and 8.20.7 is renumbered due to rearrangement of exhibits and addition of new exhibits per previous clearance comments received.

(98) Exhibit 8.20.7-10, Audit Information Management System (AIMS) Acronyms and Command Codes (CC) Included in IRMs 8.20.5, 8.20.6, and 8.20.7 is updated with new information.

(99) Exhibit 8.20.7-11, Integrated Data Retrieval System (IDRS) and Corporate Files On-Line (CFOL) Acronyms and Command Codes (CC) Included in IRMs 8.20.5, 8.20.6, and 8.20.7 is updated with new information.

(100) Exhibit 8.20.7-12, "Interest-Related" IRC §, Rev. Proc., Rev. Rul., and Applicable IRM References is a new exhibit to provide critical interest-related responsibilities and reference points in one online location for APS TE’s.

(101) 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 is a new table developed to provide APS TE’s with a single reference point for the broadest scope of these codes and rules for posting and adjusting them. Tax law changes, administration of such, and IDRS Programming Requirements, can now require an IMF Reason Code (RC) and a TC 971 AC entries for a number of new Credit Reference Numbers (CRN) and Item Reference Numbers (IRN). This table associates the CRN/IRN with its Source IRM Reference, respective Form used to report each credit type, TC 971 AC required to adjust the CRN/IRN, and the applicable IMF RCs used for both AIMS and Non-AIMS adjustments.

(102) Added Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed relates to Material Change (26) for IRM 8.20.7.7.2, Form 5403, Appeals Closing Record Preparation for AIMS Closure.

(103) Added Exhibit 8.20.7-15, Assembly Order for Non-Collection Cases relates to Manual Transmittal Change (42) for IRM 8.20.7.13, Administrative File Closing Assembly Order.

(104) Added Exhibit 8.20.7-16, TC 520 Closing Codes (cc) and Master File Freezes relates to Manual Transmittal Change (50) CDP and EH Bankruptcy Case Closing Procedures 4th bullet.

(105) Added Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures to consolidate all AOIC update information in one location and reduce unnecessary duplication of instructions in multiple sections.

Effect on Other Documents

This IRM supersedes IRM 8.20.7 dated October 03, 2014 and incorporates the following Interim Guidance Memoranda, Deviation Memorandum and Supplemental Memorandum:
AP-08-0915-0007, Interim Guidance on Paperless e-file Case Procedures
AP-08-1015-0008, Electronic Storage and Transmittal of Forms 5402 and Appeals Case Memos for Small Business/Self Employed (SB/SE) Field and Specialty Examination (Exam) Cases
AP-08-1115-0009, Interim Guidance for Account and Processing Support (APS) Offer Acceptance Report for Offer in Compromise Cases
Deviation Memorandum PQCS-15-01, Electronically Stored Documents in the Appeals Centralized Database System (ACDS)
Supplemental Memorandum PQCS-16-02, Memorandum Supplementing Collection Due Process (CDP) Requirements in IRM 8.20.7, Account and Processing Support - Closing Procedures
AP-08-0716-0005, Interim Guidance on Specific Dollar Settlements
AP-08-0916-0006, Interim Guidance on Closing Procedures in Collection Cases
AP-08-0916-0007, Excise Tax Dyed Fuel and Refusal Penalty Cases
AP-08-0517-0006, Electronic Storage of Offer in Compromise (OIC) Public Inspection Files (PIF)
AP-25-0817-0009, Interim Guidance on Innocent Spouse Mirroring Requests
AP-08-0218-0001, Re-issuance of Interim Guidance for Account and Processing Support (APS) Offer Acceptance Report for Offer in Compromise Cases

Audience

Appeals

Effective Date

(09-29-2018)

Anita M. Hill
Director, Case and Operations Support

Program Scope and Objectives

  1. Purpose. This IRM section describes the closing actions and procedures used by Account and Processing Support (APS). A closing action is required to process the applicable resolution for the Appeals’ or the United States Tax Court (USTC) final determination for the respective taxpayer’s case. APS uses the appropriate closing form(s) and documents provided by the technical employee, to prepare the adjustment document(s) for all database and systems applicable to the taxpayer’s account(s) being released and concluded under Appeals’ or USTC jurisdiction. IRM 8.20.7, Account and Processing Support (APS), Closing Actions:

    1. Provides guidance and procedures for the range of closing actions applicable to the full range of case types under Appeals’ and/or Counsel jurisdiction.

    2. Provides specific instructions for processing closing actions for all systems and databases associated with the taxpayer’s case.

    3. Includes instructions for identifying closing requirements for both docketed and non-docketed cases.

    4. Includes an exhibit for editing and completing Form 5403, Appeals Closing Record.

    5. Includes an exhibit of the Sample Appeals Quality Measurement System (AQMS) Coversheet.

    6. Includes an exhibit for the ACDS Attachments Required for the AQMS TE/TCS Reviewers.

    7. Includes an exhibit for the Innocent Spouse - ACDS Statute Date/Code Table.

    8. Includes an exhibit for Sources of Information and IDRS References.

    9. Includes an exhibit for How to Determine the TC 521 Date.

    10. Includes an exhibit for APS Instructions - Method and Example For Computing Interest Abatement.

    11. Includes an exhibit for General Acronyms and Acronym Definitions Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7.

    12. Includes an exhibit for Appeals Centralized Database System (ACDS) Acronyms and Codes Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7.

    13. Includes an exhibit for Automated Information Management System (AIMS) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7.

    14. Includes an exhibit for Integrated Data Retrieval System (IDRS) and Corporate Files Online (CFOL) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7.

    15. Includes an exhibit for "Interest-Related" IRC § , Rev. Proc., Rev. Rul., and Applicable IRM References.

    16. Includes an exhibit entitled Table of the Most Common Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account.

    17. Includes an exhibit for Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed

    18. Includes an exhibit for Assembly Order for Non-Collection Cases

    19. Includes an exhibit for TC 520 Closing Codes (cc) and Master File (MF) Freezes

    20. Includes an exhibit for Automated Offer in Compromise (AOIC) Update Procedures

  2. Audience. Appeals Account and Processing Support (APS) Employees.

  3. Policy Owner. Appeals Policy is under Director, Case and Operations Support.

  4. Program Owner. Appeals Policy is the program office responsible for providing technical and procedural guidance to the Appeals organization.

  5. Contact Information. Appeals employees follow established procedures on http://appeals.web.irs.gov/directory/contacts.htmHow to Contact an Analyst. All other employees should contact the Product Content Owner provided on the Product Catalog Information page for this IRM.

Background

  1. 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.

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

  3. APS responsibilities are described in IRM 8.20.7.1.3, Responsibilities.

Authority

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

Responsibilities

  1. 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.

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

  3. 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.

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

  5. 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.

  6. 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.

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

    • Receiving, controlling and processing ACDS, AIMS, IDRS and other system/account update requests from the Appeals Technical Employees (ATE) and Counsel Attorney.

    • Mailing closing letters prepared by the technical employee when appropriate.

    • Verifying and updating Assessment Statute Expiration Dates (ASED) for each taxpayer’s account in Appeals’ or Counsel’s jurisdiction.

    • Processing and monitoring final account adjustment processing based upon the disposition of the case to ensure the correct billing notice or refund is released to protect the taxpayer’s right to finality for their respective case.

    • Identifying account adjustment errors and/or unpostable conditions and expeditiously performing corrective actions to ensure the taxpayer’s account is accurate and resolved.

    • Adherence to the Appeals Feedback Loop requirements based upon the case type.

Program Reports

  1. 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:

    • Appeals Centralized Database System (ACDS)

    • Automated Information Management System (AIMS)

    • Automated Offer In Compromise System (AOIC)

    • Innocent Spouse Tracking System (ISTS)

    • Integrated Data Retrieval System (IDRS)

    • Processing Employee Automated System (PEAS)

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

    • IRM 8.10.1, Appeals Reports and Projects - Internal Reports

    • IRM 8.20.2, Account and Processing Support (APS) - IDRS Transcripts and Automated Systems

    • IRM 8.20.3, Account and Processing Support (APS) - Appeals Centralized Database System (ACDS)

    • IRM 8.20.10, Account and Processing Support (APS) - Appeals Processing Employee Automated System (PEAS)

Terms and Acronyms

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

    • Exhibit 8.20.7-10, General Acronyms and Acronym Definitions Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

    • Exhibit 8.20.7-12, Appeals Centralized Database System (ACDS) Acronyms and Codes Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

    • Exhibit 8.20.7-14, Automated Information Management System (AIMS) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

    • Exhibit 8.20.7-16, Integrated Data Retrieval System (IDRS) and Corporate Files Online (CFOL) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

Related Resources

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

    • http://appeals.web.irs.gov/APS/default.htm, Account and Processing Support (APS)

    • IRM 8.20.5, Account and Processing Support (APS) - Carding New Receipts

    • IRM 8.20.6, Account and Processing Support (APS) - Interim Actions

    • IRM 8.20.10, Account and Processing Support (APS) - Processing Employee Automated System (PEAS)

Introduction to Closing Procedures

  1. Account and Processing Support (APS) is responsible for the following closing actions:

    • Processing Master File (MF) and Non-Master File (NMF) account updates and adjustments for all docketed and non-docketed cases in the Appeals work streams

    • Updating and closing Appeals Centralized Database System (ACDS) records

    • Updating and closing Audit Information Management System (AIMS) controls

    • Updating Automated Offer In Compromise (AOIC)

    • Updating Innocent Spouse Tracking System (ISTS)

    • Updating and closing Partnership Control System (PCS)

    • Updating and closing Processing Employee Automated System (PEAS) records

    • Updating taxpayer’s entity e.g. Name Line, Address, Filing Status, etc...

    • Updating taxpayer’s IDRS account(s) via appropriate tax, credit, penalty, interest adjustment(s)

    • Updating all relevant reference item adjustments (TXI, AGI, SE, etc.)

    • Updating taxpayer’s IDRS account(s) via input of miscellaneous transaction codes and/or closing the TC 520 with the correct closing code (cc)

    • Using all applicable processing strategies to avoid an Unpostable Condition on the taxpayer’s account

  2. The term Appeals Technical Employee (ATE), is used throughout this IRM and is defined in exhibit IRM 8.1.1-1, Common Terms Used in Appeals.

  3. The Appeals Team Manager (ATM) will enter the ACAPDATE (ATM Approval Date) on ACDS prior to forwarding the case to APS for closing actions.

    • The ACAP action is required for all CLS (closing) submissions to APS for processing action(s).

    • The ACAP entry generates a PEAS unassigned record for the designated Processing Team Manager (PTM) who then assigns the case to an APS TE.

  4. In addition to researching the Appeals specific IRM's, APS TE's must also research the appropriate non-Appeals IRM's for general IDRS, AIMS, and account processing guidance. Non-Appeals specific IRM guidance is the primary "source" of policy and procedural instruction to staff, owned by the originating Business Operating Divisions (BOD's) and must be referenced as the source information to ensure that all users adhere to the same policy and procedure throughout the Service.

    Reminder:

    Policy and procedural guidance owned by another BOD will not be duplicated within the Appeals Account and Processing Support (APS) IRM's, but will be cross-referenced when appropriate.

  5. Closing procedure details vary based on the type of case being processed, the presence or absence of AIMS Controls, the Master File Tax (MFT) Code, and final disposition of the case.

  6. Closing actions that generally apply to every case type closed by APS are listed below:

    • Analyze IDRS transcript to identify account status and take all necessary adjustment/update actions

    • Confirm critical data fields for Appeals Inventory Validation Program (AIVP)

    • Date and mail closing letters (if applicable)

    • Follow Disclosure Guidelines and transmit copies of the applicable documents to the designated Fed/State Office identified on the Disclosure Spreadsheet

    • Identify and resolve MF Freeze Codes and account conditions when release of the refund or notice is appropriate* (see example below)

    • Process and monitor Non-AIMS Adjustments until posted

    • Process Appeals/Counsel/Tax Court final decision on taxpayer's account(s)

    • Recognize potential Unpostable Conditions and use the correct Priority Code (PC) and/or Transaction Code (TC) to avoid an unpostable

    • Submit cases selected for AQMS to the designated reviewer

    • Transmit Administrative File and account adjustment source documents as appropriate

    • Transmit Form 5402, Appeals Transmittal and Case Memorandum and attachment(s) per ATE instruction to comply with Appeals Feedback Loop agreements. (This action should be taken when ACDS is closed and should not be delayed until PEAS is closed.)

    • Update and close ACDS

    • Update and close AIMS Control(s)

    • Update, suspense, and document Case Activity Records on Processing Employee Automated System (PEAS), and close PEAS inventory case when all processing and monitoring action(s) is/are completed

    • Update tracking systems (AOIC, ISTS)

    • Verify the ATE included all "interest-related" notations, forms and schedules** (see Reminder in (10) below)

    Example:

    *For a Collection Due Process (CDP) WUNO:

    APS TE Closing Actions for a CDP WUNO
    A.) Research IDRS CC: SUMRY to identify the Appeals’ taxpayer accounts (Tax Periods) with collection activity currently suspended in IDRS and Master File (MF) Collection Status 72 with a "-W" freeze.
    B.) Compare the Status 72 tax periods with the tax periods reflected on the ACDS CDP WUNO/ACAP’d Form 5402 for CDP closing actions.
    C.) Steps to Resolve discrepancies:
    1. If the CC: SUMRY tax periods in Status 72 match the tax periods listed on the Form 5402, then no discrepancy exists - comparison complete.

    2. All Status 72 tax period must be researched whether they also have a Master File -L AIMS freeze or not. If one or more tax periods are in Status 72 but they are not included in the CDP WUNO your are currently closing, then use the ACDS Search feature to verify if another CDP WUNO is open for the TIN and includes all of the additional tax periods - go to step 3.

    3. If there are additional periods listed on SUMRY, before contacting the ATE, the account must be researched for an open TC 520 with cc 76/77. Refund litigation cases and accounts related to certain bankruptcies may be in status 72 with a -W freeze. Or, if the separate CDP WUNO includes all of the additional tax periods in Status 72 then no discrepancy exists - comparison complete, Go to Step 5, If not go to step 4.

    4. Use secure email to alert the ATE about the discrepant tax period(s) and place the case in PEAS Suspense until the discrepancy is resolved and additional actions can be taken.
      ✓ Provide the ATE with the WUNO, tax period(s) in Status 72 but not on ACDS or Form 5402, and the TC 520 76/77 date. *The discrepant tax period(s) may be the result of a new CDP case in transit to Appeals for which a TC 522 should not be input.
      ✓ If the ATE verifies that the discrepant tax period(s) should be closed go to step 5.
      ✓ If the ATE verifies that the discrepant tax period(s) should not be closed, go to row D.) and close only the periods included on ACDS and Form 5402.

    5. To close a period in Status 72 per ATE instructions received in step 4, input a TC 522 cc 76/77 with the same date as the TC 520 being reversed. Also close the open control base.

      Caution:

      *Always compare the TC 520 cc 76/77 date with the other CDP tax period’s TC 520 cc 76/77 date to verify that the tax period not already on ACDS is not a new CDP case in transit to Appeals. Do NOT input a TC 522 on a new CDP case in transit/not yet received and carded onto ACDS.

    D.) See IRM 8.20.7.20, Collection Due Process (CDP) Overview of Back-End Processing for continuation of the closing instructions.
  7. Upon receipt of the case, verify that the Assessment Statute Expiration Date (ASED) is correctly reflected on both ACDS and AIMS (when applicable) and ensure that the file contains all returns identified for the Workunit (WUNO) if applicable, per ACDS and Form 3210/E3210. See IRM 8.21.2, Account and Processing Support (APS) Statute Responsibility, for guidance on APS Tax Examiner (TE) statute verification responsibilities. If the correct ASED is not reflected on both ACDS and AIMS, the ASED must be corrected on ACDS within 24 hours of assignment of the case.

  8. The APS TE assigned to close a case must be aware of "interest-related case features" , recognize and analyze "interest-related forms and documents" , and must also recognize when any of the "interest-related instructions" are missing or incomplete.

  9. Whenever an "interest-related form, document, or notation" is missing or incomplete, the APS TE will use encrypted email (Cc both your Processing Team Manager (PTM) and the Appeals Team Manager (ATM) to request the necessary form, document, or notation from the Appeals Technical Employee (ATE) be provided by MM-DD-YYYY (allow 10 business days). Enter the response due date in the subject line of the encrypted email.

  10. If no further action can be taken on the case, place the case in the applicable PEAS Suspense Reason Code*, and set a PEAS Follow-up for the day after the response due date. When the ATE timely provides the requested "interest-related item(s)" , associate the item(s) with the respective case, remove the case from PEAS Suspense, and prioritize the case as appropriate for processing and closing actions. Whenever the ATE/TCS attaches the requested "interest-related" document to the ACDS record using the ACDS Attachment functionality instead of submitting the document directly to the APS TE, they must notify the APS TE. Providing the requested information and notifying APS, closes the document request PEAS suspense period.

    • *S01 - Waiting on ATE for information/response (Use this suspense for non-docketed cases when the ATE did not provide, nor secure the "interest-related" instruction(s) from TCS prior to submitting the case to APS for closing.) The ATE is responsible for preparing the Form 3608 to request "interest-related" instruction(s) from TCS.

    • *S10 - Waiting on TCS information/response (Use this suspense for Docketed cases when Counsel did not provide, nor secure the "interest-related" instruction(s) from TCS prior to submitting the case to APS for closing.) The APS TE is responsible for preparing the Form 3608 to request "interest-related" instructions from TCS.

    Reminder:

    *All MFT 30 cases (whether docketed or non-docketed) received by APS for AIMS closing, must have the applicability of IRC § 6404(g) verified in writing by the ATE, TCS, or Counsel Attorney. The ATE, TCS, or Counsel Attorney will provide a 6404(g) worksheet for all MFT 30 tax periods on which IRC § 6404(g) is applicable, and when IRC § 6404(g) is NOT applicable, the ATE must make a notation on the Form 5402 stating that "IRC § 6404(g) does not apply" . When an MFT 30 docketed case does not already include a Form 5402, the Counsel Attorney will provide APS with the required IRC § 6404(g) information as well as the determination as to if IRC § 6404(g) does not apply whenever appropriate. See IRM 20.2.7, Recording IRC § 6404(g) Notice Date, and IRM 20.2.7, Input of IRC § 6404(g) Notice Date on MF for additional information.

    Note:

    If the case was never assigned to an ATE and the Counsel Attorney did not include the "interest-related" documentation in the docketed case file, the APS TE must submit a request to TCS for preparation of the missing documents. Use APGolf to generate the Form 3608 and select the appropriate TCS ATM from the drop down menu in Item 13. This will systemically generate a Form 3608 assignment to the TCS ATM. The general instructions for preparing the Form 3608 CG, Request for TCS Services are accessible via the Appeals Home Page:
    ⇒ Click on TCS in the menu bar near the top of the page
    ⇒ Click Request for Tax Computation - Instructions and Forms in the For Appeals Only section
    ⇒ Click on a. Appeals - Information for TCS Requests and the General Instructions for Appeals Customers will open
    ⇒ Use the TCS Assignment Grid for Non-ATCL Cases, to identify the correct TCS ATM for your Appeal’s POD (ATCL cases will have been assigned to an ATCL so these procedures do not apply to assigned ATCL cases.)

    Instructions for APS to Complete Form 3608 to Request TCS Preparation of "Interest-Related" Documentation on Docketed Cases

    Information for TCS Requests for Computations Form 3608 Section and Page Number for Instructions
    Identify taxpayer information Box 1 - 6 will auto-populate APGolf Form 3608
    SEQUA Worksheet Box 7 Secondary Items Other 1. pg. 3
    Form 2285 Box 7 Secondary Items Other 2. pg. 3
    IRC § 6404(g) Spreadsheet Box 12 Additional Clarification pg. 4

     

    Exception:

    If the requested "interest-related item(s)" are not received timely, notify the ATE, PTM, and ATM via encrypted email that you are rejecting the case back to the ATE to make it "fit for use." Always include the earliest ASED in the encrypted email subject line. The ATE must make all applicable corrections and resubmit it to their ATM to be reviewed and approved with a new ACAPDATE. Always document the PEAS Case Activity Record (CAR) to reflect your actions and decisions prior to rejecting the case back to the ATE and verify that ACDS is open/reopened as appropriate.

    Reminder:

    APS TEs use PEAS Closing Code (cc) 20 when rejecting a case back to the ATE. When rejecting a case back to the ATE, the APS TE must make sure ACDS is Open. If ACDS has already been closed, use the Special Activities menu option Recall a Closed Case to reopen ACDS controls.

  11. Each administrative file may contain the following items:

    • Appeals generated forms, letters, waivers, notices, and Form 5402, Appeals Transmittal and Case Memorandum (ACM)

    • Statute Extension form(s)

    • Form 5403 Instruction Worksheet

    • Form 3870, Request for Adjustment prepared and signed by the ATE

    • Interest Related Forms and Worksheets

    • Counsel generated forms, letters, settlement computations and transmittal

    • Tax Court Entered Decision or Order Entered document and/or settlement computations

    • Compliance generated forms, letters, waivers, notices and work papers

    • IDRS and AIMS prints utilized by other IRS and Appeals personnel to perform their job duties throughout the casework cycle

    Note:

    For all assigned cases submitted to APS for processing, the ATE is responsible for organizing the administrative file contents in a logical and chronological order prior to submitting the case to their Appeals Team Manager (ATM) for review and approval.

    The ATM will ensure all closing documents relevant to the processing of the case are included in the front of the case for access by APS.

  12. When the APS TE completes a processing action and can take no further action on the case until adjustment verification is received, or the input transaction posts, they must properly notate the PEAS Case Activity Record (CAR), and place the case in PEAS Suspense for the appropriate time frame. PEAS also has a Follow-up Date option which is recommended for the most efficient inventory management. The APS TE must determine the appropriate Follow-up Date based upon the reason they are placing the case in PEAS Suspense.

  13. Types of Appeals Specialized Case Closings and Account Adjustments:

    • Bankruptcy IRM 8.20.7.15

    • Civil Penalty IRM 8.20.7.16

    • Claims IRM 8.20.7.17

    • Closing Agreements IRM 8.20.7.18

    • Collection Appeal Program (CAP) IRM 8.20.7.19

    • Collection Due Process (CDP) IRM 8.20.7.20

    • Conversions IRM 8.20.7.21

    • Criminal Investigation Division (CID) Freeze

    • Department of Justice (DOJ) IRM 8.20.7.23

    • Docketed IRM 8.20.7.24

    • e-fileIRM 8.20.7.25

    • Early Referral IRM 8.20.7.26

    • EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC) IRM 8.20.7.27

    • Employee Tax Compliance (ETC) IRM 8.20.7.28

    • Employment Tax IRM 8.20.7.29

    • Estate Tax & Gift Tax (E&G) IRM 8.20.7.30

    • Excise Tax including Dyed Fuel and Refusal Penalty IRM 8.20.7.31

    • Fast Track Mediation (FTM) IRM 8.20.7.32

    • Fast Track Settlement (FTS) SB/SE IRM 8.20.7.33

    • Fast Track Settlement (FTS) TE/GE IRM 8.20.7.34

    • Foreign Bank and Financial Accounts (FBAR) Penalty IRM 8.20.7.35

    • Freedom of Information Act (FOIA) IRM 8.20.7.36

    • Identity Theft (IDT) IRM 8.20.7.37

    • Individual Retirement Account (IRA) IRM 8.20.7.38

    • Innocent Spouse (INNSP) IRM 8.20.7.39

    • Installment Agreements (IA) IRM 8.20.7.40

    • IRC 7430 Administrative Cost IRM 8.20.7.41

    • Joint Committee IRM 8.20.7.42

    • MFT 31 Separate Assessments IRM 8.20.7.43

    • Manual Refund IRM 8.20.7.44

    • Non-Docketed IRM 8.20.7.45

    • Non-Filer Barred Refund IRM 8.20.7.46

    • Non-Master File (NMF) IRM 8.20.7.47

    • Offer In Compromise (OIC) IRM 8.20.7.48

    • Penalty Appeal (PENAP) IRM 8.20.7.49

    • Petitioning/Non-Petitioning Spouse IRM 8.20.7.50

    • Premature/Improper Referrals IRM 8.20.7.51

    • Reference Returns IRM 8.20.7.52

    • Statutory Notice of Deficiency (90/150-Day) Letter IRM 8.20.7.53

    • Tax Equity and Fiscal Responsibility Act (TEFRA) IRM 8.20.7.54 and IRM 8.20.7.55

    • Tax Exempt and Government Entity (TEGE) IRM 8.20.7.56

    • Taxpayer Advocate Service (TAS) Cases IRM 8.20.7.57

    • Termination and Jeopardy IRM 8.20.7.58

    • Transferee/Transferor IRM 8.20.7.59

    • Trust Fund Recovery Penalty (TFRP) IRM 8.20.7.60

    • Unpostables IRM 8.20.7.61

  14. In docketed cases, verify that the decision document, settlement computation and Form 5403, Appeals Closing Record all contain the same:

    • Taxpayer Identification Number (TIN)

    • Taxpayer Name

    • Tax Period

    • Tax Adjustment Amount

    • Penalty Adjustment Amount

    Note:

    If the docketed case has never been assigned to an ATE and there is no Appeals Time Applied, a Form 5402, Appeals Transmittal and Case Memorandum will not be included with the case or uploaded as an ACDS attachment. Instead, a completed Form 1734, Transmittal Memorandum or other Transmittal/Memorandum prepared by Counsel, will be included with the case and serve as the transmittal.

    Reminder:

    Whether the case is docketed or non-docketed, the accurate application of interest law is mandatory, thus all "interest-related forms, schedules, and notations" must be provided to APS by Counsel and/or TCS to support APS ability to accurately update the taxpayer’s account and accurately process the case resolution adjustments. Whenever "interest-related forms, schedules, and notations" are missing, or are incorrect, the APS TE must prepare Form 3608 to request the missing or corrected information. See IRM 8.20.7.2 (10) Note for procedures on preparing Form 3608. Whenever the case has not previously been assigned to an ATE/TCS, access the TCS Assignment Grid for Non-ATCL Cases via the following link: http://appeals.web.irs.gov/taxcomput/Default.htm to identify the correct TCS ATM on the Form 3608.

  15. All Non-Docketed cases submitted to APS for closing, must either have the Form 5402, attached to the ACDS record, or have a paper copy included in the case file. Regardless of the process used to provide the Form 5402 to APS, (electronic or hard copy), APS must always verify that the Appeals Team Manager (ATM) Approval signature block and the ACAPDATE entry are completed. If the ATM Approval signature is missing on the hard copy, check the ACDS attachments for the WUNO to locate the “ATM-approved” Form 5402. When you cannot locate the "ATM-approved" Form 5402 contact the ATE for assistance.

  16. Interim Guidance Memorandum AP-08-1015-0008, Electronic Storage and Transmittal of Forms 5402 and Appeals Case Memos for Small Business/Self -Employed (SB/SE) Field and Specialty Examination (Exam) Cases superseded the requirement for the ATE/ATM to always include a paper copy of the Form 5402 in the case file. See IRM 8.20.7.2.3, Appeals Feedback Loop Process and Requirements for additional guidance.

  17. In all agreed cases, verify that the signed and executed agreement form, decision document, settlement computation and Form 5403, Appeals Closing Record, all contain the same:

    • TIN

    • Tax period

    • Taxpayer name

    • Tax

    • Penalty

  18. The employee who is responsible for processing the AIMS adjustments must review the Fed/State Disclosure criteria to determine if the IRS has an existing Fed/State Disclosure Agreement applicable to the taxpayer based on their address at the time their return was filed. The link to the Docketed and Non-Docketed Disclosure spreadsheets and the Disclosure Codes is available on the APS web page at http://appeals.web.irs.gov/APS/default.htm, under the FED/STATE ISSUES SECTION. Follow the Docketed or Non-Docketed Disclosure guidance provided for the state in which the taxpayer lived at the time they filed their return. If there is an existing Fed/State Agreement in place for the State and type of tax return being processed, the spreadsheet will identify the type(s) of documents you must copy and include in the Disclosure Package. The spreadsheet will provide the address and designated name to include in the "Attention:" line to which the Disclosure Package must be mailed. All documents containing PII must be transmitted via Form 3210/E3210. Each time you perform a disclosure, you must also document the taxpayer's account by entering the applicable State Disclosure Code in Item 39 on Form 5403, Appeals Closing Record.

  19. If Compliance sends a disk containing the work papers, RAR, etc., leave the disk in the administrative file.

  20. Valid ACDS CLOSINGCDs (cc):

    • 03 - Agreed Pre-Ninety

    • 04 - Agreed Statutory Notice of Deficiency/Non-Filer

    • 05 - Defaulted Statutory Notice of Deficiency

    • 08 - Agreed Docketed - Appeals Secured Agreement

    • 10 - Agreed Docketed - Counsel Secured Agreement with Appeals Time

    • 11 - Dismissed for Lack of Jurisdiction (Appeals-Issued Statutory Notice of Deficiency or Notice of Determination ONLY)

    • 12 - Dismissed for Lack of Prosecution (Appeals-Issued Statutory Notice of Deficiency or Notice of Determination ONLY)

    • 13 - Unagreed Pre-Ninety/CDP Disregarded Request/Section 6330(g)

    • 14 - Claim Fully Disallowed/OIC Rejected/Penalty Appeal Fully Sustained

    • 15 - Claim Fully Allowed/OIC Accepted/Penalty Appeal Fully Abated

    • 16 - Claim Partially Allowed/OIC Withdrawn/Penalty Appeal Partially Abated

    • 17 - Tried Tax Court Case

    • 18 - TEFRA key/other Department of Justice (DOJ) case Claims Court

    • 19 - TEFRA key/other Department of Justice (DOJ) District Court/Bankruptcy

    • 20 - Premature Referral/Returned to Campus or Compliance Technical Services Function

    • 21 - Premature Referral Jurisdiction Released/Returned to Compliance Technical Services (CTS), Dismissed Compliance Area or Campus Notice cases with No Appeals time, or a Tried Counsel Secured Agreement that was never assigned in Appeals

    • 30 - Transfer to Another Appeals Area

    • 40 - Reassigned Within the Same Appeals Area

    • 42 - Docketed Appeals Jurisdiction

    • 43 - Docketed Counsel Jurisdiction (Trial Prep)

    • 45 - Reference/Team Member Closing

    • 98 - Reject Corrected

    • 99 - Removed

Appeals Inventory Validation System (AIVP)

  1. 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.

Common Account Adjustment and Research Command Codes Used by APS

  1. 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.

    Command Code (AIMS/CAF/CFOL/IDRS/PCS) Internal Revenue Manual
    • ACTON


    (IDRS)
    IRM 2.3.12, Command Code ACTON
    • ADD24/34/48

    • ADC24/34/48


    (IDRS)
    IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48
    • ADJ54

    • REQ54


    (IDRS)
    IRM 2.4.16, Command Codes REQ54 and ADJ54
    • AM424


    (AIMS)
    IRM 2.8.2, AIMS Command Code AM424
    • AMAXU


    (AIMS)
    IRM 2.8.6, AIMS Command Code AMAXU
    • AMCLS


    (AIMS)
    IRM 2.8.7, AIMS Command Code AMCLS
    • AMDIS


    (AIMS)
    IRM 2.8.3, AIMS Command Code AMDIS
    • AMSOC


    (AIMS)
    IRM 2.8.5, AIMS Command Code AMSOC
    • AMSTU


    (AIMS)
    IRM 2.8.4, AIMS Command Code AMSTU
    • BMFOL

    • BMFOLR


    (CFOL)
    IRM 2.3.59, Command Codes BMFOL and BMFOLR
    • BRTVU


    (CFOL)
    IRM 2.3.57, Command Code BRTVU
    • CFINK


    (CAF)
    IRM 2.3.31, Command Codes CFINK, RPINK, KAFFQ and KAFTQ for CAF Inquiry
    • EMFOL


    (CFOL Entity)
    IRM 2.3.64, Command Code EMFOL
    • ENMOD


    (IDRS Entity)
    IRM 2.3.15, Command Code ENMOD
    • ENREQ

    • INCHG

    • IRCHG

    • BNCHG

    • BRCHG


    (IDRS Entity)
    IRM 2.4.9, Command Codes ENREQ, INCHG, IRCHG, BNCHG and BRCHG
    • ESTAB


    (IDRS)
    IRM 2.3.62, Command Code ESTAB
    • IDT48

    • IDT58

    • RPM48

    • RPM58


    (IDRS)
    IRM 2.4.61, Command Code IDT48/IDT58/RPM48/CSO48/CSO58
    • IMFOL


    (CFOL)
    IRM 2.3.51, Command Code IMFOL
    • INOLE

    • SPARQ


    (CFOL)
    IRM 2.3.47, Command Codes INOLE, EOGEN, and SPARQ
    • INTST

    • ICOMP

    • COMPA


    (IDRS)
    IRM 2.3.29, Command Codes INTST, ICOMP, and COMPA
    • ISTSD


    (IDRS)
    IRM 2.3.76, Command Code ISTSD
    • ISTSE


    (IDRS)
    IRM 2.3.77, Command Code ISTSE
    • ISTSR


    (IDRS)
    IRM 2.4.56, Command Code ISTSR
    • MFREQ

    • RECON


    (IDRS)
    IRM 2.3.10, Command Codes MFREQ and RECON
    • NAMES

    • NAMEE


    (CFOL Entity)
    IRM 2.3.60, Command Codes NAMES, NAMEE, NAMEI, NAMEB, FINDS, FINDE, AND TPIIP
    • REQ54

    • ADJ54


    (IDRS)
    IRM 2.4.16, Command Codes REQ54 and ADJ54
    • REQ77

    • FRM77

    • FRM7A


    (IDRS)
    IRM 2.4.19, Command Codes REQ77, FRM77 and FRM7A
    • RTVUE

    • RTFTP


    (CFOL)
    IRM 2.3.52, Command Code RTVUE and RTFTP
    • STAUP

    • STATI

    • STATB


    (IDRS)
    IRM 2.4.28, Command Codes STAUP, STATI AND STATB
    • TERUP


    (IDRS)
    IRM 2.4.13, Command Code TERUP
    • TRDBV

    • TRPRT


    (CFOL)
    IRM 2.3.73, Command Codes TRDBV, TRERS, TRPRT, and R8453
    • TSCHG


    (PCS)
    IRM 2.2.3, PCS Command Code TSCHG
    • TSCLS


    (PCS)
    IRM 2.2.7, PCS Command Code TSCLS
    • TSUMY


    (PCS)
    IRM 2.2.9, PCS Command Code TSUMY
    • TXMOD

    • SUMRY


    (IDRS)
    IRM 2.3.11, Command Codes TXMODA and SUMRY
    • UPDIS


    (Generalized Unpostable Framework (GUF))
    IRM 2.3.48, Command Code UPDIS for the GUF System
    • UPTIN


    (GUF)
    IRM 2.3.37, Command Code UPTIN for the GUF System
    • XSINQ


    (Excess Collection File (XSF))
    IRM 2.3.45, Command Code XSINQ

Appeals Feedback Loop Process and Requirements

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

  2. 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.

  3. Whenever the ATE provides instructions to transmit a copy of the Form 5402 and ACM back to the Compliance Function, APS must do so via an encrypted electronic process whenever possible, and only 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. This electronic storage and transmission process is in accordance with the Government Records Directive, as noted in Office of Management and Budget’s (OMB) memorandum, dated August 24, 2012.

    Note:

    APS is not required to prepare or include a Form 3210/E3210 when electronically transmitting the Appeals Feedback Loop file via encrypted email.

    The Step Action Chart below provides instructions for APS Employees to electronically transmit Appeals Feedback Loop documents to the Compliance Function designated by the ATE on Form 5402:

    Step Action Chart for Transmitting the Electronic Appeals Feedback Form 5402 to Compliance

    Step No. Action
    1 Perform ACDS closing data entry and validation using existing procedures.
    2 Save the ACDS Form 5402 and ACM attachment named "WUNO-XXXXXXXXXX-ACM" to your computer. (The actual WUNO is inserted in place of the Xs.)
    3 Open the saved Form 5402 and select the email option from the PDF to generate an email to the Compliance Function identified by the ATE in the "Instruction to APS" field.
    4 Attach the Form 5402 and ACM file saved in Step 2 to the email opened in Step 3.
    5 Encrypt the email and enter the following information in the Subject line:
    "WUNO-XXXXXXXXXX" (inserting the correct WUNO for the Xs.)
    Click Send
    6 Delete the saved ACM from the temporary working folder on your computer.

     

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

    1. Transmit all hard copy documentation containing Personally Identifiable Information (PII) via Form 3210/E3210. In a high volume office the Form 5402 and ACM Feedback Copies can be batched and submitted to the appropriate office weekly. In a lower volume office, each Form 5402"Feedback Copy" may be transmitted individually. Local procedures should be implemented and followed based on efficiency, accuracy and mail cost savings.

    2. Use Form 3210/E3210 for the purpose of transmitting ACM Feedback Copies which list the name control and TIN of each case for which PII is being transmitted. Follow existing Form 3210/E3210, suspense and follow-up guidance to verify the PII is received by the designated recipient and the acknowledgement copy is returned timely. In addition, maintain a copy of the Feedback Loop Form 3210/E3210, in a separate binder to verify the feedback was sent to the address designated by the ATE on the Form 5402.

      Caution:

      Do not send the administrative file to the address on the Form 5402 line identified as "APS Mail/FAX Form 5402 and ACM To:"

IRS Future State Transition to a Paperless Case Environment

  1. The IRS Future State transition is in process and APS case receipt, processing and closing actions will adjust as each case type or work stream becomes paperless.

  2. Several paperless case projects involving APS case actions have already been implemented and whenever possible, the processing guidance in this IRM is written in a way to allow for agile inventory management between a paper case processing procedure to a paperless case processing procedure. This is a transition strategy implemented to allow the most efficient use of the guidance in this IRM without requiring extensive updates as well as to mitigate the expense of repetitive IRM clearance and publishing.

  3. The Managing Government Records Directive M-12-18 is accessible via the following link - Office of Management and Budget (OMB), M-12-18 dated August 24, 2012.

Electronically Stored Documents in the Appeals Centralized Database System (ACDS)
  1. 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:

    • Electronic cases require all case documents to be attached to the ACDS record

    • Paper cases may require APS to print the respective document(s) for association with the case file, as well as create a pdf record to upload as an ACDS attachment

    • It is no longer necessary to print paper copies of the document if the sole purpose is for storage and retention in the administrative file.

    • If existing guidance requires mailing a paper copy of the documents to another operating division (for example, feedback loop purposes), then existing guidance remains in effect.

    • See (2) below for additional information about documents which APS must continue to print and associate with the paper case file, as well as hardcopy documentation requirements for manual interest computations.

  2. 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.

    Note:

    When a paper copy of the various document(s), form(s) and/or interest computation is required to be associated with the paper case file, the APS TE can also upload the item as an ACDS attachment. This practice facilitates post-closure access to an item that would otherwise require an ESTAB request for the paper case file from Campus Files or another function.

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

    • Form 2859, Request for Quick or Prompt Assessment

    • Form 3753, Manual Refund Posting Voucher

    • Form 3870, Request for Adjustment

    • Form 5403, Appeals Closing Record

    • Form 5792, Request for IDRS Generated Refund (IGR)

    • Form 8485, Assessment Adjustment Case Record

    • IRM 20.2.1, Manual Calculation of Interest - Documentation provides details for the interest computation documentation requirements.

    • IRM 8.20.6, ACDS Attachments provides details for uploading an item as an ACDS attachment as well as a recommended attachment description process.

Appeals Quality Measurement System (AQMS) Review

  1. AQMS relies on a statistically valid sample of closed cases in completing the quality review of the Appeals process. AQMS selects cases for review by setting a unique skip interval of closed cases for each area on ACDS. These individual skip intervals are monitored throughout the year and are adjusted accordingly by AQMS.

  2. The validity of the statistical sample is critical to AQMS and the receipt of selected cases directly impacts the ability to achieve a statistically valid sample. In order to ensure the validity of the reviews, the Manager, AQMS periodically sends a report of cases selected but not received to the Director, APS for appropriate follow-up.

  3. Standard 8 measures the following actions taken by APS employees on Collection cases:

    1. Compliance with processing procedures for CDP/EH, OIC, CAP and TFRP cases

    2. Accuracy of adjustments

    3. Appropriateness of time spans

  4. Standard 8 Collection cases are rated at the maximum allowable score when the following occurs:

    1. Front-end and back-end processing procedures for Collection cases are correctly applied

    2. Adjustments are accurately processed and posted prior to sending the case to AQMS and

    3. APS employee's actions are timely and appropriate

  5. Standard 8 measures the following factors on Non-Collection cases:

    1. Accuracy of interest computation(s)

    2. Accuracy of ACDS Update(s)

    3. Final closing documents and processing instructions are accurate and present

    4. Computational and assessment/abatement procedures are followed

    5. Accuracy and timeliness of assessments/abatements

    6. Appropriate time spans and time applied

  6. Standard 8 Non-Collection cases are rated at the maximum allowable score when the following occurs:

    1. Interest is correctly computed by the TE

    2. ACDS is updated with the revised statute date and tax/penalty/claim amount

    3. All final closing documents and instructions are accurately prepared and in the administrative file

    4. Proper procedures for assessment/abatements are applied

    5. Assessments/abatements are completed timely and accurately

    6. Time span and time applied are appropriate

Automated AQMS Coversheet

  1. 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.

  2. The APS employee closing the case will:

    • Print, the AQMS Coversheet

    • Attach the AQMS Coversheet to the front of the case file.

      Exception:

      ACDS Category "IC" and "CIC" cases selected for AQMS, see IRM 8.20.7.3.2.5.1, ACDS Category IC and CIC Cases Selected for AQMS Review for procedures.

    • Process the case and attach the AQMS TE-required reviewer documentation to the file and/or ACDS Record. Verify the AQMS TCS-required reviewer documentation is attached to the ACDS Record and upload missing documentation as necessary.

      Reminder:

      The ACDS Attachment requirement applies only to AQMS-selected cases closed by APS on ACDS with account adjustment(s) processed by APS.

Cases Selected for AQMS Review

  1. Four types of cases will be identified for AQMS review:

    1. Cases closed on ACDS but account adjustments are not processed by APS - These cases are normally Collection cases. See IRM 8.20.7.3.2.1 for instructions on closing Collection cases selected for AQMS Review. APS will not re-charge the Collection case types identified in IRM 8.20.7.3.2.1 to AQMS.

    2. Cases closed on ACDS and Non-AIMS Collection cases* that require account adjustments are processed by APS - *These cases are normally non-AIMS but may include some Collection cases that require APS to process account adjustments. When a case is selected for AQMS review, the case will be identified via the AQMS Coversheet (Exhibit 8.20.7-2) and a six-digit number listed on the AQMSSELECT line located on the case summary card. After processing the AIMS/Non-AIMS adjustment(s), the APS TE will suspense and monitor the taxpayer’s account(s) until all adjustments have posted to the account, and AIMS controls are closed as appropriate. The entire administrative file is then forwarded by APS to the AQMS Reviewer.

      Reminder:

      APS must suspense and monitor the case until all required Appeals adjustments, credit transfers, etc., are posted to the account(s) before submitting the case to AQMS. APS must also Use CC: ACTON to close any Open Appeals IDRS Control Base, 66XXX, prior to releasing the case to AQMS.

    3. ACDS Category IC and CIC Cases Selected for AQMS Review - see IRM 8.20.7.3.2.5.1 for APS procedures.

AQMS Cases Closed on ACDS But No Tax, Penalty, or Interest Adjustments are Processed by APS
  1. The table below identifies specific types of cases, some of which APS processes an adjustment as an interim action but for which an adjustment is not processed at closing:

    Type of Case Action
    Collection:
    • Collection Due Process (CDP)

    • CDP and EH

    • CDP with OIC

    • CDP with liability issue or penalty appeal

    • Equivalent Hearing (EH)

    • Offer in Compromise (OIC)

    • Trust Fund Recovery Penalty (TFRP) (also see additional instructions below)

    • TFRP Claim

    • Print, complete and attach the AQMS Coversheet to the front of the file.

    • Process all required Appeals account updates (suspense and monitor the case until all account updates are posted i.e., credit transfers, TC 481, 521, 571 etc., before submitting the case to AQMS).

      Note:

      EH Cases with Related CDP Cases Selected for Review - Attach the EH AQMS Coversheet generated on the AQMS selected case to the CDP case and annotate "EH selected for AQMS review forward to AQMS upon final closure of the related CDP case."

    Paperless Collection Appeal Program (CAP) APS will:
    • Save the AQMS Review Selection Sheet as a pdf file Example: "AQMS 9945320015 CAP.pdf" . The number included in the file name is the WUNO

    • Forward the entire electronic CAP case file along with the AQMS Review Selection Sheet pdf file to the designated AQMS Reviewer via encrypted email.

    • APS will select the "Request Delivery Receipt" option to track the email.

    • The "Request Delivery Receipt" replaces the need for APS to create an electronic Form 3210/E3210.

    • When the APS TE receives verification of delivery of the electronic case file to AQMS, it serves the same purpose for APS as the return of Form 3210/E3210 and the TE will update the ACDS FROMDATE to close the record.

    • The AQMS Reviewer will purge the CAP email upon completion of their review.

    FBAR
    • EEFax Form 5402 and if agreed, also fax the Form 13449, Agreement to Assessment and Collection of Penalties Under 31 USC 5321 (a)(5) and 5321 (a)(6) to Enterprise Computing Center (ECC).

    • Suspense case in PEAS until assessment of the verification is received.

    • Print, complete and attach the AQMS Coversheet to the front of the file.

    • Send the original FBAR case directly to the AQMS Reviewer with a copy of the Appeals generated documents and applicable adjustment document(s).

    • Prepare the Form 3210/E3210 for AQMS to send the FBAR case to the ECC after their review is completed.

    TFRP TBOR2 cases
    • See IRM 8.20.7.60.1.1, TFRP TBOR2 Cases for Appeals Quality Measurement System (AQMS) Review for procedures.

    Dyed Diesel Fuel
    • Send the original case file to the originating function.

    • Send the AQMS Coversheet and copies of the file to the AQMS Reviewer.

  2. F-3210/E3210 Procedures for Returning cases after AQMS review. When the APS TE closes a case type identified above for AQMS Review, the following procedures apply:

    • Complete Form 3210/E3210, for the AQMS Reviewer to use when shipping to the recipient. Ensure the proper address, return information and your return address is notated with your name, phone and fax numbers as the releasing official.

    • Prepare a separate Form 3210/E3210, for each recipient, if the case requires multiple recipients.

    • Sign and address the Form 3210/E3210, as the Releasing Official. Send all 4 parts of the Form 3210 or 2 prints of the E3210, to the AQMS Reviewer.

    • Ship the case to the AQMS Reviewer with all Form 3210/E3210s in an envelope/file folder notated "Form 3210/E3210" and the Reviewer's name.

    • See Table #1 Form 3210 Part and Purpose below if you generate Form 3210 from ACDS and are not actively using the Transmittal Database to generate E3210s.

    • See Table #2 E3210 Print and Purpose below if you are actively using the Transmittal Database to generate E3210s.

      Note:

      If there are any potential errors, the AQMS Reviewer may return the case to the originating APS office for corrective action.

    Table #1 Form 3210 Part and Purpose

    Form 3210 Part Purpose
    Part 1 For the recipient(s) records.
    Part 2 For the AQMS Reviewer to retain for his/her records.
    Part 3 For the recipient(s) to acknowledge receipt of the case and return to the originator.
    Part 4 For the AQMS Reviewer to return to the APS TE upon shipment of the case to the recipient(s). In addition, the AQMS Reviewer will provide a copy of the UPS Shipping Receipt which lists the UPS tracking numbers or submit Form 12634, Routing Sheet when tracking is not applicable.

    Note:

    The return of Part 4 of Form 3210 along with a copy of the UPS shipping receipt from the AQMS Reviewer will provide notification of the date the AQMS Reviewer shipped the case to the recipient(s). Perform Form 3210 follow-up as needed after receipt of those documents.

  3. When the APS TE has access to the SB/SE CDI Transmittal Database Production Site and initiates E3210s instead of Form 3210s, only 1 print of the E3210 is needed to transmit the paper case to the AQMS Reviewer. The AQMS Reviewer will verify the item(s) listed on the E3210 as received, then sign and date the E3210 as acknowledged and return the acknowledged E3210 to the EEFax number identified by the initiator. Upon receipt of the EEFax acknowledged E3210, the initiator will follow procedures in http://imdtrack.web.irs.gov/IG_Uploads/IRS.gov_Yes/OUO_No/ap-08-0617-0008.pdf to file the acknowledged E3210 in the mailbox folder by (Month, YYYY), and also "self-acknowledge" the E3210 in the Transmittal Database. This closes the E3210 process with only 1 paper print needed to transmit the paper case to AQMS.

    Exception:

    As the E3210 process is expanded from the Appeals Test Team to additional Appeals Functions, the extra printing for the AQMS Reviewer’s "3210 package" will become obsolete because of the E3210 Forward Transmittal functionality.

  4. When both the E3210 Initiator and the E3210 Recipient have access to the SB/SE CDI Transmittal Database, then the receipt and acknowledgement process is performed within the Transmittal Database and the EEFax acknowledgement process is not necessary.

  5. See Table #2 below for the E3210 print requirements for the AQMS E3210 Envelope/Folder Package:

    Table #2 E3210 Print and Purpose for AQMS Cases ONLY

    E3210 Envelope/Folder E3210 Details Purpose
    2 Prints
    • Addressed to the appropriate Campus Files Function using the applicable Distribution ID

    • APS TE information entered as the initiator

    • Request Acknowledgement via EEFax

    • 1 print of E3210 is for the Campus Files EEFax Acknowledgement upon receipt of the case after the AQMS Review is completed.

    • 1 print is for the AQMS Reviewer to retain for their records after they EEFax it to the APS TE once they’ve shipped the case to Campus Files.

    • In addition, the AQMS Reviewer will EEFax a copy of the UPS Shipping Receipt which lists the UPS tracking numbers or EEFax the Form 12634, Routing Sheet when tracking is not applicable.

  6. Upon completion of the AQMS review, the AQMS reviewer will use the Form 3210/E3210 prepared by APS to transmit the case to the campus files and/or field function as appropriate. If APS did not provide the Form 3210/E3210 for AQMS to transmit the reviewed file to the campus files function, AQMS will return those files to the originating APS office.

  7. Update the ACKCLS FROMDATE upon receipt of the Form 3210/E3210 acknowledgement from the campus files and/or field function to avoid cases aging on the ACDS ACKCLS follow-up report during the AQMS review time frame.

AQMS Cases Closed on ACDS and Processed by APS
  1. When identified as an AQMS selected review case, the following actions will be taken:

    1. Print the pre-populated AQMS Coversheet and attach it to the front of the file. See Exhibit 8.20.7-2, Example of AQMS Coversheet.

      Note:

      AWR-326 which deployed in August, 2017, now auto-populates the APS TE information on the AQMS Coversheet.

    2. Process all required Appeals adjustments. (APS must suspense the case until all required Appeals adjustments, credit transfers, etc., are posted on the transcript before sending the case to AQMS).

    3. Make the required copies for the applicable AQMS TE/TCS packages (See Exhibit 8.20.7-3 for a listing of required documentation when a manual interest computation is prepared.)

    4. Re-charge the file to the AQMS Reviewer assigned to the case at the time of closing. Use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge including the AQMS Reviewer's name and office address in Part C section 15 E on the Form 2275 for case tracking purposes. In addition enter in remarks "Please enter new DLN from Form 5147 in Item #6" . Attach Form 2275 to the APS Adjustment Document (Form 5403/3870/8485/IAT Tag, etc...) and ship to the appropriate Campus Files Function.

      Reminder:

      When the Campus Files Function returns the receipted Form 3210/E3210 acknowledging receipt of the refile package for association with the Form 5147, Transaction Register, the APS TE will enter the FROMDATE to close the ACDS record and eliminate the potential for the ACDS record to reflect as overage on the ACKCLS Follow-up Report during the time AQMS is completing their review.

      Note:

      If AQMS returns the case to APS for corrections, the APS TE can open a new PEAS case without ACDS being open.

      Exception:

      Form 2275 is NOT required for a Field Collection-sourced case on which no account adjustment was processed. Whenever a TC 290 for 0.00 or any dollar amount is processed, then Form 2275, Records Request, Charge and Recharge is necessary for proper handling by the Campus Files Function.

Controlling Cases Shipped to AQMS Reviewers
  1. Take the following actions on ACDS for cases selected for AQMS review:

    • Update the LACTION field in CASES to QXXX, with XXX equal to the AQMS Reviewer's POD initials.

    • Prepare Form 3210/E3210 when sending the case to the AQMS Reviewer and monitor the Form 3210/E3210 suspensed copy to verify receipt of the acknowledgement copy returned by AQMS.

    • Enter LACTION To Date - the date the case is sent to the AQMS Reviewer.

    • Enter LACTION From Date - the date the Form 3210/E3210 acknowledgment is received from the AQMS Reviewer.

    • Update the ACKCLS FROMDATE upon receipt of the Form 3210/E3210 acknowledgement received from the Campus Files Function to avoid cases aging on the ACDS ACKCLS follow-up report during the AQMS review time frame.

Related Cases with a Different WUNO
  1. Send related cases with a different WUNO to the AQMS Reviewer. The Reviewer will determine if the case file forwarded to AQMS contains sufficient information for conducting a review. In general, the AQMS Reviewer needs all items that were produced by the ATE, such as Form 5402, ACM, settlement computation, Appeals correspondence/issue files, etc. for the AQMS selected case as well as what was received from the originating function (e.g., tax returns, administrative/workpaper files obtained from the Revenue Agent, Revenue Officer or Service Center). Complete case file information also includes the Appeals case files for any cases related to the case selected for AQMS review.

    Note:

    If you have any questions as to which specific related case(s) must be sent with the AQMS selected case, contact the AQMS ATE Reviewer for clarification.

  2. Examples of related cases are provided in the table below:

    Type of Case Types of Related Cases
    Non-Collection Cases
    • Flow Through Entities such as Partnerships, "S" Corporations, Trusts/Estates

    • Examinations of Individuals and Corporations with proposed offsetting, whipsaw and other types of issues

    • Employment Tax cases

    • Transferee/Transferor cases

    Collection Cases
    • OICs filed during CDP cases and the related CDP case

    • Related CDP lien and levy cases

    • Timely CDP and related Equivalent Hearing (EH) cases

    • Related officer files for TFRP cases

    • Related OIC files (i.e., if husband and wife have separate offers, AQMS needs the related file)

    • Underlying liability and Innocent Spouse files related to CDP/EH cases

Shipping Cases to the AQMS Reviewer
  1. Each Area Office has specific AQMS Reviewers assigned based on the type and grade of the case. The AQMS Reviewer's name and POD are found on the generated selection sheet. See IRM 8.20.7.3.2.5.1, ACDS Category IC and CIC Cases Selected for AQMS Review for APS procedures when an ACDS category "IC" or "CIC" case is selected for AQMS review.

  2. Use the following instructions for the shipment of cases to the AQMS Reviewer:

    1. Forward the AQMS selected case along with all related cases to the attention of the AQMS Reviewer listed on the AQMS Coversheet.

    2. Enter the AQMS Reviewer's name and office location on the Form 3210/E3210 and annotate "AQMS REVIEW - NOT FOR CARDING BY APS."

    3. List the AQMS selected case along with the related cases (if applicable) on the Form 3210/E3210.

    4. Add the AQMS Reviewer's name on the shipping envelope/boxes to facilitate easy identification of the work.

    5. For non-Collection cases, include copies of various documents for the AQMS TE/TCS Reviewers. Refer to Exhibit 8.20.7-3 for details.

ACDS Category IC and CIC Cases Selected for AQMS Review
  1. All ACDS Category "IC" (Industry Case) and "CIC" (Coordinated Industry Case) will have all of the documents needed by the AQMS Reviewers for Standards 1 through 7 uploaded to IMS by the ATCL and TCS before the case is submitted to APS-CIT for closing. The APS-CIT TE will take the following actions when the Category IC/CIC case is selected for AQMS review:

    1. Convert the AQMS Selection Sheet to a pdf and attach it to the ACDS record. (This pdf will be submitted to the AQMS Reviewer once all case closing and account monitoring actions are completed in step f. below).

    2. Document the PEAS Case Activity Record (CAR) for the AQMS review-selected case(s) with the AQMS Selection Number and add a NOTE to forward the AQMS Selection Sheet pdf to the AQMS Reviewer when you close the case on PEAS.

      Note:

      The PEAS CAR entry, along with the PEAS Note are used to remind you to forward the AQMS Selection Sheet [ACDS attachment] to the AQMS Reviewer via encrypted email, once all of the account adjustments are posted.

    3. Complete all processing actions, place the case in PEAS Suspense as appropriate, and monitor the adjustment(s) until fully posted.

    4. Use the ACDS attachment functionality to attach all completed adjustment documents, all manual interest computations, and all interest-related forms and schedules to the ACDS record.

      Reminder:

      Attaching the completed adjustment documents and all interest-related forms, schedules and computations, is mandatory to provide the AQMS Tax Examiners with all of the APS documentation required to complete the Standard 8 AQMS review.

    5. Transmit the administrative file and all tax periods to Campus Files following existing procedures.

      Note:

      The AQMS AO and the AQMS TCS will use the IMS case documentation to complete their review. The AQMS Tax Examiners will use the ACDS attachments to complete their Standard 8 review. The APS-CIT TE who closes the IC or CIC case will not prepare an:
      ♦ AQMS TCS review folder
      ♦ AQMS APS review folder
      ♦ AQMS Form 3210/E3210

    6. When all case closing actions are completed, and all account adjustments are posted, forward the pdf of the AQMS Selection Sheet to the designated AQMS Reviewer using secure email. This alerts the AQMS Reviewer that all case actions are completed and all account transactions are posted so the IC/CIC case is ready for AQMS Review.

    7. Document your actions in the PEAS CAR and close PEAS.

AQMS Refile Procedures for Non-Collection Cases
  1. The AQMS Reviewer will send all non-Collection cases to the Campus Files Function identified by the APS TE on the Form 3210/E3210, prepared by APS for AQMS.

    Note:

    If Appeals has been alerted to forward the closed case to a function other than Campus Files, the APS TE will use IAT Tool Fill Form to prepare Form 2275, Records Request, Charge and Recharge, as well as the applicable Form 3210/E3210(s). APS Re-Charge requirements are provided above in IRM 8.20.7.3.2.2 (1) d).

  2. When the APS Tax Examiner (TE) closes a case identified for AQMS Review, the following procedures apply:

    • Prepare Form 9856, Attachment Alert and attach it to the front of each return.

    • See:
      Exhibit 8.20.7-3, ACDS Attachment(s) Required for AQMS Cases
      IRM 8.20.7.2.4.1, Electronically Stored Documents in the Appeals Centralized Database System (ACDS)
      IRM 8.20.7.13, Administrative File Closing Assembly Order
      Exhibit 8.20.7-15, Assembly Order for Non-Collection Cases Table row 9 - Work Papers for multi-year WUNOs cross-referencing TC 971 AC 057 procedures.

    • Complete Form 3210/E3210, for the AQMS Reviewer to use when shipping the case to Campus Files. Ensure the proper Campus address, return information, refile DLN and your return address are notated with your name, phone and fax numbers as the releasing official.

    • Sign and address the Form 3210/E3210, as the Releasing Official. Send the 3210 folder/envelope, to the AQMS Reviewer per the instruction provided in Table #1 or Table #2 above as applicable.

    • Ship the case to the AQMS Reviewer.

      Note:

      If the appropriate Forms(s) are not attached to the returns and/or the Form 3210/E3210(s) are not included, the AQMS Reviewer will return the case to the originating APS office for refile action. In addition, if there are any potential errors, the AQMS Reviewer may return the case to the originating APS office for corrective action.

AQMS Reviewed Cases Returned to APS for Correction

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

  2. AQMS will:

    • Email the Potential Error Report (PER) to the APS Director

    • Ship the administrative file to the APS Office to the attention of the PTM or Tax Examiner

    • Notify the PTM if PTM is not co-located with the TE, and transmit the administrative file to the TE

  3. APS will:

    • Verify the ASED for each tax period requiring correction.

    • Import and Assign as a New Case on PEAS, do not reopen the closed PEAS case, and ensure the correct ASED is reflected for each tax period to be corrected as required by the AQMS Potential Error Report (APERT).

      Exception:

      Opening a new PEAS record for AQMS corrections, is different from other Post Closing procedures outlined in IRM 8.20.10, Import and Assign where the prior PEAS Record is reopened.

    • Identify the case as a Post Closure case by using the PEAS Feature Code PC.

    • Process the correction(s) to the taxpayers' account as identified by AQMS.

    • Document the PEAS Case Activity Record to reflect actions taken and apply direct time.

    • Place case in PEAS Suspense and monitor adjustments until fully posted.

    • Notify PTM when account corrections have posted.

    • Close case on PEAS and send to campus files or refile as appropriate.

Errors That Require Correction but Do Not Require a Potential Error Report (PER)

  1. 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:

    • Form 3210/E3210 prepared incorrectly or incomplete.

    • Errors that must be corrected by APS but are not caused by APS e.g. Incorrect Item Reference Number adjustment amount or adjustment omitted from 5403 Instruction Worksheet.

  2. 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.)

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

  4. 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.

Complex Interest Quality Measurement System (CIQMS) Notification of Interest Error

  1. Upon identification of an interest error by CIQMS, the CIQMS Reviewer will complete a report and email it to the:

    • APS TE who processed the interest adjustment

    • PTM of the APS TE

    • Appeals Interest Program Manager

  2. The Appeals Interest Analyst will forward the CIQMS Report to the APS Senior Technical Advisor, the applicable APS Area Manager, and the APS Area Technical Advisor(s) for their information and follow-up as appropriate.

  3. If the CIQMS Review designation of the error is "Information Only," APS will consider the review specifics for training and development purposes as appropriate.

  4. If the CIQMS Review designation of the error is "Correction must be made," APS will follow the steps below to Import and Assign the case and take all necessary action(s) to process the interest correction in a timely manner.

  5. APS will:

    • Verify the ASED for each tax period requiring correction.

      Reminder:

      The ASED verification is for statute awareness purposes and to remind the TE that the tax assessment must not be abated in error when processing the interest correction. Interest corrections do not require an open ASED but an interest assessment must be posted within the 10 year CSED date for the respective tax adjustment. An interest abatement can be processed at any time regardless of the ASED or CSED.

    • Import and Assign as a "Fast Import for Non-Closing" on PEAS, do not reopen the closed PEAS case, and ensure the correct ASED is reflected for each tax period to be corrected as required by the CIQMS Error Report.

      Exception:

      Reopening a new PEAS record for AQMS or CIQMS corrections, is different from other Post Closing procedures outlined in IRM 8.20.10, Import and Assign where the prior PEAS Record is reopened.

    • Identify the case as Type = "OTH" and Feature Code = "PC."

    • Process the correction(s) to the taxpayers' account as identified by CIQMS and confirmed as accurate by APS.

      Reminder:

      If APS disagrees with the CIQMS interest error report for any reason, the APS Area Technical Advisor or Area Manager should coordinate the resolution of the issue with the Appeals Interest Program Manager.

    • Document the PEAS Case Activity Record to reflect actions taken and apply direct time

    • Place case in PEAS Suspense and monitor adjustment(s) until fully posted

    • Notify PTM when account correction(s) have posted

    • Close case on PEAS and send adjustment documents to campus files or refile as appropriate

Appeals Account and Processing Support - Complex Interest Team (APS-CIT)

  1. APS-CIT provides the following interest accuracy support actions for Appeals:

    • Interest computation "assistance" to the Appeals Technical Employee (ATE) on Interest Abatement Claim cases in compliance with IRM 8.7.7, Procedures and Methods of Resolution

    • Pre-assessment interest review upon request by an APS Processing Team Manager (PTM)

    • Interest computation "assistance" to the Appeals Tax Computation Specialist (TCS) in compliance with IRM 8.17.5, Refund Litigation Cases

      Exception:

      Appeals does not process Department of Justice (DOJ) Refund Litigation case adjustments, nor is APS-CIT designated the responsibility to calculate interest on DOJ cases.

      Reminder:

      DOJ Refund Litigation case processing guidance is provided in IRM 25.3.6, Special Notices of Abatement/Adjustment.

  2. APS-CIT examiner's correct their own unpostable account adjustments.

  3. APS-CIT examiner work requires mandatory review if the interest adjustment amount is ≥$500,000.00.

  4. For additional information on APS-CIT see APS Complex Interest Team Resources.

Balance Due > $10 Million Additional Closing Requirements

  1. When a case has a balance due over $10 million, including interest and penalty, APS will follow the procedures in IRM 4.4.18, Over $10 Million Deficiency and send a copy of the following forms to the Chief Financial Office Staff at the address provided below:

    • Form 5402

    • Appeals Case Memorandum (ACM)

    • Settlement Computations

    • Agreement or Decision Document

    • Form 2859, Request for Quick or Prompt Assessment

    • Special Handling Instructions


    Office of Unpaid Assessment Analysis
    Attn: OS:CFO:R:R:B
    333 W. Pershing Road
    Mail Stop S-2 1035
    Kansas City, MO 64108-4302

Expedite Processing for Certain Large Dollar Cases >$100,000

  1. Upon receipt of an agreed and unpaid deficiency (as defined in IRC 6211, relating to Income, Gift, Estate and certain Excise Taxes) where the Deficiency >$100,000, APS will assign the case on PEAS for expedite processing.

  2. The assessment of an agreed and unpaid deficiency must be processed with a 23C Date prior to the waiver + 30 day date to avoid a deficiency interest suspension under IRC 6601(c).

  3. If processing the adjustment via CC: AMCLSA will cause the 23C date of the assessment to be later than the waiver + 30 day date, the assessment must be processed via Form 2859, Request for Quick or Prompt Assessment, in order to avoid a suspension of deficiency interest whenever possible. See IRM 20.2.7, IRC 6601(c), Suspension of Interest on Deficiencies and IRM 4.4.25, Agreed Unpaid Deficiencies Greater Than $100,000 for additional information.

  4. Upon receipt of a Large Dollar Overpayment >$100,000 case, APS will assign the case on PEAS for expedite processing. Expedite processing of large dollar overpayments reduces the amount of credit interest accrual the government must pay under IRC 6611. See IRM 21.4.4, Refund Inquiries, Manual Refunds for guidance on manual refund processing.

  5. Managerial review is mandatory for each tax period with an adjustment greater than $100,000.

  6. PEAS Fields used when processing a large dollar case are identified in the table below:

    PEAS Field Entries for Large Dollar and/or Short Statute Expedite Processing

    PEAS Field Filed Entry Options Description
    TYPE CLS Closing
    SubTYPE
    • SP

    • RI

    • NR

    • Normal Interest

    • Restricted Interest

    • Net Rate Netting

    Feature Code
    • MR

    • Blank

    • Manual Refund

    • Quick Assessment

    Priority
    1. Statute

    2. >100K

    3. >1M

    4. >10M

    5. TAMRA

    1. Imminent Statute

    2. Deficiency of one hundred thousand dollars but less than one million dollars

    3. Deficiency of one million dollars but less than 10 million dollars

    4. Deficiency of 10 million dollars or more

    5. Refund of overpayment plus interest due within 120 days after the court’s decision becomes final

    Priority Date Enter the earliest date by which the case must be processed
    • This is the date by which the adjustments must be processed

    PEAS Suspense Suspense Code
    See IRM 8.20.10, PEAS Suspense From Full Update
    • Use the most applicable PEAS Suspense Code to identify why additional processing action(s) cannot be taken as of the date the case is placed in PEAS Suspense

    • Set a PEAS Follow-up Date to alert you of the earliest Follow-up Date

    PEAS Case Activity Record (CAR) Self-explanatory
    • The APS TE must update the PEAS CAR to reflect the reason why the case is in suspense and provide an explanation of next action to be taken once the PEAS Suspense timeframe is expired.

    • See Example below.

     

    Example:


    PEAS CAR entry on 12/15/2016 - Form 2285 included with the administrative file was incomplete/incorrect. Contacted TCS Jane Doe via email 12/15/2016 and confirmed via telephone to request a corrected Form 2285. Follow-up date 12/22/2016. (PEAS Suspense Code S10).
    PEAS CAR entry on 12/21/2016 - Corrected Form 2285 received and Quick Assessment (MAAS) prepared and submitted with a 12/30/2016 23C Date. Follow-up date 12/30/2016. PEAS Suspense Code S09).

  7. The APS TE will place the case in PEAS Suspense for monitoring until the required account adjustment verification is received.

  8. APS will monitor all manual assessments and manual refunds until DLN verification of the transaction is received.

Quick Assessment Requirements

  1. 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:

    • (1) Interest accuracy review requirements

    • (2) Random quality review requirements

    • (3) Source document and interest computation attachment requirements

    • (3) c. Note: Non-Restricting Transaction Code (TC) 340 guidance

    • (5) Manual debit interest transactions must include "DB-INT-TO-DT"

    • (6) Use of TC 190 on quick and prompt assessments unless the interest already is restricted, or must be restricted with a TC 340

    • (7) Mandatory module recomputation for all manually calculated interest

    • (8) Reversal of some tax credits require manual computation and restriction of debit interest

    • (9) Posting Delay Code (PDC) and adjustment cycling procedures are required when a TC 772 is included on the adjustment document but the taxpayer’s account is in credit balance status so the credit must be held via a hold code to avoid an erroneous refund or incorrect computer generated overpayment interest

    • (10) Use of TC 342 and Priority Code 5

    • (11) IRC § 6631 Notice Requirement Letter 3535, Interest Computation Cover Letter

    • (12) All manual interest computations must be associated with the applicable documentation supporting the interest computation

    • (13) All manual interest computations must be uploaded to ACDS as an attachment.

  2. The online Form 2859, Request for Quick or Prompt Assessment 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.

    Note:

    Whenever an IRC 6662 Accuracy Related Penalty must be included on Form 2859, the Tax Examiner must enter the correct Penalty Reference Number (PRN) on the correct line, (4c). In the Remarks field, also identify the exact IRC 6662 penalty being assessed since each IRC 6662 penalty, now has a unique PRN. This is important so that the RACS Unit will accurately post the IRC 6662 Penalty with the respective PRN to identify it as a "Return Related Penalty" for interest computation purposes. If a TC 240 is entered, and the correct PRN is not associated when posted, IDRS programming will compute underpayment penalty interest from the 23C Date of the assessment instead of the Return Due Date.

    Example:

    Form 2859 prepared for a Form 1040, 201012 to assess:
    Tax Deficiency $ 178,111.00
    IRC 6662(a) Penalty $ 35,622.20 (See Caution * below)
    Failure to File Penalty $ 44,527.75
    23C Date of 10/10/2017

    Form 2859 Entries for the Example:

    Form 2859 Part C - Assessment Information: Transaction Code Transaction Amount
    Line 4b. Tax - Exam/Appeals 300 $ 178,111.00
    Line 4c. Reference Code 680 $ 35,622.20
    Line 6. Failure to File Penalty 160 $ 44,527.75
    Line 17. Interest 190 $ 58,781.74
    Line 18. Total Assessments N/A $ 317,042.69
    Line 22. Total Lines 18-21 N/A $ 317,042.69
    Line 24. Balance of Tax Due N/A $ 317,042.69
    Remarks:
    If a different IRC 6662 PRN is appropriate, always enter the correct PRN to ensure accurate posting to the taxpayer’s account.
    IRC 6662(a) PRN 680 Identifies TC 240 as IRC 6662 Return Related Penalty assessment with penalty interest due from the Return Due Date of 04152011, instead of a miscellaneous penalty with penalty interest accruing as of 10102017.

     

    Caution:

    * IRC 6662(a) was used as an "umbrella" IRC Reference during the timeframe where each IRC 6662 reference did not have a unique Penalty Reference Number (PRN) assigned. Whenever IRC 6662(a) is the only identifier provided to APS for an IRC 6662 Penalty assessment, the TE will use PRN 680, unless they can ascertain the specific IRC 6662 Penalty and then utilize the appropriate PRN for the assessment. See IRM 20.1.5.3.2, Penalty Assessments and Abatements (8) table for a list of IRC 6662 (b), (h), (i), and (j) PRNs. The 680 PRN historically used to assess the IRC 6662(a) is no longer specifically listed because it should not be used unless the correct PRN cannot be determined based upon the assessment authority document.

  3. 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.)

    Note:

    IRC 6631, Notice Requirements only apply to notices which "include an amount of interest required to be paid" by the taxpayer.

    Reminder:

    While there is no requirement under IRC 6631 to provide an explanation on business Master File (BMF) modules, it is recommended that an explanation be provided to the taxpayer when interest on a BMF module is manually computed.

  4. 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:

    • The Right to Be Informed

    • The Right to Quality Service

    • The Right to Pay No More than the Correct Amount of Tax

  5. 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.

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

    How to Access Letter 3535

    Access Point for Letter 3535 Procedure Steps
    IRS Publishing Website From the IRS Web Home Page:
    1. Click on the Forms, Pubs, and Docs tab (left side of the screen)

    2. Scroll down to Media and Publications IR Web site (MYM&P)

    3. Click on the Forms/Pubs/Products Repository - electronic publishing catalog of all IRS published products

    4. In the Product Catalog Information, under the View by Product Number section, select Product Type "Letter"

    5. In the Enter product number field, type 3535

    6. Click submit

    7. The Letter 3535 Product Information Page will open

    8. Under the Electronic Availability section, click on the current revision hyperlink

    9. A "fillable" pdf of Letter 3535 will open on your screen

    10. Complete the entries as appropriate for the case

    ACDS From the ACDS Home Page:
    1. Click on the APGolf tab

    2. In the Select Category drop down menu (left side of the screen) click on Closing

    3. Under the Select Form/Letter menu, scroll down to and then select Letter 3535 Interest Computation

    4. Within the Forms/Letters Generator - Select A Case screen, enter the WUNO and all other appropriate search criteria

    5. Complete the fill-in form and under the Signature Block click on the radio button for Other, enter your name and your title

    6. In the Enclosures section, enter Interest Computation Report

    7. Identify cc recipient if applicable

    8. Click on the Generate Letter/Form button

     

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

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

    Reminder:

    Input two history items on TXMOD as follows:

    History Items and Actions Required for Quick Assessments

    History Item Requirement Purpose
    "MAAS with the 23C date"

    Example:

    MAAS 11292016

    • Alerts other IRS employees than an assessment is in the process of being posted with the 23C date provided.

    • Prevents a manual refund of any payment sitting on the account that must be used to pay the deficiency.

    "HOLDDOC51"
    • This causes the module to stay active on IDRS until a Doc Code 51 posts.

     

  9. 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.

  10. 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.

  11. 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:

    • (1) Receipt of a copy of Form 3552, Prompt Assessment Billing Assembly, is verification the assessment has been "journalized." The transaction codes will not yet be posted to the account, but the assessment DLN has been assigned and the ASED is protected for that particular assessment.

    • (2) Upon receipt, verify the accuracy of the assessment amount, as well as the name, address, TIN, and tax period on Form 3552 by comparing the items with the Form 2859 entries.

    • (3) If any errors are detected on Form 3552, IMMEDIATELY contact the campus accounting function for issuance of a corrected bill. Do not remove the statute date from ACDS, and do not enter the Statute Code ASESD until a corrected Form 3552 is received and verified to be correct.

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

    • Upon submission of the Form 2859 to the campus function for processing, the APS TE will place the case in PEAS Suspense and set a PEAS Follow-up for the 23C Date.

    • (1) The APS TE must:
      ▸ Follow-up with the campus if verification of the assessment is not received by the 23C Date entered on the Form 2859.
      ▸ Document the follow-up action(s) in the PEAS CAR and include the name of the person contacted and their phone number.
      ▸ Alert their Lead and/or PTM if the Form 3552 is not faxed as requested, and the ASED is within 30 days of expiring.
      Reminder: All follow-up actions must be documented on the PEAS CAR.

    • (2) Upon receipt of the Form 3552 assessment verification:
      ▸ Enter the Document Locator Number (DLN) of the assessment in the PEAS record for each respective tax period.
      ▸ Remove the statute date on ACDS, and enter the Statute Code "ASESD" to exclude the ACDS record from appearing on a future ACDS or PEAS Statute Reports.
      ▸ Use PEAS suspense and monitor the account(s) until all transactions are fully posted.

  13. 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.

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

    • AMCLSA input

    • Verification of the Quick Assessment DLN(s)

    • Mailing of the Letter 3535 and Report 490 Activity Summary

    • Conclusion of all suspense and monitoring requirements

    • Shipment of the administrative file to AQMS or Campus Files

Form 5403, Appeals Closing Record Preparation for AIMS Closure

  1. 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.

  2. 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:

    • AIMS Adjustment (Doc. Cd. 47)

    • AIMS Status Code (ST)

    • Assessment Statute Expiration Date (ASED)

    • Blocking Series (BS)

    • Carry-Back (C/B)

    • Command Code (CC)

    • Credit Reference Number (CRN)

    • Delinquent Return Indicator (Del-Ret-Ind)

    • Disposal Code (DC)

    • Document Code (Doc. Cd.)

    • Document Locator Number (DLN)

    • Failure to File Penalty (FTF) and (TC 160)

    • General Adjustment (GA)

    • Hold Code (HC)

    • Item Reference Number (IRN)

    • Manual Assessment (Doc. Cd. 51)

    • Master File (MF)

    • Overpayment (OP)

    • Penalty Reason Code (PRC)

    • Priority Code (PC)

    • Quick Assessment (Q/A)

    • Transaction Code (TC)

    • Revenue Accounting Control System (RACS)

    • Restricted Interest (RI)

    • Return Due Date (RDD)

    • Underpayment (UP)

    • Unpostable Code (UPC) and UPC Reason Code (RC)

  3. 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.

Form 3210, Document Transmittal Follow-up Requirement

  1. See IRM 3.13.62, Suspense Copies, Form 3210 for procedures on Form 3210 monitoring and acknowledgement follow-up requirements.

E3210 Awareness

  1. 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:

    • Electronic process for creating document transmittals (E3210) with auto-population of initiator’s identifying information as well as auto-population of recipient information using a Distribution ID list item selected by the user

    • Systemic process to acknowledge an E3210 when the recipient is also an active user of the CDI Transmittal Database

    • Systemic process to "self-acknowledge" an E3210 when the receipted E3210 is returned to the initiator via a tradition method or EEFax

    • Systemic retention of the acknowledged/self-acknowledged E3210 for 12 months from the acknowledgement date

    • Systemic transfer of the acknowledged E3210 at 12 months to an inactive archive for an additional 6 month retention

    • Systemic deletion of the electronic record at 18th months from the acknowledgement date

    • Research capability for any E3210 by the transmittal number assigned by the database, or by the TIN throughout the 12 month retention period

    Note:

    A paper case will require 1 print of the E3210 which will be affixed to the front of the paper case. The recipient of the paper case will perform receipt and acknowledgement and return the acknowledged E3210 using the EEFax number provided by the initiator. Upon receipt of the acknowledgement, the initiator will "self-acknowledge" the E3210 in the CDI Transmittal Database. If the recipient is also an active user of the CDI Transmittal Database, they will acknowledge the E3210 within the CDI Transmittal Database, and the initiator need take no further action because the system will change the E3210 status to "Acknowledged" and the document transmittal record will be flagged for the systemic purge at 12 months from the acknowledgement date.

    E3210 initiators will click on the "Unacknowledged" button to retrieve a listing of the unacknowledged transmittals associated with their User Profile. This systemic process replaces the manual process of locating the retained paper copy of the Form 3210 to perform mandatory follow-up and acknowledgement verification.

Procedures for Shipping Personally Identifiable Information (PII)

  1. The IRS Shipping Policy and data protection procedures for PII Documents is covered in IRM 10.5.1.6.7.3, Shipping. Additional guidance and procedures for shipping PII is found in the following online references:

    • http://publish.no.irs.gov/mailtran/piiproc.html, IRS Mail Transportation Policy

    • http://core.publish.no.irs.gov/docs/pdf/d13056--2012-05-00.pdf, Employee Toolkit

    • http://core.publish.no.irs.gov/docs/pdf/d13144--2014-04-00.pdf, PII Shipping Procedures

    • https://portal.ds.irsnet.gov/sites/vl003/lists/privacypolicyprivacycontrols/sbu.aspx, Disclosure and Privacy Knowledge Base Site

Form 5403 Instructions to APS Worksheet

  1. Form 5403 Instructions to APS Worksheet is completed by the ATE or TCS who prepares the settlement computation. The Form 5403 Instructions to APS Worksheet provides specific account adjustment information for each tax period being submitted for processing and is meant to assist APS in preparing Form 5403, Appeals Closing Record.

    Reminder:

    For additional and detailed explanations of Item 15 Item entries 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.

  2. There are two types of case resolutions for which a Form 5403 Instructions to APS Worksheet will NOT be prepared for APS, and thus APS will not be responsible to enter Item Reference Numbers or their respective adjustment amounts in Item 15 of the Form 5403:

    • Non-Docketed case settled for a "Specific Dollar Amount" in Appeals Jurisdiction

    • Docketed case settled for a "Specific Dollar Amount" in Counsel Jurisdiction

  3. When a Docketed or Non-Docketed case is settled for a "Specific Dollar Amount" by the Appeals Technical Employee (ATE), or by Counsel, the Form 5403 Instructions to APS Worksheet may not be prepared, or if prepared, may not include the specific Item 15 entries since the dollar amount settlement was not calculated using RGS and thus the relative item adjustments cannot be numerically calculated. For these specific cases, APS is not required to enter Item Reference Numbers or their respective adjustment amounts in Item 15.

    Reminder:

    Whether the Form 5403 Instructions to APS Worksheet is prepared or not, all interest-related laws and provisions apply to the tax and penalty assessments in the same manner as any other type of closing, thus the interest-related documentation, forms, worksheets, and/or notations must be provided to APS just like any other AIMS assessment or abatement case. 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 details on information the ATE, TCS, or Counsel Attorney must provide to APS when submitting a case for closing actions.

  4. See IRM 8.20.7.2 (8) for information and procedures to follow when the interest-related information is not provided by the ATE, TCS, or Counsel and associated with the case submitted to APS for closing actions.

  5. It is of critical importance to illustrate the distinction between an Appeals’ Agreed case which is settled based upon hazards of litigation under IRM 1.2.17, Policy Statement 8-47, and an Appeals’ Agreed case which is settled based upon a percentage or stipulated amount of the tax in controversy under IRM 1.2.17, Policy Statement 8-48. The table below is provided to assist APS in recognizing the type of settlement (non-docketed case resolution) and then also, the processing information prepared for APS to accurately process the adjustment(s) to the taxpayer’s account.

    Appeals Non-Docketed Case Resolutions and Associated Documentation Provided to APS

    Appeals Non-Docketed Case Resolution Processing Documentation APS Requirements
    Agreed - Fully Sustained Compliance Determination
    • ACDS cc 03

    • Approved Form 5402

    • Signed Form 870-AD

    • Form 5403 Instructions to APS Worksheet

    • Applicable Interest-Related Instructions

    • Update and Close ACDS based on approved Form 5402

    • Prepare account adjustment documents to reflect agreed upon adjustments

    • Review and verify all interest-related documentation

    • Request interest-related instruction whenever it is needed but was not provided

    Agreed - Settled Based on Hazards of Litigation (Policy Statement 8-47)
    • ACDS cc 03

    • Approved Form 5402

    • Signed Form 870-AD

    • Form 5278, Statement - Income Tax Changes

    • Form 5403 Instructions to APS Worksheet

    • Applicable Interest-Related Instructions

    • Update and Close ACDS based on approved Form 5402

    • Prepare account adjustment documents to reflect agreed upon adjustments

    • Review and verify all interest-related documentation

    • Request interest-related instruction whenever it is needed but was not provided

    Agreed - Settled Based on a Percentage or Stipulated Amount (Policy Statement 8-48)
    • ACDS cc 03

    • Approved Form 5402

    • Signed Form 870-AD

    • Applicable Interest-Related Instructions

    • Update and Close ACDS based on approved Form 5402

    • Prepare account adjustment documents to reflect agreed upon adjustments

    • Review and verify all interest-related documentation

    • Request interest-related instruction whenever it is needed but was not provided

     

    Reminder:

    When Appeals cannot reach a settlement with the taxpayer, the ATE requests TCS prepare a Statutory Notice of Deficiency (SND). APS issues the SND and suspenses the case following procedures in IRM 8.20.6. If the taxpayer signs the SND waiver of agreement (cc 04) or defaults (cc 05), APS uses the Form 5403 Instructions to APS and interest-related forms and documentation provided by the TCS to process the agreed or defaulted adjustments to the taxpayer’s account. If the taxpayer files a petition to the USTC, APS pulls the case from SND suspense, updates ACDS and AIMS and transmits the case to Counsel Jurisdiction. Under normal circumstances, the case will not return to Appeals until the case is submitted to APS for closing actions. In this instance, Counsel acquires responsibility for ensuring the interest-related information is provided to APS when the case is submitted to APS for processing.

  6. Once Compliance issues a Statutory Notice of Deficiency (SND), and the taxpayer files a petition to the United States Tax Court (USTC), the case is resolved in one of the following ways:

    Docketed Case Resolutions and Associated Documentation Provided to APS

    Docketed Counsel/Appeals Resolution Processing Documentation APS Requirements
    Appeals secures agreement
    • Agreed - Fully Sustained Compliance SND

    • Agreed - Settled Compliance SND

    • ACDS cc 08

    • Entered Decision Document with waiver paragraph

    • Form 5403 Instructions to APS Worksheet

    • Applicable Interest-Related Instructions

    • Update and Close ACDS based on approved Form 5402 and Entered Decision Document

    • Prepare account adjustment documents to reflect agreed upon adjustments

    • Review and verify all interest-related documentation

    • Request interest-related instruction from ATE/TCS whenever it is needed but not provided

    Counsel secures agreement:
    • Agreed - Fully Sustained Compliance SND

    • Agreed - Settled Compliance SND

    • ACDS cc 10

    • Entered Decision Document with waiver paragraph

    • Form 5403 Instructions to APS Worksheet

    • Applicable Interest-Related Instructions

    • Update and Close ACDS based on approved Form 1734 and Entered Decision Document

    • Prepare account adjustment documents to reflect agreed upon adjustments

    • Review and verify all interest-related documentation

    • Request interest-related instruction from TCS whenever it is needed but was not provided

    Tax Court Tried and Decided
    • ACDS cc 17

    • Entered Decision Document without a waiver paragraph

    • Form 5403 Instructions to APS Worksheet will not be provided when the case is *settled for a specific dollar amount and the F-5403 Item 15, Item Reference Numbers and adjustment amounts will not be provided to APS

    • Applicable Interest-Related Instructions


    * See IRM 8.20.7.10 (3), IRM 8.20.7.10 (8), and IRM 8.20.7.10.2, Specific Dollar Settlements - Docketed Cases for additional information.
    • When the waiver paragraph is absent, verify that at least 100 days have elapsed from the Entered Decision Date** (see Note below) and do NOT include an agreement date on the adjustment document

    • Update and Close ACDS based on approved Form 1734 and Entered Decision Document

    • Prepare account adjustment documents to reflect tax and penalty determination included in the Entered Decision

    • Review and verify all interest-related documentation

    • Request interest -related instruction from TCS whenever it is needed but was not provided

     

    Note:

    ** If 100 days have not elapsed from the Entered Decision Date, alert your PTM because the appeal period has not expired and the case may have been prematurely released from Counsel to APS.

  7. The APS TE is responsible for the following actions:

    • Verify the Form 5403 Instructions to APS Worksheet information is accurate and complete prior to transferring the code(s) and adjustment amount(s) to the Form 5403, Appeals Closing Record.

    • Analyze and compare the Form 5403 Instructions to APS Worksheet information with the current account transcript to ensure inputting the data will not create an unpostable on the account and will correctly update the taxpayer's account.

    • Resolve discrepancies or omissions upon their discovery. (This includes omissions of interest-related instructions which must be prepared and provided by the ATE/TCS/Counsel.)

    • Identify when the Form 5403 Instructions to APS Worksheet has not been included within the administrative file but should have been. APS will request the Form 5403 Instructions to APS Worksheet using the Form 3608 procedures provided in IRM 8.20.7.2 (10).

    • If RGS is used for the computation, instead of entering the Item 15 Reference Number information on the Form 5403 Instruction Worksheet, the ATE or TCS may print either the RGS Form 5403, Appeals Closing Record or the RGS Form 5344, Examination Closing Record and attach one of them to the Form 5403 Instructions Worksheet. The Form 5403 Instructions Worksheet has a line to indicate that the RGS Form 5403, Appeals Closing Record or Form 5344, Examination Closing Record is attached.

    • See IRM 8.17.5, Form 5403 Instructions to APS Worksheet for additional information.

  8. When a case is settled by Appeals or by Counsel for a specific dollar amount agreed to by both parties, TCS is not required to prepare Form 5278, Statement - Income Tax Changes or provide amounts to change reference codes since these adjustments cannot be determined. Cases on which Appeals or Counsel reaches a settlement for a specific dollar amount agreed to by both parties, will not include a Form 5403 Instruction Worksheet in the case file. These types of closings require special consideration by the APS TE assigned to process the taxpayer's settlement. The APS TE will not submit a request to TCS for a Form 5403 Instruction Worksheet on these case closings and must instead, make an entry in the PEAS Case Activity Record:

    Example:

    "Case settled for a specific dollar amount agreed to by both parties and F-5403 Item 15 entries cannot be determined."


    This PEAS CAR entry serves the purpose of meeting the AQMS Standard 8 for Form 5403 Item 15 accuracy.

  9. Regardless of the method used to resolve the taxpayer’s case, all applicable "Interest-Related Requirements" continue to apply according to the law, and whenever the interest-related information is missing, or is incorrect, the APS TE must request TCS prepare the required interest-related information to ensure an accurate account adjustment that results in an accurate interest adjustment.

    • IRC § 6404(g), Suspension of interest and certain penalties where Secretary fails to contact taxpayer interest suspension requires TCS prepare the 6404(g) worksheet for APS. (All MFT 30 cases must be flagged to identify if 6404(g) Does Apply or 6404(g) Does Not Apply per IRM 20.2.7, Recording IRC § 6404(g) Notice Date.

    • IRC § 6601(d), Income tax reduced by carryback or adjustment for certain unused deductions interest application requires TCS to prepare the Form 2285(s) for APS (BMF and IMF cases).

    • IRC § 6621(c), Increase in underpayment rate for large corporate underpayments (LCU) interest require the TCS to identify the earliest notice date that triggers LCU interest application for APS (BMF cases only).

    • Rev. Rul. 99-40, "May/Sequa" interest suspension requires TCS to prepare a May-Sequa Spreadsheet for APS (BMF and IMF cases).

    • When the APS TE must suspense the case until the required document(s) is/are received, document the PEAS CAR as follows:
      1) Identify the date when the "Interest Related Requirements Request" was sent via secure email
      2) Provide a brief identification of the requested items i.e., "May/Sequa WS" , "F-2285" , "6404(g) WS" , "LCU Date"
      3) Identify the person to whom the request was sent e.g., "ATE Oak" , "TCS Elm" , "TCS ATM Maple"
      4) Place the case in PEAS Suspense Reason Code "S10" , "Waiting on TCS information/response"
      5) Set a follow-up date for no later than 10 business days from the request date
      6) Update the PEAS CAR when additional suspense time is required and return case to PEAS Suspense Reason Code "S10" , "Waiting on TCS information/response"
      7) Notate the item(s) received on the PEAS CAR upon receipt
      8) Remove the case from PEAS Suspense
      9) Continue processing actions

Specific Dollar Settlements Under Authority of Policy Statement 8-48 - Non-Docketed Cases

  1. 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."

  2. 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.

Specific Dollar Settlements - Docketed Cases

  1. 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.

  2. 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.

Credit Reference Numbers (CRN) and Item Reference Numbers (IRN)

  1. 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.

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

    • Form 706, United States Estate (and Generation Skipping Transfer) Tax Return

    • Form 709, United States Gift (and Generation Skipping Transfer) Tax Return

    • Form 720, Quarterly Federal Excise Tax Return

    • Form 940, Employer's Annual Federal Unemployment Tax Return

    • Form 941, Employer's Quarterly Federal Tax Return

    • Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees

    • Form 944, Employer’s Annual Federal Employment Tax Return

    • Form 945, Annual Return of Withheld Federal Income Tax

    • Form 990, Return of Organization Exempt From Income Tax

    • Form 1040, U.S. Individual Income Tax Return

    • Form 1041, U.S. Income Tax Return for Estates and Trusts

    • Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

    • Form 1116, Foreign Tax Credit (Individual, Estate or Trust)

    • Form 1120, U.S. Corporate Income Tax Return

    • Form 2441, Child and Dependent Care Expenses

    • Form 3468, Investment Credit

    • Form 3800, General Business Credit

    • Form 4136, Credit for Federal Tax Paid on Fuels

    • Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

    • Form 5695, Residential Energy Credits

    • Form 5884, Work Opportunity Credit

    • Form 5884-A, Credits for Employers Affected by Hurricane Katrina, Rita, or Wilma

    • Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit

    • Form 6765, Credit for Increasing Research Activities

    • Form 8396, Mortgage Interest Credit

    • Form 8586, Low-Income Housing Credit

    • Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts

    • Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)

    • Form 8820, Orphan Drug Credit

    • Form 8826, Disabled Access Credit

    • Form 8830, Enhanced Oil Recovery Credit

    • Form 8834, Qualified Plug-In Electric and Electric Vehicle Credit

    • Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit

    • Form 8839, Qualified Adoption Expenses

    • Form 8844, Empowerment Zone and Renewal Community Employment Credit

    • Form 8845, Indian Employment Credit

    • Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

    • Form 8847, Credit for Contributions to Selected Community Development Corporations

    • Form 8849, Claim for Refund of Excise Tax

    • Form 8860, Qualified Zone Academy Bond Credit

    • Form 8861, Welfare-to-Work Credit

    • Form 8962, Premium Tax Credit

    • Form 8864, Biodiesel and Renewable Diesel Fuels Credit

    • Form 8965, Health Coverage Exemptions

    • Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

    • Form 8874, New Markets Credit

    • Form 8880, Credit for Qualified Retirement Savings Contributions

    • Form 8881, Credit for Small Employer Pension Plan Startup Costs

    • Form 8882, Credit for Employer-Provided Childcare Facilities and Services

    • Form 8896, Low Sulfur Diesel Fuel Production Credit

    • Form 8900, Qualified Railroad Track Maintenance Credit

    • Form 8906, Distilled Spirits Credit

    • Form 8907, Nonconventional Source Fuel Credit

    • Form 8908, Energy Efficient Home Credit

    • Form 8910, Alternative Motor Vehicle Credit

    • Form 8911, Alternative Fuel Vehicle Refueling Property Credit

    • Form 8912, Credit to Holders of Tax Credit Bonds

    • Schedule H, Household Employment Taxes

    • Schedule R, Credit for the Elderly of the Disabled

    • Schedule 8812, Child Tax Credit

    See http://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209minitoc.htm, Section 8C - Master File Codes, for each code and code definition.

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

    • IRM 21.5, Account Resolution

    • IRM 21.6, Individual Tax Returns

    • IRM 21.7, Business Tax Returns and Non-Master File Accounts

    • IRM 21.8, International

General Income Tax Credit Reference Numbers and Item Reference Numbers

  1. 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.

  2. 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).

  3. 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. 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.

  4. 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.

    • 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 additional information.

    • See IRM 8.20.7.10.5, Refundable and Non-Refundable Credit Adjustments for additional information.

    • See IRM 8.20.7.10.6, Self-Employment Tax Adjustment for additional information.

    • See IRM 8.20.7.10.7, Schedule H, Household Employment Tax Adjustments for additional information.

    • See IRM 8.20.7.27, EITC Recertification Program (Refundable Credits (ACTC/CTC/AOTC/EIC)

    Reminder:

    The APS TE must always verify the Item Reference Numbers (IRN) and Credit Reference Numbers (CRN), their associated amounts, and "+/-" provided on the Form 5403 Instruction Worksheet before inputting the entries on the adjustment document to ensure the entry of the code(s) or amount(s) will not cause an unpostable condition.

  5. 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).

    Decision Table when more than one adjustment document is required to process the changes to the taxpayer’s account

    Condition Requirement Purpose
    First adjustment document.
    • Always use Hold Code 4.

    • Avoid release of a premature notice or an erroneous refund.

    • Use PEAS Suspense to effectively monitor posting of the adjustment(s).

    Final adjustment document.
    • Always use a Posting Delay Code (PDC) (1-6) on the final adjustment if both the first and the final adjustment documents are input in the same cycle.

    • Include adjustment to tax, penalty, interest (if restricted), and credit adjustments (if applicable) on the Final adjustment document.

    • When inputting both the first and the final adjustment documents in the same cycle, a PDC must be included with the final adjustment document to control the cycle in which Master File will process the final account adjustment(s) and release the notice or refund to the taxpayer.

    • Use PEAS Suspense to effectively monitor posting of the adjustment(s).

    • See Reminder below.

    ASED within 60 days of the posting cycle 23C for the final AIMS adjustment.
    (CC: AMCLS)
    Determine if Quick Assessment procedures are required.
    • ASED protection.

    ASED within 90 days of the posting cycle 23C for the final Non-AIMS adjustment.
    (CC: ADJ54)
    Determine if Quick Assessment procedures are required.
    • ASED protection.

    IRN or CRN which also requires an IMF Reason Code in Item 51-53. Associate the IRN/CRN with the respective IMF Reason Code when inputting the adjustment.
    • Avoid an unpostable condition and accurately process the adjustment.

    Both Self-employment and Medicare IRNs apply to the period being adjusted. Associate the SE and Medicare IRNs on the first adjustment document.
    • Efficient resolution of Unpostable Conditions applicable to one or more of the SE and Medicare IRNs.

    CRNs apply to the period being adjusted. Associate the credit adjustments with the final tax adjustment.
    • Control the account module balance condition and avoid the release of an erroneous notice or erroneous refund.

    • This practice also ensures the debit or credit interest computation "to date" matches the final account resolution and timing of the notice or refund, regardless of whether interest is computer generated or manually computed.

     

    Reminder:

    Underpayment interest (which is not also subject to an interest suspension) accrues daily on tax and "return-related penalties" from the effective interest date until full paid. Assessed penalties accrue interest from the 23C date until full paid. Assessed interest accrues compound interest until full paid. When the taxpayer’s balance due notice is systemically prevented with input of a Hold Code (2, 3, or 4), Master File will not post accruals of Failure to Pay (FTP) Penalty (IRC 6651(a)(3), or interest. To avoid the necessity to take additional account correction/update actions, enter the tax, penalty, interest (if TC 34X is needed) and any credit adjustments (CRN) on the Final adjustment document. See IRM 20.2.5, Assessment of Interest Accruals for additional information.

Refundable and Non-Refundable Credit Adjustments

  1. 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.

  2. 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.

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

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

  5. 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 Tax Adjustment

  1. 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.

  2. 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:

    1. Item 12 - Enter TC 300 for 0.00

    2. Item 13 - Enter Disposal Code 12

    3. Item 15 - Enter appropriate Item Reference Number(s) and amount(s)

    Reminder:

    For additional and detailed explanations of Item 15 Item entries 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.

  3. 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.

    Reminder:

    #1 The Social Security Wage Limitation is programmed for each tax year. If the IRNs 873, 874, 878, 879, 891, or 892 adjustment(s) will cause the Self-Employment Income amount to exceed the assigned wage limitation set for that tax period, the adjustment will unpost with Unpostable Code (UPC) 189 Reason Code (RC) 8. The APS TE may need to access this resource, prior to input of their adjustment document entries, to verify that their account adjustment entries will not create an unpostable condition.

    Reminder:

    #2 Certain IRNs cannot be adjusted below zero. See UPC 189 RC 1 for specific codes considered Column A entries in addition to the ones identified in Reminder #1 above.

  4. See the following resources for additional information:

    • IRM 8.17.5, Form 5403 Instructions to APS Worksheet

    • IRM 8.20.7.61, Unpostables

    for additional information.

Schedule H, Household Employment Tax Adjustments

  1. 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).

  2. 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:

    • Form 5278

    • Form 5403 Instructions

    • Schedule H

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

    Schedule H Item Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) and Titles

    IRN Title Adjusts TXMODA Field:
    • CRN 003 Primary Taxpayer

    • CRN 903 Secondary Taxpayer

    Schedule H Income Tax Withheld for tax period 199512 and subsequent FICA WAGES PAID:
    • PR-FICA-PD>

    • SE-FICA-PD>


    Combines with P/S-FD-INC-TX-WTHLD> field to equal P/S-TOT-FICA>
    • IRN 004 Primary Taxpayer

    • IRN 904 Secondary Taxpayer

    Total Social Security Administration (SSA) Schedule H Wages Total Schedule H Wages:
    • P-F8919-SSA-WGS-CMP>

    • S-F8919-SSA-WGS-CMP>

    • IRN 007 Primary Taxpayer

    • IRN 907 Secondary Taxpayer

    Sum of SSA Tax and Medicare Tax Adjusts sum of SSA Tax and Medicare Tax:
    • P-CMB-FICA-MED-TX>

    • S-CMB-FICA-MED-TX>

    • IRN 073 Primary Taxpayer

    • IRN 973 Secondary Taxpayer

    Total Medicare Wages Adjusts Schedule H Wages subject to Medicare:
    • PR-MED-TX>

    • SE-MED-TX>

    • IRN 074 Primary Taxpayer

    • IRN 974 Secondary Taxpayer

    Additional Medicare Tax (AdMT) Posts Schedule H Additional Medicare Tax:
    • PR-ADDL-MED-TX-AMT>

    • SCD-ADDL-MED-TX-AMT>

    • IRN 993 Primary Taxpayer

    • IRN 994 Secondary Taxpayer


    Enter .00

    Enter .00
    Schedule H EIN
    See IRM 21.6.4.4.8.2, Schedule H, Household Employment Taxes - EIN Corrections
    Primary or Secondary Taxpayer’s Schedule H EIN entered in CC: ADJ54 "XREF-TIN" field.
    • PRIM-EIN>

    • SECNDRY-EIN>

    • CRN 335

    • IRN 885

    Schedule H Advanced Earned Income Credit (AEITC)
    • Posts as a TC 766/767 with CRN 335

    • IRN 885 adjusts AEIC> field

     

  4. 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.

  5. 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.

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

    Schedule H FUTA State Code and Item Reference Numbers (IRN) and Titles

    IRN for State Code (XX) Tax and Wages Title Adjusts MF Field:
    • TXX (997) Primary

    • YXX (995) Secondary

    Federal Unemployment Schedule H Tax Schedule H FUTA Tax for Primary or Secondary Taxpayer
    • P-FUTA-TOT>

    • S-FUTA-TOT>

    • WXX (998) Primary

    • ZXX (996) Secondary

    Federal Unemployment Schedule H Wages Schedule H FUTA Wages for Primary or Secondary Taxpayer
    • P-FUTA-TXBL>

    • S-FUTA-TXBL>

     

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

    • UPC 189 RC 1 - Input reference number attempts to reduce the related field below zero

    • UPC 291 RC 3-1 - Input reference number input without a significant money amount (cannot be 0.00)

    • UPC 290 RC 4 j - Input attempts to post to an invalid tax period

    • UPC 169 RC 8 - Secondary taxpayer reference numbers input on other than a MFJ account (903, 904, 907, 973, 994, 995, 996)

    • UPC 169 RC 0 - Schedule H adjustment input and no EIN is present for the primary/secondary taxpayer

    • UPC 150 RC 3 - Schedule H tax assessment is input to a module where the ASED has expired and Priority Code 1 is not used

    Note:

    See IRM 21.6.4, Schedule H, Household Employment Taxes, Unpostables for additional information.

Item Reference Numbers for Estate Tax and Gift (E&G) Tax

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

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

    • 074 - Generation Skipping Tax (MFT 51 and MFT 52)

    • 076 - Net Estate Tax (MFT 52)

    • 077 - Net Gift Tax (MFT 51)

  3. 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.

  4. 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.

  5. 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.

  6. 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:

    • Item 422, Applicable Credit Adj Amount

    • Item 425, DSUE Amount (Deceased Spousal Unused Exclusion)

  7. 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.

Penalty Reference Numbers for IRC § 6662 (Replace PRN 680)

  1. 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.

  2. The new more specific PRNs are as follows:

    • PRN 681 - IRC § 6662A - Accuracy-Related Penalty on Reportable Transactions

    • PRN 683 - IRC § 6662(b)(7) and IRC 6662(j) - Undisclosed foreign financial assess understatement

    • PRN 780 - IRC § 6662(b)(6) - Transaction lacking economic substance

    • PRN 781 - IRC § 6662(i) - Non-disclosed noneconomic substance transactions

    • PRN 786 - IRC § 6662(b)(1) and IRC 6662(c) - Negligence

    • PRN 787 - IRC § 6662(b)(2) and IRC 6662(d) - Substantial understatement

    • PRN 788 - IRC § 6662(b)(3) and IRC 6662(e) - Substantial valuation misstatement

    • PRN 789 - IRC § 6662(b)(4) and IRC 6662(f) - Substantial overstatement of pension liabilities

    • PRN 790 - IRC § 6662(b)(5) and IRC 6662(g) - Substantial estate of gift tax valuation understatement

    • PRN 792 - IRC § 6662(h) - Increase in penalty in case of gross valuation misstatements

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

Penalty Reason Code Entered in Item 02, of Form 5403, Appeals Closing Record

  1. 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.

  2. 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)."

  3. 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:

    • IRM 8.20.7.14.2, Non-AIMS CC: REQ54/ADJ54

    • IRM 8.20.7.16, Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures

    • IRM 8.20.7.49, Penalty Appeal (PENAP) Case Closing Procedures

  4. 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.

  5. 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.

  6. 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+.

  7. 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:

    • PC 5 - "Causes IMF or BMF MCC posting process to generate and post assessments (or abatements) of accrued, unrestricted FTP penalty and/or interest based upon the adjustment to which it is associated. PC 5 may be used with TC 290 or TC 300 for any amount and in combination with other transaction codes."

    • PC 9 - "FTP back to RDD for TC 300 adjustment - Only necessary on IMF. BMF automatically generates FTP from RDD unless TC 270 is input. Entering a TC 270 amount will prevent MF from computing back to RDD even though PC 9 is input. Use PC 9 when inputting a return or adjustment, if the module contains an SFR, to compute FTP from return due date."

    • Additional information on Priority Code 5 and 9 is provided via the following online references:

      Reference Link Title
      • http://serp.enterprise.irs.gov/databases/irm.dr/current/6209/section-8c-2-4.html

      • Document 6209, Section 8C 2 - Source Codes, Reason Codes, Hold Codes and Priority Codes
        See 4 - Priority Codes

      • IRM 4.13.5

      • Recalculating SFR Penalties

      • IRM 20.1.1

      • The Appeals Function

      • Pre-Assessment Appeals

      • Post-Assessment Appeals

      • Deficiency Procedures

      • Non-Deficiency Procedures

      • Master File Indicators

      • Master File Penalty Reason Codes

      • Penalty Transaction Codes

      • Penalty Reference Numbers

      • Corporate Files On-Line (CFOL)

      • IRM 20.1.2

      • Manual Penalty Adjustments

      • IRM 20.2.5

      • Assessment of Interest Accruals

  8. 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.

    • TC 16X = Failure to File (FTF) Penalty IRC 6651(a)(1)

    • TC 27X = Failure to Pay Tax Shown on the Return (FTP) Penalty IRC 6651(a)(2)

    Example:

    #1 An individual taxpayer filed their 201112 1040 on December 14, 2013. The Compliance RAR reflected an additional tax deficiency of $1,000.00, a FTF Penalty of $ 250.00, and a FTP Penalty of $ 225.00. The ATE settled the taxpayer’s case for the full amount of the tax deficiency but did not sustain the proposed FTF/FTP penalties for any amount. The ATE selected Penalty Resolution Reason ID"5" Not sustained in full by Appeals due to the lack of proper development of the penalty issue by the examiner, to document their penalty determination on the Form 5402. APS will prepare the Form 5403 for the tax deficiency and penalty determination as shown in the table below:

    Form 5403 Item Number and Title APS Entry Based on Example
    Item 02, Penalty Reason Code 42
    Item 12, Tax Liability Adjustment TC 300 1,000.00+
    Item 12, Penalty TC 160 0.00 +
    Item 12, Penalty TC 270 0.00 +
  9. 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.

  10. 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.

    Example:

    #2 A Compliance Non-Docketed case RAR includes a proposed Accuracy Related Penalty. The ATE settles the case for the full tax amount, but with no penalty. The ATE selects Penalty Resolution Reason ID 7 - Settled using hazards of litigation. Using the crosswalk below, the APS TE will enter PRC 40 in Item 02 of the Form 5403. The ACDS record will reflect that a penalty was proposed but was not sustained. The ACDS Return Level PropdPen field will include $$$ and the Revsdpen field will be blank. Form 5403 will include a TC 300 for the tax assessment amount but will not include a Penalty Transaction Code for the proposed but not sustained Accuracy Related Penalty. See (11) below for additional information.

    Caution:

    Entry of an Accuracy Related Penalty code with a $ 0.00 will cause the TC 29X/30X adjustment to go unpostable. Unpostable Code 291-3, TC 29X or TC 30X with invalid line reference items.

    Example:

    #3 A Compliance Non-Docketed case RAR includes a Failure to File Penalty (FTF) and the Del-Ret-Ind field is set to "1" on TXMODA and is also reflected on AIMS. The ATE settles the case and uses Penalty Resolution Reason ID 4 - Not sustained in full by Appeals due to the merits of the taxpayer’s argument or because the taxpayer meets reasonable cause criteria. Using the crosswalk below, the APS TE will enter PRC 22 in Item 02 of the Form 5403. The ACDS record will reflect that a penalty was proposed but not sustained. The ACDS Return Level PropdPen field will include $$$ and the Revsdpen field will be for less $$$, or will be blank if the ATE deemed the FTF Penalty does not apply.

    Reminder:

    Whenever the Del-Ret-Ind field is set to "1" , all subsequent account adjustment transactions, including a TC 300 for 0.00 must also include the TC 16X for the correct penalty adjustment amount, or for 0.00 to avoid the AIMS Reject Message "DELINQUENT RETURN IND SET Delinquency Penalty Must be Addressed" and the Unpostable Code 179 RC 0 or RC 1.

  11. 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.

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

    Crosswalk of Penalty Relief Reason and Applicable Penalty Reason Code Entry in F-5403 Item 02

    Penalty Abatement or Suppression Reason Identified By/On: Penalty Relief Reason ID and Description: Penalty Reason Code Used on the Adjustment Document:
    ATE/Form 5402 1 - Sustained in full by Appeals 41
    ATE/Form 5402 2 - Not sustained in full by Appeals due to a computation adjustment only 42
    ATE/Form 5402 3 - Not sustained in full by Appeals due to additional information provided by the taxpayer in Appeals 30
    ATE/Form 5402 4 - Not sustained in full by Appeals due to the merits of the taxpayer’s argument of because the taxpayer meets reasonable cause criteria 22
    ATE/Form 5402 5 - Not sustained in full by Appeals due to the lack of proper development of the penalty issue by the examiner 42
    ATE/Form 5402 6 - Not sustained in full by Appeals due to the misapplication of tax law by the examiner 45
    ATE/Form 5402 7 - Settled using hazards of litigation 40
    ATE/Form 5402 8 - N/A, includes no penalty was proposed by the examiner Blank
    ATE/Form 5402 9 - Not sustained in full by Appeals for a reason not listed 42
    ATE/Form 5402 10 - Not resolved (e.g. cc 13, 43, 20, 30, 40) If penalty is not fully sustained at closing, identify the correct PRC based upon the final determination.

     

    Note:

    IRM 2.8.7-7 Exhibit Item Number Description Item Number 02 Penalty Reason Code specifies the range for the 2 character field as 21-45. If an entry is not within this range the following error message is returned: "INVALID PENALTY REASON CODE #02" .

Restricted Interest and Special Processing Cases

  1. 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:

    • Form 2285, Concurrent Determinations of Deficiencies (Increases in Tax) and Overassessments (Decreases in Tax) in Cases Involving Restricted Interest Provisions of the Internal Revenue Code

    • Sequa Worksheet when Revenue Ruling 99-40 applies

    • IRC 6404(g), Interest Suspension Worksheet when applicable on an Individual MF account.

      Reminder:

      IRM 20.2.7, Recording IRC 6404(g) Notice Date (1) states "Examiners must notate IRC § 6404(g) does not apply or IRC § 6404(d) does apply and the date the notice was provided on the following forms or equivalent:"

      Forms Prepared by Compliance and Used to Identify if IRC 6404(g) Applies

      6404(g) Documentation Form Title Appeals Use For 6404(g) Awareness
      Form 3198 Special Handling Notice for Examination Case Processing The ATE selects one of the following when preparing the Form 5402 6404(g) Applies:
      • Yes

      • No


      When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.
      Form 4549 Income Tax Examination Changes The ATE selects one of the following when preparing the Form 5402 6404(g) Applies:
      • Yes

      • No


      When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.
      Form 4605-A Examination Changes - Partnerships, Fiduciaries, Small Business Corps. & Domestic Intl. Sales Corp.(Unagreed and Excepted Agreed) The ATE selects one of the following when preparing the Form 5402 6404(g) Applies:
      • Yes

      • No


      When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.

       

      Reminder:

      The APS TE must ensure that the 6404(g) TC 971 AC 064 is posted whenever IRC § 6404(g) applies. For additional information see IRM 20.2.7, Input of IRC § 6404(g) Notice Date on MF.

      Caution:

      Whenever the ATE determines IRC § 6404(g) does not apply, but the TC 971 AC 064 indicator is present on the taxpayer’s account, APS must reverse the 6404(g) indicator via a TC 972 AC 064. CC: FRM77 is used to post or reverse the 6404(g) indicator. The IRC § 6404(g) notice date is entered in the TRANS-DT field, and the liability amount eligible for IRC § 6404(g) interest suspension must be entered in the FREEZE-RELEASE-AMT field. For additional information see IRM 20.2.7, Input of IRC § 6404(g) Notice Date on MF.

    • Earliest 30-Day or 90-Day Notice Date and Amount when IRC § 6621(c) Large Corporate Underpayment Interest applies.

    Note:

    Interest and Special Processing actions required for specific case types processed by APS, i.e. Employment Tax, Estate and Gift Tax, Innocent Spouse, TEFRA, etc., are provided in alphabetic order by topic later in this IRM Chapter.

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

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

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

Form 5403, Appeals Closing Record, Item 08 Entry When There Are Two Agreements
  1. When closing a case with two agreements special processing steps must be taken to ensure both timely assessment and accurate interest application.

  2. To avoid unnecessarily restricting IDRS programming from performing interest computation take the following steps to process each agreement separately whenever the ASED date allows for the timely assessment of both account adjustment documents:

    1. Process the first agreement as a partial assessment and enter the applicable agreement date in Item 08 on Form 5403, Appeals Closing Record. This will allow AIMS to remain open, as well as associate the earliest agreement date with the first amount of agreed deficiency.

    2. Once the partial assessment for the first agreement has posted, process the second agreement for the additional deficiency agreed to as the final closing and enter the second agreement date in Item 08 on Form 5403, Appeals Closing Record.

    3. When appropriate, the second adjustment for final closing can be input within the same cycle as the partial adjustment as long as the appropriate Posing Delay Code (PDC) is entered on Form 5403, Appeals Closing Record, in Item 43 to ensure that both transactions do not attempt to post to the account within the same cycle.

    4. Ensure that the total tax posted to the account will not exceed the total amount of tax agreed to by the taxpayer.

    5. If the Assessment Statute Expiration Date (ASED) will not provide enough time to process both the first and the second agreement as two different adjustments, the combined amount of tax from the separate agreements can be assessed as one TC 30X, however, the deficiency interest must be manually computed to ensure accurate application of the agreement date to each respective tax amount. Once the total interest amount is determined, the interest assessment can then be posted with a TC 340. This will set the MF "-I" Freeze on the account. "Non-Restricting TC 340" procedures must be used whenever possible to avoid unnecessarily restricting the module to allow MF to generate future interest calculations on the account.

    Reminder:

    See IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340, for additional information on using a Non-Restricting TC 340.

  3. When closing a case where Appeals secured and assessed a partial agreement (1st Agreement), enter the following on Form 5403, Appeals Closing Record:

    1. Item 12 = Final Tax to be assessed according to the second agreement;

    2. Item 800 = Final settlement amount to be assessed PLUS the partial agreement amount previously assessed by Appeals;

    3. Item A - Special Handling Instructions = Enter partial agreement date and amount. If more than one partial agreement, list separately.

    4. Determine if MF can computer generate the interest computation and if not, follow restricted interest computation and assessment actions.

Interest Related Account Features and Awareness
  1. The Appeals Technical Employee (ATE), or the Tax Computation Specialist (TCS) who prepares the case determination and closing information documents for APS must identify the following interest related account features as well as prepare the applicable worksheets or notifications to alert APS and support interest accuracy on the taxpayer’s accounts.

  2. The ATE and TCS interest related account features and awareness responsibilities apply to both non-docketed and docketed cases.

  3. One or more of the following interest features may be applicable to the Individual Master File (IMF) MFT 30 account:

    IMF Interest Feature ACDS Code MF Code(s) ATE/TCS Identifies (Yes or No) IRM Reference(s)
    Carryback Loss Allowance or Recapture IRC 6511(d)(2) Statute Date Alpha Code "BB" for Loss Year MF Freeze -I or
    • TC 294

    • TC 295

    • TC 308

    • TC 309

    Yes
    • Form 2285

    • Form 5403 Instructions

    • IRM 20.2.9, Interest on Carryback of Net Operating Loss

    Combat Zone IRC 7508 None Module or Entity Freeze -C
    • TC 150 CCC K

    • TC 500 cc 52, 54, or 56

    No
    • IRM 20.2.7, -C Freeze

    Disaster Relief IRC 7508A Feature Code "DR" with start and stop date(s) in Notes Field MF Freeze -O
    • TC 971 AC 86 or AC 87

    MF Freeze-S
    • TC 971 AC 688

    Yes on ACDS
    • IRM 20.2.7, IRC 7508A, Presidentially Declared Disaster or Terroristic or Military Actions

    Untimely Notice IRC 6404(g) None
    • TC 971 AC 064

    Yes via 6404(g) Worksheet
    • IRM 20.2.7, IRC 6404(g) Interest Suspension

    May/SEQUA Revenue Ruling 99-40 None
    • TC 836

    • TC 846

    • TC 896

    • TC 971 AC 653

    Yes via May/Sequa Worksheet
    • IRM 20.2.5, Revenue Ruling 99-40 (Modifies and Supersedes Revenue Ruling 88-98) Use of Money

    Note:

    Use the Disaster Guide to verify "-O" MF Freeze Start and End Date, or to verify the "-S" Freeze Start and End Date.

  4. One or more of the following interest features may be applicable to the Business Master File (MF) MFT 02 account:

    BMF Interest Feature ACDS Code MF Code(s) ATE/TCS Identifies
    (Yes or No)
    IRM Reference(s)
    Carryback Loss Allowance or Recapture IRC 6511(d)(2) Statute Date Alpha Code "BB" for Loss Year MF Freeze -I or
    • TC 294

    • TC 295

    • TC 308

    • TC 309

    Yes
    • Form 2285

    • Form 5403 Instructions

    • IRM 20.2.9, Interest on Carryback of Net Operating Loss

    Disaster Relief IRC 7508A Feature Code "DR" with start and stop date(s) in Notes Field MF Freeze -O
    • TC 971 AC 86 or AC 87

    MF Freeze-S
    • TC 971 AC 688

    Yes
    • ACDS

    • IRM 20.2.7, IRC 7508A, Presidentially Declared Disaster or Terroristic or Military Actions

    General Agreement on Tariffs and Trade (GATT) IRC 6621 (a)(1)(B) None Prior or Current Overpayment in excess of $10, 000.00
    • TC 836

    • TC 84X

    Yes and No
    • The O/P amount is provided on Form 5402, and APS is responsible for determining if the GATT Threshold has been met

    • IRM 20.2.4, GATT Credit Interest - Computations on Overpayments

    MAY/SEQUA Revenue Ruling 99-40 None
    • TC 836

    • TC 846

    • TC 896

    • TC 971 AC 653

    Yes
    • Sequa Worksheet

    • IRM 20.2.5, Revenue Ruling 99-40 (Modifies and Supersedes Revenue Ruling 88-98) Use of Money

    Note:

    Use the Disaster Guide to verify "-O" MF Freeze Start and End Date, or to verify the "-S" Freeze Start and End Date.

APS Responsibility for Identifying and Securing "Interest-Related" Forms and Schedules
  1. During the APS TE’s initial review of a case assigned for closing action, the APS TE must take the following actions to verify that the case is “Fit for Use”, meaning it is complete and ready to be analyzed and processed without additional delay:

    • Verify the Assessment Statute Expiration Date (ASED)

    • Verify that all account adjustment documentation is associated and properly authorized via signature whenever applicable

    • Verify that all interest-related forms, schedules and documentation is provided when necessary - the paragraphs below provides more specific detail with respect to the interest-related information

  2. All "compliance-sourced" IMF MFT 30 cases with open AIMS controls being closed through APS, must always include an IRC § 6404(g) statement on the F-5402 prepared by the ATE, and signed by the ATM. The IRC § 6404(g) statement will identify if IRC § 6404(g) applies or does not apply. If IRC 6404(g) applies, the ATE will also provide the interest suspension beginning and ending dates and the dollar amount to which IRC 6404(g) applies. Without the 6404(g) statement, the case is not "Fit For Use."

  3. If a "collection-sourced" account adjustment is required on an IMF MFT 30 account, the IRC § 6404(g) determination will have already been made by the Compliance Revenue Agent at the time of the tax assessment, however, if the account adjustment also requires a manual interest computation, the APS TE must identify if the IRC 6404(g) indicator is present and when present, incorporate the 6404(g) interest suspension into the manual interest computation. Master File programming can accurately update the interest unless two separate 6404(g) suspense periods are applicable to the account.

  4. Whenever IRC 6404(g) applies, APS will then verify that the TC 971 AC 064 is posted to the taxpayer’s account, or if it is not yet posted, APS will input the 6404(g) TC 971 AC 064 using CC: REQ77. See IRM 20.2.7, Input of IRC 6404(g) Notice Date on MF for additional information.

    Reminder:

    If the 6404(g) Indicator (TC 971 AC 064) is set, but the ATE notifies APS that IRC 6404(g) does not apply to the account, then use CC: REQ77 to post a TC 971 AC 164 to the account. This removes the indicator and allows underpayment interest to accrue without application of the interest suspense period. Always document the PEAS Case Activity Record with the reason for the entry of TC 971 AC 164 to provide a clear audit trail and to justify the reversal of the 6404(g) Indicator.

  5. IMF MFT 30 account adjustments may also require the following interest-related form, schedule(s), or instruction(s):

    • IRC 6404(a) Interest Abatement (Form 3870)

    • IRC 6404(d) Interest Abatement (Form 3870)

    • IRC 6404(e) Interest Abatement (Form 3870)

    • IRC 6601(d) Carryback of a Net Operating Loss (Form 2285(s))

    • IRC 6603 Deposit posted to the account (over-deposited or under-deposited)

    • IRC 6611(e)(3) IRS Initiated Overpayment (Remark on Form 5402 to alert APS)

    • IRC 7508 Combat Zone (CZ) (MF “-C” Freeze)

    • IRC 7508A Disaster Area or Terroristic or Military Actions, (ACDS Feature Code "DR" and MF “-O” or “-S” Freeze.

    • Revenue Ruling 99-40, Use of Money (SEQUA), (SEQUA Spreadsheet)

  6. If the required interest-related form(s), schedule(s) or instruction(s) are not provided by the ATE, the case is not fit for use and the APS TE will take the following action:

    • Use secure email to contact the ATE, identify the missing item(s) and request they provide the required documentation within 5 business days (Cc the ATM and your PTM).

    • Document your action in PEAS Case Activity Record (CAR) and use the PEAS Follow-up Feature to set a reminder for yourself on the applicable date.

    • Place the case in PEAS Suspense Reason Code 1.

    • When the requested item is received, associate it with the case file, document the PEAS CAR, and remove the case from PEAS Suspense and reinsert the file in the applicable inventory processing order.

    • If the requested item(s) are not received timely, notify your PTM before rejecting the case back to the ATE/ATM. The ATE will then have to complete their work on the case, get the case re-ACAP’d and then resubmit to APS for closing.

    • Close PEAS using cc 20 "Returned to ATE/ATM for additional work."

      Reminder:

      When the verification process steps 1-6 are taken, the problem is identified as early as possible, and an attempt to resolve the problem at the lowest level provides the most efficient resolution for the ATE, APS TE, and ultimately, the taxpayer. This process allows the ATE to complete their actions while they still have recall of the case, and the APS TE can continue to process their existing inventory without delay because as they open each case for processing and closing, the case is “Fit For Use.”

    Process Table for Making a Case Fit For Use

    Case Status Case Movement Additional Actions by APS
    ACAP’d by the ATE Case transmitted to APS Monitor PEAS Unassigned
    Systemically moved into APS PEAS Unassigned Case received in APS Form 3210/E3210 reviewed, verified, receipted and returned to initiator
    PTM or LEAD assigns to an APS TE in PEAS Case assigned to an APS TE in PEAS APS TE performs case receipt and verification
    APS TE performs a Fit For Use verification upon accepting the assignment
    • Case is Fit For Use

    • Case is NOT Fit For Use

    • If case is Fit For Use, APS prioritizes the case within their existing inventory.

    • If case is NOT Fit For Use, APS takes action to secure the missing item(s) from the ATE.

    APS TE uses secure email to request the missing or incomplete items from the ATE within 5 business days APS TE enters a PEAS CAR to include a brief explanation of the items requested from the ATE. Case remains in APS TE’s PEAS Inventory in PEAS Suspense and APS TE sets a Follow-up Date. APS TE continue to work existing Fit For Use inventory until the Follow-up Date.
    APS TE receives the completed items timely via EEFax or Email APS TE enters a PEAS CAR to document the receipt of the items, removes the case from PEAS Suspense, and prioritizes case within existing inventory. APS TE processes the Fit For Use case timely and accurately.
    If the completed correct documents are not received timely, APS rejects the case back to the originator APS TE enters a PEAS CAR to document the reason why the case cannot be closed and to whom the case is being returned and on what date. APS TE closes their PEAS record once the case is in transit back to the ATE.

     

Railroad Retirement Tax

  1. 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):

    • Form 5402, Appeals Transmittal and Case Memo;

    • Appeals Case Memorandum, if prepared in addition to Form 5402;

    • Form 4549, Income Tax Examination Changes and/or Form 5278, Statement - Income Tax Changes; and

    • Settlement Computations

      For Docketed Tax Court Cases, APS will secure and also include the following document:

    • Entered Decision Document, or

    • Entered Order of Dismissal

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

    Railroad Retirement Board

    Attention: Chief Financial Officer

    844 N. Rush Street

    Chicago, IL 60611

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

Integrated Automation Technology (IAT)

  1. Integrated Automation Technology (IAT) is available to all IDRS users and use of IAT is mandatory for all APS employees effective October 1, 2014. IAT automates many of the AIMS and IDRS command code input screens, provides real-time analysis of the taxpayer's account to identify account condition(s) which may cause an unpostable and auto-populates field entries to reduce keystrokes and eliminate input errors.

    Reminder:

    IDRS Users will only be able to use the CC’s currently available in their IDRS Profile. IAT always verifies you have the command code active in your IDRS SFDISP Profile prior to allowing you to use the CC Tool.

  2. For additional information, visit the IAT Home Page.

  3. The following Command Codes (CC) are available via IAT:

    Type of Input Action Command Code
    AIMS and Non-AIMS Adjustment(s) to Tax, Penalty, Credit Reference Number(s) (CRN) and Item Reference Number(s) (IRN)
    • AMCLS

    • ADJ54

    • CMODE

    • TSCHG

    • TSCLS

    AIMS Status
    • AMSOC

    • AMSTU

    Control Base Actions
    • ACTON

    Credit Transfers
    • ADD24

    • ADD34

    • ADD48

    • DRT24

    • DRT48

    • FRM34

    Populate the ASED field on taxpayer’s account
    (Only for Delinquent Return Received
    Sets the ASED on MF TC 599 cc 89*
    *IRS Received Date Required entry in the
    COR-RECD-DATE field.)
    • FRM49

    Entity Changes
    • BNCHG

    • INCHG

    Installment Agreements
    • IADIS

    • IAGRE

    • IAPND

    • IAREV

    Manual Refund Forms 3753 and 5278
    • Form Completion Only

    Request or Re-Charge a Return
    • ESTAB

    Stop Computer Generated Refund TC 846
    • NOREF

    Suspend Notice and Collection Action
    • STAUP

    • STATI

    • STATB

    Unpostables
    • UPTIN

    • UPCAS

    • UPRES

  4. The IAT Job Aid page displays an extensive list of Job Aids for Existing Tools. The IAT Tools have Required Command Codes for the specific IDRS user, based upon the tool’s functionality. Each Job Aid identifies the required CCs for the respective tool. IRM 3.12.37, Command Code SFDISP is used to display all active command codes in an IDRS User’s profile. After using CC: SINON, type SFDISP then transmit to see a list of your active command codes. You can access the IAT Instructions and Job Aids listed below via the following link: http://iat.web.irs.gov/jobaids/iat.asp.

    IAT Jobs AIDS for Existing Tools Crosswalk for Identified Command Codes

    IAT Tool Title Command Code Interaction/Functionality
    Act On
    • ACTON

    • IDRS User can also create a personalized list of the most common history item entries they utilize for one click efficiency on all subsequent ACTON inputs.


    Examples:
    • MAAS 23C MM-DD-YYYY

    • F-3753 MR MM-DD-YYYY

    • F-5792 MR MM-DD-YYYY

    • F-12810 MM-DD-YYYY

    Address
    • ENREQ

    • BNCHG

    • INCHG

    • RECON

    AIMS Closures

    Minimum CC requirements in the users IDRS SFDISP Profile:
    • BMFOL

    • ENMOD

    • IMFOL

    • INOLE

    • TXMOD

    • AMAXU

    • AMCLS* (A/F/I/S/U)

    • AMSOC

    • AMSTU

    • FRM77**

    • REQ77**

    • TSCHG

    • TSCLS

    • TSUMY


    Partial list of automated options:
    • *Hash Calculator - For Appeals: The tool will automatically compute the hash total based on the information entered into the Form 5403 line number fields.

    • ** TC 971 AC 057 Cross-reference workpaper tax period(s).

    • ** TC 971 AC 064 Identify 6404(g) critical data for systemic or manual interest application.

    • ** TC 971 AC 256 Identifies adjustments authorized by a Closing Agreement.

    • ** TC 971 AC 282 Sets the ASED when a Delinquent Return is secured after the posting of an SFR TC 150. Will not set the duplicate return freeze. Use only when a delinquent return has been secured and do not use for an agreement on an SFR account which is not deemed a return under IRC 6020(a). Also See CC: FRM49 in table above.

    • ** TC 971 AC 653 Identify Rev. Rul 99-40 verification for the respective module was completed and is applicable.


    This tool opens and allows on screen preparation of the following forms:
    • Form 5403

    • Form 2275

    Clerical
    • ACTON

    • ESTAB

    • STAUP

    Code Search Index (CSI) Tool The CSI is designed to:
    • Provide customers with easy access to nearly 30 code databases.

    • Allow single or multiple code type searches.

    • Replace the Code Lookup and 6209 Search Tools.

    Compliance Suite
    • There are too many CCs to list separately - see link below to access the Compliance Suite Command Codes Spreadsheet.

    • http://iat.web.irs.gov/JobAids/CompSuite.xml#CCneeded

    Credit Transfer
    • ADD24

    • DRT24

    • ADD34

    • FRM34

    • ADD48

    • DRT48

    Quick Command Code Tool (QCC) Purpose and Scope of the QCC: (partial listing)
    • Initiate CCs on IDRS

    • Navigate through IDRS tax periods

    • Page through CCs

    • Provide Multi-Print and Legacy Grab Print functionality

    • Provide multiple tax period functionality for CCs BMFOLB, IMFOLB, MFREQ, RECON, STAUP

    ESTAB Tool
    • ESTAB

    Fill Forms Tool Partial List of Available Forms:
    • Form 2275

    • Form 2424

    • Form 2859

    • Form 3809

    • Form 8758

    FRM49 Purpose and Scope of the QCC: (partial listing)
    • Allows single or multiple input of TC 59X

    • Allows user to create custom list of TCs and cc’s used to perform work - user can name lists for quick reference and selection.

    • Auto-populates account TIN when TXMOD is already opened.

    • Automatically alerts user if the CC requires X-reference information.

    Manual Refund Tool Tool displays all fields for user input:
    • Form 3753

    • Form 5792

    REQ54 Tool- Adjustment Calculator Available for Forms:
    • 940

    • 941

    • 1040


    Additional functionality is in development.
    The tool can be used to input adjustment column data for other types of returns although the as posted figures may not display correctly.
    • All REQ54 fields are available on the tool.

    REQ77 Tool Tool provides drop-down menus and fillable fields for all REQ77 TCs and related entries.
    Universal Unpostable Tool Tool is designed to assist Tax Examiners in research, decision, and repetitive tasks related to UPs.
    UPTIN Histories Allows user to add, update or delete unpostable history items.

     

Integrated Data Retrieval System (IDRS) Command Code Job Aid

  1. For a listing of AIMS and IDRS Command Codes, their purpose and the applicable field names and descriptions applicable for each CC, click on the link provided. IDRS Command Code Job Aid.

Administrative File Closing Assembly Order

  1. When closing an Appeals (non-collection source) case, the APS TE will insert any additional forms, computations, and other documents as applicable in the administrative file prior to releasing the case to the next recipient:

    • AQMS

    • Campus Files Function

    • Compliance (when requested by the ATE)

    • Court of Appeals

    • Other

  2. The Assembly Order for Non-Collection Cases is provided in Exhibit 8.20.7-15. The Exhibit list is not all inclusive but is intended to serve as a guide for the APS TE when closing their case and describes the order of documents from the top to the bottom of the file(s).

Forms Prepared in Appeals Cases

  1. 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.

    1. Agreement Forms with AD Extensions Form 870-AD, Form 2504-AD, etc. – Send a copy of the agreement form to the taxpayer with the closing letter. Include the original agreement in the administrative file.

    2. Form 885-E, Schedule for FICA Tax Adjustment of Wages not Previously Reported - Attach behind the return or to the face of the return.

    3. Form 885-F, Self-Employment Tax Adjustment - Attach behind the return or to the face of the return.

    4. Form 885-T, Adjustment of Social Security Tax on Tip Income Not Reported to Employer - Attach behind the return.

    5. Form 866 and Form 906 (Closing Agreements) - Attach a copy of the closing agreement to each applicable return. Include a copy with the closing letter. Send a copy to Compliance if noted on Form 5402, Appeals Transmittal and Case Memo by the ATE.

      Reminder:

      Since APS no longer creates a Closed Office File, the APS TE must transmit one of the duplicate Original Closing Agreements to the address below, using Form 3210/E3210, where all Closing Agreements will be retained for 6 years to comply with the Appeals Records Control Schedule retention period.

    6. Form 1331 or Form 1331-B, Notice of Adjustment - Attach the original to Form 5403.

    7. Form 2285 (for Restricted Interest) - Attach original form to reverse side of the front page of return.

    8. Form 2859, Request for Quick or Prompt Assessment - Attach the original form to the front page of the return.

    9. Form 3753, Manual Refund Posting Voucher - Attach the original form to the front page of the return.

    10. Form 3870, Request for Adjustment - Attach the original form to the front page of the return.

    11. Form 5792, Request for IDRS Generated Refund (IGR) - Attach the original form to the front page of the return.

    12. Form 5403, Appeals Closing Record - Attach Form 5403 and Form 5403 Instructions to APS Worksheet, on top of the return.

    13. Form 8485, Assessment Adjustment Case Record, - Attach the completed form to the front page of the return.

    14. Form 8758, Excess Collections File Addition - Prepared by APS when refundable credits are barred from refund and must be moved to Excess Collections in order to resolve the taxpayer’s account. Attach the completed form to the front page of the return.

    15. Form 8765, IDRS Control File Credit Application - Prepared by APS to request credits that have been moved to Excess Collections be returned to offset an outstanding balance on the same tax period from which they were originally applied. Attach the completed form to the front page of the return.

    Appeals

    Attn: Closing Agreement Suspense

    55 North Robinson

    Oklahoma City, OK

    73102-9226

Closing Letter

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

    • Prepares the letter

    • Signs it if authorized to do so, or leaves the signature section blank and prepared for the ATM’s signature

    • The letter is left undated in the administrative file

  2. 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.

  3. The employee who sends the closing letter will:

    1. Date the closing letter

    2. Mail the closing letter to the taxpayer and if there is a Power of Attorney (POA), also mail a copy to the closing letter to the POA using cover Letter 937.

    3. Include copies of applicable enclosures (870-AD, 2504-AD, Form 906 Closing Agreement, Form 872-T, etc) as stated on the closing letter

    4. Retain copies in the administrative file

Form 872–A Special Consent to Extend the Time to Assess Tax

  1. 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.

  2. 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.

AIMS CC: AMCLSA General Processing

  1. Verify that all required forms and documents necessary for processing and closing the case are included, contain the correct taxpayer name and entity information, and include all necessary signatures.

    • Form 5402, Appeals Transmittal and Case Memorandum is signed and dated

    • Form 5403 Instructions to APS Worksheet, if applicable

    • Form 5403, Appeals Closing Record

    • Interest related worksheets and forms i.e. 6404(g) Worksheet, Sequa Worksheet, Form 2285, specialized forms required for specific case types and return types, as applicable

    • Agreement Form (signed), Entered Decision, or Defaulted SND as appropriate to legally authorize the account adjustment(s) and closing action(s)

  2. Review AIMS and IDRS prints for each tax period to identify AIMS and MF freeze codes and account conditions, which require special actions to accurately process the account adjustments.

  3. Verify item and credit adjustments will correctly adjust the respective field on the account without creating an unpostable condition.

    • IRN 886 reduction (-) cannot be for an amount greater than the Taxable Income (TXI) Field Amount currently posted.

    • IRNs for Self Employment Income (SEI) increase cannot cause the total SEI amount to exceed the maximum SEI for the tax period.

    • IRNs for secondary self-employment income, and/or secondary medicare income adjustments cannot be made to an account with a filing status other than Married Filing Joint.

    • CRN 764 cannot increase a refundable credit i.e. Earned Income Credit, to an amount greater than the maximum allowed amount for the respective tax period.

    • CRN reductions cannot decrease an existing credit below 0.00.

    • See http://serp.enterprise.irs.gov/databases/irm.dr/current/6209/6209.html for specific information on Transaction Codes, Credit Reference Numbers, Item Reference Numbers, MF Freeze Codes, and Unpostable Codes.

  4. Exhibit 8.20.7-1 provides instructions for completing Form 5403, Appeals Closing Record.

    Caution:

    When processing an agreed assessment on a TC 150 0.00 SFR account, and the taxpayer has not filed an original delinquent return, the agreement date must be entered in Item 08 and associated with the SFR assessment transaction(s) to ensure accurate computer generated interest assessment (TC 196/336). Rev. Rul. 2005-59 revoked Rev. Rul. 74-203 which means that when a taxpayer signs a waiver of agreement e.g. Form 870, Form 870-AD, Form 4549, or has an Entered Tax Court Decision which also includes the 6213 Waiver Paragraph, the agreement is for assessment of a deficiency, and is not in "lieu of a return" (original tax). If the agreed SFR deficiency assessment is not posted with a 23C date within 30 days of the waiver date (agreement date), the underpayment interest is suspended until the earlier of:
    ⇒ Full paid date
    ⇒ 23C (assessment date)

    Note:

    If there are two or more agreements on the case, see IRM 8.20.7.10.11.1, Form 5403, Item 08 Entry When There Are Two Agreements.

  5. Form 2285 is needed for cases involving carry-back adjustments. The TCS function completes the top portion of the form and will provide APS with all prior Form 2285(s) as appropriate when there have been multiple carry-back transactions posted to the account. APS is responsible for performing the complete module recomputation using ACT/DMI and attaching the interest computation along with the Form 2285(s) behind the front page of the return.

  6. Verify the agreement form, settlement computation and Form 5403, Appeals Closing Record all have the same:

    • Tax amount

    • Penalty amount

    • TIN

    • Tax period

    • Taxpayer name

  7. Verify signature and date on Form 5402, Appeals Transmittal and Case Memo.

  8. Follow the applicable Feedback Loop procedure using the information provided by the ATE on Form 5402, Appeals Transmittal and Case Memo.

  9. Affix the completed AMCLSA adjustment source document on top of the applicable return.

  10. Follow appropriate administrative file procedures for cross-referencing the location of the workpapers via input of TC 971 AC 057.

  11. Access the Docketed/Non-Docketed Disclosure Spreadsheet http://appeals.web.irs.gov/APS/default.htm applicable to the type of case you are processing to determine if the adjustment meets the disclosure criteria. If the disclosure criteria are met, enter the applicable Disclosure Code in Item 39 on Form 5403, Appeals Closing Record and transmit copies of all required documents to the address provided on the Disclosure Spreadsheet using Form 3210/E3210.

  12. Monitor account adjustment posting and update/suspense/close PEAS timely in compliance with current APS policy and procedure. PEAS Case Activity Record (CAR) entries must be succinct and yet clearly document the processing action(s) taken and/or the reason the case must be placed in suspense.

  13. See IRM 21.1.7, Suspense Copies, Form 3210, Document Transmittal, for procedures on monitoring and acknowledgement follow-up requirements.

    Exception:

    If the APS TE uses the SBSE CDI Transmittal Database to generate an E3210, all monitoring and follow-up actions are managed using the CDI Database Transmittal functionality.

Non-AIMS Adjustments General Closing

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

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

    • Abatement of Interest Claim

    • Campus Source Claim

    • Collection Due Process

    • Identity Theft

    • Offer in Compromise (OIC DATC and certain OIC DATL)

    • Penalty Appeal (PENAP)

Non-AIMS CC: REQ54/ADJ54

  1. 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.

  2. 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.

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

    • Item 15 Sequence Number, identified by IDRS upon completion of the adjustment input action.

    • Item 16 Blocking Series:
      ⇒ 00 - Original return is associated with the Non-AIMS adjustment Source Document (SD)
      ⇒ 05 - IMF adjustment made without the original return
      ⇒ 15 - BMF adjustment made without the original return
      ⇒ 18 - Adjustment without the original return - creates a Refile DLN
      ⇒ 96 - Penalty Appeal Indicator -N Master File freeze is set - creates a Refile DLN
      ⇒ 97 - Penalty Appeal Indicator -N Master File freeze is released
      ⇒ 98 - Certified Claim Disallowance Letter issued by Appeals - adjustment SD without original return
      ⇒ 99 - Certified Claim Disallowance Letter issued by Appeals - adjustment SD includes the original return

    • Item 17 Deficiency Interest to Date, MM-DD-YYYY when restricted interest TC 34X is adjusted.

    • Item 18 Source Code, this is a required field for IMF TC 29X adjustments. The Source Code (SC) chooses the beginning explanation appearing on the taxpayer's adjustment notice with the reason code (RC) completing the statement. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Source Code for the Appeals adjustment. The most common SC used for Appeals adjustments is "02" which begins the adjustment notice with "We changed your [YYYYMM]" account to correct your [RC].

    • Item 19 Reason Code, this is a required entry and up to 3 RC's may be input. When a Penalty RC is also appropriate, it is entered in position #4. When multiple RC's are input, enter them in numeric order from lowest number to highest number. RC 099 is used when other RC's do not apply and to complete the notice statement with "Account Information" . See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Reason Code for the Appeals adjustment.

    • Item 21 Hold Code, is entered when appropriate. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Hold Code for the Appeals adjustment.

    • Item 23 Priority Code, is entered by APS whenever necessary and must be used when certain conditions exist on the module. The most common PC used on Appeals non-AIMS adjustments is "1" whenever the taxpayer’s account includes an unreversed TC 420 or a TC 424. Input of PC 1 will bypass the following Unpostable Codes:
      ✓ UPC 150 RC 3
      ✓ UPC 160 RC 0
      ✓ UPC 328 RC 1
      ✓ UPC 330 RC 1
      ✓ UPC 330 RC 2
      See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Priority Code for the Appeals adjustment.

    • Item 24 Posting Delay Code (PDC), is entered by APS when the adjustment is input during the current cycle, but the posting of the transactions must be delayed from 1-6 cycles. A PDC is only entered when needed.

    • Item 25 Source Document (SD) Attached, this is a required entry.
      "Y" , means the SD will be submitted to files for association with the REQ54/ADJ54 Form 5147, IDRS Transaction Record
      "N" means no SD "NSD" will be submitted to files
      "R" , means the SD is being retained by the input function

    • Item 29 TC No. is where the Transaction Code(s) being adjusted are entered along with the increase or decrease dollar amount for each respective TC entered on the associated row i.e. 291, 161, 271, 341, etc.

      Caution:

      In the rare instance where a Non-AIMS Adjustment is authorized for a TAX Increase (TC 290/298) and an Agreement Date (Waiver Date) must also be associated with the tax assessment (ASED must be open and at least 90 days from the REQ54 input date*), the TE uses the "Correspondence Received Date (CRD)" field for entry of the applicable Agreement Date. Master File programming recognizes the CRD for underpayment interest computation in the same manner as the 870 Agreement Date (TC 30X AIMS assessment). See IRM 8.20.7.14.2 (8) for applicable IRS and Appeals IRM references.
      * If the ASED is less than 90 days from the current date, Quick Assessment processing is required. The Agreement Date is entered in the Form 2859 Correspondence Received Date field (instead of the 870 Agreement Date (TC 30X Only) field, and the Non-AIMS Tax Assessment amount is entered in row 4a Tax - Adjustment TC 290.

    • Item 29 Ref. No. Item Adjustment is where the IRN(s) being adjusted are entered along with the increase or decrease amount for each respective IRN i.e. 888, 886, 889, 878, 887, etc.

    • Item 29 Ref. No. Credit Adjustment is where the CRN(s) being adjusted are entered along with the increase or decrease amount for each respective CRN i.e. 807, 765, 338, 256, 257, etc.

    • Item 30 Remarks is used to identify any other specific information needed to complete the adjustment i.e. Refund Statute Control Date (RFSCDT), TCB-DT, and other information not specifically provided an item entry.

    • Item 31 Complete as appropriate.

  4. 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.

  5. 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.

  6. 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" .

    Exception:

    Non-AIMS Adjustments input with "NSD" in CC: ADJ54 Remarks, do not require that the Adjustment Source Document be sent to files because the Form 5147, IDRS Transaction Register will not print out for the Files Operation to associate with the Source Document.

  7. 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.

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

    • IRM 2.4.16, Terminal Messages (ADJ54) (Message Numbers are Displayed With the Message on the Screen for Easy Cross Referencing to the Definitions below). see (45) ASED IS IMMINENT/EXPIRED, CLEAR THROUGH STATUTE UNIT (3) states that only certain authorized employee numbers can bypass this validity check. APS TEs must use Quick Assessment procedures.

    • Exhibit IRM 2.4.16-4, Input Screen CC ADJ54CORSP-DT (CORRESPONDENCE DATE)

    • IRM 3.13.222, Correspondence Received Date (CRD)

    • IRM 21.7.7, Correspondence Received Date

    Reminder:

    APS TEs must follow guidance in IRM 8.21.2, Appeals Statute Responsibility - Account and Processing Support (APS) Statute Responsibility for consistent Assessment Statute Expiration Date (ASED) protection throughout the time the taxpayer’s case is under Appeals and/or Counsel jurisdiction:
    Verifying the Statute of Limitations on New Receipts see (6) c.
    Cases Not Accepted by Appeals
    Actions When Statute Date is Uncertain
    Statute Verification on Case Closings
    Processing Closings on Short Statute Cases
    Cases That Reject as Closing

Final Disposition of the Taxpayer's Account Balance

  1. 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:

    • The Right to Be Informed

    • The Right to Quality Service

    • The Right to Pay No More than the Correct Amount of Tax

    • The Right to Finality

    • The Right to a Fair and Just Tax System

  2. 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:

    • Analyze each tax account to identify Master File Freezes or other account conditions which may impact the current account adjustment(s).

    • Identify the appropriate processing codes to use when processing the adjustment(s) to avoid an unpostable condition, and or a delay in the release of the refund or notice to the taxpayer.

    • Process the legally authorized account adjustment(s) on each respective tax period, which, upon posting will result in the final settlement of the taxpayer's account.

  3. 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).

  4. 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).

  5. 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.

  6. 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.

Bankruptcy Examination Case Closing Procedures

  1. Bankruptcy cases require unique processing and statute controls. This section explains the APS procedures for closing Appeals bankruptcy examination cases.

  2. The bankruptcy automatic stay does not prohibit assessments that are allowed to be immediately assessed absent a bankruptcy. The Trust Fund Recovery Penalty (TFRP) and most excise taxes do not involve deficiency procedures and are immediately assessable. See IRM 8.25.1, Trust Fund Recovery Penalty (TFRP) Overview and Authority for additional information.

Identifying Bankruptcy Cases

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

  2. The following conditions identify a bankruptcy filing:

    • Transaction Code TC 520 with bankruptcy closing codes (cc’s 60-67, 81, and 83-89) on TXMODA

    • "-V" freeze or a "-W" freeze for cc’s 81 and 84 on TXMODA

    • "Bankruptcy" on the 1st page of the AMDISA

    • "E/BNK" Status Code on ACDS which is defined as "Inactive, TP in Bankruptcy"

Bankruptcy Case Closing Procedures

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

  2. 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.

    Reminder:

    A bankruptcy filing does not suspend the ASED.

    • Agreed cases, the ATE will identify the date the taxpayer filed bankruptcy.

      Note:

      If the ATE did not identify the bankruptcy date, request clarification from the ATE.

    • Unagreed field sourced cases are returned to Compliance Technical Services (CTS) as directed by the ATE for monitoring and statute control.

    • Unagreed campus sourced cases are returned to the originating campus as directed by the ATE for monitoring and statute control.

Bankruptcy - Agreed Closing Procedure

  1. 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.

    Caution:

    The agreed assessment must be processed timely to ensure posting of the assessment prior to the ASED identified by the ATE. APS must use Quick Assessment procedures if the ASED will expire in 60 days or less.

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

Bankruptcy - Unagreed Case Processing/Closing

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

    • Issue the SND using Letter 1384, Notice of Deficiency provided by the ATE.

      Note:

      The SND MUST be issued within the normal statute of limitations.

      Reminder:

      When an SND is issued on a bankruptcy case, the case will not be placed in SND suspense but instead the case is forwarded according to the ATE instruction.

    • Return field sourced cases to Examination Technical Services.

    • Return campus sourced cases to the originating campus function.

    • Close ACDS using cc = 05, Defaulted SND.

    • If Examination established the AIMS Controls, use CC: AMSTUB to update AIMS controls to appropriate AIMS Status.

    • Field Examination Technical Services cases are updated to AIMS Status 21.

    • Campus Cases are updated to AIMS Status 20.

    • If Appeals established the AIMS Controls, use CC: AMCLSA with Disposal Code 01 and cc 33 to remove the record from the AIMS database.

  2. 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:

    • Issue an SND using the Letter 1384, Notice of Deficiency prepared by the ATE. The file will not be suspended.

    • Close ACDS using CLOSINGCD = 19.

    • Close AIMS via CC: AMCLSA using Form 5403, Appeals Closing Record:
      Use the "Copy" Blocking Series 79X,
      Item 12 = TC 300 0.00,
      Enter cc 19 in Item 811.

    • Attach a copy of the face of the return and a copy of the Form 5403, Appeals Closing Record to the completed Form 2275, Records Request, Charge and Recharge.

      Reminder:

      The office and address where the administrative file is transmitted to must be included on Form 2275, Records Request, Charge and Recharge.

    • Form 2275 is forwarded to Campus Files for association with the Form 5147, Transaction Record to identify that the administrative file has been "re-charged" to either Counsel or the Tax Division, U.S. Department of Justice.

    • Transmit the administrative file to the Counsel or Department of Justice office identified by the ATE, using Form 3210/E3210.

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

Bankruptcy - Dismissed Docketed Case Closing Procedure

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

  2. 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.

  3. 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."

  4. APS will not process the assessment on these cases.

  5. 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.

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

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

    • Automated Under Reporter (AUR)

    • Automated Substitute for Return (ASFR)

    • Correspondence Exam (CORR EXAM)

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

    Processing Steps for Dismissed Docketed Bankruptcy Cases

    Step Action
    Update AIMS or Close AIMS:
    Compliance Status (21)
    or
    Close AIMS with cc 33.
    If the campus functions, established the case on AIMS, update the AIMS controls to Status 21 using CC: AMSTUB.
    If Appeals established the AIMS control, close the AIMS control via CC: AMCLSA, Disposal Code 01 and cc "33" Erroneous AIMS Account.
    Close the ACDS database ACDS is closed using cc 21 unless the ATE has charged time on the case, then use cc 08.
    ACDS NOTE field Enter a remark in the NOTE field that the case is being returned to either the Exam Technical Services coordinator or the campus function (ASFR, AUR, CORR EXAM) that issued the stat notice. In the NOTE field, place the name of the function and the address where the case is being sent.
    Scan the statutory notice of deficiency (SND) and any other document which is necessary to accurately make a protective assessment in the event this action is necessary to avoid a barred statute. Attach the scanned file(s) to the ACDS record using the ACDS Attachment functionality.
    Prepare Form 3210/E3210 Affix the Form 3210/E3210 to the outside of the case file.

     

  9. Complete Form 3210/E3210 as follows:

    1. In the "To" field, place the name and address of the Exam Technical Services coordinator or the name and address of the appropriate campus function where the file is being returned as identified by the ATE.

    2. In the "Remarks" field, place the following text "Tax Court petition filed in violation of the bankruptcy automatic stay."

    3. In the body of the Form 3210/E3210 place the exact name of the taxpayer as it is listed on the SND and list all of the tax year or years included on the SND.

    4. Below the listing of the taxpayer's name and tax year, include the following text:

    • "APPEALS HAS NO JURISDICTION" .

    • "The U.S. Tax Court has dismissed this petition due to lack of jurisdiction."

    • "This case is being returned to the originating function due to an erroneous Tax Court filing. The automatic stay provisions of bankruptcy code section 362(a)(8) preclude a debtor from filing a petition with the U.S. Tax Court until the stay is lifted or is terminated. The stay in this case remains in effect. The taxpayer may re-file a valid Tax Court petition upon the lifting or termination of the stay. The bankruptcy should be monitored so that the assessment is made at the appropriate time."

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

    Figure 8.20.7-1

    This is an Image: 36045001.gif
     

    Please click here for the text description of the image.

Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures

  1. This section provides procedures for processing both pre-assessed and post-assessed Civil Penalty (CVPN) Appeals.

  2. When a CVPN case is submitted to APS for processing, APS must identify if the CVPN module(s) have already been created or if the Appeals determination will require the CVPN module be established by APS.

  3. There are several CVPN codes which carry an Assessment Statute Expiration Date (ASED) and for those cases, ASED protection and assessment time frames apply. The ATE will validate the ASEDs upon receipt and assignment of the case. Upon closing, the ATE will also enter the ASED for each period on the respective closing document.

  4. When a Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties is used, the ATE will complete the following items:

    • If the CVPN adjustment does not have an ASED, the ATE will check the box in Item 4 "Check if no ASED"

    • If the CVPN adjustment does have an ASED, the ATE will enter the ASED in Item 6 "Statute date (mandatory) (mmddyyyy)"

  5. A pre-assessed CVPN Appeals determination, will likely require that the MFT 13 or MFT 55 CVPN Module be established for each period being closed.

    • If the MFT 13 (for BMF) or MFT 55 (for IMF) account has not been established, APS will follow guidance in:
      IRM 20.1.7.7, Creating Entities or Name Lines for Non-Return Civil Penalty Cases
      IRM 20.1.7.7.1, BMF Entities
      IRM 20.1.7.7.2, IMF Entities to establish a Civil Penalty Module for a secondary taxpayer, or for a tax period that is earlier than the earliest tax period associated with the existing entity name line.

  6. A pre-assessed CVPN case is routed to Appeals according to the "All Penalty Appeal cases from IRS Field Offices" instructions on the Appeals Case Routing web page and may not already have the CVPN MFT account established.

  7. A pre-assessed Dyed Fuel and Refusal Penalty is routed to Appeals according to the "Excise Tax Case Routing" instructions on the Appeals Case Routing web page and may not already have the CVPN MFT account established. See IRM 8.20.7.31.2, Dyed Fuel and Refusal Penalty Case Closing for additional information on this type of case closing.

  8. Once the CVPN name line is established, the first TC 290 0.00 assessment entered with the applicable Penalty Reason Code (PRC) and penalty assessment amount is processed with a Blocking Series (BS) 52X, the CVPN module is created. All subsequent CVPN assessments for that same tax module are posted using BS 53X.

  9. A post-assessed CVPN Appeals determination, will already have an MFT 13 or MFT 55 CVPN module established, and must be adjusted whenever the final determination is to partially sustain or fully allow the taxpayer’s penalty appeal. When the Compliance determination and assessment are fully sustained, APS will close the taxpayer’s CVPN appeal via a TC 290 0.00 with a Blocking Series 96X to identify that Appeals has made a final determination on the respective account.

  10. Post-assessment CVPN cases are submitted to Appeals as a Penalty Appeal (PENAP) case, (Ogden PENAP work stream).

  11. When APS receives the Civil Penalty case for closing, APS will:

    1. Assign the case to an APS employee on PEAS

    2. Review closing documents for special instructions

    3. Review and update ACDS with the closing information according to the Form 5402

    4. ACDS ACTION - enter ACKCLS

    5. ACDS RevisedPen - enter the amount of the penalty sustained

    6. Input the Civil Penalty Account adjustments using IDRS CC: REQ54

    7. Send feedback to Compliance when an address is provided by the ATE in the Route To: field on the Form 5402, Appeals Transmittal and Case Memo

    Note:

    APS will process all miscellaneous civil penalties covered by the Civil Penalty Module (CPM) system through IDRS, using the customized Form 5402, Appeals Transmittal and Case Memo and Form 8278, Computation and Assessment of Miscellaneous Penalties, as the source document.

  12. All Non-AIMS adjustments must be monitored until they are posted to the account. When the CVPN adjustment(s) is input, place the case in PEAS Suspense with a follow-up date for no later than the applicable 23C Date.

Abusive Transaction IRC § 6707A Penalty Closing Procedures

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

  2. 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).

    1. If the Abusive Transaction Penalty is fully or partially sustained, assess per Form 8278 using TC 240 and Penalty Reference Number (PRN) 648, Failure to Disclose Reportable Transaction with Return (Form 8886).

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

    Determination Made CLOSINGCD
    Fully Sustained (penalties are neither adjusted nor removed) 14
    Not Sustained (penalties are fully removed/fully abated) 15
    Partially Sustained (penalties are partially abated) 16
  4. If there is a related income tax workunit, regular closing codes and procedures apply.

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

Accelerated International Penalty Case Closing Procedures

  1. Expedited processing is required for these cases.

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

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

    Determination Made CLOSINGCD
    Fully Sustained (penalties are neither adjusted nor removed) 14
    Not Sustained (penalties are fully removed/fully abated) 15
    Partially Sustained (penalties are partially abated) 16
  4. 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 Penalty Closing Procedures

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

    1. Form 5402 will be included in the closing package from the ATE. It should include information on the revised penalty amounts needed to update ACDS.

    2. Depending on the resolution, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties when prepared by the ATE, is processed by APS.

    3. Update ACDS following general closing procedures.

  2. The following ACDS cc’s apply:

    Determination Made CLOSINGCD
    Fully Sustained (penalties are neither adjusted nor removed) 14
    Not Sustained (penalties are fully removed/fully abated) 15
    Partially Sustained (penalties are partially abated) 16
  3. Forward copy of ACM and Form 5402 to Compliance per the instructions on the Customized Form 5402.

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

Claim Case Closings

  1. Several types of Claim cases are worked in Appeals:

    • Agreed or Defaulted 90-Day Cases Involving Claims

    • Abatement of Interest

    • Campus Source Claim

    • Field Source Claim

Agreed or Defaulted 90-Day Cases Involving Claims Expedite the Processing of Large Dollar Cases

  1. 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.

  2. 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.

    Note:

    These procedures do not apply to cases requiring Joint Committee Review. See IRM 8.7.9, Appeals Responsibility in Joint Committee (JC) Cases.

    The expedite procedures include the following:

    • Account and Processing Support (APS) - APS will expedite the closing of a "large dollar" overpayment case, as" flagged" by the ATE. APS will assign the case on PEAS and identify the case as a "high priority" requiring "expedite processing." APS will make every effort to process a large dollar overpayment within 30 days of Appeals’ receipt of a waiver form and/or closing agreement.

Abatement of Interest Claim Cases

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

  2. 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.

  3. For abatement of interest claims allowed in full:

    1. Date and send closing Letter 2393, Abatement of Interest - Fully Allowed or Letter 913, Closing Letter - Agreed Cases by regular mail.

    2. Review the adjustment document (Form 3870) for the appropriate closing codes, based on the ATE's conclusion to fully allow the interest abatement claim - TC 290 $0.00 and TC 341 with the amount of the interest to be abated. Note "Reason Code (RC) 82" on the adjustment form.

  4. For abatement of interest claims allowed in part:

    1. Close as a defaulted disallowance letter, tried case, Counsel settled case, or dismissed from Tax Court. (See (6) below for ACDS closing codes.)

    2. Process the adjustment document with TC 290 $0.00, TC 341 interest abatement amount, RC 81 (partially abated), or RC 82 (fully abated), if the Tax Court decides further abatement if allowed.

    3. Process the adjustment document with TC 290 $0.00, if the Tax Court decides that no further abatement is warranted or the case is closed as a default or dismissal.

      Note:

      A partial abatement of interest must have been done earlier (with TC 341, RC 81) when Letter 2391, Partial Allowance Letter Abatement of Interest was issued.

  5. For abatement of interest claims disallowed in full:

    1. Close as a defaulted Letter 2392, Disallowance Letter for Abatement of Interest, tried case, Counsel settled case, or dismissed from Tax Court. (See (6) table below for ACDS closing codes.)

    2. Process with TC 290 $0.00, RC 80 on the adjustment document.

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

    CLOSINGCD Definition
    • 03

    • Agreed fully allowed abatement of interest non-docketed case - with closing Letter 2393

    • 05

    • Defaulted disallowance letter for a fully disallowed or partially allowed abatement of interest case

    • 08

    • 10

    • 11

    • 12

    • 17

    • Agreed Docketed

    • DC Settled

    • Dismissed Lack of Jurisdiction

    • Dismissed Lack of Prosecution

    • Tried

    • 20

    • Premature Referral

    1. RevsdTax - enter the negative amount approved for abatement, e.g. fully sustained will have $-0-.

    2. DDAMTDIS - enter only the amount disallowed, e.g. full disallowance reflects the full amount of the claim and full allowance reflects $-0-. Partial allowance reflects the difference between the DDAMTCL and the RevsdTax.

  7. 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.

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

  9. 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.

Methods and Examples for Computing Interest Abatement

  1. 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.

Claim Cases - Campus Source

  1. Campus claims are normally not controlled on AIMS.

    Note:

    If AIMS controls have been established process the closing via CC: AMCLSA using Form 5403, Appeals Closing Record.

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

    1. Form 3870, Request for Adjustment or Form 8485, Assessment Adjustment Case Record.

    2. Form 5402, Appeals Transmittal and Case Memo.

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

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

    • Letter 2681, Appeals Full Disallowance After Previous Claim Disallowance

    • Letter 2682, Appeals Full Claim Allowance

    • Letter 2683, Appeals Partial Disallowance After Previous Claim Disallowance

    Note:

    An Appeals disallowance Letter 2681 or Letter 2683 will contain a reminder that the taxpayer has two (2) years from the date of the statutory claim disallowance letter (usually Letter 105-C or Letter 106-C) to file suit in either the U. S. Court of Federal Claims or a U.S. District Court. Generally, the Compliance Campus has already issued the statutory claim disallowance letter (by certified or registered mail) giving the taxpayer an opportunity to go to Claims Court or District Court. Therefore, send the closing letter by regular mail.

  5. These cases are not held for suspense.

  6. The following are the ACDS entries required at closing:

    1. ACDS cc’s

      CLOSINGCD Definition
      14 Full Disallowance
      15 Full Allowance
      16 Partial Disallowance
    2. RevsdTax - enter the negative amount approved for abatement/refund. e.g. full disallowance would be $–0–.

    3. APPEALS AMTDIS - enter only the amount of the claim disallowed by Appeals.

    Note:

    Follow these procedures for non-AIMS controlled claim cases, if a claim disallowance letter was not previously mailed or Form 2297, Waiver of Statutory Notification of Claim Disallowance was not signed. The ATE will prepare the appropriate closing letter and provide the appropriate closing instructions on Form 5402, Appeals Transmittal and Case Memo. If the claim case is controlled on AIMS, follow the general procedures for closing AIMS-controlled cases. The ATE could make a determination to secure an agreement form and/or send (by certified or regular mail) a statutory claim disallowance letter (or secure a Form 2297 in lieu of the statutory claim disallowance letter).

  7. Actions for inputting the adjustment on claims:

    • Input TC 29X for appropriate tax change, along with applicable reason code(s).

    • Use blocking series 00 if the original return is with the claim.

    • Use blocking series 05 (IMF) or 15 (BMF) if the original return is not with the claim.

    Note:

    Do not use blocking series 98 or 99.

Claim Cases - Field Source

  1. Claims for abatement and/or refund may require one or both of the following actions:

    • Issuance of a certified letter of claim disallowance

    • Account adjustments/abatements

Claim Closing When AIMS Controls Are Open
  1. For claim cases originating from Field Compliance, the amount of the claim that Compliance disallowed will be on the second page of the AMDISA. Close the case on ACDS by following normal closing procedures (docketed or non-docketed). In addition:

    1. RevsdTax - enter the net deficiency or overassessment with a (-) sign.

    2. DDAMTDIS - enter the claim amount disallowed by Appeals. This amount cannot be more than the claim amount shown on the second page of the AMDISA. (If a deficiency is to be assessed, enter the full amount of the claim.)

    3. Appeals AMTDIS - enter only the amount of Appeals AMTCLM (claim filed directly with the ATE - hasn't been seen by Exam) which was subsequently disallowed by Appeals. (If a deficiency is to be assessed, enter the full amount of the claim.)

  2. Prepare Form 5403, Appeals Closing Record according to Exhibit 8.20.7-1 to include applicable Claim related entries. The Form 5403, Appeals Closing Record claim entries are:

    1. Item 20 - "MM-DD-YYYY" = date the signed Form 2297, Waiver of Statutory Notification of Claim Disallowance was received in Appeals or the date the claim disallowance letter was issued.

    2. Item 808 - enter the amount of claim from Compliance that Appeals disallowed.

    3. Item 809 - (if applicable), enter the amount of a new claim received by the ATE after assignment of the case. This amount will not be reflected on page 2 of the AMDISA under Exam Claim Amount Disallowed).

    4. Item 810 - enter the amount Appeals disallowed in Item 809, if applicable.

    Note:

    Item 809 and 810 are only used if during the Appeals Hearing, the taxpayer submits a new claim/additional claim which was not previously considered by Compliance.

  3. Date and mail the closing letter:

    1. Letter 913 - letter for allowed claims or Form 2297 received

    2. Letter 1363 - partial claim disallowance letter sent certified mail

    3. Letter 1364 - full claim disallowance letter sent certified mail

      Note:

      The certified claim disallowance letters are not suspensed in the same way a Statutory Notice of Deficiency. Once the certified claim disallowance letter is issued, the case is closed on ACDS and the final determination is processed via AIMS or Non-AIMS as applicable.

Excess Social Security and Medicare Tax (Formerly FICA Tax) Claims Processing

  1. Excess Social Security and Medicare Tax Claims require unique processing of the tax abatement on the BMF Entity and a manual refund of the claim amount allowed to the employee/claimant. The ATE determines the fully or partially allowed withholding adjustment amount which is posted as a TC 291 abatement to the employers' BMF account; but the refund of the abatement must be issued to the employee who filed the claim.

  2. Guidance for processing partially or fully allowed Excess Social Security and Medicare Tax Claims is provided in IRM 21.6.4.4.8.5.1 , Social Security and Medicare Tax Erroneously Withheld - Employee Claims for Refund - Schedule H (2) table row 4.

  3. Excess Social Security and Medicare Tax Claim refunds must be processed via manual refund procedures. See IRM 21.4.4, Why Would A Manual Refund Be Needed?

  4. Guidance for processing the manual refund to the claimant is provided in IRM 21.4.4, Preparation of Manual Refund Forms and IRM 21.4.4, Preparation of Form 5792, IDRS Generated Refund.

Closing Agreements (CA)

  1. APS will take the following actions for a case settled via a Form 906, "Closing Agreement" :

    • Scan the signed Form 906, Closing Agreement and Form 4222, Closing Agreement Checklist (all pages)

    • Attach the scanned file to the applicable ACDS case record

    • In PEAS, select CA for the PEAS Feature Code

    • Use IDRS CC: FRM77 to input a TC 971 AC 256 for each tax period covered by the CA

    • Update the PEAS Case Activity Record (CAR) to document the actions taken

    • Affix the original Closing Agreement to the most recent tax return (latest tax period) covered by the Closing Agreement

    • Forward a copy of the Form 5402, the ACM, and an Original of the Form 906, Closing Agreement, with Form 4222, Closing Agreement Checklist, to the office identified by the ATE on the Form 5402

      Note:

      Always use Form 3210/E3210 when transmitting taxpayer information (PII).

    Reminder:

    Since APS no longer creates a Closed Office File, the APS TE must transmit one of the duplicate Original Closing Agreements to the address below, using Form 3210/E3210.

  2. All Closing Agreements will be retained for 6 years to comply with the Appeals Records Control Schedule retention period.

    Appeals

    Attn: Closing Agreement Suspense

    55 North Robinson

    Oklahoma City, OK 73102–9226

Collection Appeal Program (CAP) Case Closing Procedures

  1. The ATM will enter the ACAPDATE on ACDS, and forward the closed CAP file, via encrypted email to APS for processing.

  2. The critical CAP time restraints require the closing of a CAP case in APS by the end of the business day following the date the case was received in APS.

  3. APS will close the case on ACDS using closing instructions as provided by the ATE on Form 5402.

  4. See IRM 8.20.7.3.2.1 for instructions on paperless CAP cases selected for AQMS Review.

  5. The ACDS CASES Type Codes used to track this program are identified in the table below:

    ACDS TYPE Code Is used for
    CAPLV
    • Levies

    • Third Party Claims to property under IRC 6343(b)

    • Taxpayer requests for return of property under IRC 6343(d)

    CAPLN
    • Liens

    • Lien issues

    • Denials of requests to issue lien certificates, such as subordination, withdrawal, discharge or non-attachment

    CAPSZ
    • Seizures

    CAPIA
    • Rejected Installment Agreement(s)

    • Modified Installment Agreement(s)

    • Proposed Installment Agreement Modification(s)

    • Terminated Installment Agreement(s)

    • Proposed Installment Agreement Termination(s)

  6. ACDS cc’s are identified and explained in the table below:

    If the Collection Action is Use CLOSINGCD When
    Fully sustained 14 The collection action is supported with no change.
    Not sustained 15 The collection action is completely overturned. For example, closing code 15 would be used when a levy is released.
    Partially sustained 16 Only minor changes are made in the collection action. For example, if filing of a Notice of Federal Tax Lien is proposed, a minor change would be to give the taxpayer 10 more days to come up with the funds before the lien is filed.
  7. APS will forward the following items via encrypted email to the originating function:

    • Form 5402

    • Appeals Case Memorandum (if provided)

    • Closing Letter

Collection Appeal Program (CAP) Field Case Closing

  1. Collection CAP cases are transmitted via encrypted email* to the originating Revenue Officer (RO) with a Cc: to the RO Group Manager identified by the ATE on the Form 5402.

  2. APS is responsible for entering the Date on the Closing Letter by using the Typewriter Feature in Adobe.

  3. APS will send an encrypted email to the originating RO with a Cc: to the RO Group Manager and include the following attachments:

    • Form 5402

    • "Dated" Closing Letter

    • Appeals Case Memorandum (ACM), if one is prepared by the ATE

  4. APS will also transmit the Closing Letter to the taxpayer and/or their Power Of Attorney (POA) via fax or mail (if a fax number is not provided), on the same day as the email is sent.

  5. The electronic CAP case can be purged after 30 days.

  6. For additional information on the Step-by-Step Paperless CAP Process (For Field Sourced Cases) see IRM 8.24.1, Exhibit 8.24.1-3.

Automated Collection System (ACS) CAP Case Closing

  1. Upon closing an ACS CAP case, the Form 4442, Inquiry Referral if used, will be returned via encrypted email to the sending ACS CAP Case Coordinator together with the Form 5402 and a copy of the closing letter.

  2. For additional information on the Step-by-Step Paperless CAP Process (For Non-Field Sourced Cases) see IRM 8.24.1, Exhibit 8.24.1-2.

Accounts Management CAP Case Closing

  1. Upon closing an Accounts Management CAP case, the Form 4442, Inquiry Referral will be returned via encrypted email to the initiating CAP coordinator together with the Form 5402 and a copy of the closing letter.

  2. For additional information on the Step-by-Step Paperless CAP Process (For Non-Field Sourced Cases) see IRM 8.24.1, Exhibit 8.24.1-2.

Collection Due Process (CDP) Overview of Back-End Processing

  1. To properly close a CDP case, the APS TE takes the following actions when applicable:

    • Issue Notice(s) of Determination by certified mail

    • Monitor the case during the suspense period and if the taxpayer files a Tax Court petition, until the Tax Court decision becomes final and the file is returned from Counsel.

    • Input TC 971 AC 277 to indicate that Appeals has completed their consideration and issued a determination letter.

      Caution:

      If the CDP taxpayer has an open Bankruptcy TC 520 freeze ( -V) on Master File contact the ATE for instructions on returning the case to them for bankruptcy suspense. See Exhibit 8.20.7-16, for a table of TC 520 Closing Codes (cc) and Master File (MF) Freezes.

    • Accurately input TC 521 cc 76 and/or cc 77, to end the suspension of the collection statute on each CDP tax period.

    • Input of any collection alternatives or adjustments to IDRS, e.g. IA, CNC, Form 3870.

    • Close a CDP OIC off of the Automated Offer in Compromise system (AOIC).

    • Forward the F-433-D to Compliance Service Collection Operations (CSCO), when appropriate.

    • Forward the Form 5402 to the address specified by the ATE.

    • Input TC 481 for CDP OIC cases that are not loaded on the AOIC system.

    • Follow current procedures for uploading the Public Inspection File (PIF) to the SharePoint site for all Accepted OICs

    • Transmit an accepted CDP OIC file to Memphis or Brookhaven MOIC.

    • Forward the case(s) to the Florence APS office, or other APS office as directed by management, where an Innocent Spouse (IS) issue was raised by the same taxpayer who filed the CDP.

    • Input the closing information on ACDS and close PEAS.

    • Close the IDRS control base on CDP or EH cases originating from ACS.

  2. When there is a related innocent spouse case, a timely CDP offer case, or an equivalent hearing case associated with the CDP case, the related cases may be closed off ACDS at the time the Notice of Determination (NOD) is issued. However, the case files should be kept together with the CDP case during the monitoring period.

    Note:

    The CDP must be for the Requesting Spouse.

  3. All CDP NOD's are issued and suspensed for 60 days by the designated APS team. The date of the Notice of Determination Letter and the postmark must be the same. If the taxpayer does not petition Tax Court for a review of the Appeals determination within 30 days after the day the CDP Notice of Determination is issued, APS will commence back-end processing on or after the 60th day from the CDP NOD issuance date.

    Note:

    Additional suspense time is required for the following Notice of Determination combination letters as identified below:

    • Letter 4390 for Innocent Spouse cases (suspended for 90 days) + 30 days

    • Letter 4389 for Abatement of Interest cases (suspended for 180 days) + 30 days

    • Letter 4439 for EH Innocent Spouse cases (suspended for 90 days) + 30 days

    • Letter 4440 for EH Abatement of Interest cases (suspended for 180 days) +030 days

  4. Holtsville, Florence, Fresno, Memphis and Philadelphia APS teams process CDP and EH case closures.

  5. This section provides guidance for APS employees on closing responsibilities for CDP and EH cases and for processing collection alternatives and adjustments.

CDP Case Closing Actions

  1. APS completes back-end closing actions on all CDP and EH cases regardless of the originating source function e.g. Field Collection or Automated Collection System (ACS).

  2. When the ATM enters an ACAPDATE on the ACDS record, the Direct Ship table assigns the closure to the appropriate APS Team.

Verifying and Correcting CDP Tax Period Discrepancies
  1. APS TEs are responsible for identifying and for resolving any discrepancy between the tax periods identified on the ACAP’d CDP Form 5402, and the tax periods reflected on IDRS with collection activity suspended in Status 72.

    APS TE Closing Actions for a CDP WUNO
    A.) Research IDRS CC: SUMRY to identify the Appeals’ taxpayer accounts (Tax Periods) with collection activity currently suspended in IDRS and Master File (MF) Collection Status 72 with a "-W" freeze.

    Note:

    Status 72 and TC 520’s are not solely for CDP cases. Verify the TC 520 76/77 before continuing. If there is a open bankruptcy (See IRM 8.20.7.20.8)

    B.) Compare the Status 72 tax periods with the tax periods reflected on the ACDS CDP WUNO/ACAP’d Form 5402 for CDP closing actions.
    C.) Steps to Resolve discrepancies:
    1. If the CC: SUMRY tax periods in Status 72 match the tax periods listed on the Form 5402, then no discrepancy exists - comparison complete.

    2. If the CC: SUMRY tax periods listed in Status 72 include additional tax periods WITHOUT a Master File "-L" AIMS freeze, then use the ACDS Search feature to verify if another CDP WUNO is open for the TIN and includes all of the additional tax periods - go to step 3.

    3. If the separate CDP WUNO includes all of the additional tax periods in Status 72 then no discrepancy exists - comparison complete. If not go to step 4.

    4. Use secure email to alert the ATE about the discrepant tax period(s) and place the case in PEAS Suspense until the discrepancy is resolved and additional actions can be taken.
      ✓ Provide the ATE with the WUNO, tax period(s) in Status 72 but not on ACDS or Form 5402, and the TC 520 76/77 date. *The discrepant tax period(s) may be the result of a new CDP case in transit to Appeals for which a TC 522 should not be input.
      ✓ If the ATE verifies that the discrepant tax period(s) should be closed go to step 5.
      ✓ If the ATE verifies that the discrepant tax period(s) should not be closed, close only the periods included on ACDS and Form 5402.

    5. To close a period in Status 72 per ATE instructions received in step 4, input a TC 522 cc 76/77 with the same date as the TC 520 being reversed. Also close the open control base.

      Caution:

      *Always compare the TC 520 cc 76/77 date with the other CDP tax period’s TC 520 cc 76/77 date to verify that the tax period not already on ACDS is not a new CDP case in transit to Appeals. Do NOT input a TC 522 on a new CDP case in transit/not yet received and carded onto ACDS.

    Exception:

    Each CDP WUNO, whether related to another CDP WUNO or not, is treated separately based upon the final resolution of the respective WUNO. For example, if a liability on an MFT 30 IMF WUNO and a liability on the taxpayer’s Limited Liability Corporation (LLC) are each closed unagreed thus requiring a Notice of Determination (NOD) be issued, then the TC 520s for each of the respective tax periods cannot be reversed until the NOD default date when the ACDS Records for each WUNO will be closed cc 05. If the LLC WUNO is closed agreed (cc 04), but the IMF WUNO is unagreed, then the tax periods for the LLC WUNO must have the TC 520s reversed accordingly, and a NOD is issued for the MFT 30 tax periods. The MFT 30 tax periods’ TC 520s are not reversed until the NOD default date at which time the ACDS record is closed cc 05.

Processing Employee Automated System (PEAS)
  1. Assign the CDP WUNO on PEAS when received in the centralized APS campus office.

  2. The PEAS type will be "CLS" and the subtype selected will reflect the action required on the case:

    • "ACDS Only"

    • Special Processing – if adjustments or account action is required

APS TE CDP Closing Responsibilities Overview

  1. APS employees will:

    1. Close cases from ACDS

    2. Determine and input the TC 521 date for all CDP tax periods

    3. Input adjustments to accounts

    4. Input collection alternatives

    5. Close the AOIC database whenever applicable (See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.)

  2. The case will not be closed out of the TE’s inventory on PEAS until all actions have been completed and all IDRS transactions have fully posted.

  3. If the record has multiple years, each year may be closed as action has been completed; the entire case must not be closed until all closing and processing actions have been complete and all accounts updates have fully posted.

  4. Use PEAS Suspense when necessary, during the closing process.

  5. See IRM 8.20.10, Account and Processing Support (APS) - Appeals Processing Employee Automated System (PEAS) for detailed PEAS guidance and procedure.

ACDS Entries: CDP, EH, RJ and CDPTD

  1. This section provides guidance for ACDS entries for closing CDP, EH, RJ and CDPTD cases.

ACDS cc’s
  1. CDP cases are closed with the following closing codes:

    CLOSINGCD Action
    04 Agreed with waiver (Form 12257)
    05 Defaulted determination letter
    10 (Docketed) Agreement Secured - Used for a case settled with a secured agreement, whether it was secured by Appeals or Counsel
    11 Dismissed - Lack of Jurisdiction
    12 Dismissed - Lack of Prosecution
    13 Disregarded Hearing Request
    16 Withdrawn (Form 12256 or other written withdrawal)
    17 Tried Case - Used for any cases tried by Counsel which resulted in a court rendered decision
    20 Premature referrals or rescinded CDP cases
    42 Remanded cases (interim)
    43 Petitioned cases (interim)
  2. EH cases are closed with the following cc’s:

    CLOSINGCD Action
    13 Disregarded Hearing request
    14 Fully sustained
    15 Partially or not sustained
    16 Withdrawal
    20 Premature Referral
  3. RJ cases are closed with the following cc’s:

    CLOSINGCD Action
    14 Collection is following Appeals' CDP determination
    15 Collection is not following Appeals' determination
    16 Appeals' CDP determination is revised in cases involving change in circumstances
  4. Separate Timeliness Determination (CDPTD) cases are closed with the following cc’s:

    CLOSINGCD Action
    14 Appeals agrees with Collection's timeliness determination
    15 Appeals disagrees with Collection's timeliness determination
    16 Appeals partially agrees with Collection's determination
ACDS Dates and Action Codes
  1. This section provides guidance on ACDS dates and action codes for CDP closing types.

CDP Default: CLOSINGCD = 05
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = TC 521

    • LTODATE = Enter the date of the TC 521

    • DATECLSD = Enter date closed in APS

CDP Waiver Form 12257: CLOSINGCD = 04
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = TC 521

    • LTODATE = Date ATM or ATE signed Form 12257

    • DATECLSD = Enter date closed in APS

CDP or EH Closed With Form 12256 Withdrawal: CLOSINGCD = 16
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = TC 521 For CDP cases only

    • LTODATE = Date Appeals received Form 12256

    • DATECLSD = Enter date closed in APS

CDP or EH Closed as a Disregarded Hearing Request: CLOSINGCD = 13
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = TC 522 (For timely CDP only or where TC 520 cc 76/77 was input.)

    • LTODATE = Enter date TC 522 is input (An EH case will not have a TC 522.)

    • DATECLSD = Enter date closed in APS

CDP or EH Closed as a Premature Referral: CLOSINGCD = 20
  1. ACDS Entries:

    • ACTION: ACKCLS

    • TODATE: Date case sent for closing

    • LACTION = TC 522 (For timely CDP only or where TC 520 cc 76/77 was input.)

    • LTODATE = Enter date TC 522 is input (An EH case will not have a TC 522.)

    • DATECLSD: Enter date closed in APS

  2. See IRM 8.20.7.20.6, Inputting TC 522 for Disregarded and Non-Processable Hearing Requests for information on the use of TC 522 for CDP cases closed using cc 20.

EH Closure: CLOSINGCD = 14 (sustained) or 15 (not sustained)
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLSD = Enter date closed in APS

Retained Jurisdiction: CLOSINGCD = 14, 15, or 16
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLSD = Enter date closed in APS

CDPTD: CLOSINGCD = 14, 15, or 16
  1. ACDS Entries:

    • ACTION = ACKCLS

    • TODATE = Date case sent for closing

    • LACTION = Leave blank

    • LTODATE = Leave blank

    • DATECLSD = Enter date closed in APS

IDRS Closing Actions for CDP and EH Cases
  1. APS must accurately input TC 52X and TC 97X on the taxpayer’s account when closing a CDP and EH case from ACS or from Field Collection.

  2. The TC 521 cc used are determined by the CDP TYPE code:

    • DPLN = 76

    • DPLV = 77

    • DPL2 = 76

  3. The TC 521 date is determined by APS per guidance provided in IRM 8.20.7.20.4 below.

  4. See the table below for the TC 52X and TC 97X requirements for each type of closing:

    Type Transaction Code Requirement
    CDP
    • TC 521 with applicable closing code and date

    • TC 971 AC 277 with the date of APS closing action*

    Note:

    *Verify that the TC 971 AC 277 has posted to each tax period for which a CDP NOD has been issued. If the TC 971 AC 277 was not input at the time the CDP NOD was issued, input the TC 971 AC 277 on all applicable accounts and monitor until fully posted.

    EH
    • TC 971 AC 280 with the date of APS closing action*

    • Verify there is not an open TC 520 76/77 on each period when there is no open timely CDP. If there is an unreversed TC 520 76/77 determine if a TC 522 76/77 should be input.

    Note:

    *Verify that the TC 971 AC 280 has posted to each tax period for which a CDP EH NOD has been issued. If the TC 971 AC 280 was not input at the time the CDP EH NOD was issued, input the TC 971 AC 280 on all applicable accounts and monitor until fully posted.

    CDP Disregarded Hearing (ACDS cc 13)
    • TC 522 with the applicable closing code and the same date as the TC 520 being reversed

    • TC 972 AC 275 and the same date as the TC 971 being reversed

    CDP Premature Referral (ACDS cc 20)
    • TC 522 with the applicable closing code and the same date as the TC 520 being reversed

    • TC 972 AC 275 and the same date as the TC 971 being reversed

    EH Disregarded Hearing (ACDS cc 13)
    • TC 972 AC 278 and the same date as the TC 971 being reversed

    EH Premature Referral (ACDS cc 20)
    • TC 972 AC 278 and the same date as the TC 971 being reversed

  5. APS must close the IDRS Control Base for all CDP or EH cases referred to Appeals by ACS.

Determine the TC 521 Date for CDP Cases

  1. The TC 521 date is the date the determination becomes final. APS must input the TC 521 date and monitor IDRS to verify it posted to the taxpayer's account.

    Note:

    When calculating the TC 521 date, APS should only use the "Target Date" calculator on ACDS and not the date listed in the SNEXPDATE field.

  2. If the taxpayer does not file for a judicial review, compute the TC 521 as follows:

    If Then
    Letter 3193 Notice of Determination is issued and CDP case is closed cc 05 TC 521 = 30 days after the letter is issued.
    Form 12257 Waiver of Right to Judicial Review is secured and CDP case is closed using cc 04 TC 521 = date ATM or Hearing Officer signed Form 12257.
    Form 12256 or a withdrawal is received and CDP case is closed cc 16 TC 521 = the date Appeals received the withdrawal as shown on Letter 4383, Withdrawal Acknowledgment.
    CDP/IS Combo Letters Letter 4390 or Letter 4439 is issued as closing letter because the CDP taxpayer raised a spousal issue TC 521 = Notice of Determination Letter date + 90 days if the taxpayer does not petition Tax Court.
    CDP/ ABINT Combo Letter 4389 or Letter 4440 is issued as closing letter because the CDP taxpayer raised an abatement of interest issue TC 521 = Notice of Determination Letter date + 180 days if the taxpayer does not petition Tax Court
    The CDP case is closed as a premature referral (cc 20) do not input TC 521, input TC 522 with same date as TC 520.
    The CDP case is closed as a disregarded hearing request (cc 13) do not input TC 521, input TC 522 with same date as TC 520.
  3. If the taxpayer requested judicial review, the TC 521 date will be computed as follows:

    If The Decision Document Then
    states "Pursuant to the agreement of the parties" without an IRC § 6330(e) waiver paragraph and the taxpayer does not petition a higher court (cc 10) TC 521 = Date decision entered + 90 days.
    states "Pursuant to the agreement of the parties" with an IRC § 6330(e) waiver paragraph (cc 10) TC 521 = Date decision entered.
    states "Pursuant to the determination of the court" and is only signed by the judge (cc 17) TC 521 = Date decision entered + 90 days
    is an Order to Dismiss and the taxpayer does not petition a higher court (cc 11) TC 521 = Date decision entered + 90 days

    Note:

    If a taxpayer appeals a Tax Court decision to a U.S. Court of Appeals and/or U.S. Supreme Court, the above time periods will be extended. A chart referencing the various situations that may arise can be found in Chief Counsel Directives Manual, CCDM 36.2.5.3. Use this chart to assist in the determination of the TC 521 date. Counsel will generally hold cases until the decision of the Tax Court is final. The TC 521 date should be determined after Counsel returns the case. If there is a question in determining the TC 521 date, consult with APS management or contact the Counsel attorney directly for assistance in determining the correct date.

  4. The Collection Statute Expiration Date (CSED) is systemically computed by IDRS with the input of the TC 521.

  5. A manual computation of the CSED is required ONLY when the account is joint and only one of the joint taxpayers (Primary (P) or Secondary (S)) requested the hearing. See (6) and (7) below for additional information.

    Note:

    Use CC: REQ77 TC 550 to input a manually computed CSED.

  6. The new CSED can be manually computed using the following tools:

    1. ACDS Utilities "Number of Days" calculator. This tool calculates the number of days between the TC 520 and TC 521 dates.

    2. ACDS Utilities "Target Date" calculator. This tool calculates the new CSED date when the number of days the CSED is suspended (see (a) above) is added to the current CSED.

  7. If the CSED was suspended for only "P" or "S," a new CSED is input via REQ77 with TC 550.

    Note:

    The CSED date on the joint IMF module will only reflect the earliest of the spouse's CSED dates. When only one spouse requests a CDP hearing, input a TC 550 with the CSED extension date and a CSED TIN Indicator of either "P" or "S" to the MFT 30 CDP module to show the later of the two CSED dates for either the primary or secondary spouses. A TC 550 is not necessary when the joint MFT 30 CDP module(s) have been mirrored to MFT 31 modules for each spouse. In that case, the TC 521 input will systemically update the CSED.

How To Input TC 521 and 971 Transaction Codes

  1. APS will use the IAT IDRS CC: REQ77 tool to input TC 52X and TC 97X transactions.

  2. APS will suspend a CDP or EH case on PEAS using PEAS suspense reason code S09 and monitor the account(s) until the transaction(s) post.

  3. If the TC 521 or TC 971 input goes unpostable, the CDP or EH case will remain in suspense until APS resolves the unpostable condition.

  4. When working MFT 31 accounts verify all TC 520 have been addressed:

    • Research MFT 30 and both MFT 31 accounts

    • If only one spouse was requesting the hearing, input TC 522 on the non-requesting spouse and MFT 30 account, input TC the appropriate TC 521 on the requesting spouse

  5. When the TC 521 and TC 971 have posted to all of the tax periods for the WUNO, APS will remove the WUNO from PEAS suspense, and close PEAS using closing code 03.

Input of TC 522 for Disregarded and Non-Processable Hearing Requests

  1. APS will input a TC 522 with the appropriate TC 52X closing code, to the periods on any CDP case where the ATE closes the case as a disregarded hearing request using ACDS closing code 13. A disregarded hearing request is one submitted by a taxpayer where all the taxpayer's issues are considered frivolous or raised with a desire to impede collection. The net result of TC 522 input is that there is no suspension of the collection statute for the period of time begun with a Disregarded or Non-processable CDP Hearing request.

  2. APS will input a TC 522, to the periods on any CDP case where the ATE closes the case as a premature referral, using cc 20.

  3. TC 522 is input using the same date as the TC 521 being reversed, via the IAT IDRS CC: FRM77 tool.

Closing ACS-originated Control Bases

  1. ACS generally establishes and assigns an IDRS control base to the Holtsville, Florence, Fresno, Memphis or Philadelphia APS team when they forward a CDP or EH case to the respective site, following IRM 5.19.8, Forwarding Cases to Appeals.

    ACS will reassign to APS using the following codes:

    APS Campus Location IDRS Unit Code
    Florence 66196
    Fresno 66269
    Holtsville 66195
    Memphis 66211
    Philadelphia 66199
  2. APS uses IDRS Command Code ACTON to close the IDRS control base at the conclusion of CDP back-end processing on all ACS originated cases.

    Example:

    ACTON, C##,,C

  3. See IRM 2.3.12, IDRS Terminal Responses, Command Code ACTON, Exhibit 2.3.12–2 for ACTON format.

CDP and EH Bankruptcy Case Closing Procedures

  1. APS will not receive requests for abatements from the ATE based upon bankruptcy "dischargeability" determinations. If an ATE believes that a particular tax year was dischargeable and should be abated, the abatement has to be completed by the Insolvency function. If APS receives such a request by the ATE, the case should be sent back to the ATE to resolve the "dischargeability" issue with Insolvency.

  2. "Dischargeability" issues may arise on a CDP case if the taxpayer petitions the Tax Court. If APS receives a stipulated decision or directives from Counsel that a tax year was dischargeable and should be abated, APS will contact the Centralized Insolvency Organization (CIO) to coordinate with the appropriate Insolvency office to have the liability abated. APS will provide the following documentation to CIO:

    • Name of the Counsel Attorney for the case

    • Closing instruction from Counsel

    • Stipulated Decision

  3. The Insolvency function will contact APS once the requested abatements are completed. The Insolvency function will only make adjustments based upon "dischargeability" determinations and will not make any adjustments based upon tax recomputations. Adjustments based upon tax recomputations will be processed by APS. To contact the Centralized Insolvency Organization by phone, go to the Who/Where tab on SERP and click on the Insolvency (Bankruptcy) Tools. Then go to Insolvency (Bankruptcy) National Field/Centralized Site Directory where the telephone number for the CIO will be listed http://serp.enterprise.irs.gov/databases/who-where.dr/insolvency/national-field-centralized-site-directory.html.

  4. The Insolvency function is the only function that can input bankruptcy transactions onto IDRS. APS must not input requests for TC 520/521 with bankruptcy closing codes nor should APS input any TC 971 with abatement or partial abatement action codes.

    Note:

    See IRM 21.5.6, -V Freeze and -W Freeze guidance provided to prevent action on a case that has been referred to the Department of Justice.

  5. See Exhibit 8.20.7-16, TC 520 Closing Code (cc) and Master File (MF) Freezes for more details.

CDP Rapid Response Appeals Process (RRAP) APS Closing Procedures

  1. When the ATM enters an ACAP on the ACDS record, the case will be assigned to the appropriate APS Team per the Direct Ship table.

  2. Upon receipt of the RRAP case from the ATM, APS takes the following actions:

    • Issue the appropriate letter within ten (10) calendar days of the ACAPDATE.

    • If a Notice of Determination (NOD) is issued, suspend the case for a total of sixty (60) days.

    • If the taxpayer does not petition the United States Tax Court (USTC), overnight the case to the APS Team within two (2) business days of the expiration of the sixty (60) day suspense period.

    • If the taxpayer petitions the USTC, take no action until the Tax Court case is closed and Counsel has returned the case to Appeals.

    • If a Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, Waiver of Suspension of Levy Action, and Waiver of Periods of Limitation in Section 6330(e)(1) is secured, overnight the case to APS.

    • When transmitting the case to APS, the ATE will ensure the RRAP cover sheet is attached to the outside of the case file to properly identify the case as needing RRAP handling by the unit.

  3. APS will close the case after the decision is final and will fax copies of the Appeals closing documents listed below to the originating Revenue Officer:

    • The fax cover sheet prepared by the RO

    • Form 5402, Appeals Transmittal and Case Memo

    • Letter 3193, Notice of Determination Concerning Collection Actions Under Sections 6320 and 6330 with enclosure or

    • Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, Waiver of Suspension of Levy Action, and Waiver of Periods of Limitation in Section 6330(e)(1) with cover letter or

    • Form 12256, Withdrawal of Request for Collection Due Process or Equivalent Hearing with cover letter

    • Appeals Case Memorandum (ACM)

    • Other documents obtained by Appeals during the CDP hearing process

      Note:

      If the "other documents" exceed fifteen (15) pages, they may be mailed to the RO. However, the first six (6) items must always be faxed to the RO.

CDP and EH Closing Actions for the Case File

  1. Whenever there is judicial review of a CDP or an EH with a related case that has judicial review, the case files should be kept together until the suspense period expires or the matter is resolved in the courts.

  2. For cases originated by ACS, on IDRS input a TC 290 0.00 with HC 3 and blocking series 18X.

    Exception:

    If the ATE provides written instruction that no HC should be entered, APS will not use HC 3 but instead, leave the Hold Code field blank which defaults to zero.

  3. All Non-AIMS adjustments (TC 29X), and account updates (TC 52X, TC 971) must be placed in PEAS suspense and monitored until all input transactions have fully posted.

  4. APS will establish an appropriate follow-up date to access the taxpayer's account and verify all transactions have posted.

  5. Close PEAS once suspense and monitoring actions are completed.

    1. Use PEAS cc 03.

    2. "Complete Date" for a CDP or an EH case is the date APS closes the case off PEAS.

ACS Notification of CDP and EH Closures Via EEFax
  1. ACS case files will not be returned to ACS. ACS case files will be sent to the "Campus Files Function" . Related OIC cases will also be sent to the "Campus Files Function" if the offer was not accepted. CDP OIC files are not sent back to COIC. If the CDP OIC was accepted, only the OIC file is sent to MOIC and the CDP file is sent to the "Campus Files Function" .

  2. APS will use EEFax to provide the ACS CDP Coordinator with a copy of Form 5402 and Form 3210/E3210.

    Reminder:

    The EEFax transmission can be performed daily, but at a minimum, must be performed once a week. Send ALL Form 5402s when you close ACDS, do not wait until the Default date - do not wait until PEAS is closed.

    Installment Agreements (DDIA/MMIA) and mirrored CNC requests, secured by the ATE and not input by APS, must be included in the EEFax transmission and identified on the Form 3210/E3210.

    • Direct Debit Installment Agreements (DDIA) are transmitted to ACS by APS via EEFax

    • DDIAs must be identified on Form 3210/E3210

    • DDIAs are input by ACS

    • Manually Monitored Installment Agreements (MMIA) and mirrored CNC requests are transmitted to ACS by APS via EEFax

    • Form 433-D and mirrored CNC requests must be identified on the Form 3210/E3210

    • ACS submits these requests to Centralized Case Processing (CCP) for input on IDRS

  3. The ACS Support CDP Coordinator’s EEFax numbers are accessible via SERP, http://serp.enterprise.irs.gov/databases/who-where.dr/acs-cdp-coordinators.html.

  4. For CDP cases where the taxpayer has raised frivolous or hybrid issues, the ATE will indicate such on the Form 5402, and the following documents must be transmitted to ACS in addition to the Form 5402:

    • Copy of the taxpayer's frivolous CDP hearing request

    • Copy of Letter 4380, Appeals Received Your Request for a Collection Due Process and/or Equivalent Hearing and a copy of Letter 3846, Appeals Received Your Request for a Collection Due Process Hearing if issued

    • Copy of the Notice of Determination

    • Copy of the case history

    • Copy of any written communications received from the taxpayer as a result of the withdrawal solicitation in either Letter 4380 or Letter 3846

Revenue Officer Notification of CDP and EH Closures
  1. Revenue Officer (RO) Collection case files will be returned to the originating RO Group Manager after the case is closed on ACDS. Related OIC case files will be sent to MOIC if the offer is accepted or be sent with the CDP case file to the RO Group Manager if the OIC is rejected.

  2. Prepare Form 3210/E3210 with the address of the originating RO Group Manager provided on Form 5402 "Route Case To" field, to transmit the original administrative file to the RO Group Manager.

    Exception:

    If the case is selected for AQMS review, the administrative file should be sent to the requesting reviewer prior to being returned to the Revenue Officer.

CDP Closing Letters

  1. A closing letter is prepared for most CDP and Equivalent Hearing closings. The type of letter and mailing requirements for each letter are discussed below.

    Note:

    The only exception where a closing letter is not required is for withdrawn CDP cases that did not receive an Appeals acknowledgment letter and Collection Due Process Timeliness Determination (CDPTD).

  2. When a closing letter is issued on a CDP case, a copy of the letter will be included within the administrative file upon mailing of the letter.

CDP Equivalent Hearing: Decision Letters
  1. Stand-alone EH cases (Letter 3210, Decision Letter Concerning Equivalent Hearing Under Section 6320 and/or 6330 /Letter 5145, Agreed Equivalent Hearing Closing Letter) are closed and processed by APS CDP Back-End Campus offices.

  2. Combination EH and Innocent Spouse or EH and Abatement of Interest claim (Letter 4440, Decision Letter - Equivalent Hearing & Interest Abatement and Letter 4439, Decision Letter - Equivalent Hearing & Innocent Spouse) are processed by Campus back-end APS AFTER the suspense period for the NODs.

  3. If a case has both EH and CDP workunits, close the EH workunit. Do not hold the EH workunit pending the resolution of the CDP unless it has been chosen for AQMS review.

    Caution:

    If the EH WUNO is closed separate from the CDP WUNO, copy a complete set of documents and place it with the CDP WUNO.

  4. An EH WUNO must be suspended with a related ABINT or IS WUNO. The EH WUNO cannot be closed on ACDS until the related ABINT or IS WUNO is also closed.

CDP/EH Withdrawal Acknowledgement Letter
  1. In all cases where Appeals has previously sent the taxpayer the Substantive Contact Uniform Acknowledgement Letter (UAL), the ATE will prepare a Letter 4383, Collection Due Process/Equivalent Hearing Withdrawal Acknowledgement if a Form 12256, Withdrawal of Request for Collection Due Process or Equivalent Hearing is secured.

  2. The Letter 4383, Collection Due Process/Equivalent Hearing Withdrawal Acknowledgement:

    1. Provides the taxpayer with the date Appeals received the withdrawal

    2. Provides Account and Processing Support with the date Appeals received the withdrawal. The received date of the withdrawal is used for input of the TC 521 cc 76/77

    3. Is signed by either the ATE or the ATM

    4. If joint taxpayers are living at the same address, send a single letter addressed to both taxpayers

    5. If joint taxpayers are not living at the same address, send separate letters

  3. Do not enclose a copy of Form 12256.

  4. Send the taxpayer the original closing letter with a copy to their authorized representative, if applicable.

  5. Appeals will not send the taxpayer Letter 4383 if the withdrawal was received before Appeals acknowledged receipt of the case with the Substantive Contact Uniform Acknowledgement Letter.

CDP/Equivalent Hearing (EH) Disregarded Hearing Letter
  1. When issuing a Letter 4381, Disregard CDP/EH Request, follow established procedures for issuing a notice of determination or a decision letter.

  2. The Letter 4381 will be sent by first class mail. Certified or registered mailing is not required.

  3. If the hearing request is signed by both joint taxpayers who are living at the same address, send a single letter addressed to both taxpayers.

  4. Send separate letters to joint taxpayers that are not living at the same address.

  5. Send a copy of the letter(s) to the authorized representative, as appropriate.

  6. Verify addresses using ENMOD, INOLES or SPARQ.

  7. Place a copy of the letter and all attachments in the administrative file.

CDP/EH OIC Acceptance Letter
  1. The ATE will prepare the OIC acceptance Letter 5490, for CDP/EH OICs they accept.

  2. APS will date and issue the OIC acceptance letter to the taxpayer as an attachment to the CDP Notice of Determination, EH Decision letter, or Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, Waiver of Suspension of Levy Action, and Waiver of Periods of Limitation in Section 6330(e)(1).

    Note:

    The CDP Letters and the OIC Acceptance Letter must have the same date.

Form 12257 Waiver Closing Letter
  1. The ATE will prepare closing Letter 4382, Closing Letter for Form 12257 if a Form 12257 is secured.

  2. The closing letter requires the ATM or ATE's signature.

  3. Send the taxpayer the original closing letter and the original waiver with a copy to the authorized representative, if applicable.

  4. If joint taxpayers are living at the same address, send a single letter addressed to both taxpayers at that address.

  5. Send separate letters to joint taxpayers who are not living at the same address and enclose Form 12257 with each.

Retained Jurisdiction Closing Letter
  1. The ATE will prepare an Appeals Case Memorandum and a CAP type closing letter for an RJ case.

  2. The Form 5402 may suffice as the ACM.

  3. Send the taxpayer the original closing letter with a copy to their authorized representative, if applicable.

CDP Timeliness Determination (CDPTD) Closing Procedures

  1. CDPTD cases will not have a closing letter. Appeals does not communicate with the taxpayer regarding timeliness determinations. Appeals timeliness determination is provided to Collection who relays the information to the taxpayer.

  2. Use Form 5402 to close the case on ACDS. The Form 5402, will not have an ATM signature; no review is necessary.

  3. Separate Timeliness Determination (CDPTD) cases are closed with the following cc’s:

    CLOSINGCD Description
    14 Appeals agrees with Collection's timeliness determination
    15 Appeals disagrees with Collection's timeliness determination
    16 Appeals partially agrees with Collection's determination
  4. Shred Form 5402 after the case is closed on ACDS.

CDP Notices of Determination (NOD) Default Closing Procedures

  1. After the applicable suspense period for the CDP NOD has expired and no petition has been filed, close the WUNO on ACDS.

  2. Update ACDS using general closing instructions. Input the following:

    1. CLOSINGCD - 05

    2. ACTION - ACKCLS

  3. If the ATE prepared and provides a Form 3870, process the authorized account adjustments. Suspense the PEAS case for monitoring until the adjustment(s) fully post.

CDP Case Tax Court Decision Closing Procedure

  1. IRC 7481 governs the finality of a Tax Court Decision. Counsel will hold cases pending the filing of an appeal, or if no appeal is filed, until the decision becomes final, which is 90 days after the decision is entered in Tax Court, plus 10 days to allow for mailing. "The appeal period may be extended by a motion to vacate or revise the decision or by a motion for litigation costs." For additional information, see:

    • CCDM 36.2.5.3, Chief Counsel Directives Manual, Finality of Tax Court Decisions and Mandamus

    • CCDM 36.2.5.6.4, Chief Counsel Directives Manual, Time for Filing Notice of Appeal

  2. When the Tax Court decision is final, Counsel will return the case to Appeals on Form 1734, Transmittal Memorandum.

  3. Review Form 1734 and input the appropriate ACDS closing code:

    • A "Docketed Case" requiring closing code 10 is one that was docketed but was settled with an agreement. Docketed cases are generally settled with a decision document beginning with the words "Pursuant to the agreement of the parties in this case..." , or similar wording and are signed by the judge, the taxpayer and Counsel.

    • A "Tried Case " requiring closing code 17 is one that was docketed and not settled, was tried and received a court rendered decision. Cases requiring closing code 17 are those with a decision document from the court beginning with the words "Pursuant to the determination of the Court..." , or similar wording, are signed only by the judge and do not first refer to an agreement.

  4. Input TC 521 with a closing code 76 or 77, as appropriate. The date of TC 521 will be the date the Tax Court decision became final. Consult with APS management or contact the Counsel attorney if assistance is needed in determining the correct TC 521 date.

    Caution:

    If the case does not contain a waiver paragraph, and Counsel submits the case to APS prior to the date on which the decision becomes final, APS must suspense the case for the remainder of the 90 days plus 10 days, because the TC 521 cannot be input with a future date. Exception - Delinquent Original Return that settles the case.

  5. If a decision document contains a waiver of the restrictions on collection in accordance with IRC 6330(e), which would be placed below the judge's signature, the collection statute resumes on the date the decision is entered.

  6. A Tax Court may grant litigation fees and costs to a petitioner (taxpayer) in a CDP case. The field attorney who handled the case, not APS, is responsible for handling litigation fees and costs.

  7. The taxpayer’s petition may be dismissed for Lack of Jurisdiction, or for Lack or Prosecution.

    An Order to Dismiss for Lack of Jurisdiction results from one or more of the following conditions:

    • Petition not filed on or before the last date to file a Petition with the USTC identified on the Notice of Determination (NOD)

    • Petition filing fee was not paid and the requirement to pay the filing fee was not waived

    • Petition was withdrawn by the petitioner

    • Any combination of the conditions listed above

    An Order to Dismiss for Lack of Prosecution results from one or more of the following instances:

    • Petitioner did not appear and the failure to appear is determined to be an unexcused absence by the Court

  8. APS will take the following actions to close ACDS and update IDRS as appropriate:

    • Dismissed Lack of Jurisdiction (LOJ) - ACDS CLOSINGCD = 11

    • Dismissed Lack of Prosecution (LOP) - ACDS CLOSINGCD = 12

    • Input TC 521 with the applicable closing code to close the TC 520 and resume collection activity

    • Place the PEAS case in Suspense and monitor the IDRS account until the TC 521 is posted.

  9. APS will forward the CDP case to the location identified by the ATE on Form 5402 using Form 3210/E3210 as appropriate.

CDP Appealed Tax Court Decision Closing Procedures
  1. A Tax Court decision can be appealed by either the petitioner or the U.S. Government.

    Note:

    "S" cases cannot be appealed.

  2. Counsel retains case files for at least 90 days + 10 days (100 days total) after the Tax Court decision is entered.

  3. Counsel will notify Appeals when the decision becomes final (after the case is finished in the U.S. Court of Appeals and/or Supreme Court). At this point, the TC 521 date must be determined. If there is a question in determining the TC 521 date, consult with APS management or contact the Counsel attorney directly for assistance in determining the correct date.

CDP Assessment of Civil Penalties under IRC 6673 Closing Procedures
  1. The Tax Court may impose a penalty against a taxpayer not exceeding $25,000 under IRC 6673 (a)(1) if:

    • a taxpayer institutes or maintains a proceeding primarily for delay,

    • takes a position that is frivolous or groundless, or

    • unreasonably fails to pursue available administrative remedies.

    Note:

    A penalty award under section IRC 6673 (a)(1) is not asserted against the taxpayer in any notice issued by the IRS. The government can request the penalty in its pleadings or the penalty can be imposed by the Tax Court on its own.

  2. For identification of the IRC 6673 civil penalty amount imposed, refer to the Entered Tax Court Decision.

  3. If a court other than the Tax Court, including appellate courts, determines that the taxpayer is proposing a frivolous or groundless suit, the court may award sanctions, penalties, or costs not exceeding $ 10,000 under its rules. IRC 6673 (b)(2) and (3) allows the "award" to be assessed and collected like a tax.

  4. The Tax Examiner will prepare a Form 8485, Assessment Adjustment Case Record as the civil penalty assessment source document. In this instance, a Form 8278 will not be prepared by the ATE.

  5. APS will assess civil penalties asserted under IRC 6673 (a)(1) (PRN 643) and IRC 6673 (b)(2) and (3) (PRN 644).

  6. The IRC 6673 penalty is assessed on a Civil Penalty (CVPN) Module:

    • MFT 13 (BMF)

    • MFT 55 (IMF)

  7. Since the IRC 6673 penalty is not associated with a particular tax year before the court, but instead is a sanction imposed by the court for groundless delay, the penalty is assessed using the month and the year of the Court's order imposing the IRC 6673 penalty.

    • IMF Entities (MFT 55) - Any month can be used to identify the CVPN 55 Tax Period. Refer to IRC 6673 CVPN IMF Table below.

    • BMF Entities (MFT 13) - Calendar Year month end is used to identify the CVPN 13 Tax Period. Refer to IRC 6673 CVPN BMF Table below.

    IRC 6673 CVPN IMF Table

    IF Ordered Entered by the Court on THEN Use Period
    June 6, 2014 201406
    December 7, 2013 201312
    February 22, 2012 201202

     

    IRC 6673 CVPN BMF Table

    IF Ordered Entered by the Court on THEN Use Period
    April 14, 2014 201412
    August 6, 2013 201312
    November 22, 2012 201212

     

  8. If the Civil Penalty (CVPN) account is not yet established, reference the following IRMs and take the appropriate action(s) to establish the CVPN account for assessment of the IRC 6673 penalty:

    • IRM 20.1.7.7, Creating Entities or Name Lines for Non-Return Civil Penalty Cases

    • IRM 20.1.7.7.1, BMF Entities

    • IRM 20.1.7.7.2, IMF Entities

    • IRM 20.1.10.8.1, IRC 6673(a) - Tax Court Proceedings

    • IRM 20.1.10.8.1.2, Assertion/Assessment of 6673(a)

    • IRM 20.1.10.8.2, IRC 6673(b) - Proceedings in Other Courts

    • IRM 20.1.10.8.2.2, Assertion/Assessment of 6673(b)

  9. Process the Civil Penalty (CVPN) assessment:

    1. Research IDRS command codes BMFOL, IMFOL, INOLE, NAMES/E to ensure the penalty is being assessed on the correct filer’s account.

    2. Use IDRS CC: ADJ54 to input a TC 290 0.00*.

    3. Input the appropriate penalty reference code (PRN):
      • PRN 643 for Tax Court (6673(a))
      • PRN 644 for other than Tax Court (6673(b))

    4. Input the dollar amount of the penalty as identified on the Entered Tax Court Decision.

    5. Use blocking series 52X (required for the first assessment). Use blocking series 53X if this is NOT the first Civil Penalty (CVPN) assessment to the MFT 13 (BMF) or MFT 55 (IMF) for the respective taxpayer and tax period.

    6. Use a PDC if the Civil Penalty Entity is PN or input the ADJ54 adjustment in the cycle immediately following the cycle in which the CVPN Entity is fully established.

    7. Do not use a HC (see Caution below) because the IRC 6673 Civil Penalty is immediately assessable under the authority of the Court imposing the CVPN and is immediately collectable as of the assessment’s 23C date.

      Caution:

      If you are processing a credit transfer or offsetting an available overpayment from the same taxpayer’s IDRS account(s), then use the appropriate HC to suspend the notice until the credit transfer(s) post(s). Always monitor the account to confirm all transactions post and once the account correctly reflects all transactions, post a TC 290 0.00 Blocking Series 96X without a Hold Code to release the balance due notice and freeze the CVPN from subsequent abatement action by non-Appeals personnel.

      Reminder:

      Use PEAS Suspense procedures to ensure the CVPN account condition is timely and accurately adjusted and finalized.

    8. Take all necessary steps to avoid an unpostable condition.

    Note:

    *The TC 290 0.00 will serve as the carrier transaction code (TC) for the TC 240 IRC 6673 penalty amount.

  10. The IRC 6673 Penalty imposed by the Court cannot be mitigated by a subsequent claim or penalty abatement request filed by the taxpayer. For this reason, APS must also post a second TC 290 for 0.00 with a Blocking Series 96X to freeze the CVPN from subsequent abatement action by non-Appeals personnel.

CDP Statute of Limitations for Assessing Costs Under Section § 6673(b)(2)
  1. There is no return of tax to trigger the running of the statute of limitations prescribed by IRC 6501. The costs to be assessed under the authority of IRC 6673(b)(2) are not reported on any document filed by a taxpayer. Additionally, the costs are neither related to nor based on a tax return filed by taxpayer.

  2. APS will assess the IRC 6673(b)(2) penalty promptly upon receipt of the judgment (i.e. order of the court).

CDP or EH Collection Alternatives and Reporting an Account Currently Not Collectible

  1. Collection Alternatives or back-end processing that may be requested on CDP or EH cases include:

    • Credit transfers

    • Currently Not Collectible (CNC)

    • Innocent Spouse (INNSP)

    • Installment Agreements (IA)

    • Interest Abatement (ABINT)

    • Offer in Compromise (OIC)

    • Penalty Abatement

    • Tax Abatement

Currently Not Collectible (CNC)
  1. The ATE will enter a CNC closing code on Form 5402, Appeals Transmittal and Case Memo. The ATE will also indicate in the "Remarks" section of Form 5402, any non-CDP periods which should also be placed into CNC status.

    Caution:

    If the APS TE notices CDP or non-CDP balance due tax period(s) which are NOT also identified by the ATE for closure as CNC with a TC 530, review the decision portion of the ACM or Form 12257 to see if the omitted balance due tax period(s) is/are indicated and should have been identified for closure with a TC 530. If the omitted balance due tax period is not identified in the ACM, nor identified on the Form 12257, notify the ATE using encrypted email, and request written confirmation that the balance due tax period(s) should or should not also have a TC 530 posted to place them in CNC status. This collaborative verification process supports:
    The Taxpayer’s Right toQuality Service
    The Taxpayer’s Right toFinality

  2. Use IAT REQ77 tool to input TC 530 with the cc provided by the ATE (01-39) to place an account in CNC status.

    Note:

    For additional information on CC: REQ77, refer to IRM 2.4.19, IDRS Terminal Input, Command Codes REQ77, FRM77 and FRM7A, or http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm.

  3. The ATE must prepare a paper Form 53, Report of Currently Not Collectible Taxes if they request a mandatory follow-up. Send the paper Form 53 to ACS or the originating Revenue Officer to forward to Compliance Case Processing (CCP) for input.

  4. When CNC requests are made for one taxpayer on a joint liability, the account must be mirrored. APS will not mirror these accounts and will process these requests through the Compliance Revenue Officer (RO) and ACS.

CDP or EH Adjustments
  1. An account adjustment on a CDP or EH may involve tax, penalty and/or interest.

  2. IRM 21.5, Account Resolution, contains the guidelines for processing adjustments.

  3. Additional IRM references are provided below:

    • IRM 3.8, Deposit Activity

    • IRM 5.19, Liability Collection

    • IRM 20.1, Penalty Handbook

    • IRM 20.2, Interest

    • IRM 21.1.2, Reference Materials Overview

    • IRM 21.1.3, Operational Guidelines Overview

    • IRM 21.5.3, General Claims Procedures

    • IRM 21.5.4, General Math Error Procedures

    • IRM 21.5.6, Freeze Codes

    • IRM 21.6, Individual Tax Returns

    • IRM 21.6.2.2, Multiple Individuals Using the Same TIN (Identity Theft)

    • IRM 21.7, Business Tax Returns and Non Master File Accounts

    • IRM 25.6, Statute of Limitations

    • IRM 25.23.4, IDTVA Paper Process

CDP With Related Liability WUNO
  1. Tax issues heard within CDP will generally have a separate WUNO if the ATE determines that the assistance of another ATE is required to determine the correct tax liability.

  2. APS will process tax abatements and other adjustments to the account as directed by the ATE.

  3. The following documents are used to request adjustments:

    1. Form 2424 - Account Adjustment Voucher

    2. Form 3870 - Request for Adjustment

    3. Form 4159 - Payment Tracer Request

    4. Form 4549 - Income Tax Examination Changes

    5. Form 5278 - Statement - Income Tax Changes

  4. Assign the CDP and Income Tax WUNO to the TE on PEAS for closing with PEAS TYPE "CLS" and the appropriate Sub TYPE for the case.

  5. Follow general procedures for closing the Income Tax WUNO.

Automated Substitute for Return (ASFR)/Substitute for Return (SFR) in CDP
  1. The ASFR program is a non-filer or return delinquency program Compliance uses to assess tax against taxpayers who have not filed or refuse to file individual income tax returns.

  2. If the ATE receives a valid delinquent return from the taxpayer, the return will be sent by the ATE to the ASFR Recon Team for processing. The ASFR Recon Team will make all of the necessary adjustments to the account. The ASFR Contacts are available at ASFR Contacts.

  3. Once the delinquent return from the taxpayer is processed, if the ATE determines additional adjustments are necessary to accurately resolve the taxpayer’s case, APS will make additional tax abatements or other adjustments to the account as directed by the ATE via Form 3870, Request for Adjustment.

    Reminder:

    An assessment for a tax deficiency on an SFR TC 150 0.00 account, which is legally authorized by a signed agreement, an agreed SND waiver, or an Entered Tax Court Decision with a waiver paragraph, must have the Agreement Date associated with the assessment transaction(s).

    Caution:

    Original tax assessment authorized by the taxpayer’s signature on a filed return is not a tax deficiency and thus does not have an agreement date associated with the original tax assessment transaction(s).

    Exception:

    If a taxpayer files a valid return after the SFR assessment, the SFR assessment is not abated but will be raised or lowered by the difference between the amount of tax assessed on the SFR compared to the amount accepted on the taxpayer's return.

    Note:

    APS must always ensure there is written authority to process a tax abatement or process a tax assessment. If a tax abatement is authorized by the ATE after the Assessment Statute Expiration Date (ASED) has expired, the abatement can be processed, however, it cannot be reversed by a later tax assessment once the ASED has expired.

  4. Close the case on ACDS according to the Form 5402, Appeals Transmittal and Case Memo prepared by the ATE.

  5. APS must monitor the account adjustment(s) and when all actions are completed and all account adjustments are fully posted, APS will close the case on PEAS.

CDP With Related PENAP WUNO
  1. The ATE will prepare Form 3870, Request for Adjustment with the abatement information.

  2. The ATE will request blocking series 96X (penalty abatement refusal) for the TC 290 (-0-) transaction if they deny a penalty abatement.

    Note:

    This will prevent a later abatement of a penalty sustained by Appeals.

  3. If Appeals determines later to abate a penalty previously sustained by Appeals, The ATE will prepare Form 3870, Request for Adjustment with the abatement information. APS will use IDRS CC: REQ54 to input a TC 290 0.00, enter the penalty abatement TC's and amounts as determined by the ATE, and use blocking series 97X (reversal of penalty abatement refusal) on the adjustment document.

    Note:

    Only Appeals personnel can use blocking series (BS) 96X (Penalty Abatement Refusal Indicator), and (BS) 97X, (Reversal of Penalty Abatement Refusal Indicator).

CDP With Related TFRP WUNO
  1. APS does not process Trust Fund Recovery Penalty adjustments. Instead, APS will send a copy of Form 5402, Appeals Transmittal and Case Memo and ACM and Form 3870, Request for Adjustment (if one was prepared by the ATE and submitted with the case), to the Control Point Monitor (CPM) that originally sent the case to Appeals or to the CPM in the state where the taxpayer resided at the time of assessment.

    Note:

    The ATE is not required to prepare a Form 3870 if the adjustment details are in the ACM.

  2. The CPM address will be identified by the ATE on Form 5402. If the address is not listed, see the "Control Point Monitoring Technicians" contact listing at Control Point Monitor for ATFR - Collection: AI Advisory.

CDP With Related Abatement of Interest WUNO
  1. The ATE will resolve an abatement of interest case via one of the following determinations:

    1. Fully Sustained

    2. Fully Abated

    3. Partially Abated

  2. Interest abatement cases are controlled on a separate WUNO using type code ABINT and feature code DP.

  3. Request for abatements are made on Form 3870, Request for Adjustment, or Form 8485, Assessment Adjustment Case Record.

    Note:

    The amount of interest to be abated may have been previously computed on some of the cases Appeals will handle. In those cases in which it has not, the ATE will determine the "from" and "to" dates for the interest abatement and the amount of tax on which to compute the interest. In some settled cases, the ATE may obtain a Form 906, Closing Agreement.

  4. Refer to the following for guidance on interest abatement:

    • IRM 1.2.51, Delegation Order 20-1, (Rev. 2, formerly DO-228, Rev. 3), D.O. 228, Abate Interest Due to IRS Error or Delay

    • IRM 20.2, Interest Handbook

    • IRM 20.2.7, Interest, Abatement and Suspension of Debit Interest, IRC 6404 and IRC 7508

    • IRM 8.7.7, Claim and Over Assessment Cases

    • Exhibit 8.20.7-7, APS Instructions - Method and Example For Computing Interest Abatement

  5. Close the case as follows:

    Step Action Additional Instructions
    1. Control the CDP and ABINT case Use separate workunit numbers
    2. Cross-reference the WUNOs of the CDP and ABINT in Notes on the CSC N/A
    3. Assign the CDP WUNO to the TE on PEAS for closing Use PEAS TYPE "CLS"
    4. Assign the appropriate SubTYPE for the case Use PEAS SubTYPE ACDS "Only"
    5. Assign the ABINT WUNO to the TE on PEAS, using PEAS TYPE "SND" PEAS SubTYPE "Issue" N/A
    6. Issue the determination letter See IRM 8.20.6 for instructions on issuing the ABINT determination letter
    7. Close the CDP WUNO on ACDS N/A
    8. Suspend the CDP case on PEAS Use Suspense Reason Code S99-Other
    9. Add a PEAS follow up date equal to the ABINT default date The default date is the SNDATE plus 240
  6. Suspend the CDP file with the ABINT file until the ABINT case defaults or is closed from Court.

  7. Close the ABINT workunit.

CDP With an Innocent Spouse Claim
  1. The APS Teams designated to process CDP cases will send all CDP/IS cases where the CDP is for the Requesting Spouse (RS) to the Florence Campus Appeals APS unit for final closure.

  2. The Florence APS unit will:

    1. Control the CDP/IS (RS) case on PEAS

    2. Update the Innocent Spouse Tracking System (ISTS)

    3. Update IDRS

    4. Verify CCISO account Mirroring status and suspense the case until closing actions can be completed*

    5. Input CDP/IS (RS) adjustments, as needed

    6. Close the CDP/IS (RS) case on ACDS

    7. Suspend the CDP/IS (RS) case on PEAS with appropriate Suspense Reason Code for actions needed.

    8. Add a PEAS follow-up date equal to the expected posting date

    9. Close the CDP/IS (RS) case on PEAS after adjustments post

    10. File the CDP/IS (RS) administrative file according to standard procedures

    11. Perform all back end closing actions for CDP/IS (RS) cases

    Note:

    * See IRM 8.20.7.39.4 (4) for specific information applicable to AP-25-0817-0009, Interim Guidance on Innocent Spouse Mirroring Requests.

CDP/EH With an Installment Agreement

  1. APS inputs IDRS-monitored IMF and BMF installment agreements. The source IRM guidance for Installment Agreement command codes and input content is provided below:

    • IRM 2.4.30, History Items for an overview of installment agreement history item content.

    • Exhibit IRM 2.4.30-1, Command Code IAGRE Input Request

    • Exhibit IRM 2.4.30-2, Command Code IAGRE Response - IAORG or IAPND or IAREV

    • Exhibit IRM 2.4.30-3, Command Code IAORG

    • Exhibit IRM 2.4.30-4, Command Code IAPND

    • Exhibit IRM 2.4.30-5, Command Code IAREV

    • Exhibit IRM 2.4.30-6, Command Code IADFL

    • Exhibit IRM 2.4.30-7, Command Code IADIS Input Request

    • Exhibit IRM 2.4.30-8, Command Code IADIS Output Request for Active or Defaulted Modules

    • Exhibit IRM 2.4.30-9, Command Code IADIS Output Request for Deferred Modules

    • SERP Job Aids

  2. All installment agreements require a paper document, either a Form 433-D, Installment Agreement or Form 2159, Payroll Deduction Agreement.

  3. Both the Payroll Deduction Installment Agreement (PDIA) and Direct Debit Installment Agreement (DDIA) require the taxpayer’s signature. The IRS accepts the following as legal signatures:

    • Original signature

    • Electronic signature

    • Faxed signature

  4. Direct Debit Installment Agreements (DDIAs) allow the Service to debit a taxpayer’s checking account for the agreed upon installment.

  5. DDIAs for Collection field sourced cases are processed in the CSCO sites. Fax the signed DDIA along with the routing and account number (usually provided via a voided check) to the DDIA Coordinator for input. See DDIA Coordinator website and input the Business Operating Division (BOD) and the state where the taxpayer resides to identify the appropriate fax number.

  6. DDIAs for ACS sourced cases are input by ACS. Affix the original DDIA signed documents to a copy of the Form 5402 and forward to ACS via EEFax. If these documents are not faxed individually, but instead are batched in a high volume APS Office, they must be submitted via EEFax within 5 business days using Form 3210/E3210. Identify on Form 3210/E3210, which Form 5402s have DDIAs associated for input.

  7. Manually Monitored Installment Agreements (MMIAs) are not compatible with IDRS monitoring. The ATE identifies an MMIA on the CDP Form 5402 by selecting the MMIA from the Installment Agreement drop down menu.

    Note:

    Installment Agreement requests for only one spouse on a joint liability are categorized as MMIA and must be mirrored. APS is not responsible for the mirroring process on these accounts.

  8. APS will not update an MMIA account to status 60, instead, APS will send a copy of the Form 5402 along with the administrative file to the designated Revenue Officer for them to submit to Centralized Case Processing. APS will also forward a copy of the Form 5402 and Form 433-D to ACS for processing.

  9. For (5) - (8) above, APS will always verify that the TC 971 AC 043 is posted to the respective account(s).

  10. The following list identifies the four types of status codes for Installment Agreements:

    • Status 60 - Active Agreement

    • Status 61 - Suspended Agreement

    • Status 63 - Deferred Agreement (Used to cross-reference TINs where collection activity has been deferred until modules under related accounts have been satisfied. These IAs are common on business taxpayers where the officer has a related trust fund recovery penalty assessment.)

    • Status 64 - Defaulted Agreement

  11. When Appeals denies the taxpayer’s IA, also known as a "Rejected Installment Agreement" , the TC 971 AC 043 must be reversed with TC 972 AC 043. The TC 971 and TC 972 dates must be the same if the TC 971 043 was entered in Error. The TC 972/043 date will either be the same as the TC 521 date or for an EH case the date the letter was mailed..

  12. See IRM 8.20.7.40, Installment Agreements (IA) for guidance.

CDP Premature Referral

  1. A CDP Hearing request may be classified as a Premature Referral (PR) and returned to Collection if the ATE determines that a CDP notice was issued in error.

  2. The Appeals ATE will no longer rescind CDP notices they determine were issued in error but only send the case back as a premature referral.

  3. APS will take the following actions on premature referrals:

    1. Reverse the TC 520 with TC 522. Use TC 520 date as TC 522 date.

    2. Close on ACDS with Premature Referral cc 20

    3. Close IDRS control base

    4. Transmit case to originating function per Form 5402, Appeals Transmittal and Case Memo instruction from ATE

CDP and EH Offer in Compromise (OIC) Processing: Overview

  1. An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles their tax liability for less than full payment. Taxpayers may submit an OIC as an alternative to collection in a CDP or EH hearing.

  2. The Centralized Offer In Compromise (COIC) Unit will, with few exceptions, investigate all CDP or EH OICs which meet COIC criteria to determine if the OIC is accepted, returned, considered withdrawn or rejected.

  3. After COIC completes the investigation and makes their determination to accept, return, or reject the OIC or if the offer is considered withdrawn, COIC will forward all returned or rejected offers to Appeals for consideration.

  4. In cases where COIC accepts the offer, COIC will complete all back-end processing and return a copy of the accepted OIC document(s) to the ATE for association with the CDP case.

  5. In cases where COIC returns or rejects the offer, the ATE will make the final determination which will be one of the following:

    • Accept the OIC

    • Return the OIC

    • Reject the OIC

    • Withdraw the OIC

  6. CDP OICs which were returned or rejected by COIC and have not already been processed must be processed by the APS TE assigned to close the CDP/OIC case.

    Note:

    The ATE will not separate the OIC from the CDP case when submitting to APS for processing of their determination on the CDP and OIC WUNOs.

  7. Characteristics of a CDP case with a related OIC:

    1. The CDP and OIC are controlled under separate WUNOs

    2. Both WUNOs have a Feature Code of DP

    3. The CDP and OIC WUNOs include a cross-referenced to each other in "Notes" on the case summary card

      Note:

      Any TFRP assessment determined as a result of a filing of an OIC in a CDP case, must be forwarded to the appropriate Control Point Monitor (Technical Services Advisory) to process the TFRP adjustments.

  8. APS is responsible for closing CDP OICs that have been loaded onto the AOIC database by Collection. See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.

CDP OIC Processing: Accepted OIC
  1. Back-end processing on OIC cases accepted by Compliance is completed by Compliance.

  2. Back-end processing on OIC cases rejected by Compliance and accepted by Appeals is completed by APS.

  3. Back-end processing of the CDP and EH portion of the case will not change regardless of which function processes the accepted OIC.

Accepted OIC - Collection Investigated
  1. The Appeals CDP or EH OIC file where Collection accepted the OIC should contain the following copies of OIC documents:

    Note:

    The following copies will stay with the CDP or EH case file. APS is not required to send any documents on Collection-accepted OICs to MOIC.

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 7249, Offer Acceptance Report

    • Form 14640, Addendum to Form 656 (if applicable)

    • Acceptance Letter 5490, signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables

  2. The Appeals CDP or EH file where Collection accepted the OIC should contain the following original CDP/EH documents:

    1. Closing letter, i.e., Waiver Form 12257, Summary Notice of Determination, Waiver of Right to Judicial Review of a Collection Due Process Determination, Waiver of Suspension of Levy Action, and Waiver of Periods of Limitation in Section 6330(e)(1)

    2. Customized CDP Form 5402, Appeals Transmittal and Case Memo

    3. Form 14640, Addendum to Form 656 (if applicable)

    4. Separate ACM, if applicable

    5. Case Activity Record

    6. Original correspondence between the Service and the taxpayer

    7. Form 12153, Request for a Collection Due Process or Equivalent Hearing (or other written request)

    8. Form 12153A, Transmittal of CDP/Equivalent Request Hearing/ Form 12153B, Referral Request for CDP Hearing from ACS Support (with instructions)

  3. APS will take the following closing actions on CDP or EH cases where Collection investigates and accepts the OIC:

    1. Issue the CDP Notice of Determination, EH Decision Letter or Form 12257 Waiver following established procedures.

    2. Close the OIC WUNO on ACDS.

      Note:

      Since Collection issues the acceptance letter, APS will issue only the applicable CDP or EH closing letter. Collection is solely responsible for AOIC closing actions on offers they accept.

  4. ACDS inputs for accepted OIC WUNO:

    Note:

    Immediately close the CDP OIC WUNO on ACDS when the CDP is closed with a Form 12257 Waiver. Suspend the OIC documentation with the CDP WUNO where the CDP is closed with a Notice of Determination.

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt: = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period

      Enter 0 (zero) for any other tax periods

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. NOTES – Collection accepted OIC. Direct ship by Collection to MOIC

      Note:

      APS does not have IDRS-input requirements on Collection accepted OICs.

Accepted OIC - Appeals Considered
  1. When Appeals accepts an OIC associated with a CDP and EH case, the following original documents will be included in the file by the ATE:

    • Form 656 and amended Form 656, Offer in Compromise

    • Form 14640, Addendum to Form 656(If applicable)

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402, Appeals Transmittal and Case Memo

    • Appeals Case Memo (Form 14559)

    • Acceptance Letter 5490 signed by the authorized party

    • Financial statements

    • Asset, Income and Equity tables (Form 14561)

  2. When a CDP Notice of Determination (NOD) is issued, the CDP file is suspensed for 30 + 30 = 60 days to allow for timely filing of a Tax Court Petition by the taxpayer. The OIC Acceptance file must be processed to MOIC and the PIF uploaded to the Appeals Library SharePoint Site as of the date the CDP NOD is issued. In this instance, the OIC Acceptance is considered closed but the OIC file remains with the CDP NOD file in suspense for 30 days + 30 days = 60 days.

    • AOIC is closed after default of the NOD or when Tax Court enters a decision(See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.)

    • TC 520 is not reversed with a TC 521 until the date the NOD defaults

    • ACDS (OIC WUNO only) is closed at the time the case is suspensed

  3. APS Campus will ensure the case is ready and complete for closing by verifying inclusion of:

    1. Form 5402, Appeals Transmittal and Case Memo for both CDP and OIC

    2. Acceptance Letter 5490

    3. Form 7249, Offer Acceptance Report including Counsel signature, when applicable

    4. ACM (Form 14559)

    5. Unsanitized TDS or AOIC transcript

    6. ATM's approval

  4. APS Campus will date and issue the OIC acceptance letter to the taxpayer as an attachment to the CDP Notice of Determination or EH Decision letter or Form 12257.

    Reminder:

    The CDP Letters and the OIC Acceptance Letter must have the same date.

  5. The APS CDP TE will process three (3) separate files:

    1. OIC acceptance file

    2. CDP case file

    3. OIC Public Inspection File (Form 7249)

  6. OIC acceptance file - Forward the following documents on Form 3210/E3210 to the Holtsville or Memphis Campus Monitoring OIC (MOIC) unit. See "Offer-in-Compromise (OIC) Compliance Campus Locations for Back-end" at the SERP"Who/Where" tab. The documents listed below are original documents unless indicated otherwise:

    • Form 656 and any amendments to the original Form 656 (Form 14640, Addendum to Form 656)

    • Form 7249, Offer Acceptance Report

    • OIC Form 5402, Appeals Transmittal and Case Memo (copy)

    • Appeals Case Memo (copy)

    • Acceptance Letter 5490, signed by the ATM; it may also be signed by the Area Director, Director, Collection Appeals; Director, Examination Appeals or the Director, Specialized Examination Programs and Referrals (copy)

    • CDP determination or decision letter and attachment or Form 12257 Waiver (copy)

    • Unsanitized TDS or AOIC transcript

    • Financial statements

    • AET and IET schedules (Form 14561)

    • ACDS history (copy)

    Note:

    APS will update and close AOIC for all Appeals accepted CDP related offers that have been loaded on AOIC. See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.

  7. CDP or EH administrative file - OIC documents for the CDP or EH administrative case file are as follows. These are copies of the original documents:

    1. Form 656, Offer in Compromise and amendments

    2. Form 5402, Appeals Transmittal and Case Memo for OIC WUNO

    3. Form 7249, Offer Acceptance Report

    4. TDS or AOIC transcript

    5. Signed and dated Acceptance Letter 5490

    6. Collateral agreements, if applicable

  8. APS will upload the Public Inspection File to the Appeals Library on the SBSE Public Inspection File (PIF) on SharePoint. The Public Inspection File consists of the Form 7249, Offer Acceptance Report signed and dated by the ATE, appropriate approving official per Delegation Order 5-1 (Rev. 5) and if applicable, Counsel, with the date the Acceptance Date box in the upper right hand corner filled in by APS.:

  9. ACDS inputs for accepted OIC WUNO:

    1. CLOSINGCD = 15 (OIC Accepted)

    2. WUaccptOfrAmt = No entry

    3. RevsdTax = Entries as follows:

      Enter the amount of the accepted offer in the field for the earliest tax period

      Enter 0 (zero) for any other tax periods

      Note:

      The accepted offer amount entered into the RevsdTax field will populate the WUaccptOfrAmt field.

    4. NOTES – Accepted OIC file to MOIC (Memphis or Brookhaven)

  10. Process any OIC payments to the campus OIC unit noted on the acceptance letter.

  11. Input STAUP 71 on all CDP periods to prevent levy action.

    Caution:

    The TC 521 input on the CDP periods will return the periods to their pre-CDP status until MOIC inputs TC 780. The taxpayer may receive a notice to pay or be subject to erroneous levy action if STAUPs are not in place. Also, verify STAUP 71 and TC 480 inputs on all non-CDP periods.

  12. For information on AOIC Closing Procedures and Validating Procedures for an Accepted Offer, see Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures.

Automated Offer in Compromise (AOIC) - Accepted CDP OIC
  1. APS is responsible for closing actions on AOIC for any CDP offer accepted by Appeals that has been loaded onto AOIC.

  2. This section provides general information for closing an accepted OIC case on the AOIC system.

  3. Accepted CDP OICs must be closed, validated and released on AOIC and the OIC case file sent to the appropriate MOIC campus for monitoring. It is critical that the actions are promptly taken to close the case on AOIC and the case immediately sent to MOIC because:

    • IRS releases a tax lien once the taxpayer pays the accepted offer amount in full, and

    • MOIC is responsible for monitoring the taxpayer's compliance with the terms and conditions of the offer, so the closing information and case file are needed for this purpose, and

    • Aged case inventory must be closed as soon as possible.

  4. See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.

  5. As soon as possible after closing the closed accepted offer on AOIC, validate and release it to the appropriate MOIC campus for monitoring.

  6. Once the case is validated, control of the offer goes to MOIC and the file must be sent to them as soon as possible. Use the destination list from the drop down menu to determine where the file must be sent.

    Note:

    If there are related cases with different business operating division (BOD) codes (W&I and SBSE), the SB campus will monitor both offers.

  7. Prepare Form 3210/E3210 and mail to the appropriate MOIC campus. Be sure the file contains the original copies of:

    • Initial Form 656, Offer in Compromise

    • Amended Form 656, if applicable

    • Signed Acceptance Letter 5490 (may be a signed copy)

    • Form 7249, Offer Acceptance Report

    • Collateral agreement, if applicable

Rejected CDP OIC Processing
  1. The back-end processing instructions are the same for CDP or EH OICs investigated by COIC and returned with a rejection recommendation and CDP or EH OICs considered and rejected by Appeals because Appeals makes the final determination on all OICs.

  2. A rejected CDP or EH OIC will have a separate file, but the file is not returned to COIC. The rejection file remains with the CDP or EH file.

  3. The rejected OIC will not have a rejection letter separate from the determination or decision letter. The ATE discusses the rejection in the attachment to the decision or determination letter.

    Note:

    If the expiration of the TIPRA statute is imminent, the ATE may choose to issue a Letter 5197, Offer in Compromise Rejection rejecting the offer directly to the taxpayer so that the TIPRA statute is protected. Upon resolution of the CDP, the ATE will still close the cases as discussed in (2) above and the date of the TC 481 should be the date the Letter 5197 was issued. If the taxpayer has filed for bankruptcy protection, the ATE will close the CDP OIC WUNO, retain pertinent documents in the CDP file and forward the CDP OIC WUNO to APS for all closing actions.

  4. All OIC documents remain with the CDP or EH file.

  5. See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.

ACDS and IDRS Inputs for Rejected CDP OIC
  1. Close the CDP or EH OIC on ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for rejected OIC WUNO:

    • CLOSINGCD = 14 (OIC Rejected)

    • WUaccpOFRAmt = 0 (zero)

    • RevsdTax must be the same as PropdTax for the earliest tax period.

  3. IDRS inputs for a rejected OIC are completed after the suspense period expires and if the taxpayer petitions Tax Court, after the Tax Court decision becomes final.

    1. If the case was opened on AOIC, the AOIC database will input the TC 481 systemically upon closure. If the case was not opened on the AOIC database, input TC 481 on each tax period included in the rejected OIC.

      Caution:

      Sometimes COIC will input a TC 480 manually. TC 480s that were input manually to IDRS will not systemically reverse when closing AOIC. In these instances, the correct reversal code must be input manually on IDRS. If the TC 480 was manually input, there should be a notation in the AOIC remarks.

    2. The date of the Notice of Determination or Decision Letter = date of TC 481 and closing date of OIC WUNO.

Withdrawn OIC
  1. A withdrawn CDP or EH OIC will have a separate file, but the file is not returned to COIC. The withdrawn OIC file will remain with the CDP file.

  2. The withdrawn OIC will not have a withdrawal letter separate from the Notice of Determination or Decision letter. The ATE discusses the withdrawal in the attachment to the decision or determination letter.

    Note:

    If the expiration of the TIPRA statute is imminent on an Appeals considered CDP/EH offer, the ATE may choose to issue a Letter 241 Withdrawal letter to the taxpayer to protect the statute. Upon resolution of the CDP, the ATE will close the case and the date of the TC 482 is the date the Letter 241 is issued unless the withdrawal was sent via certified mail or hand delivered, in which case the TC 482 is the IRS received date.

  3. See Exhibit 8.20.7-17, Automated Offer in Compromise (AOIC) Update Procedures for step by step instructions.

ACDS and IDRS Inputs for Withdrawn CDP OIC
  1. The CDP or EH OIC should be closed both on IDRS and ACDS when issuing the Notice of Determination or Decision Letter.

  2. ACDS inputs for withdrawn OIC WUNO:

    • CLOSINGCD = 16 (OIC Withdrawn)

    • WUaccpOFRAmt = 0 (zero)

  3. IDRS inputs for withdrawn OIC:

    1. If the case was opened on AOIC, the AOIC database will input the TC 482 systemically upon closure. If the case was not opened on the AOIC database, input TC 482 on each tax period included in the rejected OIC.

      Caution:

      Sometimes COIC will input a TC 480 manually. TC 480s that were input manually to IDRS will not systemically reverse when closing AOIC. In these instances, the correct reversal code must be input manually on IDRS. If the TC 480 was manually input, there should be a notation in the AOIC remarks.

    2. Where the OIC withdrawal was sent via certified mail or hand delivered, the date of the TC 482 is the IRS received date.

    3. Where the request for withdrawal was received via fax, phone or regular mail, the TC 482 date is the same as the date of the Notice of Determination or Decision Letter and the closing date of the OIC WUNO.

TIPRA Statute Considerations
  1. The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) created IRC 7122(f), which provides that if the IRS does not reject the OIC within 24 months from the date it is received by the IRS, it will be statutorily accepted. It is effective for all OICs received on or after July 16, 2006. Once the IRS issues an OIC rejection letter, the 24 month TIPRA statute closes.

  2. If a liability included in the offer is disputed in any court proceeding, that time period is omitted from the calculation of the two-year period. In the event the taxpayer disputes in court a tax liability included in the OIC, the 24 month period will be suspended during the time the case is under any court jurisdiction.

  3. Cases received with an open TIPRA statute are subject to special consideration when in Appeals.

  4. Cases with an open TIPRA statute are subject to the same back-end processing time frames as are listed in IRM 8.21.3, Closings and IRM 8.21.4, Appeals Team Manager (ATM) which means:

    1. The written concurrence of the ATM is required to keep the OIC case open beyond 120 days remaining on the 24-month TIPRA statute period.

    2. The ATE is responsible for ensuring the OIC case is presented to APS for closing with at least 90 days remaining prior to the expiration of the 24-month TIPRA statute period.

    3. If less than 90 days remain on a TIPRA statute, the PTM must be notified via encrypted e-mail when the case is to be submitted to APS. To verify receipt of the case, APS should ensure a Form 3210/E3210 is receipted and returned to the ATM or ATE.

    4. APS should ensure timely closing actions are taken on the case.

    5. Responsibility for such statutes is jointly held by the PTM and the ATM.

Conversion of Tax Return Cases

  1. This subsection provides guidance for the various types of conversions that may occur in cases considered by Appeals. It covers converting one type of tax return to another; converting separate returns to joint returns; and converting joint to separate returns.

  2. See IRM 4.4.6, AIMS Procedures and Processing Instructions, Conversion of Returns, for additional information.

Form 1041 to Form 1120 Conversion

  1. When Appeals sustains conversion of Form 1041, U.S. Income Tax Return for Estates and Trusts to Form 1120, U.S. Corporation Income Tax Return the case requires the following special processing actions:

    1. There should be Form 1120 prepared by Compliance in the file and marked "1041 converted to 1120 by Compliance." Forward the form to the Campus for processing to Master File. Retain a copy for closing.

    2. Prepare Form 2363, Master File Entity Change, and input TC 016 (CC ENREQ/BNCHG) to eliminate Form 1041 filing requirements.

    3. After the return posts to MF, input TC 424 to establish the Form 1120 account on AIMS.

    4. After the AIMS account is fully established, prepare Form 5403, Appeals Closing Record following normal procedures. Annotate Item A "Form 2363 to eliminate Form 1041 FR prepared/input by Appeals."

    5. Process the AIMS closure on the MFT 02 account per the Appeals Settlement.

Form 1120S to Form 1120 Conversion

  1. When Appeals sustains the conversion from Form 1120S, U.S. Income Tax Return for an S Corporation to Form 1120, U.S. Corporation Income Tax Return, the case requires the following two steps:

    1. Prepare Form 2363, Master File Entity Change and input TC 091 to change the filing requirements to corporation.

    2. Process Form 2363, Master File Entity Change and Form 5403, Appeals Closing Record in the same cycle.

    3. Send the following notification to Entity Control Section at the Campus: "Form 1120S converted to Form 1120 by Appeals. Please update Form 2553, Election by Small Business Corporation."

  2. Furnish the following information:

    1. TP name, address, and TIN

    2. Effective date of termination

    3. Reason for termination

    4. Appeals Office

    5. Statement indicating that Form 2363 has been input

  3. Prepare Form 5403, Appeals Closing Record in the usual manner. Annotate the following in Item A: "Form 2363 to change FR (filing requirement) from Form 1120S to Form 1120 prepared/input and Entity Control notified by Appeals."

  4. Process the AIMS closure on the MFT 02 account per the Appeals Settlement.

Joint to Separate Return Conversion

  1. Taxpayers who originally file a joint return, may NOT change the filing status to separate once the time for filing the return of either spouse expires.

    Note:

    A personal representative for a decedent can change from a joint return elected by the surviving spouse to a separate return. The personal representative has one year from the due date of the return (including extensions) to make the change.

    Example:

    Mr. and Mrs. J. filed their 200912 joint return on 02/15/2010. Mr. and Mrs. J's 200912 return may not be converted to separate after 04/15/2010.

  2. For Non-Docketed cases, the ATE/TCS will provide the Form 5278, Statement - Income Tax Changes and Form 5403 Instructions to APS to identify the approved changes for the taxpayer’s account(s).

  3. For Docketed cases, the TCS/Counsel Attorney will provide the Form 5278, Statement - Income Tax Changes and Form 5403 Instructions to APS to identify the approved changes for the taxpayer’s account(s).

  4. The following instructions apply when it is deemed appropriate to convert the filing status from joint to separate. Process Form 5403, Appeals Closing Record for the spouse’s account being adjusted. Remove the other spouse’s name in Item 4. Annotate "Joint to Separate" in Item A.

  5. Prepare Form 2363, Master File Entity Change and input name change and filing status change via IDRS.

  6. Update ACDS following the instructions provided on Form 5402, Appeals Transmittal and Case Memo, or Form 1734, Transmittal Memorandum to close ACDS.

    1. DO NOT change name line on ACDS. Leave the joint names and primary SSN because ACDS must reflect the filed return under consideration in Appeals.

    2. RevsdTax - Enter the combined liability amount.

    3. NOTES - Enter a brief description to explain the disposition, i.e., "Conversion to separate filing status." Separate revised deficiency amounts may also be entered i.e., "Primary TP - $1200, Secondary TP - $1000."

  7. Each conversion of a Joint to Separate, Single, or Head of Household account must be analyzed and processed based upon the applicable account condition(s). See the following IRM 21.6.1 sections for additional information:

    • Married Filing Joint to Married Filing Separate, Single, or Head of Household Procedures

    • Allowable Claims Procedures

    • Only One Spouse Requesting Filing Status Change

    • Married Filing Joint or Married Filing Separate is Invalid or Filed with Incorrect Status

Separate to Joint Return Conversion

  1. Taxpayers may elect to go from separate filing status to joint filing status if the following apply in that taxable year:

    1. Joint return is filed within three (3) years of the due date of the return

    2. Neither spouse files a petition in Tax Court after a notice of deficiency is issued (this applies where returns are filed - see note below)

    3. Neither spouse has a suit in any Court for a claim (recovery of tax)

    4. Neither spouse has entered into a closing agreement

    5. For returns beginning before July 30, 1996, the tax shown on the joint return is paid in full

      Note:

      A substitute for return (SFR) prepared by the IRS does not constitute a taxpayer filing a return. Therefore, where no return was filed previously, taxpayers may elect to file joint returns even if the case is in Tax Court.

  2. Each conversion of Separate to a Joint account, must be analyzed and processed based upon the applicable account condition(s). See IRM 21.6.1, Processing Married Filing Separate to Married Filing Joint Adjustments for additional and supplementary information.

  3. For Non-Docketed cases, the ATE/TCS will provide the Form 5278, Statement - Income Tax Changes and Form 5403 Instructions to APS to identify the approved changes for the taxpayer’s account(s). See IRM 8.20.7.21.4 (4) Reminder below.

  4. For Docketed cases, the TCS/Counsel Attorney will provide the Form 5278, Statement - Income Tax Changes and Form 5403 Instructions to APS to identify the approved changes for the taxpayer’s account(s).

    Reminder:

    The APS TE will both validate and update the taxpayer entity as identified by the ATE/TCS/Counsel Attorney instructions. Whenever necessary, ensure the Filing Status and Name Line changes have processed prior to inputting adjustments that may cause the release of an erroneous/premature billing notice, an erroneous refund or an unpostable condition.

  5. See the following IRM 21.6.1 sections for additional and supplementary information:

    • Filing Status Change Procedures

    • Processing Married Filing Separate to Married Filing Joint Adjustments

    • Married Filing Separate to Married Filing Joint and Both Taxpayer’s Previously Filed

    • Married Filing Separate to Married Filing Joint and One Taxpayer Did Not Previously File

    • Statute of Limitations Procedures for Married Filing Separate to Married Filing Joint

Separate to Joint Return When Both Primary TP and Secondary TP Filed
  1. If both taxpayers filed separate returns and there are two AIMS accounts, prepare a Form 5403, Appeals Closing Record for each spouse’s return.

  2. Prepare a Form 5403, Appeals Closing Record for the primary taxpayer's (PTP) account as follows:

    1. Item 4 - Add secondary taxpayer's (STP) name

    2. Item 12 - Enter the adjustment amount to equal the correct tax and penalty minus that assessed on the PTP's return

    3. Item 15 - In addition to the applicable Item Reference Numbers (IRN) identified on the Form 5403 Instructions for the PTP adjustments based on the STP account, enter the amount of the STP's unrefundable withholding credits. Circle the plus (+) sign since these credits now apply to the Joint account under the PTP and STP name line.

    4. Items 800 through 811 - Enter statistical data

    5. Prepare Form 2363, Master File Entity Change and input name change and filing status change using IDRS
      See IRM 8.20.7.21.4 (4)Reminder above.

  3. Prepare a Form 5403, Appeals Closing Record for the STP's account. This form becomes a tax adjustment document.

    1. Item 12 - Enter the amount necessary to reduce all assessed tax and penalties to zero.

    2. Item 15 - In addition to the applicable IRN(s) identified on the Form 5403 Instruction to adjust the STP account Return Level Entries to 0.00, also enter the amount necessary to reduce the *unrefunded prepayment credit by the amount allowed as a credit on the joint return (STP's credits). Circle the minus (–) sign. These fields adjusted to 0.00 will be adjusted as applicable on the PTP MFJ account per (2) c) action above. Also enter reference number 999 (with blank amount in (–) field). This entry prevents the case from subsequently appearing in the Campus Multiple-Filer Program.

      Reminder:

      Refunds posted to the STP account must be moved to the PTP account following guidance in IRM 21.5.2, Moving Refunds and IRM 21.5.8-1 Exhibit, Transaction Codes and Reversals, To Move Posted TC column Row "840 or 846" .

    3. Items 800 through 811 - Enter statistical data.

    4. Item A - Check "Other" block and enter "Change from separate to joint return. See Form 5403 for (PTP's Name)-(SSN)." If the STP made payments of estimated tax or if there are payments on the return, request that Form 2424, Account Adjustment Voucher, transfer the credits as requested by the ATE.

  4. Update ACDS using general closing instructions. In addition:

    1. NOTES - Add a brief statement to each spouse’s case to explain the disposition, i.e., "Converted to joint filing status under SSN (enter PTP's SSN)." Also indicate the amount of the total joint liability, i.e., "Joint liability assessed is $1,000."

    2. RevsdTax - Half the joint liability for each spouse’s case.

Separate to Joint Return When Only One Spouse Filed
  1. If only one spouse filed a return, process one Form 5403, Appeals Closing Record.

    1. Prepare Form 2363, Master File Entity Change to change the filing status to joint, and add the spouse's name and SSN to the joint account.
      See IRM 8.20.7.21.4 (4)Reminder above.

    2. Item 4, Form 5403 - Include both spouse's names.

    3. Item 12, Form 5403 - Enter the adjustment amount to equal the correct tax and penalty minus the amounts assessed on the filed return.

    4. Item 15, Form 5403 - Enter the change to adjusted gross income (AGI) and taxable income (TXI) and circle the plus (+) sign. Account and Processing Support (APS) is responsible for transferring credits to the joint account.

  2. Follow general closing instructions to close ACDS. In addition:

    1. DO NOT change name line. Leave only the name of the Primary Taxpayer because ACDS must reflect the filed return under consideration by Appeals.

    2. NOTES - Add a brief statement to explain the disposition, i.e., "Converted to joint filing status (both taxpayer's names)."

    3. RevsdTax - Enter the total joint liability amount.

  3. See IRM 21.6.1, Married Filing Separate to Married Filing Joint and Separate to Joint and One Taxpayer Did Not Previously File for additional information.

Criminal Investigation Division (CID) MF "-Z" , or "Z-" Freeze

  1. Appeals and the Tax Court receive and make determinations on Civil Tax Cases. Occasionally, a Criminal Investigation is opened during the time the Civil Tax case is also open. When this happens, CID posts one of the following transaction codes on the Civil Tax Entity or MF Account:

    • TC 914 Module Freeze "-Z"

      Caution:

      Only CID can reverse this freeze with a TC 912. When a tax module has a MF "-Z" Freeze, all account adjustments will unpost IMF Unpostable Code 183, BMF Unpostable Code 333.

    • TC 916 Refund Freeze "Z-"

      Caution:

      Only CID can reverse this freeze with a TC 915 Partial Reversal or TC 917 Full Reversal.

    • TC 918 Refund Scheme Freeze "Z-"

      Caution:

      Only CID can reverse this freeze with a TC 915 Partial Reversal or TC 919 Full Reversal.

  2. If a Civil Tax Case is open in Compliance at the time the CID Freeze is posted to the account, the case will be routed by Compliance to their Fraud Suspense Unit. On rare occasions, a Civil Tax Case is not properly placed in Fraud Suspense and can enter Appeals inventory (Non-Docketed), or be routed to Counsel as (Docketed).

    Example:

    Civil Penalty Case (MFT 55/13) may be assigned to a Revenue Agent who does not know there is a CID Freeze on the Income Case and the Examination Return Control System (ERCS) isn't programmed to identify or flag a Civil Penalty Case when a CID Freeze is placed on the Income Case.

    Example:

    Taxpayer files a Petition on a Compliance Issued Statutory Notice of Deficiency and Docketed procedures require the case be transmitted to Counsel to Answer the petition.

  3. IRM 1.2.13, Policy Statement 4–26 (Formerly P-4-84) requires that when a case has a CID Freeze MF "-Z" or "Z-" , coordination between the responsible functions is necessary. This coordination must be initiated by the Appeals Technical Employee who is assigned the case, or the Counsel Attorney who is preparing the Answer to the Petition. For additional information, see IRM 8.7.1, Cases Involving Criminal Prosecution and Restrictions on Appeals Jurisdiction in Criminal Cases and also see Chief Counsel Directives Manual (CCDM) 38.3.1.8, Balancing Criminal and Civil Aspects.

    If And Then
    Tax Period has an open CID Freeze CID Approval to allow the Civil Enforcement Action is not provided by the ATE or Counsel Attorney Notify your PTM via encrypted email and include the earliest ASED in the subject line
    Place the case in PEAS Suspense "S01" , or "S02" as appropriate.
    The PTM forwards the email to the respective ATM or Counsel Attorney for response.
    ATM or Counsel Attorney has not previously coordinated the civil action with CID The Assessment Statute Expiration Date (ASED) is more than 90 days from current date APS will reject the case back to the ATM, ATE, or Counsel Attorney as appropriate and close PEAS with cc 20.
    ATM or Counsel Attorney has not previously coordinated the civil action with CID The ASED is 90 days or less from the current date APS will fax the Form 5402 and the Authority for Assessment document* to the ATM or Counsel Attorney for immediate coordination with CID.
    *Signed Agreement
    *Defaulted SND
    *Entered Tax Court Decision or Dismissal
    APS will place the case in PEAS Suspense "S01" , or "S02" as appropriate.
    APS will set a PEAS Follow-up for 1 week and involve the PTM if a response is not received from the ATM/ATE, or Counsel Attorney by the follow-up date.
    ATE or Counsel Attorney has previously coordinated the civil action with CID The written approval to proceed with the civil action is included in the file APS will process the Appeals determination, Counsel settlement, or Entered Tax Court Decision and fax the written approval to proceed with the civil action to the Scheme Development Center (SDC) contact for the campus location where the adjustment was input.

Department of Justice Cases

  1. Appeals is notified when the case jurisdiction changes to Department of Justice (DOJ).

  2. The ATE prepares the case for release to DOJ, and forwards the case to APS for ACDS and AIMS closing.

  3. Update ACDS following general closing instructions:

    1. CLOSINGCD - 18 or 19, as appropriate

    2. ACTION - ACKCLS

    3. TODATE - Date administrative file is transmitted to Counsel

    4. FROMDATE - Date acknowledgment received from Counsel

  4. APS will prepare Form 5403, Appeals Closing Record to close the AIMS controls using Copy Blocking Series 79X and complete the following entries:

    1. Item 9 - Priority Code (2 or 3 as appropriate)

    2. Item 12 - Enter TC 300 for $0

    3. Item 13 - Disposal Code 01

    4. Items 800 through 810 - Enter appropriate statistical information

    5. Item 811 - Enter closing code 18 or 19, as appropriate

  5. Attach a copy of the face of the return and Form 2275, Records Request, Charge and Recharge, to the Form 5403, Appeals Closing Record. Use IAT Tool Fill Forms to prepare Form 2275.

  6. Forward Form 2275 to the Campus to "re-charge" the administrative file and original return to Department of Justice.

  7. Upon completion of the closing actions, APS will transmit the administrative file to the Counsel Office identified by the ATE on Form 5402.

  8. The above instructions only apply to cases in Appeals jurisdiction. If a taxpayer petitions the District Court or Claims Court while in Examination jurisdiction, the DOJ transfer is coordinated between Examination and Counsel without involvement by Appeals. This case WILL NOT be controlled on ACDS.

    Reminder:

    Appeals does not process Department of Justice (DOJ) Refund Litigation case adjustments, nor is APS-CIT designated the responsibility to calculate interest on DOJ cases. See IRM 8.20.7.5, Appeals Account and Processing Support Complex Interest Team (APS-CIT) (3) for additional information.

    Note:

    DOJ Refund Litigation case processing guidance is provided in IRM 25.3.6, Special Notices of Abatement/Adjustment.

Docketed Cases

  1. APS is responsible for final processing actions on all Docketed Cases. See (2) below for cases which must be forwarded to APS-CIT for final processing actions.

  2. APS-CIT is responsible for final processing actions on all:
    ⇒ Estate and Gift (E&G) tax cases (includes IRC 6161 and IRC 6661 E&G cases)
    ⇒ ACDS Category IC cases
    ⇒ ACDS Category CIC cases
    ⇒ All Other Work streams as assigned through Direct Ship

  3. When an E&G, IC, or CIC case is received from Counsel, the APS PTM must prepare a CIT Referral Form and submit it to the *AP Complex Interest email address for assignment of an APS-CIT TE. See http://appeals.web.irs.gov/APS/default.htm, go to the APS Complex Interest Team Resources section then click on the CIT Referral Form to open the form.

  4. The APS Reports Team performs TLCATS research weekly to identify all tax litigation cases nationwide on which a Decision or Order has been entered. Upon review of the report, the APS Report Team updates ACDS for each case identified as having an Entered Decision or Entered Order. In addition, the Reports Team TE enters an LACTION of "COMING" along with a TODATE to identify the date on which the Counsel Office is shipping the administrative file to the respective APS Office for processing of the decision. Upon receipt by APS, the case is assigned on PEAS, to an APS TE for processing and closing actions.

    Exception:

    Counsel will not have an administrative file to return to Appeals when an Order to Dismiss for Lack of Jurisdiction (LOJ) is entered because an SND has not been issued to the taxpayer. The taxpayer’s case, ASED protection responsibility, and the AIMS control remain under Compliance Jurisdiction. This type of petition is premature and thus unique carding and unique closing procedures must be followed. Procedures for the APS DIMS Team to create a skeletal record which remains in the DIMS Team AOC for Premature Petitioned cases are provided in IRM 8.20.5.5.1.5.1 , Premature Petition Carding and Certification Procedure. The Premature Petition ACDS record is not transferred to any other AOC but instead remains in the DIMS Team’s AOC. Upon notification that the Order to Dismiss for Lack of Jurisdiction is entered, the DIMS TE closes ACDS using CLOSINGCD 21.

Docketed Case Closing

  1. Counsel sends all tax court cases back to Appeals for final processing of the decision and closing actions according to the orangeForm 14758, Appeals/Counsel Routing Coversheet which is prepared by APS and affixed to the front of every docketed case with the one exception of a Premature Petition case explained in IRM 8.20.7.24 (4) above.

  2. When the entered decision, entered order, or the dismissed case (except for a premature petition) is returned to APS, the Form 1734, Transmittal Memorandum or equivalent prepared by Counsel, must include the time applied and grade of attorney information.

  3. If the Docketed case is received by an APS Office other than the one identified on the orange Routing Sheet, the case will not be re-routed or rejected. The APS office receiving the case will take the necessary steps to update ACDS and process all applicable account actions and assure timely assessment of the deficiencies in the case.

    Exception:

    If the case is an ACDS Category E&G, IC, or CIC case, then the APS PTM must prepare a CIT Referral form and submit it to the *AP Complex Interest email address for assignment of an APS-CIT TE as explained in IRM 8.20.7.24 (3) above.

  4. All Docketed closing administrative files must include the Entered Decision, Entered Order, or Order of Dismissal document.

  5. If The Entered Decision/Order document, or the Order of Dismissal is not available as an ACDS attachment, it is available via the United States Tax Court Website.

    Note:

    As case types and functions transition to paperless processing, the court documents will either already be attached to the ACDS record, or APS will need to access the document(s) via the United States Tax Court Website, convert the document to a pdf, and upload the pdf as an attachment to the ACDS record.

  6. The APS TE must always verify whether or not an Entered Decision includes the IRC 6213(a) waiver paragraph.

    Reminder:

    When an Entered Decision includes the IRC 6213(a) waiver paragraph, the entered decision date serves as the Agreement Date which must be input with the tax assessment. The Agreement Date identifies the action that gives the IRS authority to process the tax assessment and also documents the taxpayer's account for underpayment interest accrual and suspension application for the "agreed" tax and penalty adjustments.

  7. If the waiver paragraph is not included, the APS TE must verify that 100 days (90 + 10) have elapsed from the decision entered date to avoid an invalid/premature assessment action during the period of time the taxpayer or the IRS can file an appeal the Tax Court decision.

    Reminder:

    When an Entered Decision does not include the IRC 6213(a) waiver paragraph, the entered decision date is not an agreement date and must not be input with the tax assessment. The assessment based on an Entered Decision, or Order of Dismissal which does not include a waiver paragraph, is legally authorized at the conclusion of the timeframe during which the taxpayer, or the IRS may file an appeal of the Tax Court’s decision with the United States Court of Appeals.

  8. See Chief Counsel Directives Manual 35.8.2.4, Waiver Paragraph for additional information.

Dismissed for Lack of Jurisdiction Case Closing, Other Than a Premature Petition or CDP NOD

  1. The following APS instructions are for Tax Court Orders to Dismiss for Lack of Jurisdiction (LOJ) AFTER a Statutory Notice of Deficiency (SND) has been issued to the taxpayer. These instructions do not apply to the following case types:

    • Premature Petition where an SND has NOT been issued:
      ✓ See IRM 8.20.5.5.1.5.1 , Premature Petition Carding and Certification Procedure
      ✓ See IRM 8.20.7.24 (4)Exception for a brief explanation of the process used by the APS DIMS Team to control and close a Premature Petition case on ACDS.

    • CDP Notice of Deficiency (NOD) has been issued (see IRM 8.20.7.20.14, CDP Case Tax Court Decision Closing Procedure (7)).

  2. The Order of Dismissal for Lack of Jurisdiction identifies the reason for the dismissal and will also identify if a tax or penalty adjustment must be made. The APS TE will identify the reason for the dismissal and follow the instructions below to close ACDS and resolve the taxpayer’s account. Reasons for Dismissal:
    ✓ Petition Filing Fee Not Paid
    ✓ Petition Filed Late
    ✓ Petition No-Change Certification
    ✓ Petition Withdrawn

    • Update and close ACDS using the applicable ACDS CLOSINGCD:
      ⇒ 08 - Dismissed Compliance Notice of Deficiency with Appeals Time
      ⇒ 11 - Dismissed Appeals Notice of Deficiency or CDP Notice of Determination
      ⇒ 21 - Dismissed Compliance Notice of Deficiency with no Appeals Time

    • Complete Form 5403 to process any tax and/or penalty adjustment and close AIMS controls using CC: AMCLSA

    • If the Order of Dismissal is not included with the case file, access the United States Tax Court web site http://www.ustaxcourt.gov/ to locate the Order of Dismissal, open and print it.

    • An assessment made as the result of a "prematurely" defaulted statutory notice of deficiency (SND) when the taxpayer has timely filed a petition are not legal/valid assessments. APS follows procedures in IRM 8.20.6, Partial (Interim) Asessment/Abatement AIMS CC: AMCLSF upon receipt of written approval from their Processing Team Manager (PTM), the Appeals Team Manager (ATM), or the Counsel Attorney to abate the premature assessment. As long as no other condition affects the Tax Court Jurisdiction, the case will be controlled as a Docketed Case with an ASED suspended from the SND issuance date, until the Tax Court Decision is entered + 150 days.

      Caution:

      When the Tax Court Decision is entered, if the tax, penalty, or credit adjustment(s) identified on the Entered Decision are within $10.00 of the previously posted assessment/abatement amounts, APS must always include Priority Code 8 on the Form 5403 in Item 9, to avoid an unpostable.

  3. If the case was dismissed because the petition was not timely filed or because the petitioner did not pay the filing fee:

    • Verify that the SND has been assessed by reviewing a current TXMODA

    • If the tax/penalty on the notice of deficiency is assessed and it is a valid assessment, it does not need to be abated and re-assessed.

    • If AIMS controls are open, prepare Form 5403, Appeals Closing Record for TC 300 for 0.00+ Note in Item A - "Tax/penalty assessed previously on MMDDYYYY" (MMDDYYYY = the 23C date associated with the previous assessment.) If the Del-Ret-Ind is set, a TC 160 for 0.00+ is also required to avoid an unpostable condition.

    • If AIMS controls are closed, prepare a Form 8485, Assessment Adjustment Case Record to post a TC 290 for 0.00 and in the "Remarks" field enter "Tax/penalty assessed previously on MMDDYYYY" . If a TC 16X Failure to File Penalty has been previously assessed, also enter a TC 160 for 0.00+ to avoid an unpostable condition. Also prepare a Form 3177, Notice of Action for Entry on Master File to post a TC 521 with the applicable closing code to manually reverse the TC 520 Litigation Freeze and resume collection activity. This TC 520 closing process is programmed to occur systemically when the adjustments are input using CC: AMCLSA.

      Example:

      A "Valid" assessment is made timely, prior to the ASED and in compliance with all applicable laws and statutes. Taxpayer files a petition to the USTC after the last day to file a petition. Counsel Dismisses the petition for LOJ. APS close the ACDS record with CLOSINGCD 11, posts a TC 290 for $0.00 on the taxpayer’s account and also inputs a TC 521 with the correct closing code to reverse the TC 520 Litigation Freeze and resume collection activity. APS then forwards the closed case (dummy file or administrative file) to the appropriate Campus Files Function. The original default assessment posted to the taxpayer’s account will not be altered.

    • If there is an invalid assessment that has not already been reversed as an interim adjustment per IRM 8.20.6, Interim Account Adjustment - Assessment or Abatement Prior to Final Determination, APS will follow the written authority from the PTM, ATM, or Counsel Attorney to process any abatement as a partial adjustment CC: AMCLSF, and then also process the final assessment prior to the ASED.

      Reminder:

      The abatement adjustment* must post before the assessment adjustment so use a Posting Delay Code on the final adjustment both documents are input in the same cycle. When processing an adjustment to tax, penalty, or credit reference that is within $10.00 of a previously posted tax, penalty or credit reference amount, Priority Code 8 must be included with the adjustment input to avoid an unpostable condition. If the abatement (partial account adjustment) and the assessment (final account adjustment) are both within $10.00 of the previously posted transactions then a Priority Code 8 must be included on both adjustment inputs.

      Caution:

      *Always use a Hold Code 4 on the abatement adjustment to suppress the issuance of an incorrect notice and/or erroneous refund to the taxpayer.

    • If the tax/penalty on the notice of deficiency has NOT been assessed, prepare Form 5403, Appeals Closing Record to make the assessment through AIMS. See Exhibit 8.20.7-1, Form 5403, Appeals Closing Record for detailed instructions.

    1. Item 08 - leave blank
      ⇒ A Dismissed for Lack of Jurisdiction for any of the reasons identified in IRM 8.20.7.24.2 (2) above are not authorized by an Agreement

    2. Item 12 - use the SND for the tax/penalty amounts

    3. Item 14 - enter the correct statute date and only use tack-on-time when appropriate and approved*

      Reminder:

      Whenever tack-on time is used to update the ASED, always update the ACDS Statute CODE to "FINAL" . *Use of TACK-ON Time requires PTM approval.

    4. Item 15 - enter the Item Reference Numbers and Credit Reference Numbers to correctly update the taxpayer’s account per the SND and supporting documentation

    5. Item 811 - 08 (if there is ATE time) or 10 (if there is no ATE time)

  4. APS updates the ACDS record with the correct ASED and STATDATE and closes the dismissed case on ACDS using the applicable CLOSINGCD:
    ⇒ 08 - Dismissed Compliance Notice of Deficiency with Appeals Time
    ⇒ 11 - Dismissed Appeals Notice of Deficiency
    ⇒ 21 - Dismissed Compliance Notice of Deficiency with no Appeals Time

Dismissed for Lack of Jurisdiction for Assessment of Less than the Notice of Deficiency Amount

  1. When the Order to Dismiss for LOJ identifies a tax deficiency and/or penalty assessment for less than the amount(s) provided on the SND, APS must verify if the SND has already been assessed or not.

  2. When the SND has been assessed for the full amount reflected on the SND, APS will abate the difference between the SND assessed amount and the lesser amount identified on the Order to Dismiss. APS will use CC: AMCLSA if AIMS controls are open, or use CC: ADJ54 if AIMS controls are not open.

    Example:

    An Order to Dismiss for LOJ identifies a tax deficiency of $ 1,000.00 and an IRC 6651(a)(1) (TC 160) penalty for $ 225.00. The APS TE verifies that the Compliance-Issued SND has already been assessed with a TC 300 tax deficiency of $ 1,100.00 and a TC 160 $ 225.00. To correct the account based upon the lesser tax deficiency identified on the Order to Dismiss, the APS TE will prepare Form 5403 with a TC 301 for $ 100.00- and a TC 160 0.00.

  3. When the SND has not already been assessed, APS will use CC: AMCLSA if AIMS controls are open, or CC: ADJ54 if AIMS controls are closed, to assess the tax and/or penalty in the amount provided on the Order to Dismiss prior to the ASED.

  4. APS will update the RevsdTax and RevsdPen amounts as appropriate and close the case on ACDS with the appropriate CLOSINGCD:
    ⇒ 08 - Dismissed Compliance Notice of Deficiency with Appeals Time
    ⇒ 11 - Dismissed Appeals Notice of Deficiency
    ⇒ 21 - Dismissed Compliance Notice of Deficiency with no Appeals Time

Dismissed for Lack of Jurisdiction - Compliance-Issued Statutory Notice of Deficiency is No-Changed After Petition Filed

  1. When the Compliance function that issued the Notice of Deficiency (NOD) secures additional information which fully resolves the underlying amount of tax in dispute, a "No-Change Certification" is provided to the Counsel Office with jurisdiction for the taxpayer’s petition. The Counsel Attorney considers the new information for any case under their jurisdiction. If the taxpayer’s petition is determined to be defective for one or more reasons, an Order to Dismiss for Lack of Jurisdiction is prepared, dated and provided to APS for next action(s).

  2. When APS receives both an Order to Dismiss for Lack of Jurisdiction along with the No-Change notification, APS will take the following actions:

    • Use CC: TXMODA to verify that the SND has not already been assessed

    • Update ACDS RevsdTax and RevsdPen amount of 0.00 and use the applicable CLOSINGCD per IRM 8.20.7.24.2 (2) above.

    • Use CC: AMCLSA to post the TC 300 for 0.00+ and if the Del-Ret-Ind is set, also enter TC 160 for 0.00+ to avoid an unpostable condition

  3. Forward the case to the appropriate Campus Files Function using Form 3210/E3210.

Dismissed for Lack of Prosecution Case Closing

  1. This type of dismissal is used when the taxpayer did not pursue their case in the manner required by the Tax Court rules and procedures, for example, failure to appear at calendar call.

  2. The Order of Dismissal for Lack of Prosecution states the tax/penalty amounts to assess.

  3. Close the case following general closing instructions. In addition, the entries for Form 5403, Appeals Closing Record are:

    1. Item 08 - Leave Blank

    2. Item 12 - enter tax/penalty to be assessed per the amounts provided on the Order of Dismissal

    3. Item 14 - enter the correct statute date and only use tack-on-time when necessary

    4. Item 15 - enter the Item Reference Numbers and Credit Reference Numbers to correctly update the taxpayer’s account per the Form 5403 Instructions

    5. Item 811 - 08 (if there is ATE time) or 10 (if there is no ATE time)

  4. Close ACDS using general closing instructions and CLOSINGCD 12.

Docketed Personal Holding Company Tax Cases

  1. In cases where the liability in personal holding company tax has been established by a decision of the United States Tax Court (USTC) but deficiency dividends have not been paid and a Form 976, Claim of Deficiency Dividends Deductions by a Personal Holding Company has not been filed, APS will:

    1. Prepare Form 5403.

    2. Assess the deficiency according to the entered decision.

    3. Enter Hold Code 3 in Item 07 on Form 5403. Hold Code 3 prevents the issuance of a notice for the adjustment transaction on which it is entered but does not prevent the issuance of any other notice.

    4. Close the case on ACDS.

    5. Send the administrative file after assessment by Form 3210/E3210, to the Compliance function identified by the ATE to await the filing of Form 976, Claim for Deficiency Dividends Deductions by a Personal Holding Company, Regulated Investment Company, or Real Estate Investment Trust by the taxpayer.

  2. See the following IRM references for additional information:

    • IRM 4.10.8, United States Tax Court Cases: Area Compliance Responsibilities

    • IRM 8.6.4, Form 2198 Agreement - Personal Holding Company Tax

    • IRM 8.7.1, Personal Holding Company Tax Alleviated by Deficiency Dividend

Docketed Closing When a Delinquent Return has been Processed

  1. When a delinquent return has been received the normal ASED is computed by adding 3 years to the Return Received Date. The normal ASED is suspended as of the date the SND is issued, until:

    • A waiver of agreement is received (non-docketed closing)

    • Taxpayer defaults on the SND (non-docketed closing)

    • Taxpayer petitions the USTC and the docketed case is finalized via:
      ▸ Dismissal for Lack of Jurisdiction
      ▸ Dismissal for Lack of Prosecution
      ▸ Entered Tax Court Decision with a waiver paragraph becomes final
      ▸ Entered Tax Court Decision without a waiver paragraph becomes final after the 90 + 10 day appeal period concludes
      ▸ Court of Appeals’ determination becomes final

    • See Delinquent Return Included in an Appeals Case IRM 8.20.7.45.2 (8) for additional closing instructions

Docketed Closing When a Substitute for Return (SFR) is the Only Return Posted

  1. When the taxpayer’s account includes an SFR TC 150 0.00, and a return has not been filed, the ASED on AIMS will be MM-"EE" -YYYY and the ASED on IDRS will remain blank. Unless and until the taxpayer files a return, the ASED on master file is:
    ▸ NOT populated (leave it blank)
    ▸ Do not enter an ASED in Item 14 Statute Date
    ▸ Do not post a TC 560 to the taxpayer’s account because there is no IRS Received Date from which to calculate the normal ASED
    ▸ CC: AMCLSA will close AIMS and leave the AIMS ASED recorded as an SFR "EE" statute, and leaving Item 14 blank, will not post an incorrect TC 560 to the taxpayer’s account.

  2. If the IRS or Appeals has issued an SND the case is finalized by one of the events listed below:

    • A waiver of agreement is received (non-docketed closing)

    • Taxpayer defaults on the SND (non-docketed closing)

    • Taxpayer petitions the USTC and the docketed case is finalized via:
      ▸ Dismissal for Lack of Jurisdiction
      ▸ Dismissal for Lack of Prosecution
      ▸ Entered Tax Court Decision with a waiver paragraph becomes final
      ▸ Entered Tax Court Decision without a waiver paragraph becomes final after the 90 + 10 day appeal period concludes
      ▸ Court of Appeals’ determination becomes final

    • See Substitute for Return Cases Processed in Appeals, IRM 8.20.7.45.3 (6) for additional closing instructions.

Sealed Case

  1. A docketed case can be "sealed" by a USTC Judge. The Counsel Attorney will notify their designated APS PTM to redact the ACDS record and overlay all identifying information as determined by Counsel. The WUNO will stay the same for inventory control purposes.

  2. APS will process the Entered Order or Entered Decision following normal processing guidelines and update the taxpayer's accounts to reflect the Court's determination per the Entered Order or Entered Decision.

  3. APS will document the PEAS Case Activity Record to state that they were not able to apply the Fed/State Disclosure guidelines to this case because the case is Sealed.

    Caution:

    Do not share the case name or any other case information with anyone except your Processing Team Manager (PTM) and only on a need to know basis.

  4. The APS TE must process the account adjustments and place the case in PEAS Suspense until all adjustments post.

  5. Upon verifying that all adjustment have posted to the account, take the following actions to physically seal the case for transmission to campus files:

    • Associate all documents according to closed case assembly guidelines

    • Enclose each tax period separately in opaque material (brown paper, brown folder, etc...)

    • Use shipping tape to affix opaque material around each tax period

    • Clearly annotate the following information on the top of the opaque material:
      "Sealed Case"
      "Appeals WUNO (enter complete WUNO)"
      "Controlling DLN (enter complete Controlling DLN for each applicable package)"

  6. Prepare Form 3210/E3210 with the following exceptions:

    • Instead of using the taxpayer name or name control, use "Sealed Case" if preparing a Form 3210, or "XXXX" with the term "Sealed Case" in the comments field if using the SBSE CDI Transmittal Database to generate an E3210. The taxpayer’s complete TIN must be entered in the TIN field of the Transmittal Database but when the E3210 is printed, all but the last four digits will be masked.

    • Include the WUNO for reference and privacy of case identification.

    • Identify each tax period and include the controlling DLN for each tax period.

    • Enter a Remark on the Form 3210/E3210 "This case has been sealed by the Tax Court, do not open sealed items and do not disclose case information."

e-file Procedures

  1. The following guidelines are provided for closing e-file cases on ACDS.

    • e-file cases from Andover EPSS are 100% paperless effective as of September 8, 2015 per Interim Guidance Memorandum AP-08-0915-0007. See (2) and (3) below for Andover EPSS paperless closing instructions.

    • e-file cases from the field are closed using procedures provided in IRM 8.20.7.25 (4) below.

  2. When the ATM enters the ACAPDATE on ACDS, the paperless case is assigned to the APS PEAS INBOX based on the Direct Shipment Case Routing Table. All signed closing documents and the signed closing letter are attached to the ACDS record by the ATE/ATM.

  3. The PTM or Lead will assign the case to an APS TE for closing. The APS TE will:

    • Update and close the ACDS record using the information provided on the Form 5402

    • Use encrypted email to transmit the following ACDS case document attachments to the Electronic Products and Services Support (EPSS) email *W&I EPSS OOA
      • Signed closing letter
      • Signed Form 5402 and ACM (if present)

    Note:

    APS will enter the following in the email subject line: "T2-XX-EPSS-DOP-Appeals-WUNO-Closure to EPSS"

    • T2 = Team Number

    • CD = Use Assistor Initials

    • WUNO = Enter the complete WUNO of the case

  4. The e-file field source cases are closed using the procedures below:

    1. Mail the original and one copy of the letter and Decision (if applicable) to the appellant and power of attorney. Place one copy of the letter, Decision document, and the e-file transmittal form in the file.

    2. If there is no power of attorney, mail the original letter and Decision document to the appellant. Place one copy of the letter, Decision document, and the e-file transmittal form in the file.

    3. Forward a copy of the Decision, e-file narrative and closing letter to the applicable e-Help Office or the appropriate SB/SE e-file monitoring Coordinator identified by the ATE on the Form 5402.

  5. When closing the case off of ACDS, the employee will select each case to be closed by the WUNO. Update the following fields:

    1. CLOSINGCD

      CLOSINGCD Definition
      14 Rejection/Reprimand Sustained
      15 Rejection/Reprimand Not Sustained
      16 Partially Sustained
      20 Premature Referral
    2. DATECLSD – Date case is closed must be in the current month

    3. ACTION – ACKCLS

    4. TODATE – Date case is closed

Early Referral (ER) Case Closing Procedures

  1. ER issues are NOT controlled on AIMS by Compliance Examination or Compliance Collection, so APS will not prepare or process Form 5403, Appeals Closing Record.

  2. ACDS is updated as follows:

    • CLOSINGCD - 03 (agreed) or 13 (unagreed)

    • RevsdTax - Revised dollars is computed the same way as the proposed deficiency except use the amount determined by Appeals for an agreed case. For an unagreed case, enter the proposed deficiency.

  3. Forward the original documents to Compliance Examination or Compliance Collection using Form 3210/E3210.

EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC)

  1. The Protecting Americans from Tax Hikes (PATH) Act was enacted December 18, 2015. The PATH Act prohibits taxpayers from retroactively claiming certain TIN related credits for any tax year in which the taxpayer, spouse or qualifying child did not have a valid SSN assigned or ITIN/ATIN application received by the return due date or due date as extended. See IRM 3.11.6.9.6.1, Protecting Americans from Tax Hikes (PATH Act) for detailed information covering the account conditions and account update procedures that may occur prior to the protested or petitioned case being submitted to Appeals. This IRM section provides information for awareness and procedural instructions for the following Recertification Program topics:

    Recertification Program Overview and Procedures Contained in this IRM Section

    Recertification Topic Find in Paragraph
    Credit Adjustment Codes (2)
    Recertification Indicators (RI) awareness (3)
    Setting the 2 Year Ban and when more than one adjustment document must be used (4)
    RI(s) setting and update instructions and 10 Year Ban awareness (5)
    When APS processing actions set or adjust the RI(s) (6)
    How the RI(s) impact the taxpayer’s account and future filing requirements (7)
    How the ATE identifies and provides Recertification instructions to APS (8)
    Reversing the RI(s) as instructed (9)
    Source IRM references for additional research if needed (10)
    Taxpayer Bill of Rights (11)

     

  2. Recertification cases are carded on ACDS with a Feature Code "EI" and can be applicable to an income tax case with Open AIMS Controls, a Campus Audit Reconsideration Case or can be part of a Collection Due Process (CDP) case. The Recertification Indicator (RI) can apply to one or a combination of the following refundable credit types:

    • Additional Child Tax Credit (ACTC) - CRN = 336 +/-

    • Child Tax Credit (CTC) - CRN = 336 +/-

    • American Opportunity Tax Credit (AOTC) CRN 260 +/-

    • Earned Income Credit (EIC) - CRN 764 +/765 -

  3. When the IRS denies the taxpayer certain refundable credit(s) at filing, or later reverses all or part of the refundable credit(s) under deficiency procedures, a Recertification Indicator is set for the adjusted refundable credit(s). (Current IRS procedures use -IND for the EIC-RECERT and use -CD for the AOTC-RECERT and ACTC-RECERT.) For the purpose of this IRM section, the literal -IND and -CD mean the same thing with respect to the Recertification process and adjustment of the respective credits. The Recertification Indicator fields identified below are visible on the taxpayer’s ENMOD:

    • ACTC-RECERT-CD> set when Child Tax Credit or Additional Child Tax Credit is denied or reversed as an adjustment

    • AOTC-RECERT-CD> set when American Opportunity Tax Credit is denied or reversed as an adjustment

    • EIC-RECERT-IND> set when Earned Income Credit is denied or reversed as an adjustment

    Example:

    To view an image of an ENMOD reflecting these three Recertification Indicators see http://irm.web.irs.gov/Part2/Chapter3/Section15/28128002.gif which is located in IRM 2.3.15-4 Exhibit, IMF Entity Data.

  4. When the Technical Employee instructs APS to set the 2 year ban for one or more of the refundable credits, a Priority Code 6 must also be input on the adjustment document containing the refundable credit adjustment(s). A PC 7 is used in place of the PC 6, if an Amended Return "-A" freeze is also present on the account to both set the 2 year ban and also bypass the Master File -A freeze.

    Reminder:

    If the taxpayer’s account requires adjustments to more CRNs and IRNs than will fit in Item 15, process the Item Reference Numbers (IRN) using Partial CC: AMCLSF procedures, then cycle the final AIMS Closing with the Tax, Pen, and CRNs and IMF Reason Codes using CC: AMCLSA. See (5) Decision Table in IRM 8.20.7.10.4, General Income Tax Credit Reference Numbers and Item Reference Numbers for additional guidance when more than one adjustment document is required to process account adjustments.

  5. Each of the refundable credit recertification fields (identified in (3) above) will display it’s own applicable Recertification Indicator/Code (RI IND/RI CD) and each RI must be addressed at closing to accurately resolve the taxpayer’s account(s) and release the refund or billing notice:

    1. 0 (or blank) - Recertification not required

    2. 1 - Recertification (Form 8862) is required for subsequent year Form 1040 series return (systemically set when the specific refundable credit is initially partially or fully disallowed):
      ✓ TC 29X/30X and IMF Reason Code 181 sets ACTC-RECERT-CD>
      ✓ TC 29X/30X and IMF Reason Code 178 sets AOTC-RECERT-CD>
      ✓ TC 765 sets EIC-RECERT-IND>

    3. 2 - credit denied for 2 years after the disallowed year set by including PC 6 or PC 7 on the credit adjustment document

    4. 4 - credit denied for 10 years after the disallowed year set by Compliance after concurrence by the Manager/Team Leader, Functional Fraud Coordinator (FFC), or Campus Fraud Coordinator/Exam Fraud Coordinator and posting of the specific code applicable to each refundable credit:
      ✓ TC 29X/30X and IMF Reason Code 183 sets ACTC-RECERT-CD> 4
      ✓ TC 29X/30X and IMF Reason Code 180 sets AOTC-RECERT-CD> 4
      ✓ TC 29X/30X, TC 765, TC 240 with Penalty Reference Code 680 with PC 6 or 7 sets EIC-RECERT-IND> 4

    5. 8 - Reserved

    6. 9 - Recertification (Form 8862) is set instead of the "1" when a TC 971 AC 156 is input and posted and recertification will be required for subsequent year Form 1040 series return

  6. If one or all of the refundable credits were fully allowed when the taxpayer filed their return, and as a result of an examination, the open audit results in a pre-assessment protest to Appeals (DC 07) or pre-assessment petition to USTC (DC 11), the resolution of the case may require APS to set one or more of the recertification indicators when closing the case. APS will follow the instructions provided by the ATE/Counsel Attorney’s to set the Recertification Indicator using the procedures provided below:

    • TC 29X/30X, CRN 336 and IMF Reason Code 181 (Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) disallowed/reversed) will set the ACTC-RECERT-CD> to 1

    • TC 29X/30X, CRN 336 and IMF Reason Code 181 (Child Tax Credit (CTC) and Additional Child Tax Credit (ACTC) disallowed/reversed) and input with PC 6 or 7 will set the ACTC-RECERT-CD> to 2

    • TC 29X/30X, CRN 260 and IMF Reason Code 178 (American Opportunity Tax Credit (AOTC) disallowed/reversed) will set the AOTC-RECERT-CD> to 1

    • TC 29X/30X, CRN 260 and IMF Reason Code 178 (American Opportunity Tax Credit (AOTC) disallowed/reversed) and input with PC 6 or 7 will set the AOTC-RECERT-CD> to 2

    • TC 29X/30X and CRN 765 (Earned Income Credit (EIC) denied) will set the EIC-RECERT-IND> to 1

    • TC 29X/30X and CRN 765 (Earned Income Credit (EIC) denied) and input with a PC 6 or 7 will set EIC-RECERT-IND> to 2

  7. Once the EITC Recertification Indicator is set, the taxpayer must submit a Form 8862, Information to Claim Earned Income Credit After Disallowance, completed to recertify they are eligible to receive one or a combination of the EIC, AOTC, ACTC, or CTC credits for the respective tax period.

    Note:

    The source IRM 4.19.14.6, Recertification:
    ✓ (5) states "If the EITC, combined CTC/ACTC. or AOTC is disallowed or reduced a CP 79 will be sent to the taxpayer informing them that the credits were disallowed and that they will be required to file Form 8862 to recertify the next time they claim the credit. A recertification indicator will remain on the account until the taxpayer recertifies."
    ✓ (6) states "Credits claimed by taxpayers who are required to recertify but do not attach Form 8862 to their next return will be denied through Math Error procedures during the processing of the tax return under IRC 6213(g)(2)(k), (P) and (Q)."
    ✓ (7) states "Master File programming automatically removes the recertification indicator (RI) 1 or 9 when a case is closed and the taxpayer receives the full EITC, CTC/ACTC, or AOTC claimed under the conditions detailed below."
    ⇒ EIC - Current posted TC 764 with an amount equal or exceeding a prior TC 765 with Doc. Code 47 (CC: AMCLS)
    ★ All other conditions will require manual removal of the Recertification Indicator by input of TC 971 AC 056.
    ⇒ CTC/ACTC - Current posted TC 766 CRN 336 with an amount equal or greater than the amount of a previously posted TC 767 Doc. Code 47 with CRN 336
    ★ All other conditions will require manual removal of the Recertification Indicator by input of TC 971 AC 161.
    ⇒ AOTC - Current posted TC 766 CRN 260 with an amount equal or greater to the amount of previously posted TC 767 Doc Code 47 with CRN 260
    ★ All other conditions will require manual removal of the Recertification Indicator by input of TC 971 AC 160.

  8. The ATE will select one of the following literal statements from the Recertification Closing Action on the customized Form 5402, Appeals Transmittal and Case Memo:

    • "None" , Recertification was not at issue in the appealed case

    • "Reverse Recertification Indicator - Input TC 971, AC 56" , Recertification Indicator must be reversed by APS input of TC 971 AC 056

    • "Do Not Reverse Recertification Indicator do not input TC 971 AC 056" , Recertification Indicator must remain in place

    • "Recertification Ban Imposed by Compliance/Reversed by Appeals" , Input TC 971 AC 056

    • "Recertification Ban Imposed by Compliance/Sustained by Appeals" , do not input TC 971 AC 056, Recertification Indicator must remain in place

    • "Recertification Ban Not Imposed by Compliance/Imposed by Appeals" :
      ✓ Use Priority Code 6 to set the 2 Year ban on tax period YYYYMM
      ✓ Use Priority Code 7 to set the 2 Year ban on tax period YYYYMM and bypass the Amended Return Freeze

    • "Recertification Ban Not Imposed by Compliance/Not Imposed by Appeals" , Recertification Indicator was not set

    • The ATE/Counsel Attorney may need to provide written instructions to clarify if the Recertification Indicator must be reversed for some or all of the refundable credits the Recertification requirements do not apply in the same way to each of the credits containing a RI.

  9. To accurately process a Recertification case and Reverse one or more of the Recertification Indicators per the ATE instructions, APS will use CC: REQ77/FRM77 to input:

    • TC 971 AC 161, if requested by the ATE to Reverse the ACTC Recertification CD

    • TC 971 AC 160, if requested by the ATE to Reverse the AOTC Recertification CD

    • TC 971 AC 056, if requested by the ATE to Reverse the EITC Recertification IND

  10. Source IRMs for the guidance contained in this IRM section and this particular type of account condition are provided below:

    • IRM 2.3.15-4, IMF Entity

    • IRM 4.4.12, Item 09: Priority Code (2) table PC 6 and PC 7 rows

    • IRM 4.19.14, Liability Determination - EITC Revenue Protection Strategy:
      Recertification
      Math Error Referrals to Examination - EITC, CTC/ACTC, AOTC

    • IRM 4.19.15, Liability Determination - Discretionary Programs:
      Child and Dependent Care Credit
      Lifetime Learning Credit and Hope/American Opportunity Tax Credit (AOTC)

    • IRM 4.19.20, Liability Determination, Automated Correspondence Exam (ACE) Processing Overview

    • IRM 8.10.1, Appeals Program Level Reports

    • IRM 8.17.3-4, Settlement Computations - Overpayment with Frozen Refund, plus Earned Income Credit and Additional Child Tax Credit Adjustment

    • IRM 8.22.8, Earned Income Tax Credit

    • IRM 21.6.3, Individual Tax Returns - Credits:
      Credits Procedures
      Form 8863, Education Credits
      Form 8863, Adjusting the Account
      Child Tax Credit
      CTC - Adjusting the Account
      Refundable Credits
      Earned Income Tax Credit (EITC)
      EITC - Adjusting the Account
      EITC Recertification
      EITC Recertification Math Errors
      Additional Child Tax Credit (ACTC)
      ACTC Adjusting the Account
      American Opportunity Tax Credit

  11. Accurate processing of the Credit Recertification case supports the following Taxpayer Bill of Rights:

    • The Right to Be Informed

    • The Right to Quality Service

    • The Right to Pay No More than the Correct Amount of Tax

    • The Right to Finality

    • The Right to A Fair and Just Tax System

Employee Tax Compliance (ETC) Case Closing Procedures

  1. IRS employees are entitled to the same privacy and security measures as any other taxpayer regardless of whether they are in an active or inactive employment status. If you know the employee, take the case to your manager or lead for reassignment. If you do not know the employee, continue processing the case.

    Example:

    The IRS-EMP-CD on TXMODA and on IMFOLT identifies an IRS Employee Tax account:

    IRS Employee Code Description
    P Primary taxpayer is the IRS employee
    S Secondary taxpayer is the IRS employee
    B Both taxpayers are IRS employees
  2. When the ATM enters an ACAP on the ACDS record, the Direct Ship table assigns the closure to the appropriate APS Team. Upon receipt of the ACAP’d case, the APS TE will:

    • Close the case off of ACDS

    • Mail the closing letter to the taxpayer and/or POA

    • Process the Appeals determination and make adjustment(s) as applicable

    • Update the AIMS status code to 21

    • Use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to identify the location of the case. See the Agency Address below.

    • Associate a copy of the Form 5403 and front page of the tax return with the Form 2275 and transmit the "Re-charge Package" to the appropriate Campus Files Function for association with the Form 5147 Transaction Record

    • Forward all ETC cases to Compliance at the following address:

      Internal Revenue Services

      Attn: Technical Services

      31 Hopkins Plaza

      Baltimore, MD 21201

  3. See IRM 10.5.5, Employee UNAX Responsibilities for additional information.

Employment Tax Case Closing

  1. IRS Examination and Collection functions forward employment tax cases to Appeals.

  2. If the case originated in Collection, send a copy of the Form 5402 and the closing agreement, to the Employment Tax Examinations (ETE) Coordinator, Collection as indicated in the routing instructions.

  3. If the case originated in Examination, send a copy of the Form 5402 to the Employment Tax Analyst as indicated in the routing instructions.

FICA - Employee Share of FICA Tax Assessment (Form 1040)

  1. When an income tax case also contains an adjustment for the employee’s share of FICA tax, prepare two Form 5403s. The assessments are done separately because the 30-day interest free waiver period (agreement date) does not apply to the Employee Share of FICA tax. Prepare Form 5403 for the FICA tax assessment as follows:

    1. Check "AMCLSF"

    2. Item 08 - leave blank

    3. Item 12 - TC 300 amount should reflect only the amount of the Employee Share of FICA Tax to be assessed and is identified on Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment

    4. Item 16 - no entry

    5. Item 800 - Enter the Appeals Results Amount in Item 800 if appropriate

    6. Item 801 - Enter the Counsel Results amount in Item 801 if appropriate

    7. Item A Note “Form 885-E included See 2nd Form 5403 for income tax deficiency”

  2. Prepare Form 5403, for income tax assessment:

    1. Check "AMCLSA"

    2. Item 08 - enter agreement date if the assessment is authorized by an agreement

    3. Item 12 - TC 300 amount = income tax assessment only (FICA tax assessment must not be duplicated on AMCLSA Form 5403)

    4. Item 800 - total assessment of fica tax, income tax and penalty

    5. Complete the Form 5403 with all other appropriate closing information provided via the Form 5403 Instruction Worksheet

    6. Item A - Note "See 1st Form 5403, Appeals Closing Record for Employee Share of FICA Tax assessment"

  3. If inputting both the Employee Share of FICA adjustment and the Income tax adjustment in the same cycle, use a PDC 1 on the second adjustment (closing) input since only one TC 30X can post per cycle. If the adjustment documents are input in different cycles, then the PDC is not required.

  4. If only the Employee Share of FICA tax is being assessed, prepare one Form 5403 and leave Item 08 blank.

  5. Form 2504, Agreement to Assessment or Collection of Additional Tax and Acceptance of Overassessment, reflecting taxpayer’s agreement to the FICA tax must be present in the administrative file. Since Employee Share of FICA tax is not an income tax it is not subject to deficiency procedures and cannot be included on a SND. When a SND is being issued, the ATE will notify APS to process the Employee Share of FICA as a partial assessment.

Federal Insurance Contribution Act (FICA) Form 941 (MFT 01) Adjustments

  1. Form 941, Employer’s Quarterly Federal Tax Return is filed by employers who withhold income taxes from wages or who must pay Social Security or Medicare tax. The type of tax reported on a Form 941 is also referred to as FICA tax and is posted to Master File on MFT 01. FICA tax audit examination adjustments are documented on one or more the following forms and included as applicable with the Employment Tax case closing package submitted to APS for processing and closing:

    • Form 4666, Summary of Employment Tax Examination - The entries summarize FICA taxes, Railroad Retirement Taxes (RRTA), Federal Unemployment Taxes (FUTA), income tax withholding, and backup withholding adjustments. Tax credit(s) and penalty(ies) are also summarized on this form.

    • Form 4667, Examination Changes - Federal Unemployment Tax - This form is used to calculate FUTA adjustments for a Form 940 examination. See IRM 8.20.7.29.4 below for additional MFT 10 FUTA procedures.

    • Form 4668, Employment Tax Examination Changes Report, This form is used to calculate FICA and income tax withholding adjustments for employment tax examinations of Form 941 and Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees MFT 11.

    • Form 4669, Statement of Payments Received - This form is used by the payor to show that it is entitled to relief under IRC 3402(d), Tax Paid By Recipient, IRC 3102(f), Special Rules For Additional Tax, IRC 1463, Tax Paid By Recipient Of Income, or Regulations section 1.474-4.

    • Form 4670, Request for Relief of Payment of Certain Withholding Taxes, This form is used by the employer to request relief from the payment of income tax required to be withheld from wages when the employee has reported the wages and paid the tax.

  2. Individual Income employment tax and withholding adjustments are reported by the taxpayer on their Form 1040 Income Tax return and/or attachment:

    • Schedule H, Household Employment Tax Adjustments

    • Form 4137, Social Security and Medicare Tax on Unreported Tip Income

    • Form 8919, Uncollected Social Security and Medicare Tax on Wages

    • Form 8959, Additional Medicare Tax

  3. FICA tax adjustments (MFT 30 or MFT 01) are not subject to deficiency procedures under IRC 6211 - IRC 6215 which apply to Income, Estate and Gift taxes imposed by subtitles A and B and Excise taxes imposed by Chapters 41, 42, 43, and 44 nor under IRC 6212 which applies to the same tax types identified for IRC 6211. For this reason, the ATE will request APS process the individual taxpayer FICA tax adjustments types (Schedule H, Tip Income Tax, Employee Share of FICA) as interim action partial assessments).

    Caution:

    Form 94X series accounts are systemically governed by mathematical validity checks for AIMS ADJ47 and Non-AIMS ADJ54 adjustments. See IRM 21.7.2, TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas - Employment Taxes for details related to the validity checks.

  4. When assigned to process an Employment Tax MFT 01 non-docketed closing, the APS TE will prepare Form 5403 for each Quarter reflected on the Form 4668 by entering the appropriate tax, penalty, credit reference and item reference codes and amount(s) on Form 5403 for all increases or decreases in FICA-related adjustments (Social Security and Medicare Tax) reflected on Form 4668, Employment Tax Examination Changes Report. See IRM 8.20.7-1 Exhibit Table Form 5403, FICA Tax MFT 01 Item 12 and Item 15 Entries for details covering Tax/Pen/Int adjustments and Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) codes, Form 4668, Schedule of Adjustments and specific details and explanations.

    Reminder:

    #1 When Form 5403 Item 15 entries exceed the number allowable for a single CC: ADJ47 AIMS adjustment input, the APS TE must use a two-step process to accurately cycle the account adjustments. STEP 1 - when AIMS controls are open, the APS TE can either prepare a Form 8485 (Non-AIMS CC: ADJ54)) or a Form 5403 (Partial AIMS CC: AMCLSF) to process the overflow Item 15 entries in the current IRDS Cycle. STEP 2 the final Form 5403 (Full AIMS) closure must be cycled to post in a later cycle. The APS TE can use Form 5403 Item 43 Posting Delay Code (PDC) to systemically delay posting of the Final F-5403, or they can input the CC: ADJ47 AMCLSA in a later cycle. (See Reminder #2 and Caution below).

    Reminder:

    #2 Entry of Item 43 PDC is considered a "systemic" ” cycling procedure and allows input of both adjustment documents on the same day. Inputting the second adjustment document on a later date/subsequent cycle is considered a "manual" cycling procedure. The systemic cycling procedure using Item 43 PDC is preferred when there is no known risk of the first adjustment creating an Unpostable Condition. The manual cycling procedure where the APS TE monitors the posting of the first adjustment input and then once all adjustments post, then inputting the second adjustment document is preferred when the risk of an unpostable condition is not certain. Regardless of the cycling procedure used by the APS TE, the taxpayer’s case must be suspensed in PEAS and the taxpayer’s account must be monitored until all input transactions fully post.

    Caution:

    *Only 1 TC 290/300 carrier transaction code can post in a single cycle. TC 308/309 (IRC 6205 Interest Free Adjustment tax assessment) are compatible with the TC 300 carrier transaction code and TC 298/299 (Non-AIMS IRC 6205 Interest Free Adjustment) are compatible with TC 290 carrier transaction code.

  5. See the table below for additional FICA Tax adjustment information and details:

    Employment Tax-Related Internal Revenue Manuals and Applicable Subsection Titles

    IRM Number and Title: Subsection Title:
    IRM 4.23.8, Employment Tax - Determining Employment Tax Liability
    • Processing Interest-Free Employment Tax Cases

    IRM 4.23.10, Employment Tax - Report Writing Guide for Employment Tax Examinations
    • Examination Procedures for IRC 3402(d) and IRC 3102(f)(3) Relief (includes case processing instructions)

    • Form 5344/Form 5599 Additional Entries for Completion of Employment Tax Closures (includes case processing instructions)

    IRM 8.7.16, Technical and Procedural Guidelines, Appeals Employment Tax Procedures
    • Fact Sheet of Settlement Computations

    • Form 4668, Employment Tax Examination Changes Report

    • Computations for Unreported Tip Income Cases

    • Computations Involving Adjustments to Household Employment Taxes (Schedule H)

    • Employment Tax Reference Codes

    • Adjustment for Employee FICA Tax (Form 885-E)

    • Interest-Free Adjustment under Section 6205(a)

    • Closing Employment Tax Changes

    IRM 20.2.10, Interest - Interest on Estate, Excise, Employment, and Foreign Taxes
    • Employment Taxes

    • Underpayment Adjustments on Employment Taxes

    • Combined Annual Wage Reporting (CAW) Assessments (IRC 6205 Interest-Free Adjustment)

    • Household Employment Taxes

    • Interest on Income Tax Withholding Assessments Abated under IRC 3402(d)

    • COBRA Benefits

    IRM 21.7.2, Business Tax Returns and Non-Master File Accounts - Employment and Railroad Tax Returns
    • Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs) - Employment Taxes

    • TC 29X / Item Reference Number (IRN) Valid Adjustment Formulas - Employment Taxes (The validity checks identified in this section also apply to TC 30X Employment Tax adjustments.)

    • Interest-Free Adjustments (Employment Tax Returns)

    • Income Tax Withholding, Backup Withholding, and Additional Medicare Tax Adjustments

    • Social Security and Medicare Tax Adjustments

     

IRC § 6205 Interest-Free Adjustments Form 941

  1. IRC 6205 Interest-Free Adjustment cases are identified by the ATE on the Form 5402.

  2. Prepare Form 5403 following general closing instructions. In addition:

    1. Item 11 - Enter the date the signed Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment is received by Appeals

    2. Item 12 - Use TC 308 (instead of TC 300) with the tax amount

  3. See the following references for additional information:

    • IRM 8.7.16, Interest-Free Adjustment under Section 6205(a)

    • IRM 20.2.10, Underpayment Adjustments on Employment Taxes

    • IRM 20.2.10, Underpayments of Federal Insurance Contributions Act (FICA) and Railroad Retirement Tax Act (RRTA)

Federal Unemployment Tax Act (FUTA) Form 940 MFT 10 Adjustments

  1. Prepare Form 5403 as follows:

    1. Enter the appropriate reference code for all increases or decreases in FUTA tax or wages in Item 15. The reference code(s) reflect the state for which the tax/wages are being adjusted.

    2. The three digit reference code for the tax portion of the adjustment is comprised of a "T" followed by the two character state code, e.g. California is TCA; New Jersey is TNJ, etc. The total of the tax (T) reference code amount must equal the TC 300/301 tax adjustment. If the "T" reference code amount does not equal the tax amount or is not entered, the adjustment will reject.

    3. If the adjustment is due to an increase or decrease in wages, a wage reference code(s) is also required. The three digit reference code for the wage adjustment is comprised of a "W" followed by the two character state code.

    4. If adjustments are made to more than one state, the appropriate reference code(s) and the tax and/or wage adjustment amount(s) attributed to each state is required.

Estate Tax and Gift Tax Case Closing

  1. Estate Tax and Gift Tax returns are often worked together. Closing procedures for both Estate Tax (Form 706) and for Gift Tax (Form 709) are provided within this section.

  2. Appeals Technical Employees (ATE) will use the customized Form 5402 and provide special processing instructions to APS-CIT for processing and closing the following types of Estate and Gift Tax Cases:

    • IRC 6161, Extension of Time to Pay Estate Tax

    • IRC 6166, Election to Make Installment Payment

    • IRC 2032A, Notice of Special use Valuation Election

    • IRC 2057, Notice of Special use Valuation Election

  3. The APS TE will use Form 5403 to process all AIMS closings using the information provided by the ATE or TCS on the Form 5403 Worksheet.

Docketed Estate and Gift Tax Closings Which Include IRC § 6161

  1. Upon resolution of a Docketed Estate Tax or Docketed Gift Tax case on which IRC 6161 is applied, the APS TE will:

    • Process the tax and penalty adjustments as determined in the Stipulated or Entered Decision Document using Form 5403 CC: AMCLSA.

    • Enter a TC 340 0.00 in Item 12 of Form 5403 because the Interest on the account must be calculated and posted by the Estate and Gift Tax Unit located at the Covington Campus.

    • Close ACDS using the information provided on the Form 5402.

    • Make a copy of the adjustment authority and adjustment document to send to campus files for association with the Form 5147, Transaction Register.

    • Use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to re-charge the administrative file to the Estate and Gift Tax Unit. Associate a copy of the front page of the tax return and a copy of the Form 5403 and submit the Re-charge package to the appropriate Campus Files Function for association with the Form 5147.

Non-Docketed Estate Tax IRC § 6161 Closing (MFT 52)

  1. Non-Docketed Estate Tax IRC 6161 cases are submitted to APS for ACDS closing actions via a customized Form 5402. APS will update ACDS using the cc provided on the Form 5402:

    • 14 if unagreed (i.e. extension denied)

    • 15 if agreed (i.e. extension granted)

  2. APS will use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to re-charge the case to the Advisory Employee identified by the ATE.

  3. If the Estate Tax IRC 6161 case is related to an Estate Tax Deficiency case, there will be one WUNO for each type.

  4. APS will process the Estate Tax deficiency based upon the final disposition document, (agreement, default, entered tax court decision) but an Estate Tax IRC 6161 closing by itself requires no AIMS or IDRS update.

Non-Docketed Gift Tax IRC § 6161 Closing (MFT 51)

  1. Non-Docketed Gift Tax IRC 6161 cases are submitted to APS for ACDS closing actions via a customized Form 5402. APS will update ACDS using the cc provided on the Form 5402:

    • 14 if unagreed (i.e. extension denied)

    • 15 if agreed (i.e. extension granted)

  2. APS will use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to re-charge the case to the Advisory Employee identified by the ATE.

  3. If the Gift Tax IRC 6161 case is related to an Gift Tax Deficiency case, there will be one WUNO for each type.

  4. APS will process the Gift Tax deficiency based upon the final disposition document, (agreement, default, entered tax court decision) but a Gift Tax IRC 6161 closing by itself requires no AIMS or IDRS update.

Docketed and Non-Docketed Estate Tax IRC § 6166 Closing

  1. IRC 6166, Installment Election, only applies to the Form 706, Estate Tax Return MFT 52 account and when approved, will post as a TC 468 with a closing code 02 which sets the IDRS Status to 14. If the IRC 6166 was denied and is being appealed the TC 468 closing code will be 04. All STAT 14 modules must be manually maintained and billed, so the APS TE will process the Appeals determination, or the Entered Decision via the appropriate TCs and input a TC 340 0.00 to restrict the account from computer generated interest. The Organizational Mailbox for the 6166 Unit is FOR INTERNAL USE ONLY .

  2. the APS TE will use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to re-charge the case to the Advisory Employee identified by the ATE, see the address below.

    SBSE Estate and Gift 6166

    201 W. Rivercenter Blvd. Stop 824G

    Covington, KY 41011

IRC § 2057 or IRC § 2032A Closing

  1. For IRC 2057 and IRC 2032A cases, the ATE will prepare a customized Form 5402 which includes IRC 2057, and IRC 2032A closing procedure instructions for APS.

  2. To properly close estate tax cases, it is important to understand the definitions of net deficiency/overassessment and gross deficiency/overassessment:

    1. Net deficiency/overassessment - the amount determined when the maximum amount of state or foreign death taxes is allowed as a credit in the settlement computation.

    2. Gross deficiency/overassessment - the amount determined when the settlement computation only allows the amount of state or foreign death taxes that have been paid.

  3. When closing a net deficiency estate tax case, show the "net" deficiency in Item 12 of Form 5403 if either of the following two situations exists:

    1. substantiation of payment of state or foreign death taxes is not required; or

    2. substantiation of payment of state or foreign death taxes is required, but the waiver provides for an additional assessment in event substantiation is not timely submitted, and ample time remains for assessment of the unsubstantiated credit.

  4. For estate cases that do not involve state or foreign death tax credits, enter the "gross" deficiency/overassessment in Item 12, Form 5403.

  5. In docketed cases, whether settled or tried, if required substantiation of state or foreign death tax has not been submitted, make the assessment for gross deficiency or gross overpayment and follow the same credit procedure as in agreed nondocketed cases. The petitioner may obtain credit for state inheritance taxes after the decision is entered in the United States Tax Court case if a claim is submitted to the Service within the statutory period.

  6. Enter the "net" deficiency or overassessment in Item 800/801, Form 5403.

  7. Appeals will expedite the closing of a certain "agreed and unpaid deficiency" or overpayment case, if the case meets the "large dollar" criteria described in IRM 8.2.1, Expedite Processing for Certain Large Dollar Cases.

    Note:

    This guidance does not apply to a deficiency and/or overpayment case that requires Joint Committee. See IRM 8.7.9, Cases Requiring JC Review

    .

  8. To close the case, APS will:

    • Update and close ACDS according to Form 5402 instructions.

    • Prepare and process Form 5403 as appropriate and input via CC: AMCLSA.

    • Use IAT Tool Fill Forms to prepare Form 2275, Records Request, Charge and Recharge to re-charge the case to the Advisory Employee identified by the ATE.

    • Make a copy of the closing document and the front page of the return for association with the Form 2275 and send to Campus Files for association with the Form 5147, "Transaction Record" generated by the CC: AMCLSA adjustment.

    • Prepare Form 3210/E3210 to send the administrative file to the Estate and Gift Examiner identified on the Form 5402.

  9. Estate and Gift will process the case pursuant to IRM 4.25.11, IRC 2032A Special Use Valuation Election, and IRM 5.5.8.4, Special Valuation Estate Tax Lien Under IRC 6324B.

Restricted Interest in Estate Tax Cases
  1. Interest may be limited to specific time periods or rates, or it may be statutorily prohibited; this gives rise to the term "restricted interest." Restricted interest is subject to the same variables (time, rate, amount) as "normal" interest. The primary difference between normal and restricted interest is that the computer may not be able to identify all conditions involved in a restricted interest situation and therefore restricted interest computations may have to be performed manually.

  2. See IRM 8.7.4, Technical and Procedural Guidelines, Appeals Estate and Gift Tax Cases, Exhibit 8.7.4-2 Restricted Interest Provisions for Estate Tax for additional information.

  3. If the case involves any of the Code Sections listed in IRM 8.7.4-2, the TCS or ATE will prepare Form 1366, Tax Analysis Worksheet for Overassessment of Estate Tax Involving Restricted Interest, as part of the settlement computation for use by APS in computing the restricted interest.

  4. The TCS or ATE will also notate that restricted interest applies on the Form 5403 Instruction Worksheet. This alerts APS to look for the Form 1366.

  5. The ATE is responsible for ensuring that the Form 1366 is attached to the Form 5403 Instruction Worksheet and that both documents are attached to the inside left flap of the administrative file folder when the case is closed.

  6. See IRM 20.2.1.5, Normal and Restricted Interest, for further information concerning restricted interest computations.

  7. See IRM 20.2.10, Interest on Estate Tax Returns, Combination Adjustments, for further information concerning Form 1366.

Gift Tax Case Closing

  1. The special purpose agreement form for gift tax cases is Form 870-AD or a Form 890. Form 890 is only used when the only issue is the amount of the exemption and there is no tax due.

  2. The detailed instructions for preparing Form 5403 are found in Exhibit 8.20.7-1, Form 5403 - Appeals Closing Record (Instructions).

  3. Appeals will expedite the closing of a certain "agreed and unpaid deficiency" or overpayment case, if the case meets the "large dollar" criteria. For additional information, see IRM 8.2.1, Expedite Processing for Certain Large Dollar Cases.

    Note:

    This guidance does not apply to a deficiency and/or overpayment case that requires Joint Committee. See IRM 8.7.9, Cases Requiring JC Review

    .

Gift Tax MFT 51 / MFT 54 Item 422 and Item 425 Entries

  1. The ATE or TCS who prepares the tax computations and the Form 5403 Instruction Worksheet will identify the correct Item Reference Number and adjustment amount when there are updates required to the Applicable Credit via Item 422 and/or the Deceased Spousal Unused Exclusion (DSUE) Item 425.

Excise Tax IRC § 4251 - Direct Assessment

  1. Excise tax imposed by IRC § 4251 is assessed directly against the user of communications facilities and services if the tax is not paid to the collecting agency. Although liable for the tax, the user is not required to file an Excise Tax Return, nor is the tax assessed against an MFT 03 account.

  2. Process the assessment as a Non-Master File (NMF) assessment in the name of the person against whom the direct assessment is to be made using Form 1331, Notice of Adjustment.

  3. If there is an overassessment of a NMF direct assessment, process the overassessment on Form 1331, Notice of Adjustment.

  4. If NMF AIMS controls are open, use Form 5403, to close AIMS via CC: AMCLSA.

  5. Apply these procedures to other direct assessments. See IRM 4.24.6, Direct Assessment Procedures Under IRC 4251, 4261, and 4271 for more information regarding direct assessments.

  6. Letter 4451, Employment Tax Closing Letter Unagreed Non WC, will be used for unagreed cases. Letter 913, Closing Letter - Agreed Cases, will be used for agreed cases. APS will date and mail all copies of the closing letter addressed to the taxpayer.

  7. The Telephone Excise Tax Refund (TETR) Form 8913, applied to the 2006 tax period only. The TETR Credit Reference Numbers (253 and 254) are retained in this IRM for historical purposes only and to provide an explanation of these codes for use in analyzing a 2006 tax period. See Exhibit 8.20.7-13, Table of the Most Common Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) for additional information.

Excise Tax - Preparing Form 1331

  1. This form is a three-part assembly, and depending upon local arrangements, may be prepared in part by APS and in part by the Campus on NMF overassessments. The form is not required for an overassessment for which a restricted interest worksheet is prepared. Form 1331-C, Notice of Adjustment (Wage or Excise Tax) is used for NMF excise tax cases.

  2. For excise tax cases involving restricted interest, the ATE will use the Form 5402 and the Form 5403 Instructions to APS Worksheet to provide notification to APS of the interest restriction. The ATE will Include the type of tax and IRC § or applicable regulation authorizing the restriction of interest in the "Special Handling Instructions" section of the Form 5403 Instructions to APS Worksheet.

Dyed Fuel and Refusal Penalty Case Closing

  1. APS will update and close ACDS according to the Form 5402 instructions provided by the ATE.

  2. See IRM 8.20.7.16, Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures for guidance on how to establish the MFT 13 and MFT 55 CVPN account.

  3. APS will not transmit the Form 5402 back to the originating function for this case type because this action is completed by the ATM per IRM 8.7.10, Routing Form 5402 and ACM Feedback to Excise for Excise Tax Cases.

  4. The APS TE will take the following actions to process a Dyed Fuel and Refusal Penalty case assigned to them on PEAS:

    1. Review closing documents for special instructions.

    2. Review and update ACDS with the closing information according to the Form 5402.

    3. Input the Civil Penalty Account adjustments via IDRS CC: REQ54 according to the Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties.

    4. See IRM 8.20.7.31.2 (5) below for the specific penalty reference number associated with each Dyed Fuel or Refusal Penalty IRC.

    5. Enter your IDRS number in Item 12a "Terminal operator" .

    6. Enter the amount of the penalty sustained in ACDS RevisedPen field.

    7. Enter ACKCLS in ACDS ACTION field and close ACDS.

    8. Suspense the case and monitor the account for posting of the adjustment(s).

    9. Transmit the closed file per the ATE instructions or to campus files function as appropriate using Form 3210/E3210.

  5. Each Dyed Fuel Penalty IRC is assessed via a unique penalty reference number (PRN) as identified on Form 8278 in block 9 C Excise:

    Dyed Fuel and Refusal Penalty IRC § and the Associated Penalty Reference Number

    Dyed Fuel and Refusal Penalty IRC § Penalty Reference Number (PRN)
    IRC 6675 661
    IRC 6715 656
    IRC 6715(a)(1) 665
    IRC 6715(a)(2) 665
    IRC 6717 655
    IRC 6718 657
    IRC 6719 670
    IRC 6720(A) 673
    IRC 6725 667

     

  6. When processing more than one Penalty Reference Code per CVPN module, use a sequential posting delay code (PDC) for the Blocking Series 53X adjustment(s).

  7. Since the taxpayer has availed themselves of their pre-assessment appeal rights, APS must also input a TC 290 0.00 with Blocking Series 96X to set the Appeals Refusal Abatement Indicator on each of the CVPN modules being closed as the last account adjustment.

MFT 40 Ultimate Purchaser Claims

  1. See IRM 21.7.8, MFT 40, Ultimate Purchaser Claims for processing procedures on an MFT 40 account.

Fast Track Mediation (FTM) Case Closing Procedure

  1. APS will update and close ACDS according to the instructions provided by the ATE on Form 5402.

  2. Use one of the following CLOSINGCDs:

    • 14 - Case fully resolved

    • 15 - Case not resolved

    • 16 - Case partially resolved

    • 20 - Withdrawals

FTM Offer In Compromise WUNO Closing Procedure

  1. Use one of the following CLOSINGCDs:

    • 14 - Case fully resolved

    • 15 - Case not resolved

    • 16 - Case partially resolved

    • 20 - Withdrawal

  2. Collection already received a copy of the Form 13370, Fast Track Mediator's Report at the conclusion of the FTM session, so APS does not need to send anything to Collection as part of closing the FTM OIC WUNO.

FTM Trust Fund Recovery Penalty (TFRP) WUNO Closing Procedure

  1. APS will update and close ACDS according to the instructions provided by the ATE on Form 5402.

  2. Use one of the following CLOSINGCDs:

    • 14 - Case fully resolved

    • 15 - Case not resolved

    • 16 - Case partially resolved

    • 20 - Withdrawals

  3. Collection already received a copy of the Form 13370, Fast Track Mediator's Report, so APS does not need to forward anything to Collection as part of closing the FTM TFRP WUNO.

Fast Track Settlement (FTS) SB/SE Cases

  1. The Appeals Technical Employee will prepare the "SB/SE FTS Closing Package" .

FTS SB/SE Closing Package

  1. The "SB/SE FTS Closing Package" includes the following documents:

    • Form 5402 - signed by the FTS Appeals Official

    • Form 14000, Fast Track Session Report (signed by all parties)

    • ACM - Required on a hazards settlement

    • Special Appeals Agreement Forms (AD) or Form 906/866 Closing Agreement (if required)

    • Letter 1595, Draft Closing Agreement Request for Taxpayer Signature Transmittal Letter to transmit a copy of executed Closing Agreement to the taxpayer

FTS SB/SE Closing Procedure

  1. The Proposed and Revised Adjustment dollars are provided by the ATE on the FTS Session Report or the Form 5402.

    Note:

    Appeals does not receive an administrative file in an SB/SE FTS case, however APS must take the appropriate action to close the case off of ACDS. APS does not process account adjustments based on the agreement reached during the FTS session.

  2. The Appeals Official (ATE) will:

    1. Prepare a Form 5402 and include the following entries:

      1. Proposed and the Revised FTS Adjustment dollars

      2. Item 11 remarks: SB/SE Fast Track Settlement Case

      3. CLOSINGCDs for SB/SE FTS cases are as follows:

        • 14 - Fully resolved

        • 15 - Not Resolved - Including taxpayer withdrawal

        • 16 - Partially Resolved

        • 20 - Withdrawn for procedural reasons (further development, bankruptcy)

    2. Submit a copy of the Form 5402, Form 14000, Fast Track Session Report, and the Case Activity Record to APS for ACDS closing ONLY. If a hazards settlement, the Appeals Official will also provide APS with any Special Agreement Forms and a copy of the ACM.

    3. Forward the "SB/SE FTS Closing Package" to the SB/SE Examiner/Group Manager using F-3210/E3210.

    4. Send a copy of the Form 14000, Draft Closing Agreement Request for Taxpayer Signature Transmittal Letter and a copy of the Form 5402, and the ACM if required, to the SB/SE FTS Program Manager.

Fast Track Settlement Tax Exempt / Government Entity (TE/GE) Case Closing Procedure

  1. Although Appeals does not receive an administrative file in a TE/GE FTS case, APS must take appropriate action to close the case off of ACDS using the information provided by the ATE on Form 5402.

    Note:

    APS does not process account adjustments based on the agreement reached during the Fast Track Settlement session.

Closing Procedure for Terminated, Withdrawn, or Unresolved TE/GE FTS Cases

  1. TE/GE FTS cases that are terminated, withdrawn, or fully unresolved will be closed on ACDS and returned to TE/GE for appropriate action.

  2. The FTS ATE will prepare a "TE/GE FTS Closing Package," which contains the following documents:

    1. Form 14000, Fast Track Settlement Report signed by all parties.

    2. Two copies of Letter 5203, Unagreed Fast Track Settlement Closing Letter one copy addressed to the taxpayer and the other copy to TE/GE.

  3. The FTS ATE will route the original "TE/GE FTS Closing Package" to TE/GE through the Appeals Team Manager (ATM).

  4. The FTS ATE will send a copy of the Form 14000, Fast Track Session Report and Form 5402 to the TE/GE FTS Program Manager.

  5. The ATM will send a copy of the "TE/GE FTS Closing Package" to APS for ACDS closing ONLY.

  6. APS will update and close ACDS using the following information provided on the Form 5402:

    • Proposed FTS Adjustment dollars which will be the same amount on both the Form 5402, and the Form 14000.

    • Item 11 remarks: TE/GE Fast Track Settlement Case

    • Closing codes:

      • 15 - Unresolved or voluntary withdrawal

      • 20 - Withdrawn or terminated for procedural reasons

Closing Procedure for Fully or Partially Resolved TE/GE FTS Cases

  1. For TE/GE FTS cases that are fully or partially resolved, the FTS Appeals Official will prepare a "TE/GE FTS Closing Package" , which contains the following documents:

    1. Form 14000, Fast Track Session Report signed by all parties.

    2. Two copies of Letter 5202, Agreed Fast Track Settlement Closing Letter one addressed to the taxpayer and the other to TE/GE.

    3. A Form 5402 with the following entries:

      • Proposed and the Revised FTS Adjustment dollars

      • Item 11 remarks: TE/GE Fast Track Settlement Case

      • Closing codes:

        • 14 - Fully resolved

        • 16 - Partially Resolved

    4. A brief Appeals Case Memorandum (ACM), if the issues were resolved based on hazards of litigation (whether factual or legal).

    5. Closing Agreement(s), if applicable.

      • If the FTS ATE resolves the issues using mediation techniques only, TE/GE will secure the appropriate agreement form.

      • If the FTS ATE settles the issues using Appeals settlement authority and/or the settlement is based on hazards of litigation, the FTS ATE will secure the appropriate special agreement documents, such as Form 870-AD, Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Overassessment, Form 866, Agreement as to Final Determination of Tax Liability, or Form 906, Closing Agreement on Final Determination Covering Specific Matters.

      • On Joint Committee Cases, Appeals does not execute any closing agreement until the settlement is cleared by Joint Committee. In those cases, the FTS Appeals Official will prepare a Form 5402 which states, "This case may not be closed until Joint Committee approval is received. Upon receipt of the Joint Committee letter, Appeals will execute a closing agreement and the case may then proceed through TE/GE closing procedures."

  2. The FTS Appeals Official will route the original "TE/GE FTS Closing Package" to TE/GE through the Appeals Team Manager (ATM).

  3. The FTS ATE will send a copy of the Form 14000, Fast Track Session Report and Form 5402 to the TE/GE FTS Program Manager.

  4. The ATM will send a copy of the "TE/GE FTS Closing Package" to APS to close the case off of ACDS.

  5. APS will update and close ACDS using the following information provided on the Form 5402:

    • Proposed and the Revised FTS Adjustment dollars

    • Item 11 remarks: TE/GE Fast Track Settlement Case

    • Closing codes:

      • 14 - Fully resolved

      • 16 - Partially Resolved

Foreign Bank and Financial Account (FBAR) Penalty Case Closing Procedure

  1. There are three types of closing for an FBAR penalty case. Determine the type of case and follow those instructions outlined in the following sections:

    • Premature Referral

    • Pre-Assessment

    • Post-Assessment

  2. ACDS CLOSINGCDs for FBAR cases:

    Determination Made CLOSINGCD
    Agreed or No Change - valid only for pre-assessment case 03
    Unagreed or Partially Sustained valid only for pre-assessment case 13
    Sustained in Full valid only for post-assessment case 14
    Not Sustained valid only for post-assessment case 15
    Partially Sustained valid only for post-assessment case 16
    Premature Referral valid for either pre-assessment or post-assessment 20

FBAR Closing - Premature Referral

  1. When Appeals receives the income tax case or international penalty case along with the FBAR case, and the ATE determines it is a premature referral, special procedures must be followed.

  2. See the table below for information on closing the premature referral:

    If Premature Referral- jurisdiction is released on the Then
    Combined FBAR case with related case
    • close combined cases

    • return to the originating Compliance office, generally the Technical Services

    • ATE prepares Form 5402, to notify the Enterprise Computing Center (ECC) FBAR Penalty Coordinator jurisdiction is released

    FBAR case only is being returned as a premature referral
    • return to the originating group

    • ATE prepares Form 5402, to notify the ECC FBAR Penalty Coordinator jurisdiction is released

  3. ACDS field entries for closing the premature referral. Case level entries are:

    • CLOSINGCD: 20 - Premature Referral (Jurisdiction Released)

    • Date Closed: Date case sent to the Technical Services

    • ACAPDATE: Date ATM signed Form 5402

    • Action: ACKCLS

    • TODATE: Date case sent to Technical Services

    • FROMDATE: Date the receipted Form 3210/E3210 is received

  4. No entries are required at the return level.

  5. Transmit the Form 5402 and (ACM) via secure email to Enterprise Computing Center (ECC):

    • Email Address - *SBSE BSA Compliance-FBAR Penalty Coordinator

  6. Transmit the FBAR file using Form 3210/E3210 to Technical Services at the address below:

    Internal Revenue Service
    Attn: FBAR Penalty Coordinator
    985 Michigan Avenue
    Detroit, MI 48226

FBAR Closing - Pre-Assessment Case

  1. The ATE will prepare the closing letter and Form 5402.

  2. There are two types of Agreed Pre-Assessed FBAR cases:

    • Agreed with signed waiver Form 13449, Agreement to Assessment and Collection of Penalties Under 31 USC 5321(a)(5) and 5321(a)(6).

    • No Change case - FBAR is not sustained and signed Form 13449 is not required.

  3. An unagreed case is when the FBAR penalty is fully or partially sustained for which a Form 13449 is not required.

  4. The ATE will date and mail the letter prior to the submitting the case to APS for closing actions.

  5. ACDS Closing entries:

    • CLOSINGCDs: see IRM 8.20.7.35 (2)

    • Date Closed : Date Case sent to ECC

    • ACAPDATE: Date the ATM approves the case and signs Form 5402

    • ACTION: ACKCLS

    • TODATE: Date case was sent to the FBAR Penalty Coordinator at ECC

    • FROMDATE: Date the receipted Form 3210/E3210 was acknowledged by ECC

    • Revised Penalty - Def/OA:

      Pre-Assessment CLOSINGCD (cc) Dollar entry for each tax period
      Agreed with waiver (cc 03) enter total amount of penalty agreed to
      No Change (cc 03) enter zero (0)
      Unagreed (cc 13) total amount of the penalty imposed
  6. The FBAR administrative file is prepared by the ATE and will contain the following additional documents when submitted to APS for closing:

    • Form 13449, Agreement to Assessment and Collection of Penalties under 31 USC 5321(a)(5) and 5321(a)(6) and itemized attachment

    • Form 5402 and settlement memorandum

    • FBAR penalty computation, if any changes were made

    • Appeals closing letter - dated

    • Original and copy of any delinquent FBAR(s) secured by Appeals

  7. APS sends the FBAR file by UPS Ground with Form 3210/E3210 to:

    Internal Revenue Service
    Enterprise Computing Center
    Attn: FBAR Penalty Coordinator
    985 Michigan Ave
    Detroit, MI 48232

FBAR Closing - Post-Assessment Case

  1. Post-assessment FBAR cases are priority cases and require expedite handling.

    • Assignment to ACAPDate = 120 days

    • ACAPDate to Date Closed = 10 days

    Note:

    Pay special attention to those cases where the FBAR assessment if more than 180 days old.

  2. The ATE will prepare the closing letter and Form 5402

  3. The ATE will mail the closing letter prior to submitting the case to APS for closing.

  4. ACDS field entries for closing post-assessment FBAR cases:

    • ACDS cc’s:

      ACDS CLOSINGCD cc Definition
      14 sustained in full
      15 not sustained
      16 partially sustained
    • Date Closed: Date case sent to the FBAR Penalty Coordinator at ECC

    • ACAPDATE: Date the ATM approves the case and signs Form 5402

    • Action: ACKCLS

    • TODATE: Date the case was sent to the FBAR Penalty Coordinator at ECC

    • FROMDATE: Date receipted copy of Form 3210/E3210 received from ECC

    • Revised Penalty amounts:

    • Post-assessment CLOSINGCD (cc) Dollar entry for each tax period
      Sustained in full (cc 14) enter total amount of penalty agreed to
      Not Sustained (cc 15) enter zero (0)
      Partially Sustained (cc 16) revised penalty amount
  5. The FBAR administrative file is prepared by the ATE and will contain the following additional documents when submitted to APS for closing:

    • Form 13449, Agreement to Assessment and Collection of Penalties under 31 USC 5321(a)(5) and 5321(a)(6).

    • Form 5402 and settlement memorandum

    • FBAR penalty computation, if any changes were made

    • Appeals closing letter - dated

    • Form 13448, Penalty Assessment Certification Summary (Title 31 "FBAR)"

  6. Transmit the Form 5402 and (ACM) via encrypted email to Enterprise Computing Center (ECC):

    • Email Address - *SBSE BSA Compliance-FBAR Penalty Coordinator

  7. APS sends the FBAR file by UPS Ground with Form 3210/E3210 to:

    Internal Revenue Service
    Enterprise Computing Center
    Attn: FBAR Penalty Coordinator
    985 Michigan Ave
    Detroit, MI 48232

Freedom of Information Act (FOIA) Case Closing

  1. All FOIA cases are closed on ACDS by the Fresno APS Team.

  2. After the ATE makes a determination on the Administrative Appeal, the ATM reviews the determination, signs, dates and mails the Closing Letter and distributes all copies as appropriate.

  3. Upon receipt of the completed FOIA case, APS closes the case on ACDS according to the Form 5402.

ID Theft Liability Adjustments

  1. Holtsville APS is responsible for all processing and adjustments on ID Theft cases in Appeals jurisdiction. These cases are identified on ACDS with a feature code "ID" and a TC 971 AC 522 on ENMOD.

  2. Prior to submitting the ID Theft case to Brookhaven APS, the ATE must:

    • Ensure the taxpayer's address in IDRS is correct. Failure to verify and update IDRS to the taxpayer's correct address may result in the ID thief getting the taxpayer's mail from the IRS, including the Identity Protection Personal Identification Number (IP PIN) needed to file in future years.

    • The ATE will prepare and sign Form 3870, Request for Adjustment if needed and as appropriate to accomplish correction of the taxpayer's account.

  3. Unless the ATE specifies otherwise, APS will:

    • Utilize the ID Theft streamlined process

    • Utilize the IDT 48/58 procedures (see Note below)

    • Assume the ATE verified the good taxpayer via their request for an Appeals hearing, Form 14039, Identity Theft Affidavit and the proof of ID provided

    • Assume the ATE verified the taxpayer's correct address in IDRS on receipt of the case and at closing

    Note:

    For additional information about IDT 48/58, see IRM References below:
    ✓ IRM 2.4.61, IDRS TERMINAL INPUT - Command Code IDT48/IDT58/RPM48/RPM58/CSO48/CSO58
    ✓ IRM 25.23.10.5.2, Refund Related IDT

  4. APS will resolve any problems with the adjustment requests with the ATE initiator. If the ATE initiator is not responsive or the issue remains unresolved, raise the issue to the PTM / ATM level.

  5. The ATE information within the subsections below is included for APS reference to verify the type of "ATE-prepared" documents and instructions that are required for each type of ID Theft case.

ID Theft Income Related Adjustment

  1. When it is confirmed that an ID thief used the taxpayer's SSN to earn income, the ATE must provide instructions to APS, (see Step Process Table below for reference) for adjusting the account to reflect the taxpayer's correct account information and to remove the "bad" transactions:

    ID Theft Income Related Adjustment Step Process Table

    Step Process
    1 The ATE will:
    • Prepare Form 3870 and write "ID theft adjustment" at the top. Identify the bad transaction(s) that must come off of the account.

    Example:

    "Reverse the TC 290/300 assessed including interest and penalties."

    2 The ATE will prepare Form 4844 for APS to input TC 971 AC 501 after the account is adjusted.
    3 The completed case will be forwarded to Holtsville APS for processing after it has been ACAP'd.

     

ID Theft Return Related Adjustment -Taxpayer Didn't File

  1. When it is confirmed that an ID thief used the taxpayer's SSN to file a fraudulent return AND the taxpayer had no filing requirement, the ATE must instruct APS to adjust the liability to make the taxpayer whole:

    ID Theft Return Related Adjustment Step Process Table - No Return Filed

    Step Process
    1 The ATE will:
    • Prepare Form 3870 and write "ID theft adjustment-treat this fraudulent return as a nullity" at the top.

    • Identify the bad transaction(s) that must come off of the account.

    • Address any refunds, prepayment credits or payments on the account.

    Example:

    The bad taxpayer got a fraudulent refund or the fraudulent refund is frozen on the account or was offset to another year that the good taxpayer owes for. In all those instances, direct APS to reverse the fraudulent refund.

    Example:

    The good taxpayer had refunds or payments applied to the liability. Those credits must be returned. Direct APS whether to move the good taxpayer’s credits and where to move the good taxpayer's credits

    2 The ATE will prepare Form 4844 for APS to input TC 971 AC 501 after the account is fully adjusted.
    3 The completed case will be forwarded to Holtsville APS for processing.

     

ID Theft Return Related Adjustment - Multiple Returns Filed

  1. When it is confirmed that an ID thief used the taxpayer's SSN to file a fraudulent return and the taxpayer also filed, the ATE must instruct APS to adjust the liability to make the taxpayer whole:

    ID Theft Return Related Adjustment Step Process Table - Multiple Returns Filed

    Step Process
    1 The ATE will:
    • Prepare Form 3870 and write "ID theft adjustment-treat this fraudulent return as a nullity" at the top.

    • Identify the bad transaction(s) that must come off of the account.

    • Address any refunds, prepayment credits or payments on the account.

    Example:

    The bad taxpayer got a fraudulent refund or the fraudulent refund is frozen on the account or was offset to another year that the good taxpayer owes for. In all those instances, direct APS to reverse the fraudulent refund.

    Example:

    The good taxpayer had refunds or payments applied to the liability. Those credits must be returned. Direct APS whether to move the good taxpayer’s credits and where to move the good taxpayer's credits.

    2 The ATE will:
    • Prepare Form 4844 for APS to input TC 971 AC 501 after the account is fully abated/adjusted.

    3 The ATE will:
    • Attach a copy of the good taxpayer's "duplicate" TC 976 return (electronic or paper) or the taxpayer's original return if not posted as a "duplicate" TC 976 return.

    4 The completed case will be forwarded to Holtsville APS for processing.

     

Identity Theft - Additional References

  1. The links provided below provide additional references and information for processing IDT Cases:

    • IRM 2.4.61, IDRS Terminal Input, Command Code IDT48/IDT58

    • IRM 3.28.4, Special Processing Procedures - Identity Theft Returns for Submission Processing

    • IRM 21.4.5, Refund Inquiries, Erroneous Refunds

    • IRM 25.23, Identity Protection and Victim Assistance

Individual Retirement Account (IRA) Closing Procedure

  1. Examination of Form 1040, Individual Income Tax Return, for 1975 and subsequent tax periods may require adjustments to the IRA Master File (IRA MF) in addition to the normal adjustment to the Individual MF (IMF) account.

  2. Separately post the following adjustments to the IRA MFT 29:

    1. 6% tax when the taxpayer contributes more than the maximum amount to the retirement fund

    2. 50% tax when the taxpayer does not take enough money out of the retirement fund (distributions are required at a certain age)

    Note:

    DO NOT separately post the 10% tax on early distribution (taxpayer took money from the retirement fund before the proper age was reached). This tax is included in the deficiency and is posted to the MFT 30 account as a portion of the TC 30X adjustment amount.

  3. See IRM 4.4.14, MFT 29 Account Exists and IRM 4.4.14, MFT 29 Account Does Not Exist for additional information.

  4. When joint filers each have separate IRA accounts and both are adjusted, prepare two Form 5403s for the IRA accounts. Check AMCLSI Box on the top of each form. Process these forms before processing the joint MFT 30 Form 5403.

    1. Item 1 - If the IRA adjustment is to the account of the spouse with the secondary SSN on Form 1040, line through the primary SSN.

    2. Item 2 - Enter MFT 30. After completion of CC: AMCLSI, MFT 29 is generated systemically to the IRA record for transfer to MF. MFT 29 is never reflected on the terminal screen.

    3. Item 4 - Enter the name control.

    4. Item 01 - If the IRA adjustment is to the account of the spouse with the secondary SSN on Form 1040, enter the SSN of the spouse. If the IRA adjustment is to the primary SSN, leave this item blank.

    5. Item 12 - Enter the "excess contribution tax" in the plus or minus field, whichever is applicable. Valid TC’s are 300, 301, 340, 341, 342, 770, and 772.

    6. Item 15 - Enter the reference number and amounts, either increase+ or decrease-. The dollar amount entered for reference number 160 or 162 must be the same dollar amount as the Item 12 TC 30X amount.

      IRAF Reference Numbers and Definitions

      Ref. No. Definition
      160 Increase or decrease 6% tax on excess contributions
      162 Increase or decrease 50% tax on under distribution

       

    7. Items 800 through 811 - Omit entries. The Item 800 and Item 811 entries are included in the MFT 30 Form 5403 Items 800/811.

    8. Item A - Enter "IRA adjustment" and cross reference the IMF account with the name and TIN of the related Form 1040.

  5. Prepare Form 5403 for income tax adjustments in the usual manner. Include the IRA adjustments in results (Items 800/801).

  6. Additional IRM Reference for IRA Accounts and IRA Adjustments:

    • IRM 4.4.14, AIMS/Processing Handbook, Individual Retirement Account (IRA), Education Savings Accounts and Medical Savings Account Adjustments

    • IRM 21.6.5, Individual Tax Returns, Individual Retirement Arrangements (IRA), Coverdell Education Savings Accounts (ESA), Archer Medical Savings Accounts (MSA) and Health Savings Accounts (HSA)

Innocent Spouse Case Closing Overview

  1. This section contains instructions for the processing of innocent spouse cases after the request is determined to be disallowed, partially disallowed, nonqualifying, or allowed in full and the modules are not mirrored. For instructions on processing mirrored modules see IRM 25.15.15, Mirror Modules for Requests for Relief from Joint and Several Liability.

  2. Allocation of liability could apply to either allowed or partially allowed requests. A partial allowance occurs when the taxpayer does not qualify for full relief but is entitled to some relief. Partial allowance does not include a situation where a taxpayer is eligible for full relief under IRC § 6015(c), but is not allowed a refund of payments/offsets made against the liability. Relief under IRC 6015(c) is available only for unpaid liabilities resulting from understatements of liability. This determination is made by the ATE.

  3. Assessments against only one spouse of a joint return were made:

    1. Prior to January, 2001, on the separate Non-Master File (NMF) MFT 20 account.

      Note:

      If NMF was used to assess one spouse, NMF is used to assess the other spouse.

    2. Effective January 2001, on the separate MF MFT 31 account.

    3. See IRM 8.20.7.43, MFT 31 Separate Assessment Module Overview for additional information.

Innocent Spouse/CDP Case Closing

  1. All Innocent Spouse cases along with related CDP cases are routed to the Florence APS for closure and should remain together.

    Reminder:

    The CDP must be for the Requesting Spouse (RS). See IRM 25.15.12, CDP/EH and Innocent Spouse Cases for additional information.

  2. APS will follow the steps below:

    1. Close the CDP and IS workunits on ACDS.

    2. Update the Innocent Spouse Tracking System (ISTS). See IRM 25.15.14, Innocent Spouse Tracking Systems Inventory Validation Instructions for procedures.

    3. Input all required IS and CDP adjustments/transactions. See IRM 8.20.7.20, Collection Due Process (CDP) Overview of Back-End Processing, for additional information on CDP transactions.

    4. When all adjustments/account transfers have been completed and posted to IDRS close IS and CDP workunits on PEAS.

    5. The administrative files should be filed according to standard procedures.

    Note:

    A MFT 31 account does not automatically mean the case is an INNSP case. If a previous determination was made and the case is only in Appeals as a CDP case, do not send the case to Florence Campus APS for processing.