Part 25. Special Topics

Chapter 29. Tax Compliance Check

Section 1. Standard Tax Compliance Checks for Suitability and Monitoring

25.29.1 Standard Tax Compliance Checks for Suitability and Monitoring

Manual Transmittal

November 24, 2023

Purpose

(1) This transmits revised IRM 25.29.1, Tax Compliance Check, Standard Tax Compliance Checks for Suitability and Monitoring.

Material Changes

(1) IRM 25.29.1.1.2, Authority, added Public Law 116-93, Consolidated Appropriations Act, 2020, Section 108.

(2) IRM 25.29.1.1.6, added Related Resources; moved content from IRM 25.29.1.1.2, Authority, (3) Other, to new subsection.

(3) IRM 25.29.1.1.7, moved from IRM 25.29.1.1.6. Revised paragraph (5) by adding the first sentence and deleting the last sentence. Revised paragraph (7) by adding “return was filed inaccurately.”

(4) Editorial changes, such as updated links.

Effect on Other Documents

This IRM supersedes IRM 25.29.1, Tax Compliance Check, Standard Tax Compliance Checks for Suitability and Monitoring, dated August 18, 2021.

Audience

All business units that process tax compliance checks for suitability determinations and monitoring tax compliance.

Effective Date

(11-24-2023)

Traci DiMartini
IRS Human Capital Officer

25.29.1.1 (08-18-2021)

Program Scope and Objectives

  1. Purpose: This IRM transmits the standardized tax compliance check criteria used for employment suitability determinations and monitoring employee/contractor tax compliance.

  2. Audience: All business units that process tax compliance checks for suitability determinations and monitoring employee/contractor tax compliance.

  3. Policy Owner: The IRS Human Capital Officer.

  4. Program Owner: The IRS enterprise Tax Compliance Check Service application is managed by Privacy, Governmental Liaison and Disclosure (PGLD).

  5. Primary Stakeholders: The Human Capital Office (HCO), PGLD, and Information Technology (IT).

  6. Program Goal: To ensure individuals are treated consistently as it applies to their individual tax liabilities by employing a common definition of tax compliance for suitability and monitoring tax checks.

25.29.1.1.1 (08-18-2021)

Background

  1. The One Tax Compliance initiative was developed to ensure consistency in performing tax compliance checks for individuals when making suitability determinations for hiring or monitoring tax compliance of employees and contractors within the IRS. To provide uniformity, suitability and monitoring tax compliance checks transitioned to utilize the enterprise Tax Compliance Check Service (TCCS), replacing the use of various legacy tools and reducing the need for manual account research.

  2. The TCCS is an enterprise common service developed to perform automated suitability and monitoring tax checks across the IRS. The TCCS uses automated business rules to lookup taxpayer accounts and identify the tax compliance status.

  3. This IRM outlines the criteria used and the results obtained through the automated TCCS service, in performing a tax compliance check for suitability and monitoring.

  4. To be fully compliant with federal tax filing and payment obligations, an individual must accurately and timely file, pay on time and have no outstanding tax liability.

25.29.1.1.2 (11-24-2023)

Authority

  1. Public Laws:

    1. Public Law 105-206, IRS Restructuring and Reform Act of 1998, Section 1203, Termination of Employment for Misconduct at: https://www.govinfo.gov/app/details/PLAW-105publ206

    2. Public Law 116-93, Consolidated Appropriations Act, 2020, Section 108, at: https://www.govinfo.gov/app/details/PLAW-116publ93

  2. Regulation: Title 5, Code of Federal Regulations, Part 2635, Standards of Ethical Conduct for Employees of the Executive Branch, Subpart A, General Provisions, Section 2635.101, Basic obligation of public service at:5 CFR 2635

25.29.1.1.3 (08-18-2021)

Roles and Responsibilities

  1. HCO is responsible for the Servicewide policy, Standard Tax Compliance Checks for Suitability and Monitoring for Federal Applicants, Employees, and Contractors.

  2. As owner of the TCCS enterprise service, PGLD is responsible for ensuring the automated evaluative rules used in TCCS align with the standard tax check criteria for suitability and monitoring.

  3. Applications Development, within IT, maintains the Tax Check Program (TCP) and its applications.

  4. Business units that process tax compliance checks used for suitability determinations and monitoring tax compliance are responsible for incorporating TCCS into their procedures and using the results when making determinations of suitability or monitoring compliance.

25.29.1.1.4 (08-18-2021)

Program Management and Review

  1. The TCCS Metrics Service interface captures statistics for all TCCS data requests.

  2. Statistics on TCCS data requests are captured via Business Objects Enterprise (BOE). The BOE reports are used to quantify the level of tax compliance for all successful data calls and are segmented by requesting business unit.

25.29.1.1.5 (08-18-2021)

Program Controls

  1. TCCS Metrics Service Log

  2. Federal Information Security Management Act

  3. Technology Contingency Plan

25.29.1.1.6 (11-24-2023)

Related Resources

  1. IRM 6.332.2.3, Federal Tax Compliance Check

  2. IRM 6.451.1.23.3, Misconduct Screenings and Tax Compliance

  3. IRM 6.731.1.1, Appointments Subject to Investigation

  4. IRM 10.23.2, Personnel Security, Contractor Investigations

  5. IRM 10.23.3, Personnel Security, Suitability for Employment and Personnel Security Operations

  6. Policy Statement 25-3, Standard Tax Compliance Checks for Suitability and Monitoring for Federal Applicants, Employees, and Contractors, at:https://irm.web.irs.gov/Part1/Chapter2/Section1/IRM1.2.1.aspx#1.2.1.16.2

25.29.1.1.7 (11-24-2023)

Terms and Acronyms

  1. Suitability Determination - Suitability reflects the standards required for employment with the government in general, and particularly the IRS, with reference to a person’s character, reputation, and overall fitness.

  2. Monitoring -The process of screening employees and contractor employees to ensure continued tax compliance.

  3. Tax Check Program (TCP) - The TCP is used by IT to support multiple IRS program owners and provides data to their business systems. The applications under TCP include the TCCS, the Tax Check Application, and the Employee Tax Compliance TCCS Interface.

  4. Tax Compliance Check Service (TCCS) - The TCCS automates the business rules to perform multi-year tax account research, retrieve tax delinquency data and filing and payment of required taxes for individual taxpayers.

  5. Compliant - Tax compliance is the accurate and timely filing of all required tax returns and the timely payment of all tax liabilities. A compliant result is determined when tax records reflect there is no record of an overdue tax return or unpaid tax debt.

  6. Compliance Issue - A compliance issue result reflects that one or more of the following conditions in any of the report sections exist:

    1. A history of late filing,

    2. A history of late paid tax debt, or

    3. The taxpayer is resolving an outstanding liability through an administrative or judicial proceeding, which allows due process for the individual to settle the tax matter.

  7. Non-Compliant - A non-compliant result indicates that a required tax return is not on file, return was filed inaccurately, or there are unresolved tax liabilities. An overall non-compliant result indicates that one or more of the sectional results were identified as non-compliant.

25.29.1.2 (08-18-2021)

Standard Tax Compliance Checks - Overview

  1. The TCCS standardizes the tax compliance criteria and the tax compliance results used for tax compliance checks performed by the IRS for the purpose of suitability and monitoring.

  2. The use of the enterprise TCCS application to perform suitability and monitoring tax checks ensures uniformity across the IRS. Business units will use the results to make suitability and/or compliance monitoring decisions based on the specific business process.

  3. To be fully compliant with federal tax filing and payment obligations, an individual must accurately and timely file, pay on time, and have no outstanding tax liability.

  4. TCCS will review four years of tax records or up to five years if a Fraudulent Failure to File or Civil Tax Fraud penalty was assessed.

25.29.1.3 (11-24-2023)

Tax Compliance Result

  1. The automated tax check and TCCS will return an overall tax compliance result and a sectional result for each of the three-criterion (filing, outstanding liabilities, and timeliness of payments). To be fully compliant with federal tax filing and payment obligations, an individual must accurately and timely file, pay on time, and have no outstanding tax liability.

  2. TCCS uses three outcomes to measure tax compliance: compliant, non-compliant, or compliance Issue.

  3. The overall tax compliance result is based upon the sectional result for each criterion (filing, accuracy, outstanding liabilities, and timeliness). The overall tax compliance result is always reflective of the lowest level of tax compliance identified within each of the sectional results.

    • For example, if tax records indicate that a taxpayer is compliant related to filing, non-compliant related to outstanding liabilities, and has a compliance issue related to prior late payments, the overall tax compliance result would be non-compliant since this reflects the lowest level of compliance amongst the sectional results.

      Tax Compliance Criteria Sectional Result Overall Result
      Filing Compliant Non-Compliant
      Outstanding Liabilities Non-Compliant
      Timely Payment Compliance Issue