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March 18, 2014

LB&I Control No: LB&I-04-1213-010
Impacted IRM 4.26.17

FROM: Heather C. Maloy
Commissioner, Large Business & International Division
SUBJECT: LB&I Directive for the Use of MFT C6 on FBAR Examination Cases

This memorandum provides direction to the field on the use of Master File Transaction (MFT) code C6 when establishing a Report of Foreign Bank and Financial Accounts (FBAR) examination case.  The following guidance helps ensure that all FBAR examination files are established on the Examination Returns Control System (ERCS).  The use of MFT code C6 will ensure consistent inventory control procedures across examination offices.

Per IRM 4.26.17, Report of Foreign Bank and Financial Accounts (FBAR) Procedures, before commencing an FBAR examination, the examiner is required to secure the Territory Manager’s approval via a Form 13535, Foreign Bank and Financial Accounts Report Related Statute Memorandum (RSM).  Without this approval, the agent should not question the taxpayer about issues relating to FBARs.  A separate penalty determination must be made for each co-owner of an account (including a spouse) and, as applicable, a separate RSM and case file record established.

Upon receiving approval, the examiner is to set up a separate FBAR case file, per IRM, FBAR Case File Procedures.  In addition to using Activity Code 545, the examiner must establish the FBAR case file using MFT C6.

For examiners that use Form 5345-D to establish case files on ERCS, refer to Attachment I, Form 5345-D Instructions for Establishing an FBAR Examination Case File, for proper coding and tracking of FBAR case files.

For all other examiners, please follow your normal procedures for establishing a new case file and use MFT C6 with Activity Code 545.

For more details regarding the Bank Secrecy Act (BSA) Program and the FBAR examination procedures, please refer to IRM 4.26.1 Bank Secrecy Act.

If you have any questions regarding these procedures, you or a member of your staff may contact Debora Kellough at (832) 515-0459.

Attachment (1)

cc: Division Counsel, LB&I
     Chief, Appeals



Form 5345-D Instructions for Establishing an FBAR Examination Case File

Examiner Duties:

Examiners must secure approval from their Territory Manager, via a Related Statute Memorandum (RSM), before commencing an FBAR examination.  Once the FBAR examination is approved, the examiner should establish the case file on ERCS using
Form 5345-D, Examination Request – ERCS.

A separate penalty determination must be made for each co-owner of an account (including a spouse) and, as applicable, a separate RSM and case file record established.

Complete the Form 5345-D as follows:

  1. Fill-in the taxpayer’s name and address.  (Only TPH or TPW)
  2. Check the “Control Non-AIMS DET Item” box
  3. Enter the PBC, SBC, EGC, and ERCS examiner information
  4. Enter the taxpayer’s TIN (TPH or TPW’s as appropriate)
  5. The MFT is C6
  6. For the type of form, enter “FBAR”
  7. In the middle section of the form, enter all of the FBAR years being established
    for the listed taxpayer
  8. On the lower left side of the form, place an N in the TEFRA, Original return,
    Labels, Joint Committee, Foreign Control, and LMSB/CIC boxes
  9. Leave the “Control PBC” box blank
  10. In the related return area, enter the key case information
  11. In the Reason for Request area, enter: “TO CONTROL AN FBAR INVESTIGATION”
  12. Use the same Project Code and Tracking Code as indicated for the key case
  13. Sign and date the form, and submit it to your group manager following local procedures
  14. The agent will track FBAR case time to the appropriate taxpayers and years.

Secretary Duties

The following is guidance for creating FBAR modules on ERCS.  Managerial approval will not be necessary within ERCS when both creating and closing FBAR ERCS records.

  1. From the ERCS main menu, select 1 – Request Tax Return.
  2. Select 3 – Control Non-AIMS DET
  3. Enter appropriate PBC/SBC/EGC and employee ID before continuing.
  4. Enter Taxpayer TIN, then first tax year being picked up.
  5. Enter Activity Code 545.  Once this is entered, the MFT will update to C6 and the source code will update to 99.
  6. Enter status code 10, hit enter and then a date will appear below the status code without a label.  This date is the statute date which defaults to 3 years from the day after the end of the entered tax period.  This date is incorrect.
  7. Input the appropriate statute date per the F5345-D.  An FBAR statute typically will be six years from June 30th of the year following the pickup year, i.e. for 200512, enter 06302012.  If the FBAR statute was extended, input this statute date in its place.
  8. After correcting the ASED and hitting enter, enter the tracking code, hit enter, then
    hit “Y” to accept the information. It will not ask for a project code at this time.
  9. ERCS will now give you the option to enter additional years.  Note: When entering additional years, ensure you are correcting the ASED for each pickup.
  10. Once done entering additional years, it will ask for information on the related case.  Enter key case TIN, MFT and TY.
  11. Once key case info is entered, enter the name and address for the taxpayer being established.
  12. Once all inputs are complete, you will need to input the project code from the correct multiple tax returns screen as follows:
    • From the ERCS main menu, select 2 – Correct or Display Records, then select 2 – Correct multiple tax returns.
    • Select 13, input the project code then Enter.
    • Update the project code for each year established.
    • Once all years are updated, input 99 to save the updates.
  13. Establishing the records are now complete as managerial approval is not required in ERCS.  From now on the agent will track FBAR case time to the appropriate taxpayers and years.