4.22.4 Examination of NRP Returns

Manual Transmittal

August 05, 2024

Purpose

(1) This transmits revised IRM 4.22.4, National Research Program, Examination of NRP Returns.

Material Changes

(1) The Section Title was changed from “Examination of NRP Income Tax Returns” to “Examination of NRP Returns”.

(2) This IRM content was revised to reflect current NRP examination processes and procedures.

(3) Manual Transmittal- Large Business and International (LB&I) and Tax Exempt and Government Entities (TE/GE) are removed as user organizations and from the Audience element because guidance related to their exam work was edited out after the previous update.

(4) 4.22.4.2.1(1)(2) - Removed mention of paper case files.

(5) 4.22.4.3(4)(c) - Added a new paragraph that references tracking codes. Updated and revised the table containing tracking code information.

(6) 4.22.4.3.6(1) - Some qualifying situations for requesting an exclusion were removed from the IRM. The removed criteria is intended for internal use only by the NRP office, and their inclusion caused misinterpretation. One new qualifying situation was added to the list for a taxpayer who is incarcerated. Descriptions for each were revised for clarity.

(7) 4.22.4.3.6(5) - Updated instructions for case closing procedures.

(8) 4.22.4.4(2) - Removed paragraph that mentioned inactive studies.

(9) 4.22.4.4.1(2) - Added a note to clarify NRP cases always close from the group to the coordinator.

(10) 4.22.4.4.1(3) - Added “and coordinator review” for accuracy and clarity. Also included an emphasis in two places for readability.

(11) 4.22.4.5 - Added new subsections describing NRP code and edit transcription.

(12) Throughout this IRM, editorial changes were made to add clarity, correct punctuation, misspellings and grammar, and to update or add citations and references.

Effect on Other Documents

This guidance supersedes IRM 4.22.4, Examination of NRP Returns, dated 01-28-2021.

Audience

Small Business/Self-Employed (SB/SE) examination employees.

Effective Date

(08-05-2024)

Peter Rose
Director, Knowledge Development, and Application (KDA)
Research, Applied Analytics and Statistics

Program Scope and Objectives

  1. This IRM provides guidance for conducting examinations of NRP key case tax returns. The types of returns applicable to these cases include examinations of:

    • Form 1040, Individual Income Tax - IRM 4.22.6

  2. Audience. This information applies to IRS employees who are involved in the examination process of NRP selected returns:

    • Territory managers

    • Group managers

    • Examiners

    • Reviewers

    • NRP staff

  3. Director, Knowledge Development and Application under Research, Applied Analytics and Statistics (RAAS) is the policy owner.

  4. NRP is the program office responsible for the oversight of the NRP studies.

  5. For information about the National Research Program, visit the NRP website at: https://nrp.web.irs.gov.

Background

  1. The IRS needs reliable compliance measures to determine which key areas of noncompliance to address and which treatments to apply to maximize the use of its limited resources. Data provided by NRP examinations gives us the information to meet these needs.

  2. NRP applies specific guidelines to existing examination techniques and processes to capture necessary compliance data. Using enhanced internal information and established processes, NRP minimizes the burden to both the taxpayer and examination personnel.

  3. NRP results are available for the IRS to effectively manage its compliance programs and design pre-filing activities that help taxpayers comply with the tax law.

  4. NRP is critical to the organizational transformation of the IRS. NRP is one of several efforts the IRS is using to enhance its compliance-oriented programs.

Authorities

  1. By law, the IRS has the authority to conduct examinations under Title 26, Internal Revenue Code, Subtitle F – Procedure and Administration, Chapter 78, Discovery of Liability and Enforcement of Title, Subchapter A, Examination and Inspection, which includes, but is not limited to, the following IRC sections:

    • IRC 7602, Examination of books and witnesses

    • IRC 7605, Time and place of examination

    Note:

    Additional information related to conducting examinations is contained in 26 CFR 601.105, Statement of Procedural Regulations.

  2. Under the Reform and Restructuring Act of 1998 (RRA '98), Congress mandated the IRS to deliver service to taxpayers at a new and much higher level of performance in the most cost-effective and least burdensome manner possible. Data from NRP examinations enable the IRS to operate as a more efficient and effective tax administration organization.

Roles and Responsibilities

  1. Director, Research, Applied Analytics and Statistics (RAAS) oversees the NRP Program.

  2. Director, Data Management Division (DMD) oversees the Compliance Data Warehouse (CDW).

  3. Chief, National Research Program manages and monitors NRP operations and provides guidance. This is the office with primary responsibility for administering the NRP program.

  4. For all NRP studies, the NRP Office manages and monitors NRP operations and provides guidance and assistance to all participating Business Operating Divisions (Small Business and Self Employed (SB/SE), Large Business and International (LB&I) and Tax Exempt and Government Entities (TE/GE)) as needed.

  5. Examination Directors have responsibility for NRP examinations within their areas.

  6. Territory Managers have responsibility for NRP examinations within their territories.

  7. The Planning and Special Programs (PSP) Territory Manager (TM) will coordinate the receipt, control, and assignment of NRP returns. The PSP TM will monitor and report on the status of the NRP inventory, approve transfer of cases and have second line authority for approval/disapproval of exclusion requests.

  8. Group Managers and Case Managers are responsible for NRP cases within their groups, including timely assignment of NRP cases, and providing guidance to examiners on the scope and requirements of these examinations. They are also responsible for maintaining a workflow throughout the entire examination cycle that ensures timely completion. To ensure the quality of NRP examinations, managers will review cases according to procedures outlined in this IRM.

Program Management

  1. Effective management of the NRP study is achieved by training the NRP managers and examiners. This ensures that quality examinations are conducted and the IRS gets good data.

    1. Only examiners who complete NRP training will work NRP cases.

    2. Group Managers with NRP cases in their group are also required to complete the applicable Integrated Talent Management (ITM) NRP training course.

    3. Examiners with NRP cases assigned to them and group managers with NRP cases in their group are required to complete the Integrated Talent Management (ITM) NRP training course on an annual basis for as long as the NRP cases are active.

    4. The number of NRP examiners appointed will be sufficient to handle the NRP workload.

    5. Qualified examiners at appropriate grade levels will be assigned NRP cases.

Terms and Acronyms

  1. Acronyms relating to the NRP examination include:

    1. AIMS - Audit Information Management System

    2. CDW - Compliance Data Warehouse

    3. DIF - Discriminant Function

    4. ERCS - Examination Returns Control System

    5. EOAD – Examinational Operational Automation Database

    6. ITM - Integrated Talent Management

    7. KITA - Killed In Terrorist Action

    8. LB&I - Large Business and International Division

    9. NRP - National Research Program

    10. PSP - Planning and Special Programs

    11. SAC - Special Agent in Charge

    12. SB/SE - Small Business and Self-Employed Division

    13. TE/GE - Tax Exempt and Government Entities

Related Resources

  1. IRM 4.22.6, Area Office - Examination of Individual Returns

  2. IRM 4.22.8, NRP EITC Component of the Individual Reporting Compliance Study

NRP Examination Process

  1. The NRP examination process follows the normal examination process to the extent possible. By adhering to normal examination processes and procedures, NRP is able to minimize the burden to both the taxpayer and examiner while still capturing the necessary data. Each NRP study consists of the following processes for a single tax year:

    1. Sample Selection – Each NRP study selects a statistically valid, stratified random sample of returns. Data from the sampled returns produce a set of data that is representative of the study population from which the returns were selected. With appropriate weighting, the results from the sample returns can be used to develop estimates for the study population.

    2. Case Building – Refer to IRM 4.22.2 NRP Case Building, for detailed information about the NRP Case Building process.

    3. Classification – Refer to IRM 4.22.3 Classification of NRP Returns, for detailed information about the NRP Classification process.

    4. Examination – Except as otherwise specified in IRM 4.22.4 Examination of NRP Returns, existing examination processes and procedures are to be followed for NRP cases.

    5. Data Transmission – Refer to IRM 4.22.4.4 Examination of NRP Returns, for detailed information about the NRP Data Transmission process.

  2. To facilitate continued improvements to NRP studies and processes, the NRP staff will communicate with the Area, Territory, or Industry Offices in coordination with the NRP Coordinators, to solicit feedback and insights on each study. These discussions will include any recommended changes for future studies, taxpayer reactions to the program and ways of accomplishing NRP with reduced taxpayer and examiner burden.

Receipt of NRP Cases

  1. NRP electronic case files contain all case building items in electronic format.

  2. Upon receipt of NRP case files, the receiving office will verify that the case files are complete and agree with the accompanying transmittal list ( Form 3210). If files don’t agree with the accompanying transmittal, contact the NRP Office at the following e-mail address: ctr.aus.nrp@irs.gov.

  3. After verification, the receiving office will sign and date (on each page) the original and one copy of the transmittal lists (Form 3210) within five workdays.

Processing of NRP Cases

  1. NRP cases are processed as part of the normal examination workload unless otherwise specified herein.

Assignment of Cases

  1. After receipt of cases from the NRP Coordinator, Group Managers and Case Managers will assign cases to examiners as quickly as possible.

  2. NRP examinations will only be conducted by examiners who have completed the required NRP training. NRP examinations will be completed promptly without sacrificing quality.

  3. Examiners with NRP cases assigned to them and group managers with NRP cases in their group are required to complete the Integrated Talent Management (ITM) NRP training course on an annual basis for as long as the NRP cases are active.

Examination of Returns

  1. Examinations of NRP returns are generally held face-to-face. Exceptions to this will be made after concurrence by management on a case-by-case basis. There will be no surveys before or after assignment unless certain exclusion criteria are met.

  2. Examinations will be conducted consistent with existing examination guidelines unless they conflict with instructions contained herein. If conflicts arise with existing examination guidelines, NRP guidelines take precedent.

  3. Where possible, perform field examinations at the taxpayer's place of business to permit actual observation of the taxpayer's business facilities and extent of operations. See IRM 4.10.3.4.4, Where to Conduct Interviews.

  4. Prior/Subsequent or Related returns are not required for NRP Key cases. Examiners must follow IRM 4.10.5, Required Filing Checks, and determine that all required related returns and prior/subsequent year returns were filed.

    1. If a prior/subsequent or related return is picked up for examination, use Source Code 91 when establishing the control on AIMS/ERCS.

    2. If a prior/subsequent or related return is picked up for examination, also use the appropriate Project Code and Tracking Code for the applicable key tax year.

    3. Tracking Codes and Project Codes must be verified for accuracy by referencing AIMS, the Case Stuffer (CFD in RGS), or the RGS Summary Record.

          Tracking Code
    (Key) Tax year Source Code Project Code Traditional AI Select_Explore AI Select_Exploit
    2019 80 0674 7719 8008 8009
    2020 80 0674 7720 8010 8000
    2021 80 0674 7721 8721 8001
    2022 80 0674 7722 8722 8002
    2023 80 0674 7723 8723 8003
    2024 80 0674 7724 8724 8004
    2025 80 0674 7725 8725 8005
    2026 80 0674 7726 4726 8006
    2027 80 0674 7727 4727 8007
    2028 80 0674 7728 4728 8008
    2029 80 0674 7729 4729 TBD
    2030 80 0674 7730 4730 TBD

  5. If indications of fraud are discovered during the examination of an NRP or related return, make a referral in accordance with the procedures in IRM 25.1, Fraud Handbook.

    1. Label the referral as an NRP case. Such identification is necessary so that the Special Agent in Charge (SAC) can recognize it as being an NRP return.

    2. If the case is accepted for joint investigation and a reasonably accurate estimate of the results cannot be made during the NRP examination period, the NRP Office will provide additional guidance.

  6. If an NRP return crosses Operating Divisions, contact your NRP Coordinator for guidance.

  7. When an examiner determines or is notified that an NRP and/or any related return is being controlled by the Partnership Control System (PCS), the examiner will contact the agent working the related case to find out when reliable information can be expected concerning adjustments that affect the NRP examination. Follow-up periodically to ensure that reliable information is provided timely.

  8. Alert Area Counsel immediately in all instances involving summons enforcement regarding an NRP case. Also, inform the NRP Office by memorandum of such cases as soon as they arise.

  9. Under certain circumstances, NRP returns can be removed from the study. In addition to the exclusion criteria in this IRM, there are systemic conditions that will require the exclusion of certain taxpayers from the NRP sample. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.22.4.3.6, for the procedures for requesting exclusions of NRP cases.

  10. If the examiner finds that an examination cannot be conducted for reasons other than those listed in this IRM, the manager must notify the NRP Coordinator. The NRP Coordinator will contact the NRP program office to determine if the NRP case can be excluded from the study.

  11. All problems not specifically covered in this section will be resolved jointly by the NRP Office and participating Operating Divisions.

Scope and Depth of Examinations

  1. Importance of NRP Results -The examination outcomes of NRP returns provide the data used to understand the extent and nature of noncompliance for the relevant population of returns from which the NRP returns are drawn. These data are used in many ways. Primary among these are developing noncompliance estimates, including the tax gap estimates; developing estimates to satisfy the reporting requirements of the Improper Payments Information Act (IPIA) of 2002 as amended; and developing or updating models for scoring returns as to their probability of significant tax understatement. The scope and depth of the examination of an NRP-selected return are sufficient to provide reliable information for these purposes. Examiners must be mindful of causing unnecessary burden for the taxpayer.

  2. Scope of Examination - Every classified item must be examined. An inquiry or an inspection of records and documents must be made for all classified line items. If an examiner has a question about the classified issues, refer to IRM 4.22.3, Classification of NRP Returns, for further instruction.

    1. Expansion of Audit Scope - If the examination reveals issues in addition to those classified, the examiner will expand the examination to include the additional items. Materiality is never a factor for expanding the scope of the NRP key case.

    2. Related Entity Examinations - If the examiner chooses to pick-up a related return or entity, controls must be established. If the related entity is outside the group control, the examiner will follow the procedures outlined in IRM 4.1.1.7.5, Collateral Referrals.

      Note:

      Related return examinations are not NRP sample returns. The examinations of any related entities are not subject to the requirements of an NRP examination. The scope is determined by the examiner. Related returns are not subject to the NRP guidelines.

  3. Depth of Examination - Examiners must use their professional judgment concerning the depth of examination required for any item on the tax return bearing in mind the future uses of the data collected from the examinations. See IRM 4.22.4.3.2, Evaluation of Books and Records.

    1. The depth of the examination of an NRP examination is the same as a non NRP examination. NRP taxpayers must not be held to a higher standard or more in-depth audit procedures.

    2. Pursue issues to the depth necessary to reach a supportable conclusion. Oral testimony can be accepted in appropriate situations. See IRM 4.10.7, Issue Resolution.

  4. Mandatory Probes - At a minimum, conduct some inquiry or inspection of records and documents supporting classified or mandatory items including, but not limited to, income, deductions, taxes and credits. In the examination of all NRP cases, be equally alert to discovering unreported income, as well as allowing taxpayers any additional deductions or credits to which they are entitled. Given the variety of taxpayers and types and sources of income and deductions, it is not practical to give specific guidelines for the scope and depth of such inquiry. This is a matter of judgment in each case. For minimum income probes refer to IRM 4.10.4, Examination of Income.

  5. Required Workpaper Documentation - Lead sheets and any supporting workpapers are required for each issue, must be prepared electronically, and included in the applicable electronic case file. Lead sheets must contain the adjustment amount, audit procedures and conclusion. In addition, certain issues require completion of an NRP-specific lead sheet that contains data capture features. All supporting workpapers must be properly named so they can be associated with the appropriate issue/lead sheet. RGS users refer to IRM 4.10.15.8.9 & IRM 4.10.15.10, including subsections, for general lead sheet and workpaper information and requirements.

    1. Audit procedures and conclusions for each issue audited must be supported by written comments in the workpapers regardless of whether an adjustment was made. This is necessary to ensure that the statistical data gathered for NRP is accurate and complete.

    2. Examiners must describe what inquiry or inspection of records or documents was made to verify reported or possible unreported income, deductions and credits.

  6. NRP Data Capture Lead Sheets - NRP Data Capture Lead Sheets are all presented in an Excel format and designed so that information entered by the examiner can be extracted and provided to the stakeholder requesting the information.

    1. Information on how to access and complete the Lead Sheets is provided in the training material and within the Lead Sheets.

    2. Do not delete any tabs on NRP Lead Sheets.

    3. NRP Lead Sheets must remain in Excel for proper data capture.

    4. NRP Lead Sheets can be renamed to include the Issue Reference Number according to revised SBSE electronic case file guidelines.

    5. An NRP initial interview supplemental questionnaire is provided to assist examiners with the initial interview.

Evaluation of Books and Records

  1. NRP examiners will gather facts to determine the accuracy of any item classified for examination. This determination will include all the facts supporting both sides of an issue.

  2. Documentary evidence is emphasized in the conduct of an NRP examination. Records kept contemporaneously with the occurrence of an event generally reflect accurately of that event. Books of original entry are to be obtained if they exist. The contemporaneous records, invoices, bank statements, cancelled checks, and any other documents to support the books and records will be inspected to a depth adequate to support the accuracy of those books and records.

  3. In situations where contemporaneous books and records do not exist or are incomplete, secondary written records (such as, copies of original documents obtained from third parties) or other reconstructions of records, if credible, can be used.

  4. Oral testimony by a taxpayer is direct evidence which must be thoroughly considered. The degree of reliability placed on a taxpayer's oral testimony must be based on the credibility of the taxpayer and the surrounding circumstantial evidence.

  5. Oral testimony by other than the taxpayer can also be credible if that person has first-hand knowledge of the facts and circumstances.

  6. The steps to obtain evidence and the evaluation of it must be documented in the issue's workpapers.

De Minimis Adjustments

  1. Due to the future uses of the data collected through the NRP examinations, all adjustments must be entered and captured within RGS, IMS or the study specific Data Capture Instrument (DCI) on the key case examination only.

  2. Each NRP Study has its own requirements regarding de minimis adjustments. For more information, refer to the applicable NRP training courses at https://nrp.web.irs.gov/training.

Wrong-Line Adjustments

  1. Wrong line adjustments occur when a taxpayer reports an amount on the wrong line of an income tax return. They include:

    1. Decreasing an amount that was reported (solely or as part of a larger amount) on the return and then allowing the amount elsewhere on the return, OR

    2. Decreasing an amount that was reported (solely or part of a larger amount) on the return and then allowing that amount split among two or more line items, AND

    3. Affects or potentially affects the final tax liability.

  2. All wrong line adjustments must net to zero.

  3. Wrong line adjustments do not include:

    1. Increasing an amount that was reported (solely or as part of a larger amount) on the return. If the increase relates to an amount that was reported by the taxpayer on the wrong line, make the adjustment to the correct line.

    2. Increasing or decreasing an amount as a result of adjustment(s) made to another return (prior, subsequent or related).

  4. Each NRP Study has its own guidance regarding wrong line adjustments. For more information, refer to the applicable NRP training courses at: https://nrp.web.irs.gov/training.

  5. Guidelines for making wrong line adjustments include:

    1. For each affected return line item, don’t combine wrong line adjustments with other adjustments. If necessary, add issues in RGS to capture the wrong-line adjustments separately.

      Note:

      It’s acceptable to combine other adjustments (to the same line) into one issue.

    2. Use Reason Codes "10" or "14" , as appropriate, to describe all wrong line adjustments

    3. The sum of wrong line adjustments made to the NRP key case must equal zero.

  6. Cases with flow-through income and expenses to other entities have special considerations. Form 1065, Form 1120S, and Form 1041 provide for items of income and expense to be distributed as ordinary income or (loss) and as separately distributed items (per Schedule K-1 and return attachments). In completing a report for examination changes at the conduit level, the examiner will not reflect changes that are in name only and used to determine ordinary income or (loss). If changes result in adjustments to the distributed items which could (based on statutory limitations and other requirements at the shareholder/partner level) affect tax liability, then the examiner will make those adjustments and use the appropriate Reason Code "10" or "14."

  7. Even though wrong line adjustments do not affect the determination of taxable or ordinary income, their true nature can have a definite effect on the determination of tax liability for the NRP return or the shareholder associated with the NRP return. These changes (such as those to Self-Employment Tax, Minimum Tax, Earned Income Credit, etc.,) will be reflected on the report. In addition, changes will be made to misclassified items on a Form 1040 that could result in changes to the shareholder return due to statutory or other limitations at the recipient's level.

Transfers

  1. Once a decision has been made to transfer a case to another area and the requirements of IRM 4.11.29, Transfer of Returns Open for Examination, have been met, the following procedures apply:

  2. A completed Form 3185, Transfer of Return, with "NRP study cycle" clearly entered in the "Comments" section will be used to transmit NRP cases and any related data to the transferee Area NRP Coordinator for review and updating of control records. The Area NRP Coordinator will establish local procedures for expediting transfers, both into and out of the Area.

  3. Upon receipt of the NRP package, the receiving Area must acknowledge receipt by updating the NRP control system and by signing and acknowledging Form 3210, Document Transmittal.

    1. The transferring Area NRP Coordinator must review Form 3210 periodically to see if the "Acknowledgment Copy" of Form 3210 has been received.

    2. If it has not been received within 30 days, follow-up action must be taken by contacting the transfer-out clerk within the Area and, if necessary, the receiving Area NRP Coordinator.

  4. The NRP Coordinator must also review the "Transfer Pending" report on the NRP control system periodically to see if any cases are being transferred into the Area. If a case is not received within 30 calendar days of the "Sent" date, the transferee Area NRP Coordinator must contact the transfer-in clerk within the Area and if necessary, the transfer-out Area NRP Coordinator to ensure transfer completion.

  5. Formal discussions between the transferrer and transferee Areas are strongly recommended, to eliminate questionable transfers.

Exclusions

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    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    "≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Transmission of Electronic Data to NRP Databases

  1. After each NRP examination, the electronic data must be transmitted to the various NRP databases.

Data Consistency Checks of NRP Examination Records

  1. NRP will test all transmitted data to ensure it is complete and consistent. Transmitted case data consists of EOAD data extracted from the electronic case files as well as examiner responses to the NRP questionnaire, if one is used for the study, NRP lead sheets or other NRP data capture instruments.

  2. Data that is incomplete or inconsistent will be identified for correction. Data consistency tests for the Form 1040 NRP study are run by the NRP Coordinator.

    Note:

    If examiner consistency tests were run, the case still closes from the group to the NRP Coordinator for complete testing and review.

  3. Once the transmitted data has passed all NRP consistency tests and Coordinator review, the case can be forwarded to the appropriate location.

Introduction to NRP Form 1040 Transcription

  1. NRP Form 1040 returns have already been through original pipeline processing and posted to the Individual Master File. Customers of NRP data have requested additional fields that NRP cannot obtain elsewhere. NRP transcription will supplement data collection in pipeline processing and from other sources. However, the transcribed NRP data will not affect the taxpayer’s account.

  2. The specific forms/schedules/lines required for transcription originate from the NRP data load map and have been programmed as data input fields within the NRP transcription application.

NRP Transcription Application

  1. Transcribers must have access through BEARS to the NRP transcription application. Navigation and data input instructions are available within the transcription application.

NRP Transcription Concepts

  1. NRP is interested in capturing what the taxpayer originally reported.

  2. Not every form/schedule/line with taxpayer supplied data will be transcribed. Follow the transcription application prompts.

  3. Disregard pipeline processing code and edit markings.

  4. Do not combine multiple occurrences of forms and schedules unless stated otherwise below.

  5. Refer to the special handling instructions in the NRP transcription job aid for specific form/schedule/line requirements.

  6. Key Verification (KV) will validate Original Entry (OE). Additionally, NRP will perform data load tests on the transcribed data to ensure correct data input.

Screening NRP Returns

  1. Verify that the Charge Out Sheet information matches the return.

  2. Verify that the return is a Form 1040 or 1040A (TY17 and earlier) or 1040SR (TY19 and after), and that the supporting forms and schedules are for the correct taxpayer.

  3. Select the appropriate tax year in the transcription application.

  4. Verify that the Edit Sheet information matches the return.

  5. Screen the return and populate the Edit Sheet.

  6. Disregard any forms or schedules that have “AMT” or “Alternative Minimum Tax” noted by the taxpayer.

  7. Locate and note the presence of any relevant supplemental statements in the Comments box.

NRP Edit Sheet for Transcription

  1. The fields in the Edit Sheet header, including the TIN, Tax Period, Case #, Return Filed, Cycle, PBC, Taxpayer Name and DLN will be pre-populated.

  2. The forms and schedules listed at the top of the Edit Sheet will receive extensive transcription. For each form and schedule included in the tax return, edit the number of times it appears in the Number for Transcription field. The Comments field can be used to communicate relevant information to the KV.

  3. The SEID, date and time stamp will indicate when the OE and KV last saved the data.

  4. The miscellaneous forms and schedules at the bottom will be transcribed directly from the Edit Sheet. If the form or schedule appears, edit the money amount from the specified line to the Amount field.

General NRP Transcription Procedures

  1. Populate missing TINs/SSNs/EINs where possible.

  2. Populate missing money amounts using the transcription application’s calculation mismatch.

  3. Pay special attention to the applicable check boxes.

  4. If a line has multiple taxpayer entries on it, input the total unless stated otherwise below.

  5. If a line has embedded brackets, do NOT enter the money amount as a negative. Only enter a money amount as negative if the taxpayer reported it as a negative on a line without embedded brackets.

  6. Prepare a dummy form or schedule if the taxpayer submitted a statement in lieu of an actual form or schedule.

  7. Ignore any pipeline processing markings, especially for transcription lines required by NRP.

Pipeline Processing and Multiples

  1. Since taxpayers can report multiples of certain forms and schedules, pipeline processing will assign a unique sequence code to differentiate them. However, pipeline is limited in its ability to process multiples. Once these unique sequence codes run out, pipeline will combine the amounts reported on the remaining multiples and edit them on the last available sequence code.

  2. In general, NRP is interested in capturing each instance of a particular form or schedule, not the combined amounts. Transcribe each multiple separately, exactly like the taxpayer reported them, unless stated otherwise in the NRP transcription job aid.